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February 2024 Tax Updates: Notes on tax policy in 2024, guidelines for declaring CIT and PIT Finalisation in 2023 and other recent tax updates.

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February 2024 tax updates: notes on tax policy in 2024, guidelines for declaring cit and pit finalisation in 2023 and other recent tax updates

This February 2024 publication of our Tax and Accounting Updates focuses on notes on tax policy in 2024, guidelines for declaring CIT and PIT Finalisation in 2023, Decree 14 amending regulations on establishing Representative Offices of Foreign Trade Promotion Organisations in Vietnam, regulations on recruiting foreign employees, recruitment process for Vietnamese employees in positions expected to be reserved for foreign employees from 2024 and our regular review of recent Official Letters released by the tax authorities.

Notes on Tax Policy in 2024

To ensure timely and accurate tax reporting by organisations, the Binh Duong Tax Department has issued Official Letter 1000/CTBDU-TTHT dated 12 January 2024. This document provides essential information related to the 2024 tax policy that businesses should be aware of. The key points covered include:

  1. Rates and Deadlines: Organisations must adhere to specific deadlines for declaring and paying license fees
  2. VAT Declarations: Clarity on whether VAT should be declared monthly or quarterly
  3. PIT Declarations: Responsibilities regarding the declaration of PIT from salaries and wages
  4. Non-Agricultural Land Use Tax: The deadline for declaring and paying this tax
  5. Natural Resources Tax: Information on the declaration and finalisation deadlines
  6. Fixed Asset Depreciation: Guidance on registering the method for fixed asset depreciation
  7. Tax Agent Staff: Responsibilities for reporting and updating knowledge related to tax matters
  8. Electronic Invoices and Deduction Documents: Important considerations when using electronic invoicing and tax deduction documents
  9. Tax Policy Expiry: An overview of tax policies set to expire in 2024
  10. New Policies: Details on the implementation of new tax policies starting in 2024

Notably, tax policies expiring in 2024 include the VAT reduction policy from 2023, the tax payment extension policy from 2023, and the registration fee reduction policy for cars.

Conversely, new tax policies taking effect in 2024 include the global minimum tax (additional CIT) prescribed in Resolution 107/2023/QH15, the environmental protection tax reduction policy for gasoline and oil specified in Resolution 42/2023/UBTVQH15, and the VAT reduction policy from 1 January 2024 to 30 June 2024 specified in Decree 94/2023/ND-CP.

Guidelines for declaring CIT and PIT Finalisation in 2023

On 12 January 2024, the Binh Duong Tax Department also issued further in turn Official Letters 1016/CTBDU-TTHT and 1017/CTBDU-TTHT, providing comprehensive guidance on CIT and PIT finalisation for the 2023 tax period.

For CIT finalisation

  1. Provisional Payments: The total amount of CIT provisionally paid for the four quarters must not fall below 80% of the CIT amount payable according to the annual settlement. Failure to meet this threshold will result in a late payment penalty
  2. Submission Deadline: Enterprises must submit their 2023 CIT finalisation declaration no later than the last day of the 3rd month following the end of the calendar year or fiscal year
  3. Required Documents: The CIT finalisation dossier should include the following documents:
    • Finalisation Declaration Form No. 03/TNDN
    • Audit report and Annual Financial Report
    • Appendices (number may vary based on the situation):
      • Appendix of production and business results
      • Appendix of loss transfer
      • Appendix of tax incentives
      • Appendix of tax amounts paid abroad
      • Appendix of tax on real estate transfer activities
      • Appendix allocating tax amounts payable to production establishments
      • Appendix of reduced CIT
  4. Related-Party Transactions: Enterprises engaged in related-party transactions must also include documents as prescribed in Appendices I, II, III, IV, issued with Decree 132/2020/ND-CP.
  5. Financial Report Forms: Specific requirements for submitting financial reports are outlined in Section 2 of this Official Dispatch.

