Accounting and Tax Newsletter No. 02 – March 2025

Administrative Violations in Taxation

28/02/2025: Decree No. 49/2025/NĐ-CP from the Government on Exit Suspension Thresholds

This decree sets specific thresholds for tax debt and overdue periods that may result in temporary exit suspensions, as follows:

• Individual business owners and household business owners subject to enforced execution of tax administration decisions will face exit suspension if:
  • Their outstanding tax debt is at least 50 million VND, and
  • The debt has exceeded the legal payment deadline by more than 120 days.
• Individuals who are legal representatives of enterprises, cooperatives, or cooperative unions subject to enforced execution of tax administration decisions will face exit suspension if:
  • Their outstanding tax debt is at least 500 million VND, and
  • The debt has exceeded the legal payment deadline by more than 120 days.
• Individual business owners, household business owners, or legal representatives of enterprises, cooperatives, or cooperative unions who are no longer operating at their registered addresses will face exit suspension if:
  • Their tax debt has exceeded the legal payment deadline, and
  • They fail to fulfill their tax obligations within 30 days after the tax authority issues a notification of impending exit suspension.
• Vietnamese nationals emigrating abroad, overseas Vietnamese, or foreign individuals who have outstanding tax debts exceeding the legal deadline and have not fulfilled their tax obligations before departing from Vietnam will also be subject to exit suspension.

Invoices

24/02/2025: Official Letter No. 1109/CT-TTHT from the Thanh Hoa Tax Department on Issuing Invoices for Goods and Services

When selling goods or providing services, the seller must issue an invoice to the buyer in accordance with Articles 4, 9, and 10 of Decree 123/2020/NĐ-CP. Accordingly, the company must still issue an invoice even if the customer does not request one. Grouping the goods sold throughout the day to issue one VAT invoice at the end of the day is not in compliance with current regulations.

24/01/2025: Official Letter No. 432/CTHYE-TTHT from the Hung Yen Tax Department on Invoice Policy

In cases where a branch office changes its registered address and sells goods or provides services, the branch must issue an invoice to the buyer. The invoice must show the name, address, and tax identification number of the seller in accordance with the details on the business registration certificate and branch operation certificate, as specified in Clause 4, Article 10 of Decree 123/2020/NĐ-CP.

If the branch receives input invoices from suppliers, the invoice should include the name, address, and tax identification number of the buyer as stated in the business registration certificate and branch operation certificate, as per Clause 5, Article 10 of Decree 123/2020/NĐ-CP.

If there are errors in electronic invoices issued under the provisions of Decree 123/2020/NĐ-CP, the seller and buyer must rectify the errors as per Article 19 of Decree 123/2020/NĐ-CP.

Personal Income Tax (PIT)

17/02/2025: Official Letter No. 360/CTĐLA-TTHT from the Dak Lak Tax Department on Personal Income Tax Policy

• If a foreign individual residing in Vietnam terminates their employment contract mid-fiscal year, they must finalize PIT directly with the tax authority before exiting Vietnam. If the individual authorizes their income-paying organization or another entity/individual to finalize taxes on their behalf, they must comply with the required procedures, documentation, and submission deadlines as per regulations.
• Employees with a single source of income from salaries and wages who do not authorize tax finalization, have resigned, or have multiple income sources, including occasional income from other places not exceeding VND 10 million, which has already been subjected to 10% PIT withholding, are not required to have their taxes finalized by the company.

24/02/2025: Official Letter No. 1430/CTDAN-TTHT from the Da Nang Tax Department on PIT Finalization for Transferred Employees

If an employee under a labor contract of at least three months is transferred from a subsidiary to the parent company and is still employed at the time of the parent company’s tax finalization, they may authorize the parent company to finalize PIT on their behalf, in accordance with Point d.2, Clause d, Item 6, Article 8 of Decree 126/2020/NĐ-CP.

The parent company is responsible for finalizing taxes under the employee’s authorization, including income paid by the subsidiary. It must also collect the PIT withholding certificate issued by the subsidiary as per Point d.1, Clause d, Item 6, Article 8 of Decree 126/2020/NĐ-CP.

24/02/2025: Official Letter No. 1435/CTDAN-TTHT from the Da Nang Tax Department on PIT Guidance

• If an employee is a Japanese citizen (Japan has signed a Double Taxation Avoidance Agreement with Vietnam) and is a resident individual in Vietnam, their PIT obligation is calculated from the month they first arrived in Vietnam until the month they terminate their labor contract and leave Vietnam. The tax calculation is done on a full-month basis, as per Article 1 of Circular 111/2013/TT-BTC (amended and supplemented).
• If a company provides a one-time relocation allowance to a foreign employee relocating to Vietnam, this is not included in the employee’s taxable PIT income, provided the allowance is specified in the labor contract or the collective labor agreement. This follows Point b.9, Clause 2, Article 2 of Circular 111/2013/TT-BTC (amended and supplemented).
• The relocation allowance can be considered a deductible expense when determining corporate taxable income (CIT) if it meets the conditions outlined in Clause 1, Article 6 of Circular No. 78/2014/TT-BTC (amended and supplemented) issued by the Ministry of Finance on June 18, 2014.

