August 2022 Tax Updates: Decree 49/2022/ND-CP amending Decree 209/2013/ND-CP guiding the VAT Law & new regulations on periodic tax-related reports.

This August 2022 publication of our Tax and Accounting Updates looks at reminder on outstanding tax and accounting policies taking effect from July 2022, Decree 49/2022/ND-CP amending Decree 209/2013/ND-CP guiding the VAT Law, new regulations on periodic tax-related reports, and our regular review of recent Official Letters released by the Tax Authorities.

Reminder on outstanding tax and accounting policies taking effect from July 2022

Significant tax and accounting regulations come into effect in July 2022, some highlight provisions are as follows:

Officially implementing electronic invoices

From 1 July 2022, Decree 123/2020/ND-CP and Circular 78/2021/TT-BTC come into effect. Accordingly, electronic invoices have officially replaced paper invoices.

Previously, the application of e-invoices has been implemented synchronously in 63 provinces and cities across the country to eliminate paper invoices and make e-invoices mandatory by 30 June 2022. Enterprises, business households, and business individuals are required to switch from using paper invoices to using electronic invoices from 1 July 2022, except for a few cases such as small and medium-sized enterprises, cooperatives, households, and individuals doing business in areas with difficult and especially difficult socio-economic conditions not conducting transactions with tax authorities by electronic means, not meeting information technology infrastructure, etc.

Regulations on the domestic tax accounting period

Another tax and accounting policy also took effect from 1 July 2022 is Circular 111/2021/TT-BTC issued by the Ministry of Finance guiding domestic tax professional accounting. This Circular provides guidance to determining the tax accounting period according to the calendar year (referred to as the accounting year, consisting of 4 characters), specifically:

• The tax accounting period is from 1 January to 31 December of the calendar year.
• For newly established units: the tax accounting period for the first year is from the date of the decision on the establishment, division, separation, consolidation, or merger of the tax accounting unit to 31 December of the calendar year.
• For tax accounting units when being separated, consolidated, merged, or dissolved: the last tax accounting period of the year is from 1 January of the calendar year to the day before the date of the decision on division or separation, consolidation, merger, dissolution.
• The tax accounting period of the first year and the last year will comply with the guidance of the Accounting Law and its guiding documents.

Circular 111 applies for the tax accounting period from 2022 onward.

Decree 49/2022/ND-CP amending Decree 209/2013/ND-CP guiding the VAT Law

On 29 July 2022, the Government issued Decree 49/2022/ND-CP amending and supplementing several articles of the Government’s Decree 209/2013/ND-CP dated 18 December 2013 provide details and guidance on the implementation of Value-Added Tax (VAT) Law.

There are some highlighted points note worthily as below.

A new point on VAT refund for investment projects

The Decree has supplemented a new point regarding tax refund for investment projects under conditional business lines.

Accordingly, investment projects conducting conditional business lines fall into the following cases will be entitled to a tax refund:

• Investment projects in the investment stage, according to the provisions of the investment laws and specialised laws, have been granted business licenses for conditional investment business lines by a competent state agency under one of the following forms: license or certificate or written confirmation or approval
• Investment projects in the investment stage under the provisions of the investment law and specialised law, have not been required to request the competent state agency to issue business licenses for conditional investment business lines
• Investment projects following the investment and specialised laws are not required to have business licenses for conditional investment business lines

Amending regulations on determining VAT deductible land price

The Decree guides to determine of VAT deductible land price for real estate transfers, for specific cases including:

• In the case of renting land to build infrastructure, or building houses for sale, the land price deductible for VAT calculation is the land rent payable to the state budget and compensation and ground clearance, if any.
  (This regulation removed the point of “the VAT deductible price is exclusive of land use fee which is exempted or reduced” as stipulated in the previous regulation).
• For business establishments that receive land use rights transferred from organisations or individuals, the land price deductible for VAT calculation is the price at the time of receiving the land use right, excluding the value of infrastructure.
  (In the previous regulation, infrastructure value was included in the VAT deductible price).
• If a business receives a capital contribution by land use rights from an organisation or individual, the land price deductible for VAT calculation is the price stated in the capital contribution contract.
• If a real estate business performs in the form of land use right build-transfer (BT), the VAT deductible land price is the price at the time of signing the BT contract.
• At an auction of land use rights, the deductible land price for VAT calculation is the auction-winning land price.
• Where the business has land allocated by the State to invest in infrastructure to build houses for sale, the land price deductible for VAT calculation includes land use levy payable to the state budget and compensation and ground clearance (if any).
  (In comparison to the previous one, the regulation removed “exclusive of land use fee which is exempted or reduced”)

Decree 49/2022/ND-CP takes effect from 12 September 2022.

New regulations on periodic tax-related reports

On 15 July 2022, the Ministry of Finance of Vietnam promulgated Decision 1421/QD-BTC disclosing the List of Periodic Tax-Related Reports under the management of the Ministry of Finance of Vietnam.

Accordingly, there is 1 newly promulgated periodic tax-related report that report on the use of charge collection receipts (for electronic receipts).
This Decision also discloses 4 replacement periodic tax-related reports:

• Report on the use of receipts
• Report on paper receipts instead of report on the use of charge and fee receipts
• Summary table of electronic stamp data to be sent to tax authorities (which replaces the report on the use of stamps of domestically produced alcohol)
• Summary table of electronic receipts to be sent to tax authorities (which replaces the report on electronic receipt transmission)

Additionally, Decision 1421/QD-BTC removes 3 periodic reports:

• Report on printing/provision of receipt printing software
• Report on printing/provision of receipt printing software/provision of electronic receipt solutions
• Table of receipt payment

Decision 1421/QD-BTC of the Ministry of Finance of Vietnam came into force as of 15 July 2022.

Official Letters Released

Official Letters are releases showing the Tax and other Authorities’ interpretation and application of Vietnam’s Taxation Laws, providing guidance to taxpayers in Vietnam.

Party responsible for declaring tax of capital transfer where transferor and transferee are both based overseas

On 11 August 2022, the Hanoi Tax Department issued Official Letter 39624/CTHN-TTHT providing guidance on tax for capital transfer.

Accordingly, where a foreign organisation generates income in Vietnam from transferring capital of a Vietnam company, they are subject to corporate income tax in Vietnam.

In case the transferee is also a foreign organisation that does not operate under the Law on Investment and the Law on Enterprises, the Vietnamese enterprise in which the foreign organisation invests would declare and pay Corporate Income Tax from capital transfer activities of the foreign organisations.

Personal Income Tax of non-tax resident foreign experts

On 3 August 2022, the Hanoi Tax Department released Official Letter 37870/CTHN-TTHT regarding Personal Income Tax when hiring foreign experts.

Accordingly, where a company signs a labour contract with a foreign expert who meets the conditions of being a non-tax resident in Vietnam (being present in Vietnam for less than 183 days in a calendar year or 12 consecutive months from the first day of presence in Vietnam, or having no permanent residence in Vietnam, as prescribed in Article 1 of Circular 111/2013/TT-BTC dated 15 August 2013 of the Ministry of Finance, and Article 2 of the Law on Personal Income Tax 04/2007/QH12 dated 21 November 2007 of the National Assembly), then:

• In case the company’s payments to foreign experts are determined as income from salaries and wages, which the taxpayer is entitled to in any form arising in Vietnam, the company is responsible for withholding 20% before paying to individuals.
• In case individuals have incomes subject to Personal Income Tax (except for business individuals), the company needs to register tax for employees according to the provisions of Clause 2, Article 4 of Circular 105/2020/TT- BTC dated 3 December 2020 of the Ministry of Finance.