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blue-check Charges for brokerage service for selling goods outside Vietnam shall be exempt from withholding tax

Official letter No. 4250/CT-TTHT dated May 4th, 2020 of the Department of Taxation of Ho Chi Minh city regarding withholding tax
VietlawOnline

Charges for performing the brokerage service for selling goods outside Vietnam shall be exempt from withholding tax provided that the goods or services under the brokerage must be consumed or performed outside Vietnam. This regulation does not distinguish whether the broker is an organization or an individual. Read more

In particular, if an enterprise signs a contract to hire an organization or individual outside Vietnam to support the company to sell goods outside the territory of Vietnam, the remuneration paid under the contract shall be exempt from withholding tax.

In contrast, if the goods are not sold outside Vietnam, the remuneration shall be subject to withholding tax.

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blue-check [Merged] - Regulation on sales promotion, trade fairs and exhibitions

Merged Document No. 22/VBHN-BCT dated March 20th, 2020 of the Ministry of Industry and Trade on guidelines for Commercial Law concerning trade promotion

This document is to merge the amendments, supplements of Decree No. 17/2020/ND-CP dated February 5th, 2020 to Decree No. 81/2018/ND-CP dated May 22nd, 2018 of the Government providing guidelines for Commercial Law concerning trade promotion.

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blue-check Regarding conditions for deduction of discounts for imported goods

Official letter No. 4829/TCHQ-TXNK dated August 16th, 2018 of the General Department of Vietnam Customs regarding consideration for deduction of discounts for imports
VietlawOnline

According to point d clause 2 Article 15 of Circular No. 39/2015/TT- BTC, discounts for imported goods shall be subtracted from taxable value only when the sale contract specifies discount conditions. Read more

At the same time, the application for consideration for deduction of discounts must have the seller’s announcement of discounts.

Accordingly, in case a company applies for subtraction of discounts for imported goods from taxable value but in the sale contract having no specific discount conditions and the application having no the seller’s announcement of discounts, the subtraction shall not be considered.

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blue-check New regulations on sales promotion, trade fairs and exhibitions

Decree No. 81/2018/ND-CP dated May 22nd, 2018 of the Government on elaboration of regulations of commercial Law on trade promote
VietlawOnline

This Decree regulates in details activities of sales promotion, trade fairs and exhibitions. Read more

One of the new points of this Decree is the supplement of 2 new principles of sales promotion, in particular: Customers are not required to give up, refuse or exchange goods and services of other traders or organizations; the lottery results must not be used as a foundation to determine the prize winner or to present and reward bonuses in sale promotion program (Article 3).

In addition, businesses are not allowed to conduct sales promotion in multi-level form if they do not register multi-level marketing activities (Article 4).

Promoted products must not include wines, lottery, cigarettes, breast milk substitutes, medicines for human use, examination and treatment service, education service and goods and services that have been banned from circulation in Vietnam. Particularly, wines, lottery, cigarettes, curative medicines for human use are also not used as promotional products of other goods, services (Article 5).

Money can also be used as promotional merchandise, except for sales promotion conducted in the forms: provision of sample goods or services; discount and sale of goods or provision of services together with coupons (Clause 3 Article 5).

Regarding maximum value of promotional product, the promotional value of a unit of promoted product must not exceed 50% of the price of such promoted product unit. However, for time-limited sales promotion (effective within certain frame of hours, days, weeks, months or seasons) or concentrated sales promotion programs, the limit shall be 100% of the value of the promotional product (Article 6).

This Decree takes effect from July 15th, 2018 and replaces Decree No. 37/2006/ND-CPstatus1 dated April 4th, 2006.

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blue-check It is required to present reasons for discount on exported goods in contract

Official letter No. 1718/TCT-CS dated May 9th, 2018 of the General Department of Taxation regarding discount on exported goods
VietlawOnline

According to this Official letter, in case a company agrees to give a discount on exported goods, in the contract, it is required to specify reasons for giving the discount. Read more

If the discount in given in line with regulations of laws on trade and the company has issued an adjustment invoice for the sold goods, transferred the discounted amount through a bank or offset against, the deduction, refund of value added shall be considered.

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blue-check Regarding VAT on brokerage service

Official letter No. 54758/CT-TTHT dated August 14th, 2017 of the Department of Taxation of Ha Noi city regarding tax policies
VietlawOnline

According to Article 9 of Circular No. 219/2013/TT-BTCstatus2 , service which is provided for a foreign organization is performed and consumed in Vietnam shall not be entitled to apply 0% value added tax (VAT). Read more

Accordingly, in the case a company provides brokerage service for a foreign organization but the service is performed in Vietnam, it shall not be entitled to apply 0% VAT.

