Our Vietnam Legal Update #180 would lead you on 03 legal issues:
I. Increasing charter capital from profits after-tax
On 17 September 2021, Bac Giang Tax Department issued Official Letter No. 4396/CTBGI-TTHT on tax policies, increasing charter capital from profits after-tax with the following contents:
- In principle, taxpayers shall declare tax declaration, lists, and appendices (if any) according to the form prescribed by the Ministry of Finance and take responsibility before law for the accuracy, truthfulness, and completeness of their tax declaration dossiers according to regulations with tax administration authority.
- The amount of CIT temporarily paid quarterly, the enterprise shall base on the CIT amount of the previous year and expected business results in the year to determine the amount of CIT temporarily paid quarterly. However, the total temporarily paid CIT amount of the first 3 quarters of the tax year shall not be lower than 75% of the payable CIT amount according to the annual finalization. The deadline for paying CIT is the 30th day of the quarter following the quarter in which the tax liability arises. The temporarily paid CIT amount quarterly is deducted from the temporarily paid tax amount and the payable tax amount according to the annual tax finalization.
- In case the taxpayer proposes to voluntarily declare a quarterly CIT declaration temporarily and submit it to the tax authority. In this regard, there is no provision in the current tax law.
- Taxpayers shall determine the business results (profit/loss) for the accounting period in the financial statements prepared at the end of the annual accounting period unless the taxpayer has been approved by the competent authority to prepare financial statements for another accounting period.
- The owner (investor) has the right to decide to use the profit after-tax after fulfilling the tax and other financial obligations of the enterprise.
- In case the investor wants to use the after-tax profit after fulfilling the tax obligations and other obligations of the enterprise to increase the charter capital to invest in the subsidiary, the enterprise must contact the competent authorities for specific instructions on the procedures for adjusting the Investment Registration Certificate and the Enterprise Registration according to regulations.
II. Revenue and income from business cooperation contract
Binh Duong Tax Department issued Official Letter No. 13014/CTBDU-TTHT dated 10 September 2021 on revenue and income from the business cooperation contract (“BCC Contract”) with the following contents:
- Taxpayers must calculate the payable tax amount unless the tax calculation is done by the tax administration authority.
- In case the parties entered a BCC Contract which divides the business result per the turnover from the sale of goods and services, the taxed turnover is the turnover of each party divided under the contract.
- In case the parties entered a BCC Contract which divides their business result per product, the taxed turnover is the turnover of products divided into each part under the contract.
- In case the parties entered a BCC Contract that divides their business result per pre-CIT profit, the turnover for determining the pre-tax income is the proceeds from the sale of goods or provision of services under the contract. The parties shall appoint a party as a representative to produce invoices, record turnover, and expenses, and determine the pre-CIT profit divided to each party. Each party shall perform its CIT obligation under current regulations.
- In case the parties entered a BCC Contract which divides their business result per after-CIT profit, the turnover for calculating taxable income is the proceeds from the sale of goods or provision of services under the contract. The parties to the BCC Contract shall appoint a party as a representative to produce invoices, record turnover, and expenses, and declare and pay CIT on behalf of other parties.
III. Guidance on the use of goods invoices
The Tax Department of Ho Chi Minh City issued Official Letter No. 6197/CTTPHCM-TTHT dated 23 June 2021 to guide the use of created goods invoices. The main contents of the Letter are as follows:
- In case the seller has issued an invoice, the buyer has received the goods but then discovers that the goods are not following the specifications and quality, leading to the return of all or part of the goods: When returning the goods to the seller, the buyer must issue an invoice which clearly states that the returned goods are due to improper specifications, quality, and VAT (if any).
- In case the buyer is the subject with no invoice: When returning the goods to the seller, the two parties must make minutes clearly stating the type of goods, quantity, and value of the returned goods (VAT excluded), VAT according to the sales invoice, the reason for the return. The seller shall withdraw the issued invoice. The minutes must have signatures and clearly state the names of the legal representatives of both parties (or authorized persons).
Maybe you are interested in reading other Legal Update of BLawyers Vietnam: September 2021 (Part 3) | September 2021 (Part 2) | September 2021 (Part 1) | August 2021 (Part 4) | August 2021 (Part 3) | August 2021 (Part 2) | August 2021 (Part 1) | July 2021 (Part 5) | July 2021 (Part 4) | July 2021 (Part 3) | July 2021 (Part 2)