For PIT finalisation

  1. Subjects:
    • Companies are eligible for exemption from declaring PIT finalisation in 2023 only if there were no income payments or temporary suspensions of operations throughout the entire calendar year. However, if any income payments occur in 2023, companies must declare their PIT finalisation, even in cases where no tax deductions apply.
    • For companies that undergo dissolution, bankruptcy, termination of operations, or business reorganisation in 2023, they are required to declare PIT finalisation up to the point of dissolution, bankruptcy, termination, or reorganisation. Enterprises, except in cases where the type of enterprise is converted and the converted entity inherits all tax obligations from the previous enterprise, will continue to declare the final settlement at the end of the year as usual.
    • Individuals subject to direct tax finalisation will be exempted from declaring PIT finalisation in 2023 under the following circumstances:
      • If they have an additional tax amount payable after finalisation of VND 50,000 or less
      • If there is an overpaid tax amount after finalisation, but no tax refund or tax offset is required
      • If their current income does not exceed VND 10 million per month and they have 10% tax deducted at source
  2. Submission Deadline:
    • For companies, the latest submission date is the last day of the 3rd month following the end of the calendar year
    • For individuals, the deadline is no later than the last day of the 4th month after the end of the calendar year
  3. Form of tax finalisation declaration: companies can conveniently submit their PIT finalisation dossiers online via the electronic tax service system (using the HTKK tax declaration support software). There is no need to submit additional paper dossiers. For individuals, the option is to submit the tax finalisation declaration form 02/QTT-TNCN through the electronic tax service system available at this link. However, individuals must also physically sign and send a paper copy to the tax authority if required. It’s important to note that individual who has not been granted an electronic tax transaction account should be aware of this requirement when preparing their tax finalisation declarations.

Decree 14 amending regulations on establishing Representative Offices of Foreign Trade Promotion Organisations in Vietnam

On 7 February 2024, the Vietnam Government issued Decree 14/2024/ND-CP, which amends Decree 28/2018/ND-CP – the guiding regulations for the Law on Foreign Trade Management 2017 with a focus on enhancing foreign trade development measures. This new decree introduces several key changes to the procedures for granting licenses to establish representative offices of foreign trade promotion organisations in Vietnam as follows:

  • Licensing/management authority shift: The licensing authority has transitioned from the central authority, the Ministry of Industry and Trade (Vietnam Trade Promotion Agency or Vietrade), to the local authority, the Provincial Department of Industry and Trade where the representative office is located.
  • Submission methods: in addition to direct submissions or by post, online submission on the National Public Service Portal or the Provincial Administrative Procedure Processing System has been added.
  • Processing time: the timeline for processing most applications of authority and the deadline for obligations of representative offices seem to be shortened, and modified from working days to calendar days.
  • License adjustments and re-issuances: Changing the address to another province or city now falls to re-issuance by the local authority in the new location of the representative office. At least 90 days before changing the location, the representative offices need to make notifications to their creditors, employees, and other relevant parties, post this notification at the old office location, and publish it in three (3) consecutive official gazette issues.
  • Expansion of license revocation: The license of the representative office could be revoked due to violations of the foreign trade promotion organisation.
  • Revision of application forms: Most application forms, including those for new applications, adjustments, extensions, re-issuances, and annual reports, have been updated corresponding to the above changes.

Please stay tuned for further details of the decree, which will be covered in our upcoming Client Alert released in the coming days on Acclime Vietnam website.

Decree 14 will take effect from 25 March 2024.

Regulations on recruiting foreign employees

On 28 December 2023, the Department of Labour, War Invalids, and Social Affairs of Ho Chi Minh City issued Official Letter 29954/SLDTBXH-VLATLD, outlining regulations related to foreign employees employed in Vietnam.

Effective from 1 January 2024, companies are required to publicly post notices for the recruitment of Vietnamese employees in positions expected to be filled by foreign employees. These notices must be displayed on the Electronic Portal of the Ministry of Labour (Department of Employment) or the Electronic portal of the Employment Service Center for a minimum of 15 days prior to the anticipated reporting date to the Ministry of Labour or the relevant Department of Labour where the foreign employees are expected to be employed.

When assembling application dossiers for Work Permits, companies must submit comprehensive documentation verifying professional qualifications, work experience, diplomas, training certificates, and compliance with requirements for the specific job position. This submission should align with the content provided in the report explaining the organisation’s labour needs.

