Tax Newsletter

May 2019

For reference only, not to be distributed, or sold

NEW REGULATIONS
Amendment to the List of projects that required environmental impact assessment report 3
From 1 July 2019, pensions and labour accident allowance shall be increased by 7.19% 3

GUIDING DOCUMENTATIONS/ OFFICIAL LETTERS

Corporate Income Tax (“CIT”)
Loan interest payments corresponding to the portion of registered charter capital not yet fully contributed in
accordance with the committed capital contribution schedule shall be non-deductible 4
Losses from offshore investment project would not be recognized as deductible expenses 4
Public non-business units paying CIT based on a percentage of revenue shall not be allowed to make provision for
wage reserves fund 5
Severance allowance in excess of the regulated cap would not be deductible for CIT purposes 6
Personal Income Tax (“PIT”)
Vacation expenses provided to specific individuals would be subject to PIT 6
Tax policy regarding remuneration of owner of one-member limited liability company 6
Tax policy on individual’s income from capital transfer 7
Foreign Contractor Withholding Tax (“FCWT”)
VAT invoices issuance for the value of equipment directly imported by investor 7
Value Added Tax (“VAT”)
Imported goods used for Enterprise Processing Export ("EPE") construction would still be subject to VAT 8
Overpaid import VAT at import stage would be neither creditable nor refundable with tax authorities 8
Incorrect declaration on value of exported goods must be corrected before claiming VAT refund 9
Construction of social housing subject to VAT rate at 10% 9
Allocation of input VAT of goods and services used for production and trading of both VATable and non-VATable
goods and services 10
Transfer of secured assets to repay loan to the bank is exempt from VAT invoice issuance 10
Investment projects with adjusted implementation progress are considered for VAT refund 11
Converted entities are allowed to claim VAT refund for remaining creditable input VAT 11
No VAT refund for investment projects of an enterprise the registered charter capital of which has not been fully contributed 12
Invoices
It is allowable to use both electronic invoice and printed invoice 12
Electronic invoice is not allowed to be converted multiple times 13
Tax Administration
Documents attached with accounting documents in foreign language are not required to be translated into Vietnamese 13
Related Party Transaction
Interest expenses for enterprises having related party transactions 14
Customs
Delivery of raw materials to branches which process and goods for exports is tax exempt if the required conditions
are satisfied 14
Import, export license for on-spot import and export of industrial precursors 15
Issuance of paper C/O and electronic C/O for the same shipment 16
Reinforcement of the implementation of customs procedures, management, monitoring on-spot import-export declarations 17
Addressing concerns about implementation of Circular No. 21/2017/TT-BCT 18
Post-customs clearance inspection in case there are suspects about the value of goods subject to tax rate of 0% or
tax exemption 19
Notification of processing contracts signed before 5 June 2018 20
Supplementary submission of C/O within the “30 days”, inclusive of weekends and holidays 20
Handling of import declarations of processing raw materials with incorrect export type 21
Classification of consumable materials in line with HS code 21
Customs declaration and finalization report for consumable materials and tools 22
Others
Latency period for change of land use form is not entitled to exemption 24
Establishment of Foreign Direct Investment (“FDI”) company in the field of medical equipment manufacturing 24
NEW REGULATIONS

Amendment to the List of From 1 July 2019, pensions

projects that required and labour accident allowance
environmental impact shall be increased by 7.19%
assessment report
On 20 May 2019, the Government
On 13 May 2019, the Government issued Decree No. 44/2019/ND-CP
issued Decree No. 40/2019/ND-CP adjusting the pensions, social
amending and supplementing a insurance allowance and monthly
number of articles in the Decrees allowance.
regulating and guiding on the
implementation of the Law on Accordingly, from 1 July 2019, the
Environmental Protection. pensions, social insurance allowances
and monthly allowances shall be
Accordingly, the new Decree adjusted to increase by 7.19%
supplements and replaces the compared to the entitlement level
following important lists: List of of June 2019.
entities that are subject to strategic
environmental assessment; List of This Circular takes effect from 1
types of industrial manufacturing July 2019.
activities with risk of environmental
pollution; List of projects where the
environmental impact assessment
report or environmental protection
plan registration are required, etc.

In addition, the Decree replaces a

number of forms and guidance for
the preparation of strategic
environmental assessment report,
environmental impact assessment
report, environmental renovation
method, environmental protection
plans…

The Decree takes effect from 1 July

2019.

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3
GUIDING DOCUMENTATIONS/ for capital reduction with the
Department of Planning and
OFFICIAL LETTERS
Investment, this would be considered
Corporate Income Tax (“CIT”) as incompliant with the prevailing
regulations.
Loan interest payments
Accordingly, the loan interest
corresponding to the portion
expenses corresponding to the
of registered charter capital portion of registered charter
not yet fully contributed in capital which has not been fully
accordance with the committed contributed in accordance with the
capital contribution schedule committed capital contribution
schedule, would not be deductible
shall be non-deductible
expense for CIT purposes.
On 19 April 2019, the General
Department of Taxation issued Losses from the offshore
Official Letter No. 1549/TCT-CS investment project would
guiding on interest payments not be recognized as
regarding loans used for contribution
of charter capital.
deductible expenses

Accordingly, after 3 years from the On 29 March 2019, the Hanoi Tax
issuance date of the initial Enterprise Department issued Official Letter
Registration Certificate, if the No. 13704/CT-TTHT regarding
stocks registered for issuance are expenses for the offshore investment
not sold out, the company is upon termination of the investment
required to register for reduction project.
of the amount of capital for which
stocks are allowed to be issued, to Accordingly, losses arising from
make it equivalent to the number the offshore investment projects
of stocks issued. shall not be deducted from the
income (profit) arising in Vietnam.
In case a Joint Stock Company Simultaneously, expenses which
increases its charter capital, but are not corresponding with taxable
has not fully contributed yet within revenue shall not be recognized as
3 years from the issuance date of deductibleexpenses.
the Business Registration Certificate,
and the company have not registered
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In case an enterprise having an supplement the salary fund of the
offshore investment project following year, to ensure that
established a subsidiary in a salary settlement for employees is
foreign country, when this investment not interrupted.
project has been terminated and
the investment capital could not In case public non-business units
be recovered, the loss from such make provision for Income
investment capital could not be supplement fund, they should
recognized as deductible expenses follow Decree No. 141/2016/ND-CP,
for CIT purposes in Vietnam. Circular No. 145/2017/TT-BTC and
relevant regulations. With respect
Public non-business units to Wage reserves fund, if the public
paying CIT based on a non-business units declare and
percentage of revenue shall pay CIT as a percentage of revenue,
the public non-business units are
not be allowed to make not eligible to make provision and
provision for wage reserves use this fund.
fund
A public non-business unit is only
On 19 April 2019, the General allowed to make provision for
Department of Taxation issued Wage reserves fund and recognizes
Official Letter No. 1546/TCT-CS to it as deductible expenses for CIT
address concerns in relation to purpose in case the unit applies
provisions to wage reserves fund the Accounting System, invoice,
applicable to public non-business vouchers, pays CIT according to
units. the declaration and makes the
provisions in accordance with
Accordingly, Income supplement Circular No. 96/2015/TT-BTC dated
fund and Wage reserves fund are 22 June 2015 of the Ministry of
two types of fund with different Finance.
funding sources and different
expending purposes. In particular,
Income supplement fund would be
used to cover additional expenses
to raise incomes of the employees
so that they are timely encouraged
to fulfill their assigned tasks. Wage
reserve fund would be used to

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Severance allowance in Personal Income Tax (“PIT”)
excess of the regulated cap
Vacation expenses provided
would not be deductible for
to specific individuals would
CIT purposes
be subject to PIT
On 11 April 2019, the General
Department of Taxation issued On 24 April 2019, the General
Official Letter No. 1352/TCT-DNNCN Department of Taxation issued
guiding tax policy on severance Official Letter No. 1650/TCT-DNNCN
allowance paid to employees in regarding PIT policy for vacation
excess of regulated cap. expenses provided to employees.

Accordingly, when an enterprise Accordingly, in case the vacation

pays severance allowances to its expenses are paid by an enterprise
employees higher than the capped to its employees from the welfare
amount as prescribed under the fund, if the individual employee’s
Labor Code and the Law on Social name is clearly mentioned, the
Insurance upon labor contract enterpise shall be required to
termination, the enterprise shall withhold PIT on the vacation
be required to withhold PIT at 10% expenses. Otherwise, if the expenses
of the total income paid to are recorded as generally incurred
employees with value of VND for all employees and the
2,000,000 or more per each beneficiary’s name is not specified,
settlement. PIT withholding shall be exempted.

In addition, the severance allowances Tax policy regarding

paid to employees in excess of the remuneration of owner of
prescribed level shall be treated as one-member limited liability
non-deductible expenses for CIT company
purposes.
On 22 April 2019, the General
Department of Taxation issued
Official Letter No. 1590/TCT-DNNCN
guiding the tax policy regarding
remuneration of the owner of one
member limited liability company.

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Accordingly, from PIT perspective, subject to PIT at the tax rate of
the remuneration of the owner of 0.1% on the transfer price.
an one-member limited liability
company (owned by the individual) Income from capital transfer of
is not employment income and other types of companies (i.e.
shall not be subject to PIT. limited liability companies,
partnerships, etc…) would be
However, from CIT perspective, subject to PIT as the transfer of
remuneration and other expenses capital, to be subject to PIT at the
such as insurance, housing rental rate of 20% on taxable income (i.e.
expenses and other associated income after deducting the
services provided to the owner of purchasing price of the capital
an one-member limited liability being transferred and transaction
company, whether directly or expenses).
indirectly involved in the business
operations, shall not be deductible Foreign Contractor
for CIT purposes. Withholding Tax (“FCWT”)
Tax policy on individual’s VAT invoices issuance for the
income from capital transfer value of equipment directly
imported by investor
On 4 April 2019 and 8 April 2019,
the General Department of Taxation On 26 April 2019, the Hanoi Tax
issued Official Letter Department issued Official Letter
No. 1211/TCT-DNNCN and Official No. 26996/CT-TTHT guiding the
Letter No. 1287/TCT-DNNCN, issuance of VAT invoices for
respectively, regarding tax policies equipment imported by investor.
on individual’s income from capital
transfer. Accordingly, in case the foreign
contractor entered into a contract
Accordingly, the individual’s with the investor to render design,
income from capital transfer procurement and installation of
(stocks) of the joint stock equipment for a project in
companies in accordance with the Vietnam; in which the investor
Law on Enterprises and Law on would directly carry out import
Securities is determined as income clearance procedures for the
from transfer of securites and equipment and pay import VAT,

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then hand over to the foreign Value Added Tax (“VAT”)
contractor, where the foreign
contractor has issued commercial Imported goods used for
invoices to the investor for the Enterprise Processing Export
value of imported machinery and
equipments: in case the investor
("EPE") construction would
did not issue invoice for the still be subject to VAT
foreign contractor upon delivery of
On 8 May 2019, the General
the equipment, the foreign
Department of Taxation issued
contractor shall not be required to
Official Letter No. 1815/TCT-CS
issue VAT invoice for the value of
regarding VAT on imported goods
machinery and equipment directly
used for construction and
imported by the investor.
installation projects for an EPE.
In addition, upon completion of
Accordingly, in case the domestic
the supply of equipment and
enterprises import goods to use
services under the contract, the
for construction and installation
foreign contractor shall issue VAT
works for EPEs, they are still
invoices, declare and pay FCWT
required to pay VAT at the import
liabilities (if any) according to
stage.
prevailing regulations.
With respect to construction and
installation activities for EPEs,
domestic enterprises shall be
entitled to VAT rate at 0% upon
satisfaction of the conditions as
prescribed under Circular No.
219/2013/TT-BTC.

Overpaid import VAT at

import stage would be
neither creditable nor
refundable with tax authorities

On 3 May 2019, the General

Department of Taxation issued
Official Letter No. 1744/TCT-KK

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guiding the VAT declaration for Incorrect declaration on
overpaid import VAT from imported value of exported goods
goods.
must be corrected before
According to the General Department claiming VAT refund
of Taxation, in case an enterprise
overpaid import VAT for the On 19 April 2019, the General
imported goods, the tax Department of Taxation issued
overpayment amount shall be Official Letter No. 1533/TCT-CS
handled in accordance with Article guiding the VAT refund on exported
47, Tax Administration Law. goods and services.
Nevertheless, the overpaid import
VAT of imported goods would not According to the General Department
be subject to the cases to be of Taxation, it would be inaccurate
creditable or refundable (with the for the taxpayer to declare the
tax authorities) as prescribed value of exported goods as the
under VAT Law. amount after deducting the value
settled by buyer under offseting
If the enterprise has declared such method. In this case, the enterprise
amount as creditable input VAT for shall be required to correct the
VAT purposes, the enterprise shall customs declarations and pay back
be required to adjust the tax the shortfall tax liabilities.
declaration return with tax
authorities. If the tax authority has After the adjustment of customs
refunded the tax amount, the declarations and settlement of the
enterprise must return the incorrect outstanding tax payables to
refundable amount and customs authorities are completed
corresponding late payment by taxpayer, the tax authorities
interests, counting from the date would consider to proceed refund
of receiving the incorrect tax procedures for input VAT as
refund to the date of returning precribed.
payment.
Construction of social housing
subject to VAT rate at 10%
On 6 May 2019, the General
Department of Taxation issued
Official Letter No. 1783/TCT-CS
regarding VAT regime applicable to
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construction activities of social shall be apprortioned by the ratio
housing. of taxable revenue on total revenue.

