This January 2023 publication of our Tax and Accounting Updates provides a reminder of the return to the statutory VAT rate of 10% from 1 January 2023 for businesses that were entitled to a VAT reduction to 8% in 2022, Circular 25/2022/TT-BTTTT on criteria for determining components exempt from import tax for the production of IT products, Circular 18/2022/TT-BYT amends the Circular 56/2017/TT-BYT detailing the implementation of the Law on Social Insurance, the easing of procedures for granting Work Permits due to the impact of the epidemic expired from 1 January 2023 and our regular review of recent Official Letters released by the Tax Authorities.
Reminder of the return to the statutory VAT rate of 10% from 1 January 2023 for businesses that were entitled to a VAT reduction to 8% in 2022
The provision to reduce VAT at 10% to 8% prescribed in Decree 15/2022/ND-CP (which belongs to the supporting program of socio-economic recovery and development) expired on 31 December 2022, therefore businesses need ensure that their applicable VAT rate from 1 January 2023 is adjusted to return to 10% accordingly.
Circular 25/2022/TT-BTTTT on criteria for determining components exempt from import tax for the production of IT products
On 31 December 2022, the Minister of Information and Communications issued Circular 25/2022/TT-BTTTT on determining imported raw materials and components exempt from import tax to directly serve production of IT products, digital content, and software.
Accordingly, raw materials and components exempt from import tax need to satisfy the following criteria:
- Being imported directly for the production of products which are:
- In the list of software, hardware, and electronic products specified in Circular 09/2013/TT-BTTTT and Circular 20/2021/TT-BTTTT, or
- In the list of digital content products as prescribed by the Ministry of Information and Communications.
(Upon the development situation and management policies in each period, the Ministry of Information and Communications will update and adjust the lists accordingly.
- Not in the list of machinery, equipment, raw materials, and components of the telecommunications and IT industry, digital content, and software that can be produced domestically in Appendix 8 issued with Circular 05/2021/TT-BKHDT.
Dossiers and procedures for tax exemption are required to comply with the provisions stipulated in Articles 30 and 31 of Decree 134/2016/ND-CP and amended in Decree 18/2021/ND-CP.
Circular 25 will be effective from 15 February 2023.
Circular 20/2022/TT-NHNN clarifies cases allowed for transferring and bringing foreign currencies abroad
On 30 December 2022, the Vietnamese State Bank issued Circular 20/2022/TT-NHNN guiding one-way money transfer from Vietnam to abroad and transfer money for other current transactions of Vietnamese resident organisations and individuals.
One of outstanding points of the Circular is the provision on cases and limits allowed to buy, bring, transfer and pay foreign currencies abroad of organisations and individuals residing in Vietnam.
Accordingly, for organisations, they are allowed to buy, transfer and bring foreign currency abroad for the following purposes:
- Refund of funding for implementation of projects in Vietnam according to commitments and agreements with foreign parties.
- Allocating funding for overseas members to participate in the implementation of scientific research projects and topics in Vietnam and abroad (from funding sources received by non-Vietnamese residents being organisations and individuals in foreign countries)
- Paying rewards to non-Vietnamese residents being overseas organisations and individuals participating in programs and contests held in Vietnam in accordance with relevant laws. The source of bonus payment is from non-residents being overseas organisations or individuals or residents being organisations
- Cases of buying, transferring or bringing foreign currency abroad to serve the organisation’s sponsorship and aid purposes (specific cases are stipulated in Clause 1, Article 4 of the Circular)
The amount of foreign currency purchased, transferred or brought abroad by an organisation is determined based on the amount stated on relevant documents. Especially, in the case of transferring or bringing foreign currency abroad to finance programs, projects, and funds in the field of culture and education, the amount must not exceed 50,000 USD.
The Circular takes effect from 15 February 2023.
The easing of procedures for granting Work Permits due to the impact of the epidemic expired from 1 January 2023
On 9 January 2023, the Department of Labour, War Invalids and Social Affairs of Ho Chi Minh City Ho Chi Minh City released Official Letter 374/SLDTBXH-VLATLD on implementation of Resolution 105/NQ-CP dated September 9, 2021 of the Government on supporting businesses, organisations, and business household in the context of covid-19.
The authority noted that regulations on easing conditions and procedures for granting and extending Work Permits for foreign individuals during the Covid-19 epidemic period according to Resolution 105 expired from 1 January 2023.
Therefore, from 1 January 2023, when carrying out administrative procedures related to foreign employees, enterprises must prepare all documents in accordance with the provisions of Decree 152/2020/ND-CP.
Circular 18/2022/TT-BYT amends the Circular 56/2017/TT-BYT detailing the implementation of the Law on Social Insurance
On 31 December 2022, the Ministry of Health released Circular 18/2022/TT-BYT amending and supplementing a number of articles of the Circular 56/2017/TT-BYT detailing the implementation of the Law on Social Insurance.
Some significant changes of the circular include:
- Supplementing some cases entitled to one-time Social Insurance
- Clarifying dossier for examination and assessment to enjoy one-time Social Insurance
- Clarifying conditions of medical examination and assessment to enjoy retirement, survivorship and leave due to insufficient health to raise children after birth
- And other changes stipulated in article 1 of the circular
The circular takes effect from 15 February 2023.
Official Letter Release
Official Letters are releases showing the Tax and other Authorities’ interpretation and application of Vietnam’s Taxation Laws, providing guidance to taxpayers in Vietnam.
Guide to PIT declaration for employees of branch outside the headquarter’s province
On 19 December 2022, Hanoi Department of Taxation issued Official Letter 62788/CTHN-TTHT on PIT declarations for employees working for branch outside the head quarter’s province.
According to the new regulations in Article 19 of Circular 80/2021/TT-BTC, in case the company directly pays salaries to employees working at branches outside the headquarter’s province, the company is responsible for withholding and declare tax following form 05/KK-TNCN with the appendix of the tax distribution table for localities with branches according to form 05-1/PBT-KK-TNCN and submit it to the tax office at the head office.
At the same time, the company pays the PIT amount allocated to each province where the branch is located according to the provisions of Clause 4, Article 12 of Circular 80/2021/TT-BTC.
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.