Page 9 - VSIP News - QII 2014

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LEGAL UPDATES
TAX RELIEF FOR VICTIMS OF RECENT RIOTS
On May 22, 2014, the Prime Minister issued Notice 207/TB-VPCP urgently providing various relief measures to help busi-
nesses affected by recent riots in the provinces Binh Duong, Dong Nai and Ha Tinh. The relief measures include (amongst
others) the following tax relief:
• Extension of time for filing tax returns.
• Up to 2 years of deferment of tax debts without late payment penalty, in respect of tax debts incurred prior to
May 2014. Amount eligible for deferral equals the extent of damages suffered.
• Import/export duty exemption, reduction, or refund in respect of inventory lost or damaged by the riots; and
removal of customs blockages against affected businesses that has tax debts.
• Promptly allow input VAT credit or refund with respect to goods or services that were lost or damaged and not
indemnified for, including cases where invoices, supporting documents have been lost.
• Allow corporate income tax deductions for (i) losses or damages not indemnified for, or not covered
[by insurance] (ii) interest expenses on loans acquired to contribute charter capital, to the extent such loans are
used to restore losses or damages. Special Sales Tax (SST) reduction up to 30% of SST liability in 2014 or the total
amount of unindemnified damaged assets, whichever is lower.
• Reduction or exemption of land rental on a case by case basis.
CIRCULAR 78 ON CORPORATE INCOME
Circular 78 guiding the implementation of Decree 218 on CIT has been issued and will be effective from 2 August 2014. It
will take retrospective effect for the whole 2014 tax year.
1. CIT incentives
• The Government has reintroduced tax incentives for investments in certain industrial zones. Industrial zones
that do not qualify for CIT incentives are those in the inner districts of Ho Chi Minