This May 2021 publication of our Tax and Accounting Updates looks at Decree 52 providing deferral of VAT, CIT, PIT and Land rents in 2021 for selected taxpayers, an Official Letter covering signing of electronic transactions related to taxation, bank guidance for reducing interest rates for customers impacted by COVID-19, regulations on exemptions from payment of export or import duties, and our regular review of recent Official Letters released by the Tax Authorities.
Decree 52, confirming deferral of VAT, CIT, PIT and land rents in 2021 for certain taxpayers
On 19 April 2021, the Government released Decree 52 confirming the extension of deadlines for payment of Value-Added Tax (“VAT”), Corporate Income Tax (“CIT”), Personal Income Tax (“PIT”) and land rental in 2021 for selected taxpayers.
Deferral of VAT payments
Eligible Taxpayers can defer VAT payments, so that Quarter 1 and Quarter 2, 2021 payments can be deferred for 5 months for quarterly payers. March, April, May and June 2021 payments can also be deferred for 5 months for monthly payers. However, it should be noted that lodgements are still required to be completed on time, and the exemption excludes VAT on imports.
The timeframe for VAT payments for July and August are extended by four and three months, respectively.
Deferral of CIT payments
Eligible companies are able to defer their 2021 Quarter 1 and Quarter 2 provisional CIT payments by 3 months from their due dates.
Household businesses & individuals – VAT and PIT deferrals
The annual VAT and PIT payments due for 2021 for eligible Household Businesses and Individuals can be deferred until 31 December 2021.
Land rental deferrals
Eligible Taxpayers with direct land lease contracts from the State can defer 2021 annual land rental payments for 6 months, from 31 May 2021.
*Where the extended deadline falls on a public holiday, the deadline is considered as the next working day.
Eligible taxpayers who can benefit from these tax deferrals in 2021
Businesses involved in certain production or service activities (please click here for a detailed list), and Small and micro enterprises defined by regulations of the Law on Supporting Small and Medium Enterprises.
Definitions for small and medium enterprises include:
- Enterprises in the fields agriculture, forestry, fisheries, construction and industrial sectors with no more than 100 staff, and turnover no more than VND 50 billion or total capital not more than VND 20 billion
- Enterprises in the fields of commerce and services with no more than 50 staff, and turnover no more than VND 100 billion or total capital not more than VND 50 billion.
- Credit Institutions and Foreign Bank Branches effected by the COVID-19 epidemic, as prescribed by the State Bank of Vietnam.
Taxpayers wishing to take advantage of the tax deferrals in this Decree are required to use the form recommended by the Decree, which needs to be submitted electronically or in paper from no later than 30 July 2021.
Official Letter expanding guidance for electronic transactions related to taxation
On 20 April 2021, the General Department of Taxation issued Official Letter 1194/TCT-KK, which expands on the contents of Circular 19/2021/TT-BTC (“Circular 19”) is to provide guidance for electronic transactions related to taxation. Important highlights include:
5 new elements for electronic signing of electronic transactions
- Amending the regulations for electronic tax registration services at level 4 for taxpayers, including taxpayers who register for the first time.
Accordingly, taxpayers, who register for the first time and are issued tax identification numbers as prescribed in Clause 1, Article 13 of Circular 19, are allowed to register a unique mobile phone number of the individual or the legal representative of the organisation to receive a verification code for electronic transactions via “text message” when submitting the electronic tax registration documents to the tax authority.
- Amending and supplementing regulations to expand methods of authentication for individuals who have not been issued digital certificates for electronic transactions. The methods include SMS OTP, Token OTP, Smart OTP and biometric authentication.
- Additional provisions: If the taxpayer is an organisation or individual that declares and pays tax on behalf of a foreign organisation, individual or contractor via electronic tax transactions, the taxpayer can use digital certificates of the organisations or individuals declaring and paying tax on behalf to sign on electronic documents submitted to the tax authority.
- Adding “intermediary payment service providers and other State agencies” when performing electronic transactions, which must use a digital signature signed by digital certificates issued by a public digital signature authentication service provider or by a competent state agency or recognised by a competent state agency.
- Supplement specific provisions for the electronic signature of tax authorities on electronic documents sent by the tax authority to taxpayers, including:
- Electronic documents are notices automatically created by the web portal of the General Department of Taxation, sent to taxpayers or automatically created by the tax administration system of General Department of Taxation, sent to taxpayers, using digital signatures on behalf of the General Department of Taxation.
- Electronic documents created by tax officers on the tax administration system of the General Department of Taxation according to the tax administration professional process to send to the taxpayer must also use digital signatures on behalf of tax authorities and the tax officers’ digital signatures as prescribed.
4 new elements covering timings for lodging electronic tax documents
- Tax documents are considered as lodged within a specific day if they are successfully lodged between 00:00:00 to 23:59:59 on that day.
- Amending the time for confirming electronic tax document lodgement, being the time for electronic tax documents of a similar nature as the basis for tax authorities to determine the time of tax document lodgement, late lodgement or the time period for processing documents, according to regulations and to be consistent with the scope of adjustment in Article 1 of the Circular.
- Adding a provision that confirms submission dates for tax returns including attachments that are submitted either in person or by mail, is the date the taxpayer completes the submission of all required documents.
