Tax Newsletter. August 2013

Transcription

1 Tax Newsletter August 2013

2 Table of Contents: NEW DOCUMENTS New Decree guiding the implementation of the amended Laws on CIT and VAT New Circular on Personal Income Tax ( PIT ) GUIDING DOCUMENTS Value Added Tax ( VAT ) VAT on transfer of assets with the land use right of leased land by EPEs Strengthen tax management on VAT refund Corporate Income Tax ( CIT ) Tax implications for promotional goods without any registration or notification Guidance on the tax treatment for sponsorships Ho Chi Minh Tax Department opinions on the fee paid for expatriates related to their Personal Income Tax ( PIT ) compliance services Foreign Contractor Withholding Tax ( FCWT ) FCWT treatment for revenue earned by foreign contractors from providing hospitality management services CIT implications for loan interests Personal Income Tax ( PIT ) Re-submission of dependent registration dossiers when changing job Required tax procedures for tax exemption for foreign contractors and expatriates under an ODA project Import Export Duty Customs duty applicable to import goods with dutiable value exceeds the limit under the list of goods exempted from import duty Electronic bank payment vouchers for import-export activities Customs procedures for the sales of scraps and waste products from processing services Guidance on issue associated with bank payment vouchers Imposition of deadlines on customs duty payment for imported materials and supplies to produce exported goods

3 NEW DOCUMENTS New Decree guiding the implementation of the amended Laws on CIT and VAT The Government officially issued Decree 92/2013/ND-CP ( Decree 92 ) dated 13 August 2013 providing guidance on the implementation of the new regulations, effective from 1 July 2013 in accordance with the amended Laws on CIT and VAT. Decree 92 took effect from 13 August Decree 92 presents further detailed guidance on applicable objects, types of income and taxable period entitled to favorable tax rates under the amended laws, including: A 20% CIT rate is applicable for enterprises with the total annual revenue not exceeding VND20 billion; A 10% CIT rate and 5% VAT rate for income from social housing business activities; and A 50% reduction of applicable VAT rates for income generated from sale, lease, or financial lease of commercial building. Details of notable content in Decree 92 were updated in our Tax Alert on 21 August New Circular on Personal Income Tax ( PIT ) On 15 August 2013, the Ministry of Finance issued Circular 111/2013/TT-BTC ( Circular 111 ) dated 15 August 2013 providing detailed guidelines on the amended Law and Decree 5 on PIT dated 27 June 2013 by the Government. Circular 111 shall come into effect from 1 October 2013 and replace precedent PIT regulations, namely Circular 84/2008/TT- BTC, Circular 2/2009/TT-BTC and others. The regulations under Circular 111 guiding the amended Law on PIT and Decree 5 shall be applied retrospectively at the effectiveness of the Law on PIT and Decree i.e. 1 July Details of notable content in Circular 111 were updated in our Tax Alert on 28 August

4 GUIDING DOCUMENTS Value Added Tax ( VAT ) VAT on transfer of assets with the land use right of leased land by EPEs On 13 August 2013, the General Department of Taxation ( GDT ) issued Official Letter 235/TCT-CS providing guidance when an Export Processing Enterprise ( EPE ) transfers assets with the use right of leased land. Pursuant to OL 235, when EPE transfers assets on land (e.g. factory) together with the use right of leased land to domestic enterprises for purposes of dissolution, such revenue shall be subject to VAT rate of 10%. Accordingly, EPE should issue VAT invoice, declare and make payment for VAT and CIT liability per regulations. Notably, the VATable amount is exclusive of the transferring land value. Strengthen tax management on VAT refund On 31 July 2013, the Ministry of Finance ( MoF ) issued Official Letter 997/BTC-TCT providing guidelines to provincial and municipal tax authorities to strengthen the tax management on VAT refund and prevent tax frauds and losses to the State Budget. Pursuant to the OL, the MoF indicated several suspicious signs in the VAT refund dossier that is eligible for a tax refund prior to an examination. If the taxpayers fail to explain the bases for the refund, such VAT refund dossiers shall be subject to an inspection prior to a tax refund. The suspicious signs may include but not limited to: Enterprises have charter capital that is less than their operation scale and requested VAT refund; Enterprises are newly established in the past 24 months. Enterprises conduct trading activities but do not have facilities (e.g. factories, workshops, warehouses, transportation vehicles, department stores, etc.). Enterprises are set up in one province but operate in other provinces with unusual signs. Enterprises purchase goods for exporting mainly from trading enterprises, newlyestablished enterprises, organizations and individuals buying agricultural, forestry and fishery products which are not subject to input VAT. Enterprises receive payments for exporting goods and services in the checking accounts. The buyers and sellers have husband and wife or sibling relationship, or relationship with unusual signs. In addition, VAT refund dossiers shall exclude the input VAT which is not eligible for tax creditability and tax refund due to not paying via banks under the current VAT regulations. 4

