June 2022 Tax Updates: Decree 38/2022/ND-CP increasing the Minimum Monthly Wages by 6% and regulating Minimum Hourly Wages from 1 July 2022.

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June 2022 Tax Updates: Decree 38/2022/ND-CP increasing the Minimum Monthly Wages by 6% and regulating Minimum Hourly Wages from 1 July 2022

This June 2022 publication of our Tax and Accounting Updates looks at the Vietnamese Government’s approval on the increase in Minimum Monthly Wages, new regulations on allowing experts and employees to temporarily stay in industrial parks for manufacturing and business purposes, the reminder from the Department of Labour, Invalids and Social Affairs of Ho Chi Minh City on the report on employment of foreign employees, instructions for submitting the report on labour change online, interest rate subsidy of 2% per year from the state budget for enterprise loans, electronic tax registration procedures for non-business individuals through the National Public Service Portal, and our regular review of recent Official Letters released by the Tax Authorities.

Decree 38/2022/ND-CP increasing the Minimum Monthly Wages by 6% and regulating Minimum Hourly Wages from 1 July 2022

On 12 June 2022, the Vietnamese Government formally approved the proposed increase of Minimum Monthly Wages by issuing Decree 38/2022/ND-CP detailing the increase, regulating Minimum Hourly Wages and listing the geographical areas applicable to each Minimum Monthly Wage level. The Decree takes effect from 1 July 2022.

Accordingly, Minimum Monthly Wages are increased at an average of 6% across the 4 regions.

Once the change is effective:

  • Employers should ensure that their staff are not paid less than the monthly minimums.
  • This increase also impacts the maximum cap for the monthly calculation of Unemployment Insurance for employer and employee portions. The maximum cap is 20 times the Minimum Monthly Wage of the Zone the employer is in.

Minimum Hourly Wages – new requirements and application

Another notable point of the Decree is the requirement on Minimum Hourly Wages applicable to employees implementing the form of hourly wages. This has not been clearly prescribed previously. Minimum Hourly Wages are basically calculated according to the respective Minimum Monthly Wages and normal working hours, with the Minimum Monthly Wage of zone 1 of VND22.500.

All employers should ensure their payroll software and internal calculations are updated for all pay runs after 1 July 2022.

For further information, please refer to our previous article on proposed increase to Minimum Monthly Wages here. In addition, we will also release a Client Alert detailing changes, implementation and impact of the Decree 38 to employers and employees in upcoming days, please stay tuned for the update.

Extension of payment deadline for VAT, CIT, PIT, land rental in 2022

On 28 May 2022, the Government released the Decree 34/2022/ND-CP (Decree 34) on payment deadline extension for Value Added Tax (VAT), Corporate Income Tax (CIT), Personal Income Tax (PIT), and land rental in 2022. This belongs to one of the financial and monetary policies supporting social-economic recovery and development mentioned in Resolutions 11/NQ-CP and 43/2022/QH15.

Accordingly, enterprises operating manufacturing businesses for selected sectors, selected service
businesses, small and micro businesses, and other subjects regulated in the Decree are entitled to the extension in payment deadline for VAT, CIT, PIT and land rental in 2022.

Extension time is up to 6 months for corporate VAT and CIT.

For individuals and business households, the payment deadline for VAT and PIT in 2022 will be extended to 30 December 2022.

50% of the arising land rental payable in 2022 of enterprises, organisations, households, business
households, and individuals that are eligible under Decree 34 are entitled to payment extension by 6 months from 31 May 2022 to 30 November 2022.

We have released a Client Alert delving into the details on these updates including procedures for extension application, please read our detailed article here.

Allowing experts and employees to temporarily stay in industrial parks for manufacturing and business purposes

On 28 May 2022, the Government issued Decree 35/2022/ND-CP on the management of industrial parks and economic zones. A highlight point of the Decree involves allowing experts and employees to temporarily reside in industrial parks. The Decree takes effect on 15 July 2022.