Accordingly, VAT rate at 5% is only On monthly/ quarterly basis, the

applicable to the sales, leasing, Company is allowed to provisionally
finance leasing of social housing, allocate creditable input VAT in
and not to the construction activities. that month/ quarter. At the end of
In case the entity constructed social the year, the company shall
housing as a construction contractor, recalculate the creditable VAT in
the construction activities are still the year to properly adjust the
subject to VAT rate at 10%. Only at provisional allocated input VAT in
the stage when the investors sell months/ quarters.
social housings with the prescribed
conditions satisfied then the VAT Transfer of secured assets to
rate of 5% would apply.
repay loan to the bank is
Allocation of input VAT of exempt from VAT invoice
goods and services used for issuance
production and trading of
On 25 April 2019, the General
both VATable and non-VATable Department of Taxation issued
goods and services Official Letter No. 1663/TCT-CS on
issuance the VAT invoice and VAT
On 27 March 2019, the General calculation of collateral assets for
Department of Taxation issued loans.
Official Letter No. 1040/TCT-CS
providing guidance for the allocation Accordingly, in case the enterprise
of input VAT on goods and services entered into agreement with the
used for the production and trading bank to hand over the assets for
of both VATable and non-VATable offsetting with the loans before
goods and services. the maturity of the loans, it is
necessary to clarify whether the
Accordingly, in case the Company is transfer of ownership of this prop-
trading both VATable and erty is in the nature of alienating
non-VATable goods, but unable to the assets to secure the loan
record seperately the creditable repayment, or transfering assets
and non-creditible input VAT to offset the debts.
amounts, the creditble input VAT

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If this transaction is in the nature Converted entities are
of securing the assets to repay the allowed to claim VAT refund
loan and the the procedures for
handling the pledged assets have
for remaining creditable
been properly carried out, VAT input VAT
invoice issuance shall be exempt.
Otherwise, if the asset transfer On 18 March 2019, the General
agreement is not in the nature of Department of Taxation has
disposing assets to secure loans issued Official Letter No.
repayment, the enterprise shall be 890/TCT-CS providing guidance on
required to issue the VAT invoices. VAT refund upon enterprise
conversion.
Investment projects with
Accordingly, in case an enterprise
adjusted implementation
is converted from limited liability
progress are considered for company into joint stock company
VAT refund as prescribed and inherits the
entire pre-conversion tax obligations,
On 3 May 2019, the General where the tax code is not changed,
Department of Taxation issued the remaining creditable input VAT
Official Letter No. 1739/TCT-CS balance at the time of conversion
providing guidance on VAT refund would be either creditable in the
for the investment projects with following tax period or refundable.
adjusted implementation progress.
For pre-conversion VAT amount
Accordingly, in case the investment which are not entitled to the VAT
project having adjustment on the refund under the Law
implementation progress, if the No. 106/2016/QH13, Decree
enterprise has completed the No. 100/2016/ND-CP and Circular
procedures to adjust the project in No. 130/2016/TT-BTC, the
accordance with the Law on post-converted enterprise is not
Investment and obtained the entitled for tax refund and shall
written documents from the continue to credit the input VAT
competent authorities, and is not after the conversion.
under the circumstances of project
termination, the VAT refund claim
shall be considered.

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No VAT refund for investment Invoices
projects of an enterprise the
registered charter capital of It is allowable to use both
which has not been fully electronic invoice and printed
contributed invoice
On 26 April 2019, the Hanoi Tax
On 10 April 2019, the General Department issued Officical Letter
Department of Taxation issued No. 26988/CT-TTHT regarding the
Official Letter No. 1348/TCT-CS usage of electronic invoices by
regarding VAT refund applicable to Branches and Sales Offices.
investment projects.
Accordingly, an enterprise can
Accordingly, the following investment create electronic invoices to use at
projects shall not be allowed to branches, sales offices, and
claim VAT refund: simultaneously create printed
invoices to use at other dependent
The investment project of an units. The company shall submit a
enterprise the registered charter notification on issuance of invoice
capital of which has not been for each type of invoice, and use
fully contributed. one form of invoice for each sale
transaction.
The investment project of an
enterprise, which undertakes
conditional business activities
but has not satisfied the
required conditions prescribed
under the Investment Law.

The investment project of an

enterprise, which undertakes
conditional business activities
but failing to sustain the
business conditions during
operations.

