August 2021 Tax Updates: Tax return penalties during lockdown & news on compulsory social insurance.

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August 2021 Tax Updates: Tax return penalties during lockdown & news on compulsory social insurance

This August 2021 publication of our Tax and Accounting Updates looks at guidance on reducing the time of concentrated medical quarantine to 7 days for fully COVID-19 vaccinated arrivals, no penalty for late submission of tax returns during the lockdown period, instructions on implementation of regulations on compulsory Social Insurance, and tightening management of cross-border advertising activities in Vietnam.

No penalty for late submission of tax returns during the lockdown period

The Tax Departments of Ho Chi Minh City and Hanoi issued Official Letter 6770/CTTPHCM-KK dated 19 July 2021 and Official Letter 29592/CTHN-KK dated 29 July 2021, respectively, guiding the submission of tax returns during the social distancing period.

The Official Letters apply to taxpayers being an organisation or individual whose head office and address (permanent or temporary residence) is in a locked-down area according to a decision/notice of a competent State agency due to the COVID-19 epidemic, and has a tax declaration obligation during the quarantine period (including the period of social distancing under direction/decision of the Government or local agency). When the taxpayer is unable to submit the tax declaration, which may result in a late submission, the taxpayer will not be fined for administrative violations according to regulations, since this is considered as a force majeure event.

Instructions on implementation of regulations on compulsory social insurance

On 7 July 2021, the Ministry of Labour – Invalids and Social Affairs released the Circular 06/2021/TT-BLDTBXH amending and supplementing the Circular 59/2015/TT-BLDTBXH providing instructions on the implementation of regulations on compulsory Social Insurance.

Incomes calculated for compulsory Social Insurance contributions

According to Clause 26, Article 1 of this Circular, from 1 January 2021 onwards, the monthly salary on which Social Insurance premiums are based is specified at Point a, Item b1 of Point b and Item c1 of Point c, Clause 5, Article 3 in the Circular 10/2020/TT-BLDTBXH, specifically:

  • Salary by job or title:
    • The time-based salary of the job or title according to the salary scale, the salary table developed by the employer in accordance with the provisions of Article 93 of the Labour Code;
    • For employees who receive a salary based on products or a package salary, the salary is calculated by time to determine the product unit cost or a package salary amount;
  • Salary allowance as agreed by both parties: Salary allowances to compensate for factors such as working conditions, job complexity, living conditions, level of employment attraction that the base salary agreed in the labour contract has not considered yet or is not fully considered.
  • Other additional amounts as agreed by the two parties: The additional payment with a specific amount along with the base salary agreed in the labour contract and are paid regularly in each pay period.

Incomes to be exempted from compulsory Social Insurance contributions

Also, in Clause 26 of the Circular, monthly pay subject to Social Insurance contributions will not include the following fringe benefits:

  • Bonuses prescribed in Article 104 of the Labour Code;
  • Rewards for innovation;
  • Mid-shift meal allowance;
  • Fuel costs and mileage allowance;
  • Phone allowance;
  • Travel allowance;
  • Accommodation allowance;
  • Babysitting benefit;
  • Childcare benefit;
  • Death benefit inherited from employee’s relative;
  • Marriage allowance paid to employee’s relative;
  • Employee’s birthday benefit;
  • Benefits granted to employees in a difficult situation due to an accident at work or occupational disease;
  • Other supports and allowances are regulated as additional payments with non-specific amounts in conjunction with the base salary agreed under the employment contract and to be paid regularly or irregularly in every pay period, associated with the job process and performance of the employee.

The Circular 06/2021/TT-BNNPTNT is entering into force as of 1 September 2021.

Tightening management of cross-border advertising activities in Vietnam

There is notable content in Decree 70/2021/ND-CP amending Decree 181/2013/ND-CP guiding the Law on Advertising.

Accordingly, this Decree stipulates that advertising service dealers, advertising publishers and domestic and foreign advertisers participating in the provision of cross-border advertising services in Vietnam must comply with the following regulations:

  • Regulations of Vietnamese law on advertising;
  • Regulations on network security;
  • Regulations on management, provision and use of Internet services and information on the network; and
  • Tax must be paid according to tax laws.

Therefore, activities on websites of foreign organisations and individuals trading in cross-border advertising services and generating advertising revenue in Vietnam must pay tax according to Vietnamese tax laws.

The Decree 70/2021/ND-CP takes effect from 15 September 2021.

Reducing the time of concentrated medical quarantine to 7 days for fully COVID-19 vaccinated arrivals

On 4 August 2021, the Ministry of Health issued Official Letter 6288/BYT-MT on reducing the time of concentrated medical quarantine for immigrants/arrivals who are fully COVID-19 vaccinated after previously reducing the period from 21 days to 14 days in Official Letter 5599/BYT-MT dated 14 July 2021.

Accordingly, a 7-day concentrated medical quarantine will be carried out and medical observation will continue for the next 7 days for those entering Vietnam who fully meet the following conditions:

  • Received required Covid-19 vaccine doses (the last dose must be administered at least 14 days but no more than 12 months before the time of entry) and have a certificate of vaccination; and
  • Receiving a negative test result for SARS-CoV-2 (by RT-PCR/RT-LAMP method) within 72 hours before departure and certified by the competent authority of the country conducting the test; or
  • Have ever been infected with SARS-CoV-2 (have a certificate of a positive test for SAR-COV-2 by one-step RT-PCR method within the last 6 months by the time of entry) and have a certificate of recovery from COVID-19 or equivalent documents confirming recovery issued by the competent authority in the country of treatment.

The guidance does not apply to cases of people entering to work for less than 14 days and cases of quarantine according to other regulations of the National Steering Committee for COVID-19 Prevention and Control and the Ministry of Health.

Last updated on August 27, 2021
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