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blue-check Some issues relating to invoice and tax policies applicable to goods as gifts to customers

Dispatch No. 13430/CT-TTHT dated March 31st, 2017 of the Departments of Taxation of Hanoi on response to tax policies
VietlawOnline

The document is to reply to some issues relating to invoice and tax policies applicable to goods as gifts given to customers. Read more

Accordingly, in case a company presents gifts to its customers for the purpose of serving production and business in accordance with provisions of commercial law, the expenditures on gifts shall be recorded as reasonable expenses when determining income liable to enterprise income tax.

Upon giving the gifts to customers, the company has to still create invoices and fully calculate value added tax as if the goods are sold to customers (Clause 7, Clause 9 Article 3 of Circular No. 26/2015/TT-BTC).

However, in case the company buys gift vouchers of supermarkets to present customers, the gift vouchers are valuable papers equivalent to money, used as a payment instrument rather than goods, the company shall not issue invoices other than payment vouchers for making cost accounting.

According to Clause 10 Article 3 of Decree No. 65/2013/ND-CPstatus2 , incomes from gifts are subject to personal income tax (PIT) only include gifts that are securities, capital holdings, real estate and other assets subject to ownership registration. Accordingly, in case the company gives gifts (goods, gift vouchers) to individual customers, if the gifts are not assets that must be registered for ownership, the company shall not deduct PIT.

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blue-check Payment discounts offered to consumers are exempt from PIT

Official letter No. 3569/TCT-TNCN dated August 10th, 2016 of the General Department of Taxation regarding the application of tax policy to “payment discounts” paid to individuals
VietlawOnline

According to the General Department of Taxation’s opinions, with regard to “payment discounts” offered to individuals, if these individuals are consumers who buy goods for their own consumption without reselling or trading, the payment discounts are not subject to personal income tax (PIT) Read more

In contrast, if the payment discounts are paid to individuals who are goods sale agents, 1% VAT on such payment discounts shall be calculated and withheld. Regarding this issue, the General Department of Taxation has provided guidelines in Official letter No. 1162/TCT-TNCN dated March 21st, 2016.

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blue-check Regarding PIT on incomes from winning prize outside Vietnam

Official letter No. 2713/CT-TTHT dated March 30th, 2016 of the Department of Taxation of Ho Chi Minh city regarding tax policy
VietlawOnline

According to Article 15 of Circular No. 111/2013/TT-BTCstatus2 , the assessable income from promotion prize in kind is the excess over 10 million VND of the prize Read more

Accordingly, in the case the company engages in selling cars, its parent company authorizes to award the Vietnamese prizewinner the prize (a car) in a contest held by the parent company; when the company awards the prize, it shall deduct PIT on the prize at the rate of 10% with regard to the prize in excess of 10 million VND

However, with regard to the making account of expenses related to this program, because it was held outside Vietnam (it was not registered with a Department of Industry and Trade), it is not related to production and business activities of the Company, the expenditures arising related to the prize award are not allowable to be included in reasonable expenses.

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blue-check Whether the discount offered for an agent is subject to PIT deduction or not

Official letter No. 1163/TCT-TNCN dated March 21st, 2016 of the General Department of Taxation regarding tax policy on expenditures on incomes of business individuals
VietlawOnline

The document is to reply to the question about whether personal income tax (PIT) is deducted or not and how to deduct PIT when an enterprise pays these amounts to agents that are individuals: payment discount, customer support meeting turnover, trading discount and sale promotion award. Read more

Accordingly, with regard to the “payment discount” and “customer support meeting turnover”, when the enterprise pays these amounts to the individuals, it must deduct 1% PIT according to the provisions in Point 4 Annex 01 of Circular No. 92/2015/TT-BTCstatus2 and declare the payment made on behalf of the individuals under Form No. 01/CNKD

For the “trading discount” offered for an agent, it is exempt from PIT according to the guidelines provided in Official letter No. 4447/TCT-TNCN dated October 27th, 2015. PIT shall not be deducted in this case

With regard to the expenditure which is “sale promotion award”, PIT shall be deducted in accordance with the guidelines provided in Official letter No. 3929/TCT-TNCN dated September 23rd, 2015. Accordingly, the award’s value (regardless of in kind or in cash and if it is in cash, regardless of whether it is subject to ownership registration or not) shall be subject to PIT. The taxable value is the amount beyond VND 10 million; the amount under VND 10 million is exempt from tax.

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