This March 2021 publication of our Tax and Accounting Updates looks at a circular guiding the implementation of some articles of the Tax Administration Law 2019, circulars guiding tax exemptions and the reduction of Corporate Income Tax for science and technology enterprises, and a circular regulating time of submission of certificate of origin of imported goods under the EVFTA, along with our regular review of recent Official Letters released by the Tax Authorities.
Circular guiding the implementation of some articles of the Tax Administration Law 2019
On 22 January 2021, The Ministry of Finance released Circular 06/2021/TT-BTC guiding the implementation of a number of articles of the Tax Administration Law 2019 for imported and exported goods. The Circular took effect from 8 March 2021 with the following noteworthy contents:
- Clarifying exported and imported goods which are not required to declare tax upon each occurrence
Accordingly, exported or imported goods that are not required to declare tax upon each occurrence include:
- Imported and exported electric power items;
- Goods sold in segregated areas at international airports (except for duty-free goods);
- Goods provided for passengers on international flights;
- Gasoline and oil supplied to aircraft on exit; and
- Goods imported or exported on the spot are delivered and received many times a day or a month.
- Tax declaration and tax payment for goods exported and imported through e-commerce business or digital-based business
Goods exported or imported through e-commerce, digital-based trading and other services provided by an overseas supplier who does not have a permanent establishment in Vietnam will be subject to tax declaration and payment as for imported and exported goods specified in Article 5 of Decree 08/2015/ND-CP.
- Tax payment deadline for imported and exported goods
For goods subject to analysis and inspection to determine the exact taxable amount, and for cases where official prices are not available at the time of customs declaration registration, taxpayers must pay an estimated amount before goods are released. The payment deadline is specified in Article 9 of the Law on Import Tax and Export Tax.
- If the result of analysis and assessment of goods is different from the taxpayer’s declaration resulting in:
- an increase in the tax payable amount, the deadline for paying additional tax is 5 working days from the date the taxpayer received a request for an additional declaration from the customs office; or
- a reduction in the tax payable amount, the customs authority shall notify the taxpayer to make an additional declaration in accordance with the customs law and handle overpaid tax amounts according to Article 10 of this Circular.
- If the official price is available, the taxpayer must make an additional declaration and pay the additional tax amount within 5 working days from the time the official price is available. In case the official price leads to the reduction of the tax payable amount, the customs office is to handle the overpaid tax according to the provisions of Article 10 of this Circular.
- If there are actual payments or adjustments to the customs value, the deadline for additional tax payment is 5 working days from the time the importer determines these amounts.
- Notes on export and import duty exemption documents
To implement the new provisions of this Circular, on 1 March 2021, the General Department of Customs issued Official Letter 969/TCHQ-TXNK on import and export duty exemption documents.
According to Clause 4 Article 80 of the Law on Tax Administration 2019, tax exemption documents for imports and exports comply with Article 14 of Circular 6/2021/TT-BTC. However, tax exemption documents are not applicable under Decree 134/2016/ND-CP in the following cases:
- Import and export goods are exempt from import tax and export tax according to international treaties to which Vietnam is a member specified in Clause 1, Article 29 of Decree 134/2016/ND-CP.
- Exported goods produced from waste recycling and treatment are exempt from tax according to the provisions of Point b, Clause 19, Article 16 of the Law on Export and Import Duty, Clause 3, Article 25, Decree 134/2016/ND-CP, Clause 23, Article 1 of Decree 40/2019/ND-CP of the Government amending and supplementing a number of articles of the Decrees detailing and guiding the implementation of the Law on Environmental Protection;
- Imported materials and supplies are exempt from tax according to the provisions of Point a, Clause 1, Point b, Clause 15, and Point a, Clause 16, Article 16 of the Law on Export and Import Duty;
- Goods purchased, sold or exchanged by border residents are exempt from tax according to the provisions of Clause 1, Article 9 of Decree 134/2016/ND-CP;
- Duty-free imported goods in direct service of security and defence.
Circular guiding tax exemptions and reduction of Corporate Income Tax for science and technology enterprises
On 11 January 2021, the Ministry of Finance issued Circular 3/2021/TT-BTC providing instructions for granting Corporate Income Tax (“CIT”) exemptions and reduction incentives to science and technology enterprises.
Accordingly, to be entitled to CIT exemptions and reduction incentives, science and technology enterprises must meet the following requirements:
- Having obtained certificates of science and technology enterprises from competent state authorities;
- Annual revenue from production and trading of products created from the application of scientific and technological achievements must account for at least 30% of annual gross revenue;
- Revenue earned from services rendered by applying science and technology achievements in the information technology industry must be revenue generated from new services other than services already available on the market. (Criteria specified by the Ministry of Science and Technology);
- Revenue generated from products created from science and technology achievements within a tax period must be recorded separately. Otherwise, it must be allocated according to clause 2, article 18 of the Law on Corporate Services – 14/2008/QH12;
- Implementing accounting, invoice, billing or receipt issuing regulations as prescribed in laws and paying taxes based on declarations.
The Circular entered into force on 1 March 2021.
Circular regulating time for submission of certificate of origin of imported goods under EVFTA
On 25 January 2021, the Ministry of Finance released Circular 7/2021/TT-BTC regulating time frames for submitting proofs of origin for imports under the EVFTA.
According to this circular, times for submission are specified as follows:
- Customs declarants must submit proofs of origin at the time of customs procedures under the provisions of point a of clause 1 of article 7 in Circular 38/2018/TT-BTC.
- If the proof of origin is not yet available, to be entitled to special preferential import tariffs, the customs declarant must register as “late submission” in the import declaration and they will submit it later within its validity duration but no long than 2 years from the registration date.
- If the customs declarant submits the proof of origin after this time frame due to force majeure or other legitimate reasons beyond the control of the importer or other late submissions cases, The General Department of Customs will consider and decide the application of the special preferential tariff.
In case of late submission, goods must be imported within the validity period of the proof of origin.
The Circular took effect on 11 March 2021.
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.
Three ways to register e-tax accounts for individuals
On 5 February 2021, the General Department of Taxation issued Official Letter 377/TCT-DNNCN to promote the implementation of electronic transaction accounts in the tax field for individuals.
Accordingly, taxpayers may register e-tax accounts in one of the following 3 methods:
- Taxpayers can register online and go directly to the tax authority to obtain their approval and activate e-tax accounts.
- Registering e-tax accounts through the National Public Service Portal in case of possessing accounts on the National Public Service Portal.
- Taxpayers register directly at tax authorities.
Detailed instructions about the steps in registering e-tax accounts are given in the Appendix to this Official Letter. After that, when exporting materials to the EPE, the applicable VAT rate is 0% and VAT amount will be deducted and refunded in accordance with Article 2 of Circular No. 25/2018/TT-BTC of the Ministry of Finance.