26/02/2025: Official Letter No. 1375/CTTBI-TTHT from the Thai Binh Tax Department on the Implementation of the Automatic Personal Income Tax Refund Process

The Thai Binh Tax Department provides key points that taxpayers should be aware of during the Automatic Personal Income Tax (PIT) Refund Process, as follows:

Step 1: Taxpayer Creates the PIT Finalization Declaration

• The taxpayer (NNT) logs into the iCaNhan application or the eTax Mobile application.
• The tax system aggregates data from income-paying organizations, tax registration records, dependent information, and the taxpayer’s tax obligations. Based on this data, the system will automatically generate a suggested PIT finalization declaration.
• The taxpayer can review this declaration via the eTax Mobile or Electronic Tax platforms and has two options:
  • Agree with the suggested declaration, confirm, and submit the online tax return; or
  • Modify the information and attach supporting documents if there are discrepancies from the suggested data.
• Once submitted, the system automatically sends a confirmation notification and simultaneously creates a tax refund request file.

Step 2: The System Automatically Verifies and Processes the Refund if the Application Meets Three Conditions

• At the time of PIT refund processing, the income-paying organization must have fulfilled its obligation to remit the deducted PIT or the individual taxpayer must have fully paid the PIT amount to the State Budget in the tax finalization period for which the refund is requested.
• The PIT refund application must have the “Total Taxable Income” field exactly matching the consolidated data in the tax authority’s database at the time of processing. Additionally, the “Total Refund Amount Requested” must be less than or equal to the total tax calculated in the database for the same period.
• The taxpayer’s refund bank account information must be verified and linked with the tax authority’s database.

If the application meets all conditions, the tax system will automatically generate refund decisions, issue refund orders, and forward them to the State Treasury’s electronic portal for processing the refund payment to the taxpayer. The refund decision will also be sent to the taxpayer.

If the application does not qualify for a refund, the tax authority will issue a notification to the taxpayer stating that the application does not meet refund eligibility criteria.

Step 3: Post-Refund Audit

After the refund process is completed, the tax authority will conduct a review to ensure accuracy and prevent fraud.

25/02/2025: Official Letter No. 828/TCT-KK from the General Department of Taxation on the Implementation of Providing Information on Personal Income Tax (PIT) Paid on Behalf of Individuals

The General Department of Taxation (GDT) is implementing a process for income-paying organizations to provide information on the PIT amounts paid on behalf of individuals, with the following details:

(1) Scope and Applicable Entities:

• Income-paying organizations that remit PIT on behalf of individuals earning income from salaries and wages.

(2) Information to be Collected:

• The PIT amount paid on behalf of each individual as recorded in the PIT payment documents, including:
  • General information from the tax payment document submitted to the State Budget (NSNN).
  • Detailed information for each individual for whom tax was withheld and paid, including:
    • Taxpayer Identification Number (TIN).
    • Taxpayer’s Name.
    • Amount of PIT withheld.
    • Amount of PIT paid to the State Budget.
    • Excess tax paid in previous periods and offset against current obligations (if applicable).

(3) Method of Information Submission:

• Income-paying organizations must submit the required information to the tax authority where they file tax declarations via the General Department of Taxation’s electronic portal.
• The GDT has upgraded its IT system to facilitate the collection and submission of this information, specifically:
  • The HTKK (Tax Declaration Support Application) now enables income-paying organizations to compile and generate XML-formatted files listing detailed PIT payments for each individual.
  • These XML files must be uploaded to the General Department of Taxation’s electronic portal immediately after the tax payment is completed.

(4) Implementation Timeline:

• The General Department of Taxation has completed the IT system upgrade to support income-paying organizations in providing the required information.
• If any practical issues arise during implementation, tax authorities are advised to contact the General Department of Taxation for assistance:
  • For operational support:
    • Phone: (0243.9719.472, ext. 7194)
    • Email: ntha02@gdt.gov.vn
  • For IT system support:
    • Phone: (0243.7689.679, ext. 2180)
    • Email: nhomhttdt@gdt.gov.vn

Corporate income tax

20/02/2025: Official Letter No. 473/CTPHY-TTHT from the Phu Yen Tax Department on Tax Declaration for Advertising Expenses on Facebook and Google

VAT Declaration and Deduction:

• One of the conditions for input VAT deduction is the availability of:
  • A legitimate VAT invoice for purchased goods or services, or
  • A document proving VAT payment at the importation stage, or
  • A document confirming VAT payment on behalf of a foreign supplier.
• Based on the invoices attached to the inquiry, issued by Meta Platforms Ireland Limited and Google Asia Pacific Pte. Ltd, these companies are foreign digital service providers registered for tax in Vietnam. They pay VAT and CIT based on revenue percentages, and their names are listed on the General Department of Taxation’s online portal for foreign suppliers (etaxvn.gdt.gov.vn).
• However, these invoices are not VAT invoices issued for organizations applying the deduction method for VAT declaration, and therefore, they do not qualify for input VAT deduction under Vietnamese tax regulations.

Deductibility of Expenses for Corporate Income Tax (CIT) Calculation:

• If advertising expenses on Facebook and Google meet the following conditions, they can be considered deductible expenses for CIT calculation:
  • The expenses are directly related to business activities.
  • The company possesses valid invoices and documents that include the company’s name, address, and tax identification number.
  • Payments comply with the legal requirements for transactions and payment documentation.

27/02/2025: Official Letter No. 718/CTBDI-TTHT from the Binh Dinh Tax Department on Corporate Income Tax Incentives

If a company has an investment project eligible for corporate income tax (CIT) incentives due to its location in a preferential area, and it earns interest income from bank deposits related to business activities within that investment project, then the interest income from the bank deposits is also eligible for CIT incentives.