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Electronic invoice is not Tax Administration
allowed to be converted
multiple times Documents attached with
accounting documents in
On 22 April 2019, the Hanoi Tax foreign language are not
Department issued Official Letter required to be translated into
No. 23474/CT-TTHT regarding the
Vietnamese
use of electronic invoices.
On 26 April 2019, the Ministry of
Accordingly, in case the buyer is not Finance has issued Official Letter
an accounting unit, or is an No. 4942/BTC-QLKT guiding on the
accounting unit having sufficient translation of invoices and accounting
records, documents proving the documents from foreign language
provision of goods, services such as to Vietnamese as prescribed.
economic contracts, stock issue
vouchers, delivery records, Accordingly, in case the accounting
payment receipts, receipts,... the documents are in foreign language,
seller is not required to obtain the when being used for accounting
buyer’s electronic signature upon recognition and preparation of
issuance of electronic invoices. Financial Statements in Vietnam,
the main content must be translated
In principle, electronic invoices into Vietnamese as regulated under
could be converted into paper the Accounting Law. The Vietnamese
invoices for goods circulation translation must be attached with
purpose. Nevertheless, the conversion the original in foreign language.
is only allowed for one time. The
seller’s seal is not required on the With respect to documents in
converted electronic invoices; foreign languages attached to
however, other mandatory accounting vouchers, such as
contents as prescribed shall be contracts, documents attached to
required. payment vouchers, investment
project documentation, finalization
reports and other relevant
documents, translation into
Vietnamese is not required unless
there is a request from competent
authorities.

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Related Party Transaction Customs
Interest expenses for Delivery of raw materials to
enterprises having related branches which process and
party transactions goods for exports is tax
exempted if the required
On 10 April 2019, the General conditions are satisfied
Department of Taxation issued
Official Letter No. 1315/TCT-DNL On 11 April 2019, the General
regarding the interest expenses of Department of Customs issued
enterprises having related party Official Letter No. 2139/TCHQ-TXNK
transactions. regarding exemption of import
duties on imported goods used for
Accordingly, the deductible interest export - processing producing
expenses of enterprises having activities. Specifically:
related party transactions shall be
capped at 20% of EBITDA. In case One of the conditions for the
the enterprise received after tax exemption of import duty on
profit from its subsidiaries, this goods (including raw materials,
profit should be recorded as financial materials, components,
income. semi-finished products,
finished products) imported
The “Total net profit” which forms for production of exported
the basis for calculating the interest goods is that the importer
expenses cap is determined by (=) must have production facilities,
Gross profit from supply of goods have ownership/ rights to use
and service minus (-) Selling of machinery at the production
expenses minus (-) General facility, and must directly
administration expenses plus (+) export the product.
Financial income minus (-) Financial
expenses. Pursuant to Clause 1, Article
45, Enterprise Law No.
68/2014/QH13, a branch is a
dependent unit of an enterprise,
and is responsibile for carrying
out a whole or part of the
functions of the enterprise

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 including representation Import, export license for
functions as being authorized.
on-spot import and export of
Business activities of the
branch must be aligned with industrial precursors
the enterprise’s registered
business activities. On 4 April 2019, the Department of
Chemicals issued Official Letter
Thus, in case parent company No. 296/HC-QLHC regarding industrial
has ownership or rights to use precursors license for on-spot
of the machinery and equipment import and export goods. Accordingly,
at the branches or business depending on specific cases of
establishments located in on-spot import and export of
other provinces; and the industrial precursor chemicals, the
imported raw materials, enterprise will be exempted or be
materials are circulated within required to obtain import and
the company system for export licenses from the Department
production of exported goods, of Chemicals.
and the products have been
actually exported; the entire For certain cases in which the
business expenses of the import, export of precursors are
branches have been consolidated exempt from obtaining the license
in the financial statements of because the precursors are not
the parent company, then the physically delivered outside
raw materials and materials Vietnam or into a separate customs
imported for the production of area, including:
exported goods of the parent
company shall be exempt from In case the industrial precursors
import duty. are outsourced to local entities
by foreign organizations and
individuals for processing, and
then sold to other organizations
and individuals in Vietnam;

In case the industrial precursors

are traded between Vietnamese
enterprises and foreign
compaines that have no
presence in Vietnam and

