This November 2022 publication of our Tax and Accounting Updates looks at Decree 91 amending a number of articles of the Tax Administration Law, increase to Minimum Basic Wage from 1 July 2023, and our regular review of recent Official Letters released by the Tax Authorities.
Decree 91 amending a number of articles of the Tax Administration Law
On 30 October 2022, the Government issued Decree 91/2022/ND-CP (Decree 91) amending and supplementing a number of articles of Decree 126/2020/ND-CP (Decree 126) guiding the Law on Tax Administration. The following are notable modifications:
1. Provisional Corporate Income Tax of 4 quarters to be at least 80% of annual finalised tax
Accordingly, the total provisional Corporate Income Tax (CIT) of 4 quarters must be at least 80% of the CIT payable under the annual tax finalisation.
Previously according to Decree 126, the total amount of provisional CIT paid in the first 3 quarters of the year will be at least 75% of the payable finalised CIT.
Notes on the provisional CIT applied from the tax period of 2021 are as follows:
- By 30 October 2022, if the provisional tax paid by the taxpayer in the first 3 quarters of 2021 is not less than 75% of the annually finalised tax, the regulations of Clauses 3, 4, 5 Article 1 of Decree 91 on the minimum ratio of provisional CIT of 4 quarters (at least 80% of the annually finalised tax) will not apply.
- By 30 October 2022, if the provisional tax paid by the taxpayer in the first 3 quarters of 2021 is less than 75% of the annually finalised tax, the regulations requiring that the provisional CIT of the 4th quarter be at least 80% of the annually finalised tax may be applied if it does not lead to an increase in late payment interest.
2. Replacing the notice of discontinuance of invoice use and supplementing regulations on ending the deadlines for submitting tax declaration dossiers and tax payment deadlines
Specifically, replacing the Notice on the cessation of invoices use, form No. 04-1/CC in Appendix III issued with Decree 126, with Form No. 04-1/CC issued with Decree 91. Decree 91 also adds a form for requesting the adjustment of late payment interest (Form No. 01/GTC).
In addition, Decree 91 also supplements the following deadlines:
- Deadlines for submission of tax declaration dossiers, deadlines for tax payment, deadlines for tax administration agencies to handle dossiers, and validity period of decisions on enforcement of administrative decisions on tax administration will comply with regulations in the Law on Tax Administration and Decree 126.
- Where the last day of the deadlines for submitting tax declaration dossiers, the deadlines for tax payment, the deadlines for tax administration agencies to handle dossiers, and the validity period of the enforcement decision coincides with the prescribed holiday, the last day of the period is counted as the working day immediately following that holiday.
3. Official regulation on the exemption from submitting PIT declaration of the month/quarter with no income payment
Accordingly, organisations and individuals who do not pay income subject to PIT in a month/quarter will not be subject to the PIT declaration for that month/quarter. In fact, this was guided by the General Department of Taxation in Official Letter 2393/TCT-DNNCN dated 1 July 2021. However, a formal regulation with higher legal validity is clearer and more convenient to approach for taxpayers.
4. Supplemented regulations on responsibilities of e-commerce businesses in providing tax authorities with information of organisations and individuals trading on the floor
Accordingly, organisations as owners of e-commerce platforms are responsible for providing tax authorities with information about organisations and individuals who conduct part or the whole process of buying and selling goods and services on the e-commerce trading floor, including seller’s name, tax code or personal identification number, address, and contact phone number; and sales revenue through the floor’s online ordering function. The provision of information is done on a quarterly basis, no later than the last day of the first month of the following quarter, electronically, via the website of the General Department of Taxation in the data format published by the General Department of Taxation.
Decree 91 took effect from the date of signing. Particularly, the provisions in Clauses 3, 4 and 5, Article 1 of the Decree (regarding the provisional CIT of 4 quarters is of at least 80% on the annual finalised CIT) apply from the tax period of 2021.
Increase to Minimum Basic Wage from 1 July 2023, and impact on salary (insurance) payments
On 11 November 2022, the National Assembly passed a Resolution on the state budget estimate for 2023. Accordingly, the base salary will be increased to 1.8 million VND/month, an increase of 20.8% compared to the current basic wage of 1.49 million VND/month. Changes come into force from 1 July 2023 and will result in an increase to the maximum caps for calculating Social Insurance and Health Insurance payments, and therefore increasing the potential payments by employees and employers for these insurances.
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.
Foreign-invested enterprises are not allowed to do temporary import – re-export of goods
On 21 October 2022, the Ministry of Industry and Trade issued Official Letter 648/XNK-CN on whether foreign-invested enterprises can import goods and then export them without further processing.
According to the Law on Foreign Trade Management, Decree 09/2018/ND-CP and Decree 69/2018/ND-CP, the Ministry of Industry and Trade stated that the scope of export and import rights allowed to be conducted by foreign-invested enterprises does not include temporary import and re-export.
In other words, foreign-invested enterprises are not allowed to conduct business activities of temporarily importing goods and then re-exporting them abroad without further processing.
Supporting visa fees for foreign employees are included in welfare expenses
On 12 October 2022, the Tax Department of Hanoi issued Official Letter 49303/CTHN-TTHT on the deduction of input VAT and deductible expenses for labour recruitment costs.
Accordingly, where a company has expenses to support foreign employees with visa extension and renewal fees to come to Vietnam to work, if it is a welfare expense, it shall be accounted according to Clause 4, Article 3 of Circular 25/2018/TT-BTC. In addition, the total benefit expenditure of the enterprise must not exceed 1 month’s average salary made in the tax year.
For input VAT, if it serves production and business activities of goods and services subject to VAT, the full deduction will be declared according to the provisions of Clause 10, Article 1 of Circular 26/2015/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.