- Adding a regulation for when the tax authority sends notices, decisions or other documents to the taxpayer, which are determined to dated on a specific day if the signed document is successfully sent from 00:00:00 to 23:59:59 of the day.
Circular 03 – Regulations for Banks to reduce interest rates for customers affected by COVID-19
On 2 April 2021, the State Bank of Vietnam released Circular 03/2021/TT-NHNN amending Circular 01/2020/TT-NHNN concerning debt rescheduling, interest reduction or exemption, or debt non-restructuring for the purpose of supporting customers impacted by COVID-19. According to this document, regulations on interest exemption or reduction granted to customers affected by COVID-19 include:
- Credit institutions and foreign bank branches may, at their discretion, decide to grant exemption or reduction of interest or fees prescribed in their internal rules and regulations with respect to outstanding debts incurred from credit facilities before 10 June 2020 (except corporate bond purchase and investment) if:
- Obligations to repay principal and/or interest are due during the period from 23 January 2020 to 31 December 2021; and
- Customers are incapable of repaying principal and/or interest debts by payment due dates under terms and conditions of lending contracts or agreements due to decreases in their revenue and income caused by the COVID-19 outbreak.
- Interest and fee exemptions or reductions granted to customers under Circular 03 will last until 31 December 2021.
The Circular enters into force as of 17 May 2021.
Regulations on exemptions from payment of export or import duties
On 11 March 2021, the Government released Decree 18/2021/ND-CP amending and supplementing Decree 134/2016/ND-CP providing guidance on the implementation of the Law on export and import duties. The Decree provides amendments on exemptions from payment of export or import duties as follows:
- If duties levied on goods that are categorised as eligible for tax refunds, which have not yet been paid, then the non-collection of such duties will be subject to the following regulations:
- Duties on exported goods that need to be re-imported are refundable;
- Duties on imported goods that need to be re-exported are refundable;
- Duties on machinery, equipment, tools and means of transport of entities and persons that are permitted for temporary import and re-export are refundable;
- If goods imported for manufacturing or business purposes are already exported as products, duties on such goods are refundable;
- If taxpayers already pay import or export duties even when not having exported or imported goods; having fewer exported or imported goods than those on which duties are already paid, such duties will be refunded; in this case, if they incur the prescribed minimum duties, refund payments on such duties will not be made.
- Non-collection of duties levied on goods exempted from import and export duty payment requirements will be subject to the following regulations:
- Duties on exported goods that need to be re-imported are refundable;
- Duties on imported goods that need to be re-exported are refundable.
Taxpayers can apply for non-collection of duties with customs authorities where commodity import or export procedures are implemented at the time of completion of customs procedures or after customs clearance. The Decree was effective from 25 April 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.
Guidance on determining the resident status of foreigners
On 26 April 2021, the Hanoi Tax Department issued Official Letter 13134/CTHN-TTHT regarding the determination of the resident status of foreigners. According to Clause 1, Article 1 of Circular 111/2013/TT-BTC stipulates that a resident who satisfies the following criteria:
- Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months from the date of arrival in Vietnam, in which the date of arrival and departure date is counted as 1 (one) day. The date of arrival and departure date is based on the certification of the immigration authority on the passport of the individual upon arrival and departure from Vietnam. In case of entry and exit on the same day, it is counted as 1 (one) day of residence.
- Having a permanent address in Vietnam in either of the following 2 cases:
- Having a permanent address indicated in the permanent residence card or temporary address when applying for the temporary residence card issued by a competent agency of the Ministry of Public Security.
- Having a leased house to live in Vietnam under a lease contract with a term of 183 days or more in a taxable year.
In case an individual has a permanent address in Vietnam but is present in Vietnam for less than 183 days in a tax year and the individual cannot prove that he/she is a resident of any country, the individual is considered as a resident in Vietnam. Proof of being a resident of another country is the Residence Certificate. If an individual is a resident of a country that has signed a double tax treaty with Vietnam and its authority does not have provisions for issuance of a residence certificate, the individual shall provide a photocopy of his/her passport as proof of the residence period.
Guidance on corporate income tax and personal income tax for travel expenses
On 9 April 2021, the Hanoi Tax Department issued Official Letter 10858/CTHN-TTHT providing guidance on CIT and PIT for travel expenses, specifically as follows:
According to Clause 2 Article 4 of Circular 96/2015/TT-BTC, If there are sufficient invoices and other supporting documents for payment for business trip allowances, travel expenses and accommodation for employees on business trips, the expenses are treated as deductible expenses when determining CIT.
And Clause 2, Article 2 of Circular 111/2013 / TT-BTC stipulates the flat expenditure level not included in taxable income on PIT in some cases as follows:
- For employees working in business organisations and representative offices: the flat expenditure rate applied is consistent with the determination of income subject to CIT.
- For employees working in international organisations and representative offices of foreign organisations: the flat expenditure rate shall comply with regulations of international organisations, representative offices of foreign organisations.
Where a company pays business trip allowances to staff that follows the company’s financial regulations or internal regulations, this expense will be included in deductible expenses when calculating CIT and not included in the employee’s assessable income subject to PIT.