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 designated for delivery to With respect to the issuance of
other enterprises in Vietnam. electronic and paper C/O for
the same import shipment, the
With respect to the industrial current regulations and
chemicals purchased between commitments in ASEAN do not
domestic enterprises and export restrict the competent authorities,
processing enterprises or entities organization from granting
in non-tariff zones, the following paper and electronic C/O form
shall be applied: D for the same shipment.
Accordingly, in case a shipment
In case a domestic entity is granted both electronic and
purchases industrial precursors paper C/O, the Customs
from an export processing authorities shall base on the
enterprise, enterprise in electronic C/O to determine
non-tariff zones, the domestic preferential tariff rate for the
entity is required to obtain shipment. In case there are
import license; differences in the information
between the paper C/O and
In case domestic entity sells electronic C/O, the provincial
industrial precursors to an Customs Departments shall
export processing enterprise, carry out verification process
enterprise in non-tariff zones, as prescribed. The inspection
the domestic entity is not and determination of the
required to obtain export origin of goods shall be carried
out as prescribed under
license.
Circular No. 38/2018/TT-BTC
and the Procedures enacted
Issuance of paper C/O and with Decision No. 4286/QD-TCHQ
electronic C/O for the same dated 31 December 2015.
shipment
In case the ASEAN Single
On 12 April 2019, the General Window (ASW) or National
Department of Customs issued Single Window (NSW) crashes,
Official Letter No. 2174/TCHQ-GSQL the Customs authorities shall
guiding the review of electronic C/O receive the paper C/O that are
form D through the ASEAN Single granted in accordance with the
Window mechanism. Specifically: ASEAN Trade in Goods
Agreement for further
consideration.
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Reinforcement of the change to actual inspection of
implementation of customs records and status of goods
for the subsequent shipments
procedures, management,
from the deadline for the
monitoring on-spot revision, supplement of
import-export declarations declaration until the enterprise
completes the revised and
On 24 April 2019, the General supplemented declarations.
Department of Customs issued
Offical Letter No. 2411/TCHQ-QSQL For on-spot export declaration
regarding reinforcement measures for which a corresponding
for the implementation of customs on-spot import declaration has
procedures, management, monitoring been made, but the importers
on-spot import-export declarations. declared one on-spot import
declaration for multiple
Accordingly, for on-spot on-spot export declarations:
import-exports without corresponding the Customs Division shall
on-spot export-import declarations make a list of corresponding
in the system, the Customs import declarations for multiple
authorities shall organize the export declarations and report
review, statistics, classification and to the provincial Customs
handling works as follows: Department to combine and
send to the Customs IT and
In case of on-spot exports for Statistics Department for
which a corresponding on-spot further processing on system.
import declaration has been
made, but the custom system In case the importer has not
has not been able to locate completed on-spot import
due to incorrect information procedures within 15 days,
declared by the customs then:
declarers: the customs declarers
shall prepare a revised and
In case any parties cancel
supplemented declaration. In
the transaction: the exporter
case the customs declarers do
who carries out the
not make the revised and
procedures for cancelling
supplemented declaration, it is
on-spot export declaration
required to apply risk
shall notify the list of
management criteria to
cancelled declarations to

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 local tax authorities in such as the Department of
charge of the exporter for Anti-Smuggling and
further review of tax Investigation or the Police
refund, tax credit claims. or other relevant agencies
to handle in accordance
In case transactions have with the regulations to
been completed, the handle non-compliances to
importer has received customs procedures, and
goods but has not conducted send a report of the list of
on-spot import procedures: enterprises (together with
the Customs Division records) to the Department
where import procedures of Customs Management
are expected to be Supervision.
conducted shall review and
determine whether the The review will be conducted
goods are stored at the before 1 July 2019.
warehouse, have not been
put into production or Addressing concerns about
consumption, or have been implementation of Circular
used for production, No. 21/2017/TT-BCT
consumption without the
corresponding on-spot On 23 April 2019, the General
import procedures, to Department of Customs issued
determine relevant taxes Official Letter No. 2389/TCHQ-GSQL
and penalties. answering certain questionnaires
on the implementation of Circular
In case the importer is No. 21/2017/TT-BCT (“Circular 21”)
determined as non-existed on national technical standards on
or has ceased operations, content of formaldehyde and
went into dessolution or certain aromatic amines derived
bankrupt: the Customs from Azo colorants in textile products.
Division where import
procedures are expected Accordingly, for the List of textile
to be carried out shall products in Appendix 1 of Circular
cooperate with the export 21, the enterprises shall make
Customs Division to announcement of the conformity
prepare documents and before the products are circulated
escalate to related agencies in the Vietnam market, but is not

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required to present the specialized post-customs clearance
inspection results during customs inspection at the customs
clearance for the goods. authorities.

