Policy of tax

1. Tax policy for debt trading activities

On April 26, 2024, Hanoi Tax Department issued Official Dispatch No. 24943/CTHN-TTHT guiding on tax policies for debt trading activities as follows:

In case the Partner Company has debt selling activities according to the provisions of law and is not subject to VAT according to the provisions of Clause 8, Article 4 of Circular 219/2013/TT-BTC, the debt selling Company shall prepare invoice according to regulations. In case the Company conducts debt buying activities and incurs transaction fees with the debt seller, it must issue an invoice to the debt selling company according to the provisions of Article 4 of Decree 123/2020/ND-CP.

2. The bank signs a contract to sell the debt to the company. When the debtor hands over the assets to the company, the debtor does not need to issue an invoice.

On April 12, 2024, Binh Duong Provincial Tax Department issued Official Dispatch No. 10452/CTBDU-TTHT guiding on invoicing and VAT declaration for real estate transfer activities as follows:

In case the debtor is unable to repay the debt and must hand over assets to the Bank, the Bank will sign a contract to sell the debt of the debtor back to the Company (a credit institution according to the provisions of the Law on Credit Institutions). (use) then when the debtor hands over assets to the Company, the debtor does not have to issue an invoice if it meets the provisions of Clause 3, Article 1 of Circular No. 26/2015/TT-BTC amending and supplementing Point a Clause 8 Article 4 Parameter 219/TT-BTC. If a company sells loan security assets to recover debt, the sold assets are not subject to VAT.

In case the Company receives the value of real estate as loan security assets to replace the performance of guaranteed obligations, the Company, when allowed to transfer real estate according to the provisions of law, must declare and submit Income tax from real estate transfer activities to the State Budget according to the provisions of Clause 4, Article 17 of Circular No. 78/2014/TT-BTC.

3. Contractor tax policy for compensation to foreign contractors

On April 17, 2024, Ninh Binh Provincial Tax Department issued Official Dispatch No. 1489/CTNBI-TTHT guiding on contractor tax policy, specifically as follows:

In case in 2024 the Company has a contract to sell goods to a Company that is a foreign organization subject to declaring and paying tax according to the ratio method calculated on revenue. Because the delivered goods are defective and the buyer and seller have a record determining the value of the damage for compensation, when paying compensation to Company X, the Company must be obliged to calculate, deduct and Declare and pay tax on behalf of foreign company X, as follows:

– For VAT: The compensation amount does not have to be declared, calculated and paid for VAT according to the provisions of Clause 1, Article 5 of Circular No. 219/2013/TTBTC above;

– For corporate income tax: In case Company X receives compensation but that amount is not greater than the value of the damage (no taxable income), it does not have to declare and pay corporate income tax

Value Added Tax (“VAT”)

1. Transfer the remaining deductible VAT amount after the branch terminates operations

On April 15, 2024, the General Department of Taxation issued Official Letter No. 1569/TCT-KK on the transfer of deductible VAT amount after the Branch terminates operations, specifically as follows: In case of Company Branch headquartered in Hanoi city is a dependent unit of another company headquartered in another province (hereinafter referred to as the parent company) that terminates operations and invalidates its tax code but has a tax number. If the input added value has not been fully deducted at the time of termination of operation, if it fully meets the tax deduction conditions according to the law on value added tax, the branch will be able to transfer the value added tax amount. increase inputs that have not been fully deducted for the Parent Company so that the Parent Company can continue to declare and deduct according to regulations.

2. VAT on land use rights transfer activities of export processing enterprises

On April 15, 2024, Hai Phong City Tax Department issued Official Dispatch No. 1254/CTHPH-TTHT explaining the tax policy as follows: In case an export processing enterprise has leased land with a one-time payment for the entire rental period, Currently, we transfer land use rights associated with assets on land to businesses that do not operate according to export processing regulations. If the transfer of land use rights associated with the Company’s land assets is carried out in accordance with the provisions of the 2013 Land Law, then:

– Transfer activities are subject to VAT, applying a tax rate of 10%

– The company applies the VAT calculation method as prescribed in Article 12, Article 13, Circular No. 219/2013/TT-BTC of the Ministry of Finance and uses invoices as prescribed in Article 8 of Decree No. 123/ 2020/ND-CP dated October 19, 2020 of the Government.

– The company changes tax registration information according to the provisions of Clause 1, Article 36 of the Law on Tax Administration No. 38/2019/QH14 dated June 13, 2019 of the National Assembly and changes the content of registration to use invoices. electronically according to the provisions of Clause 4, Article 15 of Decree No. 123/2020/ND-CP dated October 19, 2020 of the Government.

