Value Added Tax
Proposal to continue reducing value-added tax for the first six months of 2024
On October 4, 2023, the Government issued Resolution No. 164/NQ-CP during the regular Government meeting in September 2023 and the online Local Government Conference with the following notable contents :
The Ministry of Finance will lead and coordinate with local authorities to propose to the National Assembly the continuation of a 2% reduction in value-added tax for the first six months of 2024. The proposal will review by the National Assembly's Standing Committee during the period between two sessions if the economic situation of businesses remains complicated. A report will be submitted to the National Assembly at the nearest session and to the Prime Minister before October 7, 2023.
Electronic invoice commission
On September 15, 2023, the Hanoi City Tax Department issued Official Letter No. 67048/CTHN-TTHT regarding the authorization of electronic invoicing as follows: If the seller, supplier, or service provider is a State-owned corporation that authorizes a third party, such as a branch, to issue electronic invoices for the sale of goods or provision of services, the branch shall issue invoices in accordance with the regulations stated in Clause 7 of Article 4 of Decree No. 123/2020/ND-CP and Article 3 of Circular No. 78/2021/TT-BTC.
Import VAT for DDP terms cannot be deducted
On September 21, 2023, Hanoi City Tax Department issued Official Letter No. 68332/CTHN-TTHT regarding VAT offset declaration as follows: In the case where a company signs an import contract for goods with a foreign partner under Delivery Duty Paid (DDP) condition, the selling party will bear the costs of import duties and VAT on imported goods (if any), so the company does not generate any import duties or VAT on imported goods. In conclusion, the company is not eligible to declare offset for VAT payment documents in the import stage.
Coporate Income Tax
Tax incentives for investment project location relocation
On September 25, 2023, the Bac Ninh Provincial Tax Department issued Official Letter No. 4503/CTBNI-TTHT regarding tax incentives for corporate income tax as follows: In the case where a company has a new investment project in an area eligible for tax incentives, but the company intends to change the project location:
- If the new location is in an area eligible for tax incentives, the income from the company's investment project will continue to enjoy tax incentives for the remaining period.
- If the new location is not in an area eligible for tax incentives, the income from the company's investment project carried out at this location will not enjoy tax incentives.
- In the case where the project location spans both eligible and non-eligible areas for tax incentives, the determination of tax incentives for income from the investment project is based on the actual location of the investment project on the ground.
Tax incentives for new investment projects and expanded investment projects
On October 5, 2023, the Hai Duong Provincial Tax Department issued Official Letter No. 14371/CTHDU-TTHT regarding tax incentives for foreign-invested enterprises as follows:
- For new investment projects: In case a company implements a new investment project to produce priority industrial support products listed in the Industrial Support Product List for Development Priority, meeting some criterias stated in Point g, Clause 1, Article 11 of Circular No. 96/2015/TT-BTC, the company is entitled to a preferential tax rate of 10% for a period of fifteen years (15 years); tax exemption for four years and a 50% reduction in tax payable for the following nine years.
- For expanded investment projects:
+ If a company chooses to enjoy corporate income tax incentives based on the ongoing project for the remaining period (including the tax rate and the duration of exemption or reduction, if any), the company will continue to apply the initial investment project's tax incentives.
+ In the case that the company applies tax exemption and reduction on the additional income generated from investment expansion (without enjoying preferential tax rates) equal to the tax exemption and reduction applied to new investment projects in the same area or preferential tax sectors, the company will enjoy tax exemption for four years and a 50% reduction in tax payment for the following nine years.
- The company must differentiate income from industrial support product production that enjoys preferential tax and income from other production and business activities that do not enjoy preferential treatment.
- The period of enjoying preferential tax for industrial support product production conditions will be subtracted from the previously enjoyed preferential period under other conditions, and will be calculated according to the provisions of Article 1 of Decree No. 57/2021/NĐ-CP.
- The company must comply with the conditions for applying preferential tax and regulations on procedures for implementing preferential tax according to Articles 18 and 22 of Circular No. 78/2014/TT-BTC.
Depreciation policy for assets on borrowed or leased land
On September 27, 2023, the Department of Taxation of Hai Duong Province issued Official Letter No. 14024/CTHDU-TTHT providing guidance on the depreciation of fixed assets as follows: In the case where the Company signs a contract to provide high-quality coal washing services with a partner, if the contract stipulates that the Company borrows or leases land from the partner to build a coal washing system that meets the conditions specified in Article 4 of Circular No. 96/2015/TT-BTC, then the depreciation expense of the coal washing system shall be included in the deductible expenses when determining the taxable income of the enterprise, in accordance with the depreciation rate and useful life of the fixed assets specified by the Ministry of Finance.
In case the fixed assets of the company have a lifespan according to the bidding package, if the company wants to change the depreciation period of the above-mentioned fixed assets, the company shall follow the provisions in Clause 3, Article 10 of Circular No. 45/2013/TT-BTC.