Post-customs clearance For the notification of suspicions

inspection in case there are on customs valuation in the
electronic declarations, to
suspects about the value of
mitigate the situation where
goods subject to tax rate of exporters and importers do
0% or tax exemption not receive the notification of
suspections on customs
On 16 April 2019, the General valuation and request for
Department of Customs issued inspection and consultation of
Official Letter No. 2190/TCHQ-TXNK the customs declarations, then
guiding on inspection, consultation in addition to notifying the
and determination of customs customs declarants through
dutiable value. Some main orders on the system, customs
contents are summarized as officers shall prepare a Notification
follows: of suspicions based on Form
No. 02A/TB-NVTG/TXNK (in paper)
Accordingly, in case the as prescribed under Circular
customs declarations are No. 38/2018/TT-BTC and deliver
subject to inspection by the to the declarers.
system due to risk of customs
dutiable value while the goods
are subject to import tax rate
of 0% or tax exemption,
however customs authorities
raise suspicions on the
declared customs value, a
review of declared customs
information and highlight of
suspects shall be conducted,
however consultation on
dutiable value shall not be
carried out. Nevertheless risk
monitoring and assessment
should be strengthened for

For reference only, not to be distributed, or sold © 2019 Deloitte Vietnam Tax Advisory Co., Ltd.
19
Notification of processing overdue for the deadline of
contracts signed before 5 “30-day” due to falling in weekends
and holidays during the
June 2018 implementation of customs clearance
procedures.
On 16 April 2019, the General
Department of Customs issued
Accordingly, as guided in Official
Official Letter No. 1179/GSQL-GQ2
Letter No. 4943/TCHQ-GSQL, the
regarding the implementation of
term “30 days” from the date of
finalization reports in relation to
registration of the customs
processed goods, goods
declarations refers to calendardays.
manufactured for exports, and
In case the deadline of “30 days”
export processing goods.
falls in weekends and holidays
during customs clearance procedures,
Accordingly, for process contracts
the enterprises should follow
signed before 5 June 2018 (the
guidance in Clause 1, Article 4,
effective date of Circular No.
Circular No. 38/2015/TT-BTC.
39/2018/TT-BTC) and having been
Specifically, the enterprise shall
implemented after this date, the
submit in advance a notification via
enterprise shall be required to
the e-customs data processing
notify the contracts/ appendix of
system or in writing (fax is acceptable)
contracts with respect to customs
to the customs authorities during
declarations after 5 June 2018 in
working hours. Upon receipt of the
accordance with Article 56, Circular
notification, the Customs authorities
No. 38/2015/TT-BTC, and as
are responsible for responding to
amended and supplemented under
the customs declarant through the
Clause 36, Article 1, Circular
System or in writing about the
No. 39/2018/TT-BTC.
arrangement of customs clearance
procedures during weekends and
Supplementary submission holidays and non-working hours.
of C/O within the “30 days”,
inclusive of weekends and
holidays
On 8 April 2019, the General
Department of Customs issued
Official Letter No. 2030/TCHQ-GSQL
regarding the supplementary
submission of C/O that has been
© 2019 Deloitte Vietnam Tax Advisory Co., Ltd. For reference only, not to be distributed, or sold
20
Handling of import no frauds are detected, the incorrect
declarations of processing type code is not abused, then the
incorrect declarations would be
raw materials with incorrect acceptable to use for subsequent
export type procedures on finalization reports
as prescribed.
On 4 April 2019, the General
Department of Customs issued
Classification of consumable
Official Letter No. 1929/TCHQ-GSQL
guiding incorrect declaration of materials in line with HS code
code for export type.
On 4 April 2019, the General
Department of Customs issued
Accordingly, with respect to import
Official Letter No. 1072/GSQL-GQ2
declarations for export processing
providing guidance on actual material
raw materials incorrectly declared
consumption of EPEs.
under the code E31 – importing raw
materials for export production,
Accordingly, pursuant to Clause 2,
rather than E21 – importing raw
Article 60 of Circular No.
materials for processing for foreign 38/2015/TT-BTC which is amended
traders, the Customs Division shall and supplemented by Clause 39,
verify information in the declarationsArticle 1 of Circular No. 39/2018/
agains the contracts, customs TT-BTC, in order to classify consumable
documents on import of raw materials between code A12 – import
materials and exports of products, for trading and production, and
accounting books, accounting code E11 – import by EPEs from
vouchers, warehousing bills,
overseas, and E15 – import by EPEs
ex-warehousing bills and inventories from domestic, enterprises shall be
of raw materials and finished responsible for management and
products, etc. to determine whether monitoring of raw materials,
the imported goods stated in the imported materials, exported
enterprises’ declarations withgoods from the time of importing
incorrect type code are actually and production until the time when
used for processing of exported goods are exported or changed its
goods or not. purpose, for the handling of wasted
materials, defective products, raw
In case the inspection results are materials , surplus materials,
satisfactory, confirming that the machinery, equipment, or for the
requirements for management of use and savings of imported raw
the processing types are appropriate, materials to be processed in the

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21
production, in the accounting activities but are not converted
systems in line with the accounting into exported goods;
standards issued by the Ministry of
Finance. Therefore, enterprises are If the following items are not
responsible for classifying and eligible to be recognized as
monitoring imported raw materials fixed assets, they are recognized
in accordance with regulations to as tools and instruments,
ensure the use of goods in consistent including: scraffolds, boards,
with the declaration. molds, tools and jigs used
exclusively for construction
Enterprises should review its production, hammer, pliers,
purposes of use and the actual wrenches; facilities for
production process to classify and management activities, office
adopt the appropriate type with supplies; clothes and shoes for
reference to customs, accounting specialised work.
regulations.