 Corporate income tax (“CIT”)

1. Offsetting profits and losses between independent investment projects in the same industry and the same investment registration company

On May 2, 2024, the General Department of Taxation issued Official Dispatch No. 1792/TCT-CS guiding tax policies on transferring losses into taxable income of projects enjoying corporate income tax exemption and reduction incentives as follows:

The company has 3 investment registration certificates with 3 projects with the same business line of producing artificial grass fibers and artificial turf carpets. In 2022, all 3 of the Company’s projects will operate in production and business activities and are enjoying corporate income tax incentives as independent investment projects, with the 2022 production and business results of each specific project. as follows:

– Project 1: Has taxable income and is applying a 50% corporate income tax reduction (the tax exemption period has expired);

– Project 2: Has taxable income and is applying corporate income tax exemption;

– Project 3: Not yet put into production and business activities, not yet generating revenue (loss); Project 3’s loss is smaller than Project 1’s taxable income and Project 2’s taxable income.

CIT finalization for 2022, Declaration shows the total of 3 Projects: Project 1 is profit (with income subject to CIT), Project 2 is profit (with income subject to CIT), Project 3 is loss (no revenue yet).

– The Department of Legal Affairs (Ministry of Finance) believes that: the loss of the Company’s project No. 3 that enjoys corporate income tax incentives cannot be offset against the activities of projects that enjoy corporate income tax incentives that have income (projects that enjoy corporate income tax incentives). projects No. 1 and 2), but can only choose to offset losses from business activities of project No. 3 with taxable income of business activities that do not enjoy tax incentives, other income of business activities. joint.

– The Department of Tax Policy Supervision Management (Department of Tax Policy Supervision) has the opinion that the Company’s 03 investment projects can be considered as production and business activities being carried out at the same time to apply the regulations on Compensating and transferring losses does not have a legal basis.

The General Department of Taxation respectfully forwards the content of the problems along with the official documents to the CST CST Management Department for synthesis and reporting to the Ministry to respond according to its authority.

2. The store’s point accumulation program is considered a reasonable cost

On April 26, 2024, the Hanoi Tax Department issued Official Dispatch No. 24940/CTHN-TTHT on recording reasonable costs for the standard store’s points accumulation program as follows: If the company incurs a cash bonus payment to the customer when the customer buys cumulative orders with an amount from 150 million VND, the company can account it as a deductible expense when determining income subject to corporate income tax if it meets the requirements. conditions specified in Article 4 of Circular 96/2015/TT-BTC dated June 22, 2015 of the Ministry of Finance.

3. Costs related to destruction of unused raw materials due to customers changing production strategies are not included in deductible costs.

On March 28, 2024, Hai Phong City Tax Department issued Official Dispatch No. 952/CTHPH-TTHT answering the tax policy as follows: In case the Company incurs costs related to the destruction of raw materials? used due to the customer changing the production strategy, this is not the case of loss due to natural disasters, epidemics, fires or goods damaged due to expiration or damage due to changes in biochemical processes. Natural disasters and other force majeure cases should not be included in deductible expenses when calculating corporate income tax on the value of destroyed raw materials mentioned above.

4. Abolish all Circulars guiding VAT according to the List of imported goods from June 8, 2024

On April 23, 2024, the Minister of Finance issued Circular 25/2024/TT-BTC abolishing Circular 83/2014/TT-BTC guiding the implementation of value added tax according to the List of imported goods. Vietnam.

Accordingly, from June 8, 2024, all Circular 83/2014/TT-BTC dated June 26, 2014 of the Minister of Finance guiding value added tax according to the List of goods will be abolished. imported goods from Vietnam.

5. Invoices and documents in case an insurance company compensates a customer who buys insurance

On April 1, 2024, the General Department of Taxation issued Official Dispatch No. 1326/TCT-CS providing guidance on invoices and documents, specifically as follows: In cases where the insurance participant provides invoices for purchasing goods or repair service (invoice in the name of the Insurance Company or in the name of the customer when authorized by the Insurance Company according to regulations, or the customer issues an invoice to the Insurance Company), the Insurance Company makes payment paid to the insurance participant with the corresponding value according to the contract, the Company may declare a VAT deduction corresponding to the insurance compensation paid according to the VAT invoice; In case the insurance compensation paid by the insurance company to the insured is worth 20 million VND or more, payment must be made via bank.

Custom

Goods are exempt from import tax but due to a change in purpose of use that incurs import tax, additional VAT must be paid on the import tax amount.

On April 12, 2024, the General Department of Customs issued Official Dispatch No. 1570/TCHQ-TXNK on value added tax on imported goods as follows: VAT calculation price is “import price at the border gate” plus “import tax”. export (if any)”, plus “special consumption tax (if any)” and plus “environmental protection tax (if any)”. In case an enterprise has paid VAT on the “import price at the border gate” but has not paid VAT on the “import tax” because the import tax is exempted when importing, now due to change of use purpose, the “tax” amount is incurred. imported” must pay VAT on the “import tax” in accordance with the provisions of the Law on Value Added Tax and its guiding documents.