TAX ALERT SEPTEMBER 2020
In this September Newsletter, we would like to introduce to our customer's new policies related to tax, corporate law, labor, and other regulations including:
- Determination of revenue as a basis for payment of license fees for business households and individuals
- Tax incentives for enterprises engaged in the production of software products
- Tax fixing on interest-free lending
- Retrospective for the years 2017 – 2019 raising the ceiling of interest expense to 30%
- Land rent reduction in 2020 due to the impact of Covid-19
- Enterprises are entitled to pay occupational accident and occupational disease insurance at a lower rate
- Add documents in the application for unemployment insurance benefits
- Replace the form of Report on the employment situation and the list of participants in social insurance - health insurance - unemployment insurance
1. Revenue as a basis for determining license fees of individuals who have multiple rental houses:
Circular 302/2016/TT-BTC has clearly defined the license fee charged for each business location, ease contract, and clearly stipulates the license fee level based on the rental revenue under the contract copper. However, because the instructions are not clear, the application and declaration are different. On July 9, 2020, the Ministry of Finance issued Circular 65/2020/TT-BTC to guide how to calculate revenue as a basis for determining license fees.
Accordingly, individuals who rent houses currently have to declare and pay 3 taxes, which are:
• Course fees: The default tax filing and payment period is according to the calendar year;
• PIT and VAT: You can choose to declare and pay tax according to the payment period on the lease or by the calendar year.
According to Clause 3, Article 1 of Circular 65/2020/TT-BTC amending and supplementing several articles of Circular No. 302/2016/TT-BTC, the guidance on license fees already stipulates the number of fees charged. License fees for individuals, groups of individuals, and households engaged in the production and trading of goods and services are as follows:
• Individuals, groups of individuals, households have a turnover of over 500 million VND/year: 1,000,000 VND/year;
• Individuals, groups of individuals, households with a turnover of over 300 to 500 million VND/year: 500,000 VND/year;
• Individuals, groups of individuals, households with a turnover of over 100 to 300 million VND/year: 300,000 VND/year.
The turnover used as a basis for determining license fee rates for individuals, groups of individuals, and households (except for individuals leasing properties) is the total revenue for calculation of personal income tax in the preceding year of the enterprise. production and business activities (excluding property leasing) of business locations as prescribed in Circular No. 92/2015/TT-BTC.
2. Determination of software product production activities that meet the process to enjoy corporate income tax incentives
From August 19, 2020, Circular 13/2020/TT-BTTTT stipulating the determination of software product manufacturing activities that meet the official process takes effect, replacing Circular 16/2014 /TT-BTTTT has the same content as before. The new circular adds and stipulates more details about the stages in the software production process as well as how to determine whether an enterprise satisfies the conditions to be considered as operating in software production. , to serve as a basis for competent authorities to consider the application of tax incentives.
3. Determining corporate income tax for interest-free money lending transactions
The General Department of Taxation has just issued Official Letter No. 3231/TCT-CS dated August 10, 2020, guiding the Tax Department of Nam Dinh Province related to tax policies for activities of lending money to domestic enterprises and operating activities. Borrow money from foreign enterprises without interest at Smart Shirts Garments Manufacturing Bao Minh Co., Ltd. Accordingly, Smart Shirts Gannents Manufacturing Bao Minh Co., Ltd.'s interest-free loan transaction is determined to be a transaction without market price. Therefore, interest income is re-assessed by the tax authority according to the interest rates of loans of the same or similar type in the market.
– Regarding VAT: Individual lending activities, not regular business and supply activities of taxpayers who are not credited institutions, are not subject to VAT.
– Regarding CIT: From 2017 to 2018, Smart Shirts Garments Manufacturing Bao Minh Co., Ltd. lends money to Y Yen DT Co., Ltd without interest, this is a capital lending activity that is not at market transaction prices, so this loan belongs to The representative is assigned by the tax administration agency according to the provisions of Point e, Clause 1, Article 37 of the Law on Tax Administration No. 78/2006QH11.