Customs declaration and

finalization report for
consumable materials and
tools

On 27 May 2019, the General

Department of Customs issued
Official Letter No. 3304/TCHQ-GSQL
providing guidance on customs
declaration and finalization reports
for "Consumables materials" and
"Tools."

Accordingly, the Official Letter

provides definitions of consumable
materials and tools as below:

Consumable materials are

materials used directly in
processing or manufacturing

© 2019 Deloitte Vietnam Tax Advisory Co., Ltd. For reference only, not to be distributed, or sold
22
The HS code of consumable With respect to the finalization
materials used in the import report of Consumable materials /
declarations should be as follows: Tools:

HS code for consumable Enterprises are required to

materials imported for prepare a finalization report
processing activities is E21; for for consumable materials.
production of exported goods Consumable materials without
E31. For EPEs, consumable consumption standards
materials imported from (norms), should be clearly
abroad and supplied from noted as "KXDĐM" with
domestic should be declared input – output – inventory report;
with types E11 and E15,
respectively; Enterprises are not required to
establish the material
The General Department of consumption standards and
Customs requires local customs submit finalization report for
divisions to announce this Tools. Particularly for EPEs,
guideline to manufacturing / Tools shall only be used for
processing enterprises (including internal purposes. The disposal
EPEs) for their consistent and of Tools must comply with
accurate declarations. Article 79, Circular No.
38/2015/TT-BTC which is
amended and supplemented
by Clause 55, Article 1 of Circular
No. 39/2019/TT-BTC.

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23
Others On 7 May 2019, the Ministry of
Planning and Investment submitted
Latency period for change of Official Letter No. 2933/BKHDT-DTNN
land use form is not entitled to the Government Office on the
establishment of FDI company in
to exemption the field of manufacturing medical
equipment.
On 19 April 2019, the General
Department of Taxation issued
Accordingly, Vietnam's commitments
Official Letter No. 1527/TCT-CS
providing guidance on land rental in WTO would only be applicable to
policy. provision of services, and not to
manufacturing activities. Simultaneously,
According to Decree there is no prohibitions or
No. 135/2016/ND-CP, investment restrictions under Vietnam laws on
projects with land leased by the State foreign investors in manufacturing
before 1 July 2014 and application industry.
for tax exemption submitted after 1
January 2017, would be assessed As this is a field subject to the
for land rental exemption or reduction specialized management by the
for the remaining period from the Ministry of Health, investors are
submission time. recommended to seek further
guidance from the Ministry of
In addition, the current regulations Health.
do not specifically provide on land
rental exemption in case of late
submission of application documents
due to the procedures of converting
from land allotment to land rental.
Therefore, the General Department
of Taxation does not have sufficient
legal basis to approve the land
rental exemption for such latency
period.

Establishment of Foreign
Direct Investment (“FDI”)
company in the field of medical
equipment manufacturing
© 2019 Deloitte Vietnam Tax Advisory Co., Ltd. For reference only, not to be distributed, or sold
24
Contacts
Thomas McClelland Bui Ngoc Tuan Bui Tuan Minh
National Tax Leader Tax Partner Tax Partner
Tel: +84 28 3910 0751 Tel: +84 24 7105 0021 Tel: +84 24 7105 0022
[email protected] [email protected] [email protected]

Phan Vu Hoang Dinh Mai Hanh Suresh G Kumar

Tax Partner Tax Partner Tax Partner
Tel: +84 28 3910 0751 Tel: +84 24 7105 0050 Tel: +84 28 3910 0751
[email protected] [email protected] [email protected]

Vo Hiep Van An Vu Thi Thu Nga

Tax Partner Tax Partner
Tel: +84 28 3910 0751 Tel: +84 24 7105 0023
[email protected] [email protected]

Hanoi Ho Chi Minh City

15th Floor, Vinaconex Tower, 18th Floor, Times Square Building,
34 Lang Ha Street, Dong Da District, 57-69F Dong Khoi Street, District 1,
Hanoi, Vietnam Ho Chi Minh City, Vietnam
Tel: +84 24 7105 0000 Tel: +84 28 3910 0751
Fax: +84 24 6288 5678 Fax: +84 28 3910 0750

Website: www.deloitte.com/vn
Email: [email protected]

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