Upon finalising a labour contract with a foreign employee, the enterprise must promptly forward the signed contract to the Work Permit issuing authority. It is crucial to ensure that the contract accurately reflects the designated position, job title, working hours, and other relevant details as recorded on the Work Permit.

For foreign employees whose Work Permits have expired, the enterprise must initiate the Work Permit’s revocation process. The Work Permit should be returned to the Ministry of Labour or the Department of Labour that originally issued it, accompanied by a clear document outlining the reason for revocation. Within 5 working days of returning the Work Permit, the enterprise should also liaise with the Department of Labour to obtain official confirmation of the permit’s revocation, which may be necessary for future reference.

Recruitment process for Vietnamese employees in positions expected to be reserved for foreign employees from 2024

On 25 December 2023, the Department of Labour, War Invalids, and Social Affairs of Ho Chi Minh City issued Official Letter 6932/TTDVVL-GTVL, providing instructions for recruiting Vietnamese employees into positions that are anticipated to be filled by foreign employees. This directive pertains to the City Employment Service Center’s website.

The document outlines specific guidelines for companies operating within Ho Chi Minh City. Starting 1 January 2024, companies are mandated to post recruitment information for Vietnamese employees in positions expected to employ foreign employees through the Electronic Information Portal of the Employment Service Center. To initiate recruitment, companies in the city should visit the Employment Center’s websites: vieclamhcm.com.vn and vieclamhcm.net. For city-specific job postings, they should select the category labeled “Recruitment according to ND 70.”

Upon submission, the employment service center will review and approve the enterprise’s recruitment announcement documents within the same day (during working days from Monday to Friday). Once approved, the recruitment information will be posted on the website.

The center also plays a crucial role in screening, advising, and introducing job positions to workers who seek employment opportunities that align with the business’s requirements. Within 15 days of receiving the recruitment notice, the center will facilitate this process.

Where the enterprise’s recruitment information is incomplete or inaccurate, the center will withhold approval and provide feedback via registered email, specifying necessary additions or corrections.

The recruitment notice form and steps for posting the recruitment notice on the website of the City Employment Service Center are guided in the attached appendix.

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.

Tax deduction for compulsory insurance paid abroad

On 29 December 2023, the General Department of Taxation issued Official Letter 6002/TCT-DNNCN on PIT policy for compulsory insurance payments abroad.

According to the provisions of Clause 2, Article 9 of Circular 111/2013/TT-BTC, if foreign individuals residing in Vietnam have income from salaries and wages abroad and have participated in compulsory insurance (Social Insurance, Health Insurance, Professional Liability Insurance, etc.) from abroad, those insurance fees can be deducted when calculating PIT.

However, according to the General Department of Taxation, in the case of foreign workers sent to Vietnam as internal employees, receiving salaries from companies in Vietnam and companies abroad, of which the salary is in foreign countries (including compulsory insurance paid abroad) and is fully refunded by the Vietnamese company to the overseas company, the insurance paid abroad cannot be deducted when calculating PIT in Vietnam.

Conditions for import tax refund when re-exporting goods

On 26 January 2024, the General Department of Customs issued Official Letter 428/TCHQ-TXNK concerning the tax policy on imported and subsequently re-exported goods.

As per regulations, in situations where import tax has been paid but the goods must be re-exported abroad or sent to a non-tariff zone for utilisation within that zone, the import tax becomes eligible for refund, and no tax will be payable upon export. However, certain conditions apply to re-exported goods:

  • Unused and unprocessed: The goods must not have been used or undergone any processing
  • Authorised re-export: The re-export process must be carried out either by the original importer or by a person authorised or entrusted by the original importer

The procedures for tax exemption in such cases are governed by the provisions outlined in Article 13 of Circular 06/2021/TT-BTC. When declaring tax exemptions, reductions, or non-taxable codes on the customs declaration, businesses should adhere to the guidelines specified in Circular 38/2015/TT-BTC (as amended and supplemented by Circular 39/2018/TT-BTC). Additionally, the relevant tax exemption, reduction, and non-tax code tables are accessible on the official website: Customs.gov.vn.

 

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.

Updated on February 19, 2024
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