– Regarding contractor tax of foreign companies: According to the above regulations and instructions and the actual situation at the enterprise to handle under the provisions of law.
Thus, for interest-free lending, although the lender does not earn any income from lending (zero interest), there is still the possibility of income tax arrears. Enterprises because the loan income is re-assessed by the tax authority according to the interest rate of loans of the same or similar type in the market. In case the lender is a foreign company, the borrower in the country may have arrears with the contractor's corporate income tax, which is determined by the tax authority at the interest rate of loans of the same type or equivalent in the market
4. Retrospective handling to change the ceiling interest rate on associated transactions 20% to 30% EBITDA
Decree No. 68/2020/ND-CP dated June 24, 2020, of the Government, amending and supplementing Clause 3, Article 8 of Decree No. 20/2017/ND-CP dated February 24, 2017, the Government regulating on tax administration for enterprises having associated transactions. Accordingly, the ceiling interest rate at enterprises with associated transactions is increased to 30% EBITDA compared to the old level of 20% EBITDA, applicable for the 2019 tax period and retroactively for the 2017-2018 tax period.
On July 14, 2020, the General Department of Taxation issued Official Dispatch No. 2835/TCT-TTKT guiding the implementation of Decree No. 68/2020/ND-CP to provide detailed instructions on retroactive handling for each year of 2017. , 2018 and 2019.
During the implementation process, the General Department of Taxation guides several contents related to the regulations on applying the Decree's effectiveness to the tax finalization period in 2019 and retrospectively handling the years 2017 and 2018, specifically. Can be as follows:….
5. Land rent reduction 2020 for those affected by the COVID-19 epidemic
Decision 22/2020/QD-TTG has just been issued by the Prime Minister on August 10, 2020, on the reduction of land rent in 2020 for those affected by the Covid-19 epidemic.
According to Resolution No. 84/NQ-CP dated May 29, 2020, land tenants including enterprises, organizations, households, and individuals being leased land by the State must cease production and business for 15 days or more. Due to the impact of the Covid-19 epidemic, 15% of the land rent payable in 2020 will be reduced…
6. Enterprises are entitled to lower insurance rates for occupational accidents and diseases
This is notable content in Decree No. 58/2020/ND-CP issued by the Government on May 27, 2020, and took effect from July 15, 2020.
Currently, every month, the employer has to contribute to the Labor Accident and Occupational Disease Insurance Fund at the rate of 0.5% of the salary fund as a basis for paying social insurance premiums for employees.
However, in the coming time, the employer will be proposed to reduce the contribution rate to 0.3% of the salary fund as a basis for paying social insurance if the prescribed conditions are met.
7. Add replaceable documents to your unemployment insurance claim
The Government promulgates Decree 61/2020/ND-CP amending and supplementing several articles of Decree 28/2015/ND-CP detailing unemployment insurance effective from 15/07/2020.
This Decree has added 03 types of documents that can be used in the application file for unemployment insurance. That is:
– Confirmation of the employer including the employee's information; type of signed labor contract; reason and time of termination of the labor contract.
– Certification of a competent State agency on the dissolution or bankruptcy of the enterprise or cooperative or decision on dismissal, relief from duty or dismissal for the appointed titles in case the employee is enterprise managers, cooperative managers;
– A written certification from the Department of Planning and Investment that the employee does not have written confirmation of the termination of the labor contract because the employer does not have a legal representative.
8. Replacing the form of the Report on the situation of labor use and the list of participants in social insurance, health insurance, and unemployment insurance
On August 18, 2020, the Vietnam Social Security issued Decision 1040/QD-BHXH issuing the form of the Report on the employment situation and the list of participants in social insurance (social insurance), health insurance. , unemployment insurance.
This Decision issued the form of Report on the employment situation and the list of participants in social insurance, health insurance, and unemployment insurance (Form D02-LT) to replace form D02-TS – List of employees Employees participating in social insurance, health insurance, unemployment insurance, occupational accident, and occupational disease insurance, issued together with Decision No. 595/QD-BHXH 2017.