Temporary residence at accommodation premises in industrial parks

Accordingly, experts and employees are allowed to temporarily reside at accommodation premises in industrial parks to serve the production and business activities of enterprises following the below provisions:

  • For Vietnamese experts and employees, the temporary residence is to follow the Law on Residence.
  • For foreign experts and employees, the temporary residence is to follow the Law on entry, exit, transit, and residence of foreign individuals in Vietnam.

In addition, accommodation premises are required to be in the service land area of the industrial parks to ensure security and a safe distance from the environment according to the provisions of the Laws on construction and other relevant provisions as well as not affect the production and business activities in industrial parks.

Temporary residence at enterprises in industrial parks

In case of force majeure due to the direct impact of natural disasters, environmental disasters, fires, epidemics, wars, demonstrations, riots, or other emergencies, experts and employees are allowed to stay in an enterprise in an industrial park according to the following provisions:

  • Vietnamese experts and employees are allowed to stay at enterprises in industrial parks following the Law on Residence.
  • Foreign experts and employees are allowed to stay in the enterprise in the industrial park for less than 30 days. They also must make a temporary residence declaration following the Laws on entry, exit, transit, and residence of foreign individuals in Vietnam.

According to prevailing regulations, employees are not allowed to temporarily reside in industrial parks and export processing zones. In case of necessity, foreigners (including managers, executives, and experts) are allowed to reside in enterprises in industrial parks or export processing zones according to regulations of the People’s Committee of the province.

Reminder from the Department of Labour, Invalids and Social Affairs of Ho Chi Minh City on the report on employment of foreign employees

On 30 May 2022, the Department of Labour, Invalids and Social Affairs of Ho Chi Minh City (HCMC DOLISA) issued Official Letter 18502/SLDTBXH-VLATLD, reminding employers to submit reports on employment of foreign employees and foreign employee information collection forms.

Reports on employment of foreign employees

The deadline of report on employment of foreign employees is approaching, DOLISA reminded employers of the deadline and method to submit the semi-annual and annual reports following Decree 152/2020/ND-CP.

  • Reporting form: Form No. 07/PLI in Appendix I to Decree 152/2020/ND-CP
  • Deadline: by 4 July for semi-annual reports and by 5 January for annual reports
  • Submission method: online via the link: https://forms.gle/JKW4gGgKUQfsrJYcA or scan the QR code issued in the official letter.

Foreign employee information collection form

In addition, foreign employees (or enterprises employing foreign employees) are also required to submit a form providing information on working status according to form No. 03 issued in Circular 01/2022/TT-BLDTBXH. The submission period is from 1 June to 30 June 2022. Employers and employees can access this link https://forms.gle/haXiymPeuKLeGQPx8 or scan the QR code attached to the official letter to provide information and submit the form.

Instructions for submitting the reports on labour change online

In addition to Office Letter 18502, HCMC DOLISA released additional Official Letter 18568/SLDTBXH-VLATLD dated 31 May 2022 on the implementation of Article 4 of Decree 145/2020/ND-CP dated 14 December 2020 on the employment reports.

This Official letter guides enterprises to submit online the periodic reports on labour change according to the provisions of Article 4 of Decree 145/2020/ND-CP as follows:

1. Online submission via the National Public Service Portal (https://dichvucong.gov.vn/)

  • The submission procedure is as follows:
    • Step 1: Access the Service Portal
    • Step 2: Select the item “Register for registration for adjustment of Social Insurance contributions and reports on the use of employees”
    • Step 3: Select the reporting receipt agency
    • Step 4: Enter the declaration form and submit the file to the system.
  • Report form: follow the form at the Public Service Portal.
  • Deadline for submission is before 5 June for the 6-month reports and before 5 December for the annual reports.

2. Direct submission to the Department of Labour – Invalids and Social Affairs

  • Report form: Form No. 01/PLI in Appendix I to Decree 145/2020/ND-CP
  • Deadline for submission: before 5 June for semi-annual reports, and before 5 December for annual reports. Specifically, the deadline for submitting the 2022 semi-annual reports is before 15 June 2022.
  • Submission: online by accessing the link: https://forms.gle/5y7HZ8tS1oiHoiSc9

Interest rate subsidy of 2% per year from the state budget for enterprise loans

It is notable in Decree 31/2022/ND-CP dated 20 May 2022 from the Government of Vietnam on interest rate subsidies from the state budget for loans to enterprises, cooperatives, and household businesses.

