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Page 1/8 – S&S Newsletter – Monthly Publication

S&S AUDITING AND CONSULTING COMPANY

8th Floor, 41 Nguyen Thi Minh Khai Street, District 1, Ho Chi Minh City

Tel: 028-39104.996 – 39104.997 Email: SAMUEL230@HANMAIL.NET

Fax: 028-39104.998 SAMUEL230@SSAUDIT.COM

S&S’s Newsletter – JULY 2020

Dear our Readers

,

Below are S&S’s Tax and Legal update Newsletter for July 2020.

We trust that you will enjoy this edition and welcome any feedback or queries that may arise to our email address

:

samuel230@hanmail.net

Remarks: Our Newsletter is summary for your easy to reference. Please contact our professional advisors at S&S Auditing and Consulting Firm for assistance with taxation, accounting, transfer pricing, labour, investment and customs as well as other legal issues you may have during your business operation.

S&S Auditing and Consulting Co., Ltd

HCM Head office:

Hanoi Branch:

8th Floor, Yoco Building 7th Floor, Vinaconex 9 Building,

41 Nguyen Thi Minh Khai St, Ben Nghe Ward, Pham Hung St., Me Tri Ward, Tu Liem Dist,

District 1, TP. HCM, Viet Nam Hanoi, Viet Nam

Tel: 84 (28) 39 104 996 Tel: 84 (24) 62 512 199 Fax: 84 (28) 39 104 998 Fax: 84 (24) 62 512 201 Web: http://www.ssaudit.com

Enjoy your reading! And we would be happy to meet up with you to discuss how best we can

assist your company in this regard.

(2)

Page 2/8 – S&S Newsletter – Monthly Publication

S&S AUDITING AND CONSULTING COMPANY

8th Floor, 41 Nguyen Thi Minh Khai Street, District 1, Ho Chi Minh City

Tel: 028-39104.996 – 39104.997 Email: SAMUEL230@HANMAIL.NET

Fax: 028-39104.998 SAMUEL230@SSAUDIT.COM

1.

TAX AND TAX ADMINISTRATION

1.1

OFFICIAL LETTER NO.2835/TCT-TTKT DATED 14/7/2020 GUIDANCE ON

IMPLEMENTATION OF DECREE NO.68/2020/ND-CP

- Page 4

1.2

OFFICIAL LETTER NO. 14176/CT-TTHT GUIDANCE ON DEDUCTIBLE

EXPENSES OF LAND RENTAL EXPENSE

- Page 4

1.3

OFFICIAL LETTER NO. 2838/TCT-DNNCN DATED 15/07/2020 REGARDING

TO PIT FINALIZATION

- Page 5

1.4

OFFICIAL LETTER NO.2881/TCT-DNNCN DATED 20/07/2020 GUIDANCE ON

PIT POLICY APPLYING FOR FOREIGNER

- Page 5

1.5

OFFICIAL LETTER NO.66768/CT-TTHT DATED 17/07/2020 REGARDING TO

WITHHOLDING TAX DECLARATION ON CAPITAL TRANSFER BY

FOREIGN ORGANIZATION

- Page 6

(3)

Page 3/8 – S&S Newsletter – Monthly Publication

S&S AUDITING AND CONSULTING COMPANY

8th Floor, 41 Nguyen Thi Minh Khai Street, District 1, Ho Chi Minh City

Tel: 028-39104.996 – 39104.997 Email: SAMUEL230@HANMAIL.NET

Fax: 028-39104.998 SAMUEL230@SSAUDIT.COM

2

OTHERS

2.1

CIRCULAR NO. 65/2020/TT-BTC DATED 09/07/2020 REGARDING TO

LICENCE FEES

- Page 6-7

2.2

OFFICIAL LETTER NO. 3949/CV-BCĐ DATED 24/07/2020 REGARDING TO

CONDITIONS FOR FOREIGN EXPERTS COMING VIETNAM AFTER 5 AUG

2020

- Page 7

2.3

CIRCULAR NO.11/2020/TT-BCT DATED 15/06/2020 ON RULES OF ORIGIN

UNDER EU-VIETNAM FREE TRADE AGREEMENT (EVFTA)

- Page 7- 8

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Page 4/8 – S&S Newsletter – Monthly Publication

S&S AUDITING AND CONSULTING COMPANY

8th Floor, 41 Nguyen Thi Minh Khai Street, District 1, Ho Chi Minh City

Tel: 028-39104.996 – 39104.997 Email: SAMUEL230@HANMAIL.NET

Fax: 028-39104.998 SAMUEL230@SSAUDIT.COM

1.1

OFFICIAL LETTER NO.2835/TCT-TTKT DATED 14/7/2020 GUIDANCE ON

IMPLEMENTATION OF DECREE NO.68/2020/ND-CP

The Official Letter provides guidelines on application of the limitation level (30%) of total loan interest cost qualified as a deduction from income subject to corporate income tax (CIT) according to the new regulations at Decree No. 68/2020/ND-CP to tax periods from 2019 onwards and retroactively applied to the tax periods 2017 and 2018.

Followings that, with regard to CIT finalization in 2017 and 2018:

It is allowable to re-calculate loan interest cost of current years according to the limitation level of 30% instead of 20% but it is required to apply the method of calculation of net loan interest cost (borrowing interests minus (-) deposit interests, lending interests) (if any);

It is only allowed to calculate loan interest cost of current years rather than including loan interest cost carried forward;

Entities that are exempt from the limitation of loan interest cost regulated at point c Article 1 of Decree No. 68/2020/ND-CP shall apply from 2019.

Regarding differences of CIT (increase/decrease) (if any): The tax amount incurred because of adjustment according to the retroactive regulation shall offset against CIT payable in 2020. The remaining amount after the offsetting shall be offset against the CIT amounts payable in the next 05 years.

If CIT finalization in 2017 and 2018 are inspected by tax authorities, enterprises must request for re-determination of payable CIT, then the offsetting may be only allowed.

1.2

OFFICIAL LETTER NO. 14176/CT-TTHT GUIDANCE ON DEDUCTIBLE

EXPENSES OF LAND RENTAL EXPENSE

Official letter 14176/CT-TTHT providing guidance on land rental corresponding to the unused area for business operations.

According to Official letter 14176/CT-TTHT issued by Binh Duong Tax Department on 19 June 2020, land use rights for a definite period for which the entire payment already made in a lump sum shall not be deemed as intangible fixed assets, hence the land rental is not allowed to be depreciated but needs to be allocated per regulations.

For the unused area for business operations, the corresponding rental shall not be allowed to be allocated as deductible expenses.

(5)

Page 5/8 – S&S Newsletter – Monthly Publication

S&S AUDITING AND CONSULTING COMPANY

8th Floor, 41 Nguyen Thi Minh Khai Street, District 1, Ho Chi Minh City

Tel: 028-39104.996 – 39104.997 Email: SAMUEL230@HANMAIL.NET

Fax: 028-39104.998 SAMUEL230@SSAUDIT.COM

1.3

OFFICIAL LETTER NO. 2838/TCT-DNNCN DATED 15/07/2020 REGARDING

TO PIT FINALIZATION

In accordance with guidance at this Official Letter, with regard to an employee earning incomes from various places, the authorization of PIT finalization to the company where the employee is working must fully meet 03 conditions as below:

1. Average irregular income is not more than VND 10 million/month; 2. 10% tax has been withheld by the income payer;

3. The irregular income is not included in tax finalization.

If the employee fails to fully meet the aforesaid conditions, he/she must himself/herself make PIT finalization directly with Tax Department.

1.4

OFFICIAL LETTER NO.2881/TCT-DNNCN DATED 20/07/2020 GUIDANCE

PIT POLICY APPLYING FOR FOREIGNER

At this Official Letter, the determination of whether an individual is a resident or non-resident relates to PIT calculation method and PIT rate with regard to income arisen in Vietnam of a foreigner.

A foreigner shall be considered to be a “resident” in Vietnam if he/she belongs to any of these cases: a) Being present in Vietnam for at least 183 days in a calendar year, or:

b) Being present in Vietnam for at least 183 days in 12 consecutive months, or: c) Having been granted temporary residence card, or:

d) Having house lease contract(s) with the total period of 183 days or more in the same tax year, regardless of a house, inn, hotel or working place. In this case, if the foreigner stays in Vietnam for fewer than 183 days, it is required to have documents to prove his or her residence in any country, otherwise the foreigner shall be considered to be the resident in Vietnam.

Remarks: When considering as the resident in Vietnam, taxable income will be subject to PIT according to the progressive tax rate as prescribed at Point b.3, Clause 1, Article 25 of Circular 111/2013/TT-BTC. At the end of the year, PIT will be finalized for all income, including income in Vietnam and income and profits received abroad (if any).

(6)

Page 6/8 – S&S Newsletter – Monthly Publication

S&S AUDITING AND CONSULTING COMPANY

8th Floor, 41 Nguyen Thi Minh Khai Street, District 1, Ho Chi Minh City

Tel: 028-39104.996 – 39104.997 Email: SAMUEL230@HANMAIL.NET

Fax: 028-39104.998 SAMUEL230@SSAUDIT.COM

1.5

OFFICIAL LETTER NO. 66768/CT-TTHT DATED 17/07/2020 REGARDING TO

WITHHOLDING TAX DECLARATION ON CAPITAL TRANSFER BY

FOREIGN ORGANIZATION

In accordance with guidance at this Official Letter, if the foreign contractor wants to transfer their capital in a company operating in Vietnam, then the responsibility to declare the capital transfer tax depends on the form of the contractor's operation in Vietnam. Detailed as follows:

✓ If the Contractor operates under Law on Enterprise and Law on Investment, they will declare and pay taxes by themselves.

✓ If not, depending on the transferee is a Vietnamese organization or individual or an overseas organization or individual:

If it is a Vietnamese organization or individual, the transferee shall declare tax

If it is a foreign organization or individual, the company receiving the capital contribution is responsible for tax declaration.

