This April 2022 publication of our Tax and Accounting Updates looks at guidelines for finalisation of Personal Income Tax for the 2021 tax year, increase in overtime hours from 200 hours to 300 hours per year, instructions on timing of invoice issuance for entitlement to VAT reduction to 8%, rent support for employees in industrial zones and export processing zones and contents of petition for application of transitional RCEP safeguard measures.
Guidelines for finalisation of Personal Income Tax for the 2021 tax year
On 24 March 2022, the General Department of Taxation issued Official Letter 883/TCT-DNNCN guiding Personal Income Tax (PIT) finalisation. Some highlights from the Official Letter are:
Deadline to directly finalise PIT with tax authorities
Accordingly, based on the provisions at Points a and b, Clause 2, Article 44 of the 2019 Tax Administration Law, the deadline for declaring and submitting PIT finalisation documents is as follows:
- For income-paying organisations: The deadline for submitting tax finalisation declarations is the last day of the third month from the end of the calendar year, i.e., 31 March 2022.
- For individuals who directly finalise tax: The deadline for submitting tax finalisation documents is the last day of the 4th month from the end of the calendar year, i.e., 30 April 2022.
- If an individual has a refund for PIT but submits the tax finalisation declaration late, no penalty will be applied for administrative violations in tax filing.
- Where the deadline for tax finalisation coincides with a prescribed holiday, the deadline will be the next working day of that holiday according to the provisions of the Civil Code.
Applications for self-finalisation of PIT
According to the Official Letter, an application submitted by a taxpayer who directly finalises PIT with a tax authority will include:
- PIT finalisation using form No. 02/QTT-TNCN enclosed with Circular 80/2021/TT-BTC dated 9 September 2021.
- An attached list of registered dependents for deductions according to form No. 02-1/BK-QTT-TNCN issued together with Circular 80/2021/TT-BTC dated 29 September 2021.
- Photocopies of proof documents for the amount of tax withheld or provisionally paid during the year or paid overseas (if any).
If the income-paying organisation has closed down and therefore, could not provide PIT withholding documents for the taxpayer, the tax office must consider using the taxation database and processing the taxpayer’s finalisation without requiring the documents.
If the income-paying organisation or individual (employer) uses electronic PIT withholding documents, the taxpayer must print and submit the hard copies of the documents.
- A copy of the tax withholding certificate issued by the employer or a copy of the bank documents for the overseas tax payment and the taxpayer’s certificate, if the foreign authority does not send a written confirmation for the tax payment according to the law of that country.
- Proof documents for donations to charitable funds, humanitarian funds, or scholarship funds (if any).
- Proof documents for the amount paid by the overseas income-paying organisation if the taxpayer was paid from abroad by an international organisation, Embassy, or Consulate.
- Dependant registration documents if the taxpayer claims a deduction for unregistered dependants at the time of finalisation.
Increase in overtime hours from 200 hours to 300 hours per year
On 23 March 2022, the Standing Committee of the National Assembly approved Resolution 17/2022/UBTVQH15 on the annual and monthly overtime hours of employees while ensuring COVID-19 prevention and control and socio-economic recovery and development.
According to the Resolution, an employer may assign employees to work overtime for 200-300 hours per year if it is agreed by the employees, except for the following cases:
- Employees aged between full 15 and under 18
- Employees with mild disabilities with work capacity reduction of at least 51% or employees with severe disabilities or extremely severe disabilities
- Employees doing arduous, hazardous, dangerous, or extremely arduous, hazardous works
- Female employees in their 7th month of pregnancy onward or in the 6th month of pregnancy onward, in case they work in the highlands, remote areas, border areas, or islands.
- Female employees nursing children under 12 months old
Although the employer is allowed to assign the employee to work overtime for a maximum of 300 hours in a year, the employer may assign the employee, with the employee’s consent, to work overtime for more than 40 hours but not more than 60 hours in a month.