According to the Decree, the interest rate subsidy for enterprises, cooperatives, and household businesses is 2% per year on the loan balance and loan interest subsidy terms in the prescribed periods.

The term for subsidising loan interest rate will start from the date of disbursement of a loan to the date on which the borrower pays off the principal in conformity with the announced funding resource for providing the interest subsidy and must not exceed 31 December 2023.

To be eligible for the above subsidised interest rate, a borrower needs to meet the following requirements:

  • The borrower applies for the interest rate subsidy, meets loan requirements as prescribed by applicable laws on taking loans from credit institutions and foreign bank branches to borrowers
  • The loan is granted in Vietnam Dong under a loan agreement, disbursed from 1 January 2022 to 31 December 2023, and not yet provided interest subsidies from the state budget.

Decree 31/2022/ND-CP came into force on 20 May 2022.

 

Electronic tax registration procedures for non-business individuals through the National Public Service Portal

On 16 May 2022, the General Department of Taxation issued Official Letter 1604/TCT-KK on the implementation of tax registration for the first-time registration and changing registration information of non-business individuals through the National Public Service Portal connecting the National Population Database.

Accordingly, the procedures for first-time registration on the Portal of the General Department of Taxation are as follows:

  • Step 1: Taxpayers using the granted account log in to the National Public Service Portal and select “First-time tax registration”
  • Step 2: The National Public Service Portal switches to the Portal of the General Department of Taxation.
  • Step 3: The Portal of the General Department of Taxation checks whether the taxpayer has a tax identification number:
    • If the taxpayer already has a tax code: Display “This object has been granted a tax code.”
    • If the taxpayer does not have a tax code yet: fields for first-time registration will be displayed for taxpayers to choose
  • Step 4: The Portal of the General Department of Taxation accesses the National Population Database to query personal information and return results:
    • No data: Display notice “Personal information in the National Population Database is incomplete/invalid.” If the taxpayer enters the correct information and the portal does not have the information, taxpayers should update their information at the local police station.
    • Correct data: Display sample information 05-DK-TCT, go to step 5.
  • Step 5: Taxpayers check form 05-DK-TCT and supplement any missing information.
    • If the information on the declaration matches the personal information, go to step 6.
    • If the information does not match, report: “The taxpayer did not submit the application to the tax office and contact the commune/ward agency where the individual registered to permanently reside for instructions on adjusting the information”.
  • Step 6: The Portal of the General Department of Taxation checks the professional rules for information received from the National Population Database and taxpayer information.
  • Step 7: The Portal of the General Department of Taxation saves the form and automatically transfers the information to the TMS system as soon as the application is submitted successfully.

The deployment period was from 18 May 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.

How to handle export declarations on the spot without reciprocal import declarations

On 1 June 2022, the General Department of Customs released Official Letter 2011/TCHQ-GSQL on treatment for on-the-spot export declarations without the corresponding on-the-spot import declarations.

According to this Official Letter, for on-the-spot exports without a corresponding import declaration registered before 25 April 2021, if the Customs Sub-Department checks and determines that the transaction between the parties is legitimate, the delivery has been completed and the goods have not been put into production or consumption, the Customs will still allow the importer to register the import declaration and consider administrative sanctions.

However, if the goods have been put into production or consumption at the time of inspection, the Sub-departments of Customs where the on-the-spot import and export are located will coordinate to impose tax and administrative sanctions and will not allow the registration of corresponding import declaration.

For on-spot export declarations that do not have a corresponding import declaration registered after 25 April 2021, the Customs will monitor and handle them according to the provisions of Articles 10 and 12 of Decree 134/2016/ND-CP and Official Letter No. 2687/TCHQ-TXNK.

 

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

Last updated on June 21, 2022
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