8 February, 2016
Request on the submission of audited Financial Statements upon submission of 2015 CIT Finalisation return
GDT issued Official Letter No. 5236/TCT-KK dated 8 December 2015 guiding Local tax authorities of centrally run provinces and cities as follows:
If a taxpayer subjecting to mandatory audit requirement of the financial statements, submits the CIT finalisation return to the tax authority with an un-audited financial statements, the tax Authority will reject the documents and notify to competent authorities to check, and document the records of administrative violations in the field of accounting and independent auditing and sanction as prescribed by laws.
If taxpayers submit the tax returns after the deadline as prescribed by the regulations, they shall be sanctioned under the provisions of Circular No. 166/2013/TT-BTC of the Ministry of Finance on late submission of tax returns.
Tax Authority is responsible for identifying taxpayers who are subject to mandatory audit of the financial statements in accordance with the law on accounting and independent auditing to urge taxpayers to submit tax returns on time with full regulated documents.
Grant Thornton Vietnam advises Enterprises to take note of the timely submission of the Audited financial statement.
Fees and tuition fees for Vietnamese employees’ children
GDT issued Official Letter No. 5452/TCT-CS dated 18 December 2015 regulating that if an Enterprise directly pays the fees and tuition fees for Vietnamese employees’ children and these payments are indicated in Enterprises’ policies and fully supported by legitimate invoices and documents, they shall be considered as welfare expenses and regarded as deductible expenses when computing taxable income for CIT purpose.
Total expenditures for welfare spent directly on workers shall not be exceeding one month’s average salary in a taxable year of the Enterprise.
According to Point 3, Article 30 of Circular No. 59/2015/TT- BLDTBXH dated 29 December 2015 issued by the Prime Minister of Ministry of Labour – Invalids and Social Affairs providing detailed regulations and guidance on the implementation of some articles in the Social Insurance Law on compulsory social insurance, the monthly wage used for compulsory social insurance contribution is exclusive of other welfares.
Replacement of Chief Accountant and appointment of Chief Accountant being a foreigner
Pursuant to Official Letter No. 79037/CT-HTr dated 10 December 2015 of Hanoi Tax Department, if a Company wants to replace Chief Accountant which is not being stated in the business registration license, in order to simplify the process, the Company can submit Form 08-MST at one- stop-shop at the document receiving department of the tax authority.
Grant Thornton Vietnam further notes that that Foreign-Invested Enterprises in Vietnam which appoint a foreigner to be a Chief Accountant that this foreigner must satisfy the following conditions:
- Possess Certified Accounting Certificate or Accounting/Auditing Certificate issued by foreign organisations that are accepted by the Ministry of Finance of Vietnam; or possess Accounting Practicing Certificate or Auditor Certificate issued by the Ministry of Finance of Vietnam; or Chief Account Certificate as prescribed by the Ministry of Finance;
- Having an actual working period in accounting field for at least two years including 1 year of performing accounting job in Vietnam;
- Not in the list that is prohibited from performance of accounting job as prescribed in Article 51, Accounting Law and is permitted to reside in Vietnam for one year and above.
Replacement of Identification Card (ID), Citizenship Card
In accordance to the Official Letter No. 66129/CT-HTr dated 9 October 2015 of Hanoi Tax Department if taxpayers, individuals that are under the scope of the implementation of tax regulations, upon their replacement of the ID cards, they must notify the tax authorities by submitting Form 08-MST as attached in Circular No. 156/2013/TT-BTC. Failure to comply with this requirement shall be sanctioned as regulated by Article 7, Circular No. 166/2013/TT-BTC.
Grant Thornton Vietnam recommends Enterprises to inform all its employees promptly and update the tax registration information (ID cards) accordingly.
Invoice issuance for loan interest
According to Official Letter No. 4503/TCT-DNL dated 30 October 2015 of the GDT, if the interest expenses paid to organisations and individuals for the loans that are not prohibited by the laws and supported by legitimate invoices and documents, will be allowable for CIT deductions.
Personal Income Tax (PIT) Finalisation in 2015
The organizations, individuals paying PIT taxable incomes are responsible for filling the finalisation return and settling the tax finalisation liabilities on behalf of the individuals giving authorisation, regardless of the incurred of the withholding obligations. In the case that the organisations and individuals did not pay income during 2015, they are not required to lodge the PIT finalisation.
Grant Thornton Vietnam would like to notify Organization and Individuals that the deadline for submission of the PIT finalisation return and settlement of additional payable PIT liabilities (if any) for the calendar year 2015 is 30 March 2016.
For residents who subject to direct declaration of PIT finalisation, please be noted that:
Foreigners who reside in Vietnam and have 02 sources of incomes or above (i.e. from Vietnam and overseas) must directly declare and submit PIT finalisation return.
Based on Grant Thornton Vietnam’s observation, recently Vietnamese tax authorities have enhanced the information exchange with other foreign tax authorities (i.e. Japanese, Korean, etc.) to identify the actual incomes that foreigners being Vietnam tax residents received in overseas. Consequently, many differences have been identified and Vietnamese Tax Authority has requested these individuals to provide explanations or additionally declare their tax obligations with associated penalties.
Residents being foreigners upon their termination of the labour contract in Vietnam are required to complete the PIT finalisation with the tax authority before repatriation.
Please contact Grant Thornton Vietnam’s professional advisors if you need our assistance in preparing and reviewing the 2015 PIT finalisation return.
Draft Decision of the PM on denying and holding back the repatriation of individuals who have not fulfilled tax obligations
The Ministry of Finance has proposed to the Prime Minister a Draft Decision relating to the immigration, accordingly, Vietnamese citizens are not permitted to go abroad and foreigners to be held back from repatriation if these individuals have not fulfilled their tax obligations (from VND1 billion and above for Enterprise or VND50 million and above for individual, including outstanding liability over 90 days). These individuals include:
• Legal representatives of manufacturing, goods and service trading organisations which have not fulfilled tax obligations, including: Chairman of the Board Members, General Director, Chairman of the Management Board, Owner of the Private business entity or individuals that are being appointed to be the legal representatives of the Company by the charter or the decision of business establishment which have not completely fulfilled the tax obligations.
• Other individuals not completely fulfilled tax obligations
The deferment of the repatriation towards a foreigner shall not exceed 3 years counting from issuance date of the official letter holding back the repatriation and shall be extended until the fulfillment of the tax obligations by the taxpayers.
Until now, the exact time for that Decision to be issued is still unknown, however, Grant Thornton Vietnam recommends that the Legal Representatives and foreigners to regularly review their tax obligations to ensure that they are fully paid so as to manage potential tax exposures to mitigate the risks.