Currently there are 2 types of taxes payable related to capital transfer, including VAT and CIT or PIT. In which, VAT is exempted according to Clause 8 Article 4 of Circular 219/2013/TT-BTC.

The time limit for tax declaration is 10 days from the date of signing the Capital Transfer Agreement Documents for tax declaration comprise of:

o Form 05/TNDN;

o Capital Transfer Agreement (Vietnamese version or translation version in Vietnamese) o Certificate of Capital Contribution

o Documents on expenses incurred related to capital transfer

2.1

CIRCULAR NO. 65/2020/TT-BTC DATED 09/07/2020 REGARDING TO

LICENCE FEES

This Circular provides for guidelines in details on the policy on exemption from license fees already declared at Decree No. 22/2020/ND-CP.

Accordingly, the exemption from license fees in the first year only given to newly-established enterprises (they are issued with new enterprise identification numbers).

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Page 7/8 – S&S Newsletter – Monthly Publication

S&S AUDITING AND CONSULTING COMPANY

8th Floor, 41 Nguyen Thi Minh Khai Street, District 1, Ho Chi Minh City

Tel: 028-39104.996 – 39104.997 Email: SAMUEL230@HANMAIL.NET

Fax: 028-39104.998 SAMUEL230@SSAUDIT.COM

If a newly-established enterprise opens branches, business locations, representative offices in the first year, such affiliated units shall be also exempt from license fees.

The first year shall be calculated according to the calendar year (from 1 January to 31 December). If an enterprise is established in December of such year, it still has to pay license fee in the following year. Enterprises that are established from 1 January 2020 to before 25 February 2020 (the date on which Decree No. 22/2020/ND-CP takes effect) shall not be entitled to this policy. It means that if already paid, shall not get refund or if haven’t paid yet, there is a need to pay.

Enterprises that have been established before 25 February 2020 open branches, business locations, representative offices after 25 February 2020 shall have to pay license fees because they are not entitled to the exemption.

This Circular takes effect from 23 August 2020.

2.2

OFFICIAL LETTER NO. 3949/CV-BCĐ DATED 24/07/2020 REGARDING TO

CONDITIONS FOR FOREIGN EXPERTS COMING VIETNAM AFTER 5 AUG

2020

In accordance with this guidance, after 5 August 2020, when enterprises invite (sponsor) foreign experts, workers to Vietnam for work, they must ensure these conditions:

o Experts must get a real-time polymerase chain reaction (RT-PCR) test for detecting SARS-CoV-2

three to seven days before they arrive in Vietnam. The SARS-CoV-2 testing must be done at a government-approved medical center or one recognized by the World Health Organization.

o Experts must have international insurance or agencies, organizations that invite experts must commit to pay charges for treatment in case the experts are infected with Covid-19.

o Units inviting experts must be responsible for ensuring the safety of Covid-19 prevention and control when they invite experts for work.

Experts that bought tickets and are scheduled to arrive in Vietnam before August 5th, 2020 shall be exempt from the aforesaid conditions.

2.3

CIRCULAR NO.11/2020/TT-BCT DATED 15/06/2020 ON RULES OF ORIGIN

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Page 8/8 – S&S Newsletter – Monthly Publication

S&S AUDITING AND CONSULTING COMPANY

8th Floor, 41 Nguyen Thi Minh Khai Street, District 1, Ho Chi Minh City

Tel: 028-39104.996 – 39104.997 Email: SAMUEL230@HANMAIL.NET

Fax: 028-39104.998 SAMUEL230@SSAUDIT.COM

The Circular sets out the criteria for determin orgin products under EVFTA, Certificate of Origin Form EUR.1 as well as guidance on product specific rules, cumulation of origin, application and inspection of origin of goods., etc.

Below are some key points for your attention:

▪ Rules of origin under the EVFTA include: Wholly obtained, and Sufficiently Worked or Processed

▪ Goods can enjoy special preferential import duty rates under the EVFTA if one of the following proofs of origin are provided:

o Valid Certificate of Origin Form EUR.1; or

o Origin declaration made out by certified exporter registered in an electronic database in accordance with the relevant legislation of the Union after the Union has notified to Viet Nam.

▪ An origin declaration made out by any certified exporter of the exporting country or any exporter for consignments the total value of goods which does not exceed EUR 6,000 (six thousand euros).

▪ Certificate of Origin will be valid for 12 months from the issuance date

▪ Any documents related to application of C/O must be retained for at least 3 years.

This Circular will take effect on 01 August 2020.

---0o0---

Should you have any query, please do not hesitate to contact with our company

S&S

Auditing and Consulting Co., Ltd

S&S Auditing and Consulting Co., Ltd

Ho Chi Minh Head Office:

Hanoi Branch:

8th Floor, Yoco Building

Room 702, 7th floor, Vinaconex 9 building

41 Nguyen Thi Minh Khai St,

Pham Hung Street, Me Tri Ward,

District 1, HCMC, Vietnam

Nam Tu Liem District, Hanoi, Vietnam

Tel: 84 (28) 39 104 996

Tel: 84 (24) 62 512 199

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