Monthly Newsletter September, 2019

Issuance of VAT invoices for Collaterals Handed over to Credit Institutions

On April 25, 2019, the Dispatch No. 1663/TCT-CS was issued by the General Department of Taxation to address problems regarding the issuance of VAT invoices for collaterals handed over to credit institutions.

Accordingly, in principle, the delivery of collaterals by an insolvent debtor to a credit institution for their disposition following provisions of applicable laws shall not be subject to the issuance of VAT invoices.

For property transfer agreements which are not involved in a disposition of loan collaterals, the transferors must issue relevant VAT invoices.

VAT Policy on Imports for Export Processing Enterprises’ Construction and Installation

On May 8, 2019, the General Department of Taxation issued the Dispatch No. 1815/TCT-CS guiding the imposition of VAT on imports for export processing enterprises’ construction and installation.

Accordingly, VAT will be imposed on goods imported by a local enterprise for construction and installation of facilities of an export processing enterprise under a contract entered into by and between the two businesses. Besides, the construction and installation of the export processing enterprise will not be subject to any VAT, provided that conditions specified in the Ministry of Finance’s Circular No. 192/2013/TT-BTC dated December 31, 2013, are satisfied.

Personal Income Tax (PIT) Policy on Offshore Stock Transfers

On May 17, 2019, the General Department of Taxation issued the Dispatch No. 1970/TCT-CS clarifying the PIT policy on offshore stock transfers.

Accordingly, the income of a foreign individual residing in Vietnam from a transfer of shares in a company in Japan is determined to be generated from a stock transfer. Such individual shall, therefore, declare and pay the tax at the rate of 0.1% of the transfer price and submit tax returns to the  Tax Department of his/her place of registered permanent or temporary residence.

In case of the existence of Vietnam’s and Japan’s Double Taxation Agreement regarding personal income tax on income from stock transfers, the signed Double Taxation Agreement shall apply.