(Currently, according to Article 107 of the Labour Code on overtime, the employer is allowed to assign the employee to work overtime with the employee’s consent and must ensure the overtime hours are not more than 40 hours in a month.)
Resolution 17/2022/UBTVQH15 took effect from 1 April 2022 but the regulations on overtime hours in this Resolution apply from 1 January 2022.
Instructions on the timing of invoice issuance for entitlement to VAT reduction to 8%
On 23 March 2022, the Ministry of Finance issued the Official Letter 2688/BTC-TCT regarding Value-Added Tax (VAT) prescribed in the Government’s Decree 15/2022/ND-CP.
According to this document, the Ministry of Finance provides instructions on the timing of invoice issuance for entitlement to the VAT reduction policy. In particular:
- If business entities signing contracts for profitable services which have invoiced these services at the time of payment at a 10% rate before 1 February 2022 and these services are completed during the period from 1 February 2022 to the end of 31 December 2022:
- The amount invoiced before 1 February 2022 will not be eligible for VAT reduction.
- The remaining amount invoiced within the period from 1 February 2022 to the end of 31 December 2022 will be eligible for VAT reduction.
- If business entities, subject to 10% VAT in January 2022, do not issue their invoices until February 2022, they will be considered as late issuing invoices, thus not being eligible for the VAT reduction.
- For any invoice issued before 1 February 2022 at a 10% rate, if there is any error identified in the invoice after 1 February 2022, the new correcting invoice or the goods return invoice will be issued at the VAT rate of 10%.
- For special goods and services such as electricity, business entities will be entitled to VAT reduction as per laws and regulations if invoices are issued from 1 February 2022 to 31 December 2022.
Rent support for employees in industrial zones and export processing zones
On 28 March 2022, the Prime Minister released Decision 08/2022/QD-TTg on implementation of policies on rent support for employees.
Specifically, an employee who is working for an enterprise in an industrial zone or an export processing zone, or a key economic zone will be eligible for support if the employee satisfies all of the following conditions:
- Rent accommodation from 1 February 2022 to 30 June 2022.
- Have an indefinite-term employment contract or a fixed-term employment contract for at least 1 month which was concluded and executed before 1 April 2022.
- Participating in compulsory Social Insurance (included in the list of participants in compulsory Social Insurance of Social Insurance Agency) in the preceding month of the month in which the enterprise makes the list of employees applying for rent support.
Where the employee is not participating in compulsory Social Insurance, as specified in Clause 4 Article 2 of Decree 115/2015/ND-CP, the employee must be included in the enterprise’s payroll for the preceding month of the month in which the enterprise prepares the list of employees applying for rent support.
Employees working in enterprises meeting all of the above conditions will receive a support of 500.000VND per person per month from the State. The support duration is up to 3 months and the support will be provided monthly.
Decision 08/2022/QD-TTg came into force on 28 March 2022.
Contents of petition for application of transitional RCEP safeguard measures
On 23 March 2022, the Ministry of Industry and Trade promulgated Circular 07/2022/TT-BCT providing guidance on implementation of trade remedies in the Regional Comprehensive Economic Partnership (RCEP) Agreement.
According to the Circular, a petition for application of transitional RCEP safeguard measures will contain:
- Name, address and necessary information of the organisation or individual that is a representative of domestic production industry
- Information, data and evidence for determining the representative of domestic production industry, etc.
- Names and addresses of producers of similar goods that support or oppose the measures
- Description of imports that are eligible for special preferential import tariff according to RCEP Agreement and have to undergo investigation for application of transitional RCEP safeguard measures, etc.
- Description of similar goods or directly competitive goods of domestic production industry, etc.
- Information about the volume, quantity and value of goods within 3 years before submission of the documentation and at least 6 months after the RCEP Agreement comes into force; etc.
- Specific requirements for application of the transitional RCEP safeguard measures, duration and level of application.
This Circular will be effective from 8 May 2022.