This August 2023 publication of our Tax and Accounting Updates looks at the Government’s approval for five groups of policies to be amended in the Law on VAT and requests for an urgent draft resolution on the application of global minimum tax, notes when making invoices for returned goods and calculating discounts for goods subject to 8% VAT rate, tasks and solutions for resolving difficulties in production and assembly sectors, National Technical Regulations on products and goods for construction materials applied from 1 January 2024 and our regular review of recent Official Letters released by the Tax Authorities.
The Government approves for five groups of policies to be amended in the Law on VAT and requests for an urgent draft of resolution on the application of global minimum tax
On 29 July 2023, the Government issued Resolution 115/NQ-CP on the thematic meeting session on law-making in July 2023. At this meeting, the Government focused on discussing the proposal to develop and amend a series of tax policies, in which the Government agreed on completing regulations for 5 groups of policies below for amending the VAT Law:
- Objects not subject to VAT
- Prices for calculating VAT
- VAT rates
- Input VAT deductions
- VAT refunds
In addition, at this meeting, the Government also requested Ministers, Heads of Ministerial-level agencies and Government-attached agencies to urgently study and give direct comments on the report and draft resolution of the National Assembly on the application of global minimum tax, and mechanisms and policies to support non-tax investors.
Notes when making invoices for returned goods and calculating discounts for goods subject to The 8% vat rate
Recently, the General Department of Taxation (GDT) has issued Official Letters and Decree related to the use of e-invoices, specifically:
- Official Letter 2121/TCT-CS (OL 2121) dated 29 May 2023 guiding the issuance of invoices following to Decree 15/2022/ND-CP (Decree 15) dated 28 January 2022 of the Government
- Decree 44/2023/ND-CP (Decree 44) dated 30 June 2023 on VAT reduction under Resolution 101/2023/QH15 dated 24 June 2023 of the National Assembly
- Official Letter 8732/CTTPHCM-TTHT (OL 8732) dated 12 July 2023 on the 2% reduction of VAT in Decree 44
To ensure the consistency implementation of the GDT’s guidance on the use of e-invoices, the Tax Department of Ho Chi Minh City provides the following guidelines:
- Invoicing for goods and services entitled to VAT reduction under Decree 44: following the guidance in OL 8732 on the 2% reduction of VAT
- Invoicing for returned goods due to improper specifications and quality: the seller will issue an invoice for returned goods to reduce or replace the previously issued invoice, in addition, the seller and the buyer sign an agreement for the returned goods.
For goods purchased before 1 January 2023 subject to 8% VAT, after 31 December 2022, the seller issues an invoice to return the goods at the VAT rate of 8%.
- Invoicing for trade discounts applied for goods eligible for VAT reduction under Decree 15:
Where enterprises apply trade discounts for customers and for trade discounts applied for goods eligible for VAT reduction at 8% sold in 2022 but invoiced from 1 January 2023, then:
- Where the discount is made on the last purchase or the next period, which is after 31 December 2022, the discount for the goods sold will be adjusted in the taxable price and the tax rate in accordance with applicable regulations on the date of invoice.
- Where the discount is invoiced at the end of the discount program (period), which is after 31 December 2022, the seller will issue a new invoice to adjust and apply the VAT rate of 8% on the selling date.
- For the contents of instructions on using e-invoices of the Ho Chi Minh City Tax Department which are different from those in OL 2121: please follow OL 2121 from 29 May 2023 onwards
Tasks and solutions for resolving difficulties in production and business
On 15 July 2023, the Government issued Resolution 105/NQ-CP on tasks and solutions for resolving difficulties in production and business, further administrative procedure reform, and enforcement of discipline. There are some highlights on this Resolution as below:
Study to reduce Trade Union fee by 1% and extend the payment deadline in 2023
Accordingly, at the key tasks and solutions to support cash flow, reduce costs and increase access to capital for businesses and people, the Government proposes the Vietnam General Confederation of Labor:
- Research and reduce the Trade Union fee from 2% to 1% and extend the deadline for payment in 2023
- Research to continue to implement until the end of 2023 the policy to support Trade Union members, employees, whose working time is reduced and labour contracts is terminated, due to the reduction/ cutting in the purchase orders of businesses, according to Decision 06/NQ-DCT and Decision 6696/QD-TLD of Vietnam General Confederation of Labour.
Amending Decree 152/2020 on foreign workers in Vietnam
Specifically in the task promoting investment of the non-state economic sector and attracting FDI in association with the development of new industrial sectors and fields, innovation, advanced technology and environment-friendly, the Government requested the Ministry of Labor, War Invalids and Social Affairs urgently submit to the Government before 25 July 2023 the draft Decree amending and supplementing Decree 152/2020/ND-CP on foreign employees working in Vietnam and recruiting and managing Vietnamese employees working for foreign organisations and individuals in Vietnam to create a new growth engine for the economy. We are awaiting the final version to be released.
National Technical Regulations on products and goods of construction materials applied from 1 January 2024
On 30 June 2023, the Minister of Construction promulgated Circular 04/2023/TT-BXD on National Technical Regulation on products and goods of construction materials.
Accordingly, the general provisions of the National Technical Regulation on products and goods of construction materials are as follows:
- Products and goods of construction materials must not cause unsafety during transportation, storage, preservation and use. Products and goods are traded in the market, whether being produced domestically or imported, there must be a Certificate Regulation (CR). For products and goods produced domestically, an acknowledgement of the CR announcement dossier from the local inspection agency is required additionally.
- Organisations and individuals that manufacture, import, trade and use products must declare correctly the types of products and goods of construction materials in accordance with the list of products specified in Table 1, Part 2 of National Technical Regulation.
In case the types of products and goods are unidentified, relevant organizations and individuals must coordinate with the CR and testing organisations to identify the product types.
- Products and goods of construction materials produced domestically or imported as prescribed in the list of products applied the management measures based on certification results of a registered or recognised certification organisation in accordance with the law.
- CR mark is used directly on products and goods or on packages or on labels affixed on products and goods or in quality certificates and technical documents of products following the guidance of CR and use of CR marks regulated in Circular 28/2012/TT-BKHCN and Appendix IX issued together with Circular 26/2019/TT-BKHCN.
Circular 04/2023/TT-BXD will be effective from 1 January 2024, replacing Circular 19/2019/TT-BXD.
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.
It is allowed to issue an invoice adjusted to the VAT rate of 8% if the reduction has not been calculated
On 19 July 2023, the General Department of Taxation released Official Letter 52405/CTHN-TTHT on handling invoices issued incorrectly according to Decree 15/2022/ND-CP. Accordingly:
- Where the company applied the creditable VAT method, incurred income from construction and installation activities subjected to 10% VAT and are not on the list of goods and services prohibited from VAT reduction under Decree 15/2022/ND-CP, such income is entitled to 8% VAT from 1 February 2022 to 31 December 2022 according to prescribed in Clause 2, Article 1 and Clause 1, Article 3 of Decree 15.
- Where the company incurred construction and installation activities subjected to 10% VAT and VAT reduction under Decree 15, but the company issued an invoice and declared such invoice at 10%, the seller and the buyer must sign an amendment minute stating the error, and at the same time, the seller will issue an amended invoice to correct such error to the buyer. Based on the amended invoice, the seller declares the adjusted output VAT, the buyer declares the adjusted input VAT (if any).
For more information on tax updates and other compliance requirements for businesses operating in Vietnam, follow our monthly releases on the website and social media channels at vietnam.acclime.com.