This November 2023 publication of our Tax and Accounting Updates focuses on approval on the proposal of 2% VAT reduction for the first half of 2024, salary calculated to pay 2% Trade Union fees in 2024, increase of the Trade Union fees retention rate to 70% for Local Trade Unions, conditions for importing refurbished goods under the CPTPP Agreement and our regular review of recent Official Letters released by the Tax Authorities.
Approval on the proposal of 2% VAT reduction for the first half of 2024
Further to the policy on 2% VAT reduction in 2022 and 2023, on 3 November 2023, through Resolution 182/NQ-CP, the Government approved the proposal of the Ministry of Finance submitted on 2 November 2023, regarding the 2% VAT reduction from 1 January to 30 June 2024.
The VAT reduction is applicable to goods and services currently applying the tax rate of 10% except for the following:
- Telecommunications, finance, banking, securities, insurance, real estate business, metals, refined petroleum
- Products and services subject to Special Consumption Tax
- Information technology
The official guidance on VAT reduction is expected to be released by the Ministry of Finance soon.
Salary calculated to pay 2% Trade Union fees in 2024
Decision 8086/QD-TLD of 2023 issued by the Vietnam General Confederation of Labour on 10 October 2023, regulating the principles of preparing and delivering the Trade Union financial forecast in 2024.
In general, the salary level for calculating 2% Trade Union fees in 2024 is as follows:
- 2% Trade Union fees are calculated on the total salary of employees who are required to pay Social Insurance according to the provisions of Law on Social Insurance. Therefore, the basis for determining the salary fund to pay 2% Trade Union fees in 2024 is calculated on the average salary paid for Social Insurance in the first 6 months of 2023 multiplied by the number of employees subject to Social Insurance payment according to the provisions of Law on Social Insurance.
- Trade Union fees are collected based on the number of union members according to salary and allowances in each region and according to Decision 1908/QD-TLD dated 19 December 2016.
Decree 8086/QD-TLD will take effect from 1 January 2024.
Conditions for importing refurbished goods under the CPTPP Agreement
On 2 November 2023, the Government issued Decree 77/2023/ND-CP (the Decree) on management of importing refurbished goods under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP Agreement).
Accordingly, the Government promulgated the list of refurbished goods imported into Vietnam according to the CPTPP Agreement in the Appendices of the Decree, which must meet the following conditions:
- Have an import license as prescribed in the Decree
- Meet regulations on rules of origin of goods according to the CPTPP Agreement
- Meet relevant regulations of the Vietnamese law and specialised laws applied to import new goods with the same type, in which, depending on specific cases, there are regulations on goods labels, product quality, standards, technical regulations, energy efficiency, radiation safety, network information security, measurement, environmental protection, intellectual property rights protection, other regulations
In addition, when trading in the market, the original label or secondary label of refurbished goods must display in Vietnamese the phrase “Refurbished goods” in a position and in a size that can be seen and read with the naked eye.
Decree 77/2023/ND-CP will take effect from 1 January 2024.
Official Letter 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.
Failure to submit Foreign Contractor Withholding Tax returns is determined as tax evasion
According to Official Letter 2865/TCT-PC issued by the General Department of Taxation on 11 July 2023, where a taxpayer does not submit a Foreign Contractor Withholding Tax declaration, it is determined as a tax evasion behavior. This will not be considered as false declaration leading to a lack of tax payable (with penalties often lower than those for tax evasion). Taxpayers will be considered for administrative penalties for tax evasion or prosecuted for criminal liability according to prevailing regulations.
Profits repatriation for foreign investors
On 10 October 2023, the General Department of Taxation issued the Official Letter 4480/TCT- CS guiding profit repatriation for foreign owned enterprises.
Accordingly, foreign investors are allowed to transfer profits abroad at the end of the fiscal year or at the end of direct investment activities in Vietnam, after fulfilling the finance obligations to the Vietnam authorities in accordance with the law and has submitted audited financial statements and Corporate Income Tax finalisation declaration.
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.