Nov. 28 – The government last week passed a new decree that will increase minimum wages throughout Vietnam as of December 31, 2013, which will be effective for enterprises, co-operatives, household businesses, foreign companies and international organizations operating in the country.
Replacing Decree 103/2012/ND-CP, the new Decree 182 will implement increases of up to VND2.7 million (US$130) in Vietnam’s four different geographic regions categorized on the basis of living standards. Region I, for instance, includes the urban and some suburban districts of Ho Chi Minh City (HCMC), Hanoi, and Hai Phong, as well as the cities of Bien Hoa, Binh Duong, and Vung Tau. Region II covers rural Ha Noi and HCMC plus urban Can Tho and Da Nang. Region III covers provincial cities and the districts of Bac Ninh, Bac Giang, Hai Duong, and Vinh Phuc. Region IV covers the remaining localities. Continue reading
Nov. 21 – The new issue of Asia Briefing Magazine, titled The 2014 Asia Tax Comparator, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the months of November and December.
The opportunities to sell to the Asian consumer have never been more pronounced than they are today, and those opportunities will continue to expand and develop over the next three decades. Key to understanding and accessing this massive, dynamic new consumer market is the ability to understand the underlying tax treatments. To that end, we are pleased to present our third annual “Asia Tax Comparator” as Asia Briefing Magazine’s final issue of 2013. Continue reading
Nov. 13 – A new circular released by the Ministry of Finance will reduce the tax burden on the sale and lease of homes and apartments within Vietnam, providing a boost to the country’s commercial housing sector.
Circular No. 141/2013/ND-CP will implement a 50 percent reduction in the value-added tax (VAT) applicable to the sale or lease of commercial housing. Currently, the VAT for commercial housing is 10 percent, which will be reduced to 5 percent under the new circular.
To qualify for the VAT reduction, each commercial housing unit must be under 70 square meters in size with a price less than VND15 million (US$705) per square meter.
The new decree is designed to improve the affordability of housing for Vietnam’s low-incomer earners, who have increasingly been priced out of Vietnam’s real estate market. Continue reading
Nov. 8 – Many first and second tier suppliers, including small to medium-size enterprises, are prioritizing their investments into Vietnam, acting on the business potential that it holds for companies involved in a larger supply chain providing goods and services to manufacturing hubs in Asia. It is thus increasingly important to understand the taxes which Vietnam imposes on business, such as corporate income tax (CIT).
In the final part of our recent coverage of taxation, this article will provide an introduction to corporate income tax in Vietnam. Continue reading
Nov. 5 – Vietnam has recently released a circular on anti-treaty shopping rules. This new circular amends the existing circular 133/2004, which was on the matter of double taxation agreements (DTA) with other countries, and seeks to prevent companies from using DTAs as a way to circumvent taxation.
The latest circular goes into depth on a number of new general anti-avoidance rules (GAAR) that are directly related to the claiming of tax treaty benefits.
The GAAR follows the general trend of other countries in the Asia-Pacific that are also seeking to prevent treaty shopping and strengthen their DTAs. The new circular also follows the Organization of Economic Cooperation and Development’s (OECD) definitions for such terms as ‘beneficial ownership’ and ‘residency’. Continue reading
Nov. 4 – The State Bank of Vietnam, which has sought to boost the economy through loosening the country’s credit policies, will allow commercial banks to increase their loans by up to 20 percent through the end of this year – a move that will benefit companies that are positioned to take advantage of the new credit environment.
The availability of credit has also been enhanced by a downward trend in interest rates, which have fallen 3-5 percent during the first nine months of 2013 from 13-17 percent to 11-13 percent.
Commercial borrowers have been able to acquire even cheaper credit, such as a 9 percent loan offered by Saigon Thuong Tin Commercial Joint Stock Bank, which has already issued over VND2 trillion (US$94 million) in loans this year, or the Techcombank, which charges an annual rate of 8.2 percent through a soft loan program. Continue reading
Oct. 29 – As major businesses continue to prioritize investment into Vietnam as a strategy to diversify sourcing options and supplier portfolios outside of China, it is increasingly important to understand not only how businesses are taxed in Vietnam, but also individuals. Continuing our coverage of personal income tax (PIT), this article will examine exemptions, reductions and payments to PIT in Vietnam. Continue reading
Oct. 22 – Vietnam’s National Assembly issued the Law on Personal Income Tax (PIT) on November 21, 2007, which came into effect on January 1, 2009. The law applies to individuals earning income, including individuals doing business who were previously included under corporate income tax.
According to the PIT Law, PIT is levied on the worldwide income of Vietnam residents and on Vietnam-sourced income of non-residents, irrespective of where the income is paid. The tax calculation and finalization procedure for Vietnamese locals and expatriates is the same, but different for residents and non-residents. Continue reading
Oct. 8 – Special Consumption Tax (SCT) is a type of excise tax that applies to the production or importation of specific goods and the provision of certain services.
The current SCT Law was promulgated on November 14, 2008, by the National Assembly, and came into effect on April 1, 2009 (except for alcohol and beer, which was applicable starting January 1, 2010). According to the SCT Law, SCT is levied on the production and importation of 11 categories of products and 6 types of services that are considered to be luxurious or non-essential (listed in the table below). Continue reading
Oct. 2 – Business license tax (BLT) is an indirect tax imposed on entities that conduct business activities in Vietnam and are paid by the enterprises themselves on an annual basis.
All companies, organizations or individuals (including branches, shops and factories) and foreign investors that operate businesses in Vietnam are subject to BLT charges, and the BLT rates are different for economic entities and for households/individuals.
The amount of BLT that a business is obligated to pay is based on the amount of their registered capital (as listed on their business registration certificates) in accordance with the accompanying table below. Continue reading