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Vietnam Technical Update 2016/Issue 7

Vietnam Technical Update 2016/Issue 7

New update on CIT, VAT and invoice compliance, PIT and labour compliance, export duty, import duty and compliance to custom regulations on November 2016.


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1) Corporate Income Tax (“CIT”)

  • Conditions and supporting documents to deduct warranty expenses
  • Interest expenses shall not be deductible where a company makes a non-business related advance payment to an employee and funds loans to other companies at 0% interest, and tax collection shall apply

2) Value Added Tax (“VAT”) and invoice compliance

  • Circular 173/2016/TT-BTC amending and supplementing a number of VAT circulars related to the non-cash payment requirement
  • Applicable exchange rate for invoice issuance in the case where a company uses foreign currency as its functional currency for accounting record
  • Input VAT for trial production must be declared on a VAT declaration form for investment stage (i.e. Form 02/GTGT)

3) Personal Income Tax (“PIT”) and labour compliance

  • Circular 40/2016/TT-BLDTBXH guiding Decree 11/2016/ND-CP on issuing work permits for foreigners working in Vietnam.
  • An individual receiving remuneration for a director position is not eligible for PIT exemption or reduction under the double tax agreement
  • A company paying salaries to employees that have signed labour contracts with its branches is responsible for withholding PIT, and declaring and paying PIT to the tax authority
  • Increase of region-based minimum salary as from 1 January 2017

4) Export duty, import duty and compliance to customs regulation

  • Container imbalance charge is included in the customs valuation for import duty calculation
  • A financial leasing company importing goods and leasing such goods to an Export and Processing Enterprise (“EPE”) is liable to import duty at the importation stage.
  • If goods traded between an EPE and a domestic company have a certificate of origin form D, the domestic company shall be eligible to enjoy a special preferential import rate on these goods
  • Enforcement of the post-clearance customs inspection on customs valuation

© 2020 KPMG Tax and Advisory Limited, a Vietnamese limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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