5 Corporate Income Tax ( CIT ) Tax implications for promotional goods without any registration or notification On 25 July 2013, the General Department of Taxation issued Official Letter 2372/TCT- CS presenting the tax implications for promotional goods without any registration or notification as prescribed under Decree 37/200/ND-CP. Accordingly, in the absence of a written registration or a notification for the promotional programs to the Department of Industry and Trade under the commercial regulations, when delivering goods of such promotional programs to customers, the enterprise shall issue a VAT invoice, declare and pay the VAT and CIT liability. The expenses in relation to the production or purchase of such goods shall be classified under Advertisement and Promotion expenses category, which are capped under Point 2.19, Section IV, Part C, Circular 130/2008/TT-BTC dated 2 December 2008 by the Ministry of Finance. Guidance on the tax treatment for sponsorships On 21 August 2013, the General Department of Taxation issued Official Letter 2744/TCT-CS providing guidance on the tax declaration for overseas sponsorship. Accordingly, the sponsorship received for educational, scientific, cultural, artistic, charitable, humanitarian activities, and other social activities in Vietnam is exempted from CIT. Accordingly, any sponsorship that the Company receives for other purposes other than the aforementioned i.e. enhancing the competitive competence, is not entitled to a CIT exemption. Ho Chi Minh Tax Department opinions on the fee paid for expatriates related to their Personal Income Tax ( PIT ) compliance services Pursuant to Official Letter 5792/CT-TTHT dated 25 July 2013, Ho Chi Minh Tax Department expresses their view on the deductibility of service fee paid for assisting expatriates with PIT calculation and declaration as follows: When the enterprises pay certain professional fee with respect to PIT compliance services for their expatriates, such expense does not relate to the business activities. Accordingly, the enterprises are not allowed to credit input VAT and deduct the professional fee for CIT purpose. 5

6 Foreign Contractor Withholding Tax ( FCWT ) FCWT treatment for revenue earned by foreign contractors from providing hospitality management services On 12 August 2013, the General Department of Taxation issued Official Letter 259/TCT-CS providing guidance on the determination of CIT liability for foreign contractor s revenue generated from providing hospitality management services. Pursuant to this Official Letter, the CIT rate on taxable revenue shall be determined in line with regulations at the incurring time rather than the payment time. Particularly, CIT rate of 5% under Circular 134/2008/TT- BTC dated 31 December 2008 shall be applied to revenues arisen before 1 March 2012 (even though the payment is made after 1 March 2012) and CIT rate of 10% under Circular 0/2012/TT-BTC dated 12 April 2012 shall be applied to revenues arisen from 1 March 2012 onward. CIT implications for loan interests Official Letter 241/TCT-CS dated 14 August 2013 issued by the General Department of Taxation reaffirms the guidance under Official Letter 3929/TCT-CS on the FCWT-CIT rate applicable to loan interests. Particularly, CIT rate of 10% shall be applied to loan interests arisen before 1 March 2012 (regardless of the payment time) and CIT rate of 5% shall be applied to loan interests arisen from 1 March 2012 and going forwards. The regulations shall also apply to income from bond interests, discounted bond prices, and interest from deposit certificates. Personal Income Tax ( PIT ) Re-submission of dependent registration dossiers when changing job On 19 August 2013, the General Department of Taxation issued Official Letter 2713/TCT-TNCN providing guidance on the re-submission of dependent dossiers when changing job. In the case where the former employers do not certify on the copy of dependent dossiers as regulated under Point 3.1.9, Section I, Part B, Circular 84/2008/TT-BTC dated 30 September 2008 by the Ministry of Finance, which provides guidance to Decree 100/2008/ND-CP dated 08 September 2008, the employee shall need to re-register for dependent deduction under Form 1/DK- TNCN and to submit together with dependent dossiers to the new employer in line with the regulations.

7 Required tax procedures for tax exemption for foreign contractors and expatriates under an ODA project Official Letter 2743/TCT-CS dated 21 August 2013 by the General Department of Taxation provides guidance on the tax procedures applicable to foreign contractors of ODA project that do not apply the Vietnamese accounting system, and are exempted from CIT liability on the revenue generated from project in Vietnam under the Double Taxation Avoidance agreements ( DTA ) and foreign experts are exempted from PIT liability on their employment income. In such cases, the Project Management Board shall be responsibile for submitting the dossiers notifying the eligibility for tax exemption or reduction under the DTA and requesting PIT exemption for foreign experts under the regulations. Import Export Duty Customs duty applicable to import goods with dutiable value exceeds the limit under the list of goods exempted from import duty On 5 August 2013, the General Department of Customs issued Official Letter 4480/TCHQ-TXNK guiding on the determination of customs duty for imported goods with a dutiable value that exceeds the limit under the list of goods exempted from import duty. Accordingly, in the case where the importers do not supplement / adjust the registered list with the actual dutiable value before post- customs clearance inspection and tax audit at the local site, a duty collection and penalty shall be imposed as prescribed under the regulations. Electronic bank payment vouchers for import-export activities On August 2013, the General Department of Customs issued Official Letter 451/TCHQ-TCNK providing instruction on the tax dossiers for liquidity and a duty refund applicable to imported goods. Specifically, according to Article 118, Circular 194/2010/TT-BTC dated December 2010, enterprises shall need to include one (01) copy of payment document for their exported goods in the aforementioned dossiers that relates to the import of goods to manufacture export and also present one (01) original version to the customs authority for review. Accordingly, the payment documents printed from the bank s website without a seal shall disqualify enterprises from a duty refund as stipulated under Circular 194/2010/TT-BTC. 7

8 Customs procedures for the sales of scraps and waste products from processing services Point d3, Clause 5, Article 113, Circular 194/2010/TT-BTC provides guidance on the custom duty of scraps and waste products, which are from the production of goods for exporting from imported materials and supplies (e.g. the processing of peanuts with shell to peanuts) and later are sold domestically. Effectively, the scraps and waste products are within the registered consumption levels shall not be subject to customs duty and vice versa. Furthermore, such sales are subject to VAT and CIT in accordance with the relevant tax regulations. Consequently, for sales of scraps and waste products within the registered consumption rate to domestic areas, the enterprises are not required to declare the on-spot import/export returns and pay import duty; however, the declaration and tax payment for other taxes such as VAT and CIT in line with regulations are still required. Above is the content of OL 45/TCHQ- GSQL dated 8 August 2013 issued by the General Department of Customs. Guidance on issue associated with bank payment vouchers On 15 August 2013, the General Department of Customs issued Official Letter 4757/TCHQ-TXNK providing guidance on the information disclosed on the bank payment voucher, which is a required document as a part of the complete dossiers for liquidation, a tax refund or a tax exemption. Accordingly, in the case where the bank payment vouchers do not clearly disclose the information relating to the goods, which are subject to liquidation, a tax refund or a tax exemption, the customs authority can reserve the right to conduct pre-examination for suspected cases prior to customs liquidation, tax refund or tax exemption in accordance with Point 5, Article 128, Circular 194/2010/TT-BTC dated 0 December 2010 issued by the Ministry of Finance. 8

9 Imposition of deadlines on customs duty payment for imported materials and supplies to produce exported goods On 27 August 2013, the General Department of Customs issued Official Letter 5059/TCHQ-TXNK providing guidance on the imposition of a 275-day-deadline for imported materials and supplies to produce goods for exporting. The Official Letter states that the predetermination of HS code, dutiable value, and payment timelines for imported materials and supplies to produce goods for exporting are stipulated under Point 11, Article 1 of the amended Law on Tax administration 21/2012/QH13 and Official Letter 835/BTC-TCHQ dated 28 June 2013 issued by the Ministry of Finance. Accordingly, if the duty payable is guaranteed by a credit institution, then the deadline for paying such duty is the guaranteed period; however, such period cannot exceed 275 days from the date of registering customs declaration return. In addition, the late payment interest is not imposed during the guaranteed period. If the requirements under the regulations are not met or the duty payable is not guaranteed by a credit institution, the duty shall be paid before customs clearance or release of goods. 9

10 Contact For more information, please contact : Thomas McClelland Tax Leader Tel: tmcclelland@deloitte.com Bui Ngoc Tuan Tax Partner Tel: tbui@deloitte.com Bui Tuan Minh Tax Partner Tel: mbui@deloitte.com Phan Vu Hoang Tax Partner Tel: hoangphan@deloitte.com Hanoi Office 12A Floor, Vinaconex Tower 34 Lang Ha St., Dong Da Dist. Hanoi, Vietnam Tel : Fax: Ho Chi Minh city Office 18 th Floor, Times Square Building, 22-3 Nguyen Hue Street, District 1, Ho Chi Minh City, Vietnam Tel: Fax: This tax newsletter is published for the clients and professionals of the Deloitte - Vietnam offices. The contents are of a general nature only. Readers are advised to consult their tax advisors before acting on any information contained in this newsletter. This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the Deloitte Network ) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication. 10

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