Vietnam: Various decrees on corporate and individual income tax, foreign contractor tax, tax administration

Vietnam: Corporate and individual income tax

The KPMG member firm in Vietnam prepared reports that briefly describe recent tax guidance and developments, as follows:

  • Corporate income tax: An event is considered a seasonal suspension and the related depreciation expenses during the suspension period is deductible for corporate income tax purposes: (1) when a taxpayer faces a decrease in the market demand due to the coronavirus (COVID-19) pandemic and consequently had to suspend the operation of a number of fixed assets; and (2) when the suspension is for less than nine months. Ministry of Finance Official Letter No. 12452/BTC-TCT
  • Foreign contractor tax: A foreign entity selling goods is liable for Vietnam’s foreign contractor tax when the foreign entity outsources goods-processing to an export-and-processing enterprise in Vietnam and the finished goods are then stored at a bonded warehouse for sale to another foreign entity, provided that ownership of goods is transferred within the bonded warehouse before being exported to a foreign country. Previously, if a foreign entity stored goods in a bonded warehouse in Vietnam for sale to another foreign entity and if the ownership of goods was transferred outside Vietnam territory, the transaction was not subject to foreign contractor tax in Vietnam. General Department of Taxation Official Letter No. 3997/TCT-CS
  • Individual (personal) income tax When a trade union uses the trade union’s fund to provide accommodation support to employees affected by COVID-19, that support payment is not subject to individual income tax. General Department of Taxation Official Letter No. 3845/TCT-DNNCN. When a foreign individual being a Vietnam tax resident, lodges (files) the first tax year individual income tax finalisation for a period ending within 2020 (e.g., from July 2019 to June 2020), the new family relief level (VND 11 million per month for the taxpayer, and VND 4.4 million per month for eligible dependent) will be applied for the period falling within 2020 of that first tax year. General Department of Taxation Official Letter No. 4590/TCT-DNNCN
  • Export / import tax: When an enterprise imports goods in the form of temporary import-for-reexport, but later exports on-the-spot under the instruction of the owner of the goods (instead of re-exporting to overseas or to non-tariff zones), the import tax paid by the enterprise does not qualify for a refund. General Department of Customs Official Letter No. 5817/TCHQ-TXNK
  • Special consumption tax: Concerning the extension of the special consumption tax payment deadline for domestically manufactured or assembled automobiles, domestic automobile manufacturers and assemblers will be granted a grace period for payment of the special consumption tax for the tax reporting period March to October 2020, including additional special consumption tax arising from supplementary special consumption tax declaration during the grace period. Decree No. 109/2020/ND-CP. The decree allows the payment to be deferred up to six months for each reporting period, which is due December 2020. The tax payment deferral also applies to branches and dependent units of taxpayers if they conduct automobile production and assembly activities.
  • Tax administration and customs administration: Decrees address administrative penalties concerning tax and customs. The decrees are effective 5 December 2020.
  • Foreign exchange control: When an export and processing enterprise signs a contract with a domestic enterprise to purchase construction and repair services rather than raw materials, components and other supplies used directly for the production, processing, recycling or assembly of goods for export, the export and processing enterprise is not permitted to use foreign currencies to purchase these items. State Bank of Vietnam Official Letter No. 5051/NHNN-QLNH

Read a November 2020 report [PDF 208 KB] prepared by the KPMG member firm in Vietnam


Another decree—Decree 126/2020/ND-CP (dated 19 October 2020)—provides rules regarding the following:

  • Tax declarations, tax calculation and tax filing locations
  • Deem taxation
  • Fulfillment of tax obligations on leaving Vietnam
  • Responsibility to provide information, disclose taxpayer information, and duties and obligations of commercial banks

Read a November 2020 report [PDF 187 KB] prepared by the KPMG member firm in Vietnam

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