Skip to main content

May 2024 Tax Updates: Tax Invoice Compliance and recent changes.

Written on .
May 2024 tax updates: tax invoice compliance and recent changes

This May 2024 publication of our Tax and Accounting Updates focuses on guidelines for regularly reviewing purchase and sale invoices to avoid penalties, the Vietnamese government amendment requests to supplement the 2020 Enterprise Law to overcome current shortcomings and problems and our regular review of recent Official Letters released by the tax authorities.

Guidelines for regularly reviewing purchase and sale invoices to avoid penalties

On 2 April 2024, the Tax Department of Ho Chi Minh City issued Notice 5691/TB-CTTPHCM, emphasising the importance of adhering to regulations related to electronic invoices. The notice consists of two main parts as below:

Instructions for electronic invoice lookup tool

Taxpayers are strongly advised to regularly verify and validate their purchase and sale invoices. This process ensures the accuracy and legitimacy of invoices and helps promptly identify any irregularities.

The electronic invoice lookup tool is accessible through the tax authority’s electronic information portal (hoadondientu.gdt.gov.vn) or the “TCT Electronic Invoice” application available on the App Store (for iOS devices) and CH Play (for Android devices).

Sanctions for violations of invoices

Section II of the notice outlines the consequences for violations related to invoices, as specified in Decree 125/2020/ND-CP. These violations include:

  • Incorrect declarations leading to underpayment of taxes or incorrect exemptions, reductions, or refunds
  • Failure to pay taxes
  • Unauthorised issuance or sale of invoices
  • Improper timing or creation of invoices
  • Illicit use of invoices
  • Violations related to electronic invoice data transfer
  • Violations when providing services related to electronic invoice

Should taxpayers encounter situations where their right to use or issue electronic invoices has been compromised or if they suspect the receipt of false invoices, they are encouraged to contact the Tax Department’s hotline at phone number 028 3770 22 88 for assistance.

The Vietnamese government amendment requests to supplement the 2020 Enterprise Law to overcome current shortcomings and problems

This is one of the notable contents mentioned in Resolution 66/NQ-CP dated 9 May 2024 of the Government’s Action Program.

Accordingly, the Government requests the Ministry of Planning and Investment to preside and coordinate with relevant agencies:

  • Review and improve mechanisms and policies to encourage investment in startups and innovation. Complete the amendment and supplementation of Decree 38/2018/ND-CP detailing investment for innovative small and medium-sized startups and Decree 94/2020/ND-CP stipulating mechanisms and preferential policies for the National Innovation Centres, submitted to the Government in 2024.
  • Research and propose amendments and supplements to the Law on Support for Small and Medium Enterprises that took effect in 2017, focusing on policies to support businesses in expanding business scale, improving competitiveness, production capacity, and promoting innovative business models, applying sustainable business models, etc.

Official Letters released

Official Letters are releases delineating the Tax and other Authorities’ interpretation and application of Vietnam’s Taxation Laws, providing guidance to taxpayers in Vietnam.

Establishment of an Investment Support Fund for businesses subject to Global Minimum Tax

On 22 April 2024, the General Department of Taxation issued Official Letter 1658/TCT-CS to ensure investment incentives.

Accordingly, the application of additional corporate income tax (CIT), as outlined in Resolution 107/2023/QH15, aims to implement the Global Minimum Tax Regulations.

To strike a balance between investment incentives and the attraction of foreign investment into Vietnam amidst the implementation of global minimum taxes, the National Assembly has agreed to the policy and assigned the Government to promulgate a Decree to establish and utilise the Investment Support Fund. This fund aims to encourage and attract strategic investors, multinational corporations, and support domestic enterprises in sectors that require investment encouragement.

Simultaneously, the Government is researching new investment support policies to replace tax incentives that have become ineffective in practice. These efforts aim to provide investors with confidence in Vietnam’s investment environment while also attracting significant strategic investments and supporting local businesses.

Regarding the Decree establishing the Investment Support Fund, the Ministry of Planning and Investment has been assigned to lead the drafting process. The Decree is currently open for comments from various agencies, organisations, and individuals on the Government Electronic Information Portal.

Tax refund policy for temporarily imported goods used for warranty and repair purposes

On 6 March 2024, the General Department of Customs issued Official Letter 927/TCHQ-TXNK regarding temporarily imported goods for warranty and repair.

Accordingly, if an enterprise re-imports previously exported goods for repair or recycling, based on the warranty conditions stipulated in the sales contract, and subsequently re-exports them to foreign customers (the original buyers), it will be exempt from import tax. The enterprise is required to declare type code G13 on the customs declaration form, indicating tax-free temporary import with the corresponding tax exemption code.

Where an enterprise has already paid import tax for tax-exempt goods, the amount of import tax paid will be handled in accordance with the regulations concerning the treatment of overpaid tax.
Additionally, if an enterprise re-imports goods for repair or recycling and subsequently exports them to a third country or into a non-tariff zone (without re-exporting them to the original buyer), the customs authority may determine whether the goods are eligible for tax refund or if tax collection is not required as per regulations. In such cases, any export tax refund (if applicable) will be processed, and import tax will not be collected.

Determining tax incentives for multiple investment projects

On 15 April 2024, the General Department of Taxation issued Official Letter 1555/TCT-CS regarding tax policy.

According to this directive, when an enterprise has multiple investment projects, the following scenarios apply:

  1. New Independent Investment Projects: If the additional projects are new and independent of each other as well as the original project, and they meet the specified field conditions or areas eligible for CIT incentives, these new projects will enjoy CIT incentives.
  2. Expanding Existing Projects: If the additional projects involve expanding existing ventures in fields or areas eligible for CIT incentives, and they meet at least one of the three criteria for investment expansion as prescribed, these projects will subsequently benefit from CIT incentives under the expanded investment category.
  3. Specialised Industries (Solar and Wind Energy): For investment projects related to electricity production from solar energy or wind energy, any specific regulations applicable to these industries or fields must be adhered to. These projects should comply with the provisions outlined in relevant specialised laws.

Guidelines for using electronic invoices at business locations

On 11 April 2024, the General Department of Taxation issued Official Letter 1511/TCT-KK providing instructions for using invoices at business locations situated outside the province where the head office is located as follows:

  1. Retail Business Locations Outside the Province: If a company establishes retail business locations beyond the province and maintains dependent accounting with centralised tax declaration at the headquarters, those business locations can utilise the electronic invoices issued by the company’s headquarters.
  2. Branch-Managed Business Locations Outside the Province: When a company establishes branches to manage business locations outside the province, and these locations are dependent on the branch, they can use electronic invoices issued by the respective branch or the branch registered by the company. For branches that function as independent units, fully tracking and accounting for output and input VAT, the declaration and payment of VAT should occur directly at the tax agency managing the branch.
  3. Direct Provision of Goods and Services to Consumers: Business locations outside the province that directly provide goods and services to consumers (e.g., supermarkets, shopping centres, restaurants, hotels, pharmacies) have the option to use electronic invoices generated from cash registers or electronic invoices with or without codes.

Guidelines for identifying employees exempt from Dual Social Insurance Payments under the Vietnam-Korea Agreement

On 29 March 2024, the Vietnam Social Insurance (SI) issued Official Letter 862/BHXH-TST, providing guidance on several aspects related to the implementation of the SI Agreement between Vietnam and the Republic of Korea.

The Official Letter covers the following key points:

  • Identifying employees from both Vietnam and Korea who are exempt from participating in SI payments twice
  • SI Entity Certificate issuance for Vietnamese employees
  • SI Entity Certificate collection for Korean employees
  • Conditions and procedures for stopping SI payments and confirming the compulsory SI participation period for Vietnamese employees employed in Korea under contract are provided.

Accordingly, Vietnamese individuals working in Korea and Korean individuals working in Vietnam, if they meet the specified regulations, fall into the categories of “dispatched employees” or “on-site recruited employees”. In such cases, they are exempted from paying SI contributions twice. However, it is essential to apply for a Certificate of SI Entity as the basis for this exemption.

 

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 May 15, 2024
Don’t have time to read the whole insight right now?

Get exclusive content and expert advice to your inbox.

Subscribe to our newsletter and stay up to date with the latest information regarding advancing your business in Vietnam.

Newsletter subscription