October 2023 Tax Updates: Changes to Work Permit procedures, deferral of Trade Union payments for some businesses and other recent tax updates.

This October 2023 publication of our Tax and Accounting Updates focuses on significant new improvements that underpin Work Permit procedures in Vietnam under Decree 70, draft decree amending a series of regulations on invoices and records of Decree 123/2020/ND-CP, Deferral of Trade Union payments for some businesses, 4 amended and supplemented administrative procedures under the jurisdiction of Vietnam Social Insurance, and our regular review of recent Official Letters released by the Tax Authorities.

Significant new improvements underpin Work Permit procedures in Vietnam under Decree 70

On 18 September 2023, the Government issued Decree 70/2023/ND-CP (Decree 70) amending Decree 152/2020/ND-CP (Decree 152) regulating foreign employees working in Vietnam.

Some notable changes of the Decree include:

1. Relaxation in time requirements for seeking approval to foreign employment: In particular, employers are required to announce job vacancies for Vietnamese workers in the roles intended for foreigners via the Department of Employment portal or Provincial Employment Service Centers, at least 15 days (instead of 30 days as previous regulation) before starting the process of Work Permit application. If no Vietnamese candidate is selected thereafter, the Work Permit application can be submitted.
2. Changes in the key regulatory bodies involved in Work Permit and WP Exemption approvals: The Vietnamese government has consolidated the authority to issue Work Permits and Work Permit Exemptions, transferring it solely to Department of Labour, War Invalids and Social Affairs (DOLISA) and Department of Labour, War Invalids and Social Affairs (MOLISA). The Provincial Management Boards of Economic Zones generally stopped accepting applications for Work Permit and Work Permit Exemption from 18 September.
3. Simplifying the role provisional requirements for Foreign Experts category
4. Expanding the scope for managerial level positions and updating documentation
5. Changes to requirements for Technical Worker roles which are more accommodating and assesible for wider sectors
6. Adding cases where employment announcement of foreign labour need is not required for foreign individuals married with Vietnamese citizens
7. Supplementing the requirements to report to authorities where foreign employees work at multiple locations (headquarter, branches, etc.) which have not listed in the Work Permit application form.
8. Simplifying Work Permit renewal process

Details of the changes can be found in our Client Alert here.

Decree 70 took effect from 18 September 2023.

Draft Decree amending a series of regulations on invoices and records of Decree 123/2020/ND-CP

In order to remove difficulties and improve problems arising from the practices of businesses and tax authorities in the process of using electronic invoices, the Ministry of Finance submitted to the Government a draft Decree amending and supplementing Decree 123/2020/ND-CP regulating invoices and documents.

Accordingly, the problems that need to be amended and supplemented include:

• Amending and supplementing regulations on principles of invoicing, time of invoicing, invoice content, handling of incorrect invoices to make regulations transparent and convenient for taxpayers to implement
• Supplementing regulations on document management in casino business, electronic games with prizes, and entertainment business with betting
• Additional solutions to prevent and limit fraud when businesses register to use invoices and during the process of using electronic invoices
• Amending and supplementing regulations related to management and use of electronic receipts and records
• Amending and supplementing regulations on searching, providing and using e-invoice information
• Completing the forms in a simple, transparent and easy-to-understand way

Deferral of Trade Union payments for some businesses

On 31 August 2023, the Vietnam General Confederation of Labour issued Decision 7823/QD-TLD on delaying Trade Union dues for businesses whose orders are cut or reduced.

Specifically, the Vietnam General Confederation of Labour agrees to allow businesses with a reduction of 50% or more of employees participating in Social Insurance compared to 1 January 2023 (including employees who stop working or temporarily postponing the implementation of labour contracts, unpaid leave agreements) due to businesses being cut or reducing orders, Trade Union fee payment will be postponed until 31 December 2023.

Announcing 4 amended and supplemented administrative procedures under the jurisdiction of Vietnam Social Insurance

On 19 September 2023, Vietnam Social Insurance issued Decision 1318/QD-BHXH announcing 4 amended and supplemented administrative procedures under the jurisdiction of Vietnam Social Insurance, including:

• Register and adjust payment of compulsory Social Insurance, Health Insurance, Unemployment Insurance, Labour Accident Insurance, and occupational diseases; issue Social Insurance books and Health Insurance cards
• Register, re-register, and adjust voluntary Social Insurance contributions; issue Social Insurance books
• Register to pay and issue Health Insurance cards for people who only participate in Health Insurance
• Reissue, change, and adjust information on Social Insurance books and Health Insurance cards

Detailed content of procedures in Decision 1318/QD-BHXH effective from 19 September 2023.

Official Letters Release

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

Adjustment to the incorrect amount recorded on the e-invoice

On 15 September 2023, the Hanoi Tax Department released Official Letter 67047/CTHN-TTHT on VAT policy.

Based on the current laws, where a company discovers any errors or omissions in the amount recorded on a VAT e-invoice, the company can prepare an adjusted VAT e-invoice according to the provisions of Point e, Clause 1, Article 7 of Circular 78/2021/TT-BTC. Accordingly, if the adjustment increases, the invoice will record a positive figure, if the adjustment decreases, the invoice will record a negative one in accordance with the actual adjustment.

Where the company has incurred construction activities in provinces, it is required to allocate VAT to each province at a rate equal to 1% of VAT-exclusive revenue from construction activities.

Instructions for determining where to submit PIT finalisation and refund documentation

On 20 September 2023, the General Department of Taxation issued Official Letter 4172/TCT-DNNCN on accelerating the processing of PIT refund dossiers.

In order to remove problems and speed up the time to process tax refund documents for individuals directly submitting PIT finalisation, the General Department of Taxation has provided unified guidance on determining where to submit tax refund documents according to the provisions at point b. 2 Clause 8 Article 11 Decree 126/2020/ND-CP as follows:

• Individuals who calculated family deductions for themselves at any income-paying organisation are required to submit the final tax return at the managing tax authority.
• If during the year, individuals change their workplace and calculated family deductions at the last workplace, they need to submit the final tax return at the managing tax authority of their last workplace
• If individuals change their workplace and does not calculate family deductions at the last workplace or at any organisation, they need to submit the final tax return at the managing tax authority of their residential place
• If individuals do not have or have labour contracts with less than 3 months, or are no longer working anywhere at the time of finalisation, they need to submit final tax return  at individuals residential place.

VAT reduction when invoicing at the wrong time

On 8 September 2023, the Hanoi Tax Department released Official Letter 65202/CTHN-TTHT on guiding VAT rates according to Decree 15/2022/ND-CP.

According to the Hanoi Tax Department, where the service has been completed between 1 February 2022 and 31 December 2022, but after 31 December 2022, the enterprise issues an invoice, the VAT reduction will still be applied according to Decree 15/2022/ND-CP. However, they will be fined for issuing invoices at the wrong time according to the provisions of Article 24 of Decree 125/2020/ND-CP.

Where an electronic invoice has been created and sent to the customer, then the enterprise discovers that there are errors in the amount, tax rate, and tax amount in the invoice, Company is required to apply an adjustment for incorrect VAT invoice issuance according to the instructions in Clause 2 of Article 19 Decree 123/2020/ND-CP.