Monthly Newsletter

June, 2018

Audit | Tax | Advisory crowe.vn

Table of Content

Changes to CIT and PIT regulations stipulated in Circular 25/2018/TT-BTC . 1

VAT on land use rights transfer ..................................................................... 2

VAT refund for goods imported and subsequently exported ...........................3

PIT treatment for tuition fees paid for expat’s children.....................................4

Business expense claims of more than VND 20,000,000 .............................. 5

Incremental adjustment to Social insurance and Health insurance since

01/07/2018.......................................................................................................6

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1

Corporate Income Tax / Personal Income Tax

Changes to CIT and PIT

regulations stipulated in Circular

25/2018/TT-BTC

On 16th Mar 2018, MOF issued Circular no. 25/2018/TT-BTC as

guidance for Decree no. 146/2017/NĐ-CP dated 15th December

2017 by Government, and as changes to some articles in Circular

78/2014/TT-BTC dated 18th Jun 2014, Circular 111/2013/TT-BTC

dated 15th August 2018 by MOF. Considerable changes include:

1. Changes to deductible and non-deductible for CIT purpose:

• The transferee of partial capital or the whole business is

allowed to claim depreciation of transferred fixed assets

which qualify for depreciation on residual book value.

• Excess of VND 3,000,000/ month/ person as contribution

to voluntary superannuation fund, voluntary pension

insurance, life insurance for employees; excess of

compulsory social insurance, health insurance,

unemployement insurance are treated as non-deductible

for CIT purpose.

2. Changes to assessable income from stocks trading for PIT

purpose:

• Income from stocks trading include: income from shares

trading, call options, bonds, T-bills, fund certificates and

other type of stocks as stipulated in Clause 1 Article 6 of

Securities Law. “Income from trading shares in a joint

stock company follows regulation at Clause 2 Article 6 of

Securities Law and Article 120 of Corporate Law”.

This circular takes effective on 01st May 2018.

2

Value Added Tax

VAT on land use rights transfer

On 03rd April 2018, Da Nang Tax Department issued Official letter

no. 1159/CT-TTHT as guidance for VAT on land use rights

transfer.

Main principle: as to transfer of real estates, VAT taxable value is

calculated as below: transfer price of real estate minus (-)

deductible cost base of the land for VAT purpose. Details of the

calculation follows regulations at Clause 10 Article 7 Circular

219/2013/TT-BTC dated 31/12/2013 issued by MOF.

Where the company legally received land use rights transfer, and

then wishes to transfer that land use rights to other organidation,

individual:

• Where current price of the land use rights transfer is higher

than historical price (deductible cost base of the land), VAT

taxable value is: transfer price of real estate minus (-)

deductible cost base of the land for VAT purpose.

• Based on VAT taxable value and VAT rate, the company is

required to declare and pay VAT as stipulated at Article 11

Circular no. 156/2013/TT-BTC dated 06/11/2013 which was

amended in Article 15 Circular 151/2014/TT-BTC dated

10/10/2014 by MOF.

3

Value Added Tax

VAT refund for goods imported

and subsequently exported

On 14th May 2018, MOF issued official letter no. 5537/BTC-CST

as guidance on VAT refund for goods imported and subsequently

exported.

• From 01/07/2016 to 31/01/2018, as per clause 6 Article 1

Decree no. 100/2016/NĐ-CP, business entities shall not get

VAT refund for goods imported and subsequently exported.

• From 01/02/2018, business entity that exports goods and

services including: goods imported and and subsequently

exported to non-tariff areas; goods imported and and

subsequently exported to other countries shall be assessed for

VAT refund as per Clause 2 Article 1 Decree no.

146/2017/NĐ-CP.

4

Personal Income Tax

PIT treatment for tuition fees

paid for expat’s children

On the 4th of May 2018, Bac Ninh Tax Department issued official

letter no. 808/CT-TTHT as guidance on PIT treatment for tuition

fees paid for expat’s children. Accordingly:

Where the company enters into labour contracts with foreign

employee, and in that contract, there’s term of tuition fee payment

from kindergarten to high school for that employee’s children; the

payment is made in compliance with regulations of wages and

salary; there’re sufficient documents and invoices; then, it shall be

treated as deductible expense for CIT purpose.

Where the school does not register to use tax invoice, but a

payment request and school’s receipt; then the documents

required are school’s receipt with Company’s business name,

address, tax code and debit note (non-cash). This document

shall be served as basis to treat the expense as deductible for

CIT purpose. Besides, the benefit shall not be treated as

assessable income for PIT purpose.

Such expenditures like admission fees, transportation, meals are

not tuition fees. Those shall not be treated as deductible

expenses for CIT purpose. As to employee, those are assessable

income for PIT purpose.

5

Other

Business expense claims of

more than VND 20,000,000

On 18th April 2018, Binh Duong Tax Department issued Official

letter no. 6480/CT-TT&HT as guidance for reimbursement of

business expense claims.

Where an employee go on a business trip as assigned, and make

payments for expenses over VND 20,000,000 by his/her personal

bank account; then these expenses qualify for non-cash

transactions and shall be treated as deductible expenses for CIT

purpose if satisfying conditions at point 2.9 Article 4 Circular

96/2015/TT-BTC dated 22/06/2015. Upon reimbursement to

employee, the company is not required to adopt non-cash

transaction methods.

6

Other

Incremental adjustment to Social

insurance and Health insurance

since 01/07/2018

On 15th May 2018, the Government issued Decree no.

72/2018/NĐ-CP as to increment of basic salary applicable for civil

servants, officials and armed forces from VND 1,300,000/ month

to VND 1,390,000/month. As a result, Social contribution and

Health insurance shall be adjusted in accordance with new basic

salary.

• Since 01/07/2018, where monthly salary of such people is

higher than VND 27,800,000 (20 times of basis salary),

monthly salary for SHUI purpose is VND 27,800,000.

• Asto employees whose salary structure is determined by

employer, salary for SHUI purpose includes wages,

allowances and other allowances as per labour law.

7

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