Vietnam Amends CIT and VAT Through Decree 91
HANOI – Vietnam has issued amendments to certain provisions related to the country’s corporate income tax (CIT) and value-added tax (VAT). The changes have been laid out in Decree 91/2014/ND-CP and will become effective on October 15, 2014.
With respect to CIT, a number of important changes have been laid out in the Decree. For example, for certain expenses, companies will be able to deduct up to a maximum of one month’s average salary of an employee. These expenses include the following:
- The fully-documented spending by each employee on funerals and weddings
- Travel on public holidays
- Support for additional education
Additionally, profits arising from scientific research and technology developments will now be exempt from CIT for a maximum of three years. Also, profits from the sale of products manufactured by new-technology machinery and equipment will have a tax break for a maximum period of five years.
Changes have also been made to CIT administration. From now on, taxpayers who temporarily stop trading must submit the relevant documents to their business registration office; they do not have to also inform the DGT.
Furthermore, official returns for CIT will no longer be required on a quarterly basis. However, it is important to note that quarterly payments are still required – these are based on the results of business operations in the previous year, or estimates for the current year. If the annual CIT payable on final assessment at the end of any year is 20 percent or more than the total tax paid during the year’s four quarters, late interest will be payable by the taxpayer.
The main changes with regards to VAT include the following. If borrowers sell guaranteed assets based on the authorization of lenders to repay guaranteed loans, then this is not subject to VAT. Additionally, taxpayers with a total revenue of at least VND50bn (USD2.35m) in the previous year will now be required to submit quarterly declarations.
Vietnam’s Finance Minister, Dinh Tien Dung, explained that Decree 91 would “contribute to reducing the number of hours to be spent by taxpayers on tax compliance works by 88.36 hours/year, including reduction of 41.36 hours for VAT and 47 hours for CIT.”
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