RUSSELL BEDFORD KTC Member of Russell Bedford International - with affiliated offices worldwide NEWSLETTER Issue 9, October 2014
IN THIS ISSUE Page Amendment and supplement of tax provisions New tax incentives for enterprises and individuals, guidance on declaration and payment of tax Extension of VAT payment and refund regarding to machineries and equipment imported to form fixed assets of investment projects Guidance on extension of VAT payment and refund regarding to machineries and equipment imported to form fixed assets of investment projects Business trip expenses paid overseas via personal credit cards are deductible expenses Conditions for business trip expenses paid overseas via personal credit cards to be deductible Guidance on depreciation expenses relating to fixed assets as capital contribution Depreciation expenses relating to fixed assets as capital contribution are deductible Guidance on PIT calculation for expatriates PIT liability of expatriates being citizens of a jurisdiction/country which have a tax treaty with Vietnam Financial regime for securities and fund management companies Regulations on finance sources for investment purpose, making of provisions, distribution of profit Reform of social insurance, health insurance administration Guidance on withdrawal of health insurance card of employees via internet or electronic form 1 2 2 2 3 3 4 2013 KTC Assurance and Business Advisors. All rights reserved.
Amendment and supplement of tax provisions On 1 October 2014, the Government issued Decree 91/2014/ND-CP amending and supplementing a number of tax regulations as follows: CIT VAT PIT Same tax incentive would be applied for the remaining period of a project for additional income arising from new investment in machinery and equipment during the period from 2009 to 2013 for investment projects granted tax incentives. Additional income is determined as guided in Official Letter 3311/TCT-CS issued by the General Department of Taxation on 15 August 2014; Tax exemption up to 3 years from the date of having revenue from scientific research and technological development projects; up to 5 years from the date of having revenue from sale of products of new technology firstly applied in Vietnam; Welfare for employees and employees family with sufficient supporting documents is deductible. Total deductible amount shall not exceed average actual monthly salary in that year. It is allowed to declare input VAT on goods and services, under deferred payment or installment plans, valuing of VND 20 million or above when the non-cash payment documents are not available as the payment is not yet due; VAT exemption for sale of mortgaged assets by the borrower as authorised by the lender to settle a guaranteed loan. Tax Administration No submission of tax declaration is required during suspension period of a business upon the official notice to the local business registration authority where the business registers. After such period, if the business is back, the tax declarations shall be performed as normal practices, upon the official notice to the local business registration authority; Quarterly VAT declaration for enterprises having revenue in the immediate previous year of VND 50 billion or less; Quarterly interim CIT payment shall be made within 30 days after the end of the quarter incurring the tax liability: Based on the quarterly financial statements and related tax regulations for enterprises having to prepare quarterly financial statements; Based on the previous year s CIT and business planning of the current year for enterprises not having to prepare quarterly financial statements. Late payment penalty shall be calculated from 31 December to the tax payment date for the difference exceeding 20% between interim and final tax declaration, calculating from the following day of deadline payment of quarter four to the payment date of outstanding tax. This Decree is effective from 15 November 2014 and supplements the Decrees No. 218/2013/ND- CP, 209/2013/ND-CP, 65/2013/ND-CP, and 83/2013/ND-CP. PIT exemption for free housing provided by employers to employees working in industrial zones, economic zones, and in locations with difficult or especially difficult socio-economic conditions. 1
Extension of VAT payment and refund regarding machineries and equipment imported to form fixed assets of investment projects On 12 September 2014, the Ministry of Finance (MOF) issued Circular No. 134/2014/TT-BTC guiding the procedures for extension of VAT payment and refund regarding machineries and equipment imported to form fixed assets of investment projects. Extension of 60 days from the deadline of VAT payment for import VAT on machineries and equipment for: Newly established enterprises from investment projects is in investment phase; Operating enterprises are in objective financial difficulty, having insufficient financial resources to pay tax and have to borrow from commercial banks for the import. Conditions for enterprises to be entitled to the extension: Registering of tax deduction method, being granted business registration certificate or investment certificate, or investment license; Having business stamp, bookkeeping and accounting system, having deposit accounts at banks under the business tax code; Having total import value of machineries and equipment of VND 100 billion or above; and Having investment projects of production, trading of goods, services subject to VAT. This Circular takes effect from 27 October 2014. Business trip expenses paid overseas via personal credit cards are deductible expenses On 6 September 2014, the General Department of Taxation ( GDT ) issued Official Letter 3819 guiding on deductible expenses for CIT purpose as follows: The payment for business trip abroad exceeding VND 20 million via the employees credit cards is accepted as a form of non-cash payment and then considered as deductible expenses with the following conditions: They are supported by appropriate invoices and documents; and Decision or document on assigning employees for business trip abroad is granted. The Company should have internal policies stating that expenses incurred during business trip abroad are allowed to pay via employees own credit cards, and then reimbursed by the company. This Official Letter takes effect from 6 September 2014. Guidance on depreciation expenses relating to fixed assets as capital contribution According to Official Letter 3240/TCT-CS dated 13 August 2014 guiding on depreciation of fixed assets as capital contribution which are used for business and manufacturing, such depreciation expense is accounted into deductible expenses when contribution of fixed assets is properly recognised as increased charter capital by the licensing authority. This Official Letter takes effect from 13 October 2014. 2
BUSINESS Guidance on PIT calculation for expatriates According to Official Letter 11289/BTC-CS dated 13 August 2014 of the MOF, expatriates with the worldwide income that is subjected to PIT and derived from their first month of arrival to Vietnam until the month they leave Vietnam will not be required to complete the procedures for consulate legalization for entitlement of double taxation avoidance. For the subject of application, expatriates must be citizens of a jurisdiction/country which have a tax treaty with Vietnam and they are tax residents in Vietnam. Financial regime for securities and fund management companies On 6 October 2014, the MOF issued Circular No. 146/2014/TT-BTC guiding the financial regime for securities, fund management companies, Vietnam branches of foreign fund management companies. Accordingly: The financial investment activities of fund management companies must be financed by the owners equity. The use of fund raising for investment purpose is prohibited; Keeping financial safety ratios, assurance of liquidity and compliance with the relevant regulations; Making provisions at the end of the accounting period when preparing quarterly/ annual financial statements; Distribution of profits after offsetting losses in previous years and paying CIT: Allocation of 5% to the additional capital reserve fund until the balance equals to 10% of charter capital; Allocation of 5% to the financial reserve and professional risk fund until the balance equals to 10% of charter capital. This Circular takes effect from 1 November 2014 and is applicable from the financial year 2014. 3
INSURANCE Reform of social insurance, health insurance administration On 10 October 2014, the Vietnam Social Insurance issued Decision No. 1018/QD-BHXH amending some regulations on the management of receipt and payment of social insurance and health insurance. Accordingly, the withdrawal of health insurance card of leaving employees can be done via internet or electronic forms. In such cases, the cards should be returned to the insurance authority at the end of month. This decision takes effect from 1 November 2014. 4
Disclaimer This Newsletter contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Reference should be made to the appropriate advisors and Russell Bedford KTC will not accept any responsibility for loss occasioned to any person acting or refraining in this publication. Russell Bedford KTC is a member of Russell Bedford International (www.russellbedford.com), represented by some 460 partners, 5,000 staff and 200 offices in more than 90 countries in Europe, the Americas, Middle East, Africa, Indian Sub-Continent and Asia Pacific. Russell Bedford KTC is a professional services firm committed to providing high quality service to our clients. At Russell Bedford KTC, we are focusing on providing high value added services, which bring to our client practical and cost-effective solutions to their business issues. Quality control is the most important process in our business, which makes us difference. Russell Bedford KTC is staffed by a team of qualified professionals including Certified Public Accountants (local and international), Ph.D., Masters in Accounting and Finance and Masters in Business Administration who have extensive experience in working in various industries. Our people are our assets and critical factor to our success. Contact us Hanoi Office Pham Duy Hung hung.duy.pham@russellbedford.vn Do Thuy Linh linh.thuy.do@russellbedford.vn Ho Chi Minh City Office Thai Van Anh van.anh.thai@russellbedford.vn Le Quang Hai hai.quang.le@russellbedford.vn Level 2-6, 140 Lang Street, Dong Da District, Hanoi, Vietnam Tel:+84-4-3562 5633 Fax: +84-4-3562 5634 Level 4, 162B Dien Bien Phu, Ward 6, District 3, Ho Chi Minh City, Vietnam Tel:+84-8-6290 9980 Fax: +84-8-6290 9981 For more information on our publications or on Russell Bedford KTC, please visit our website www.russellbedford.vn or email us at hanoi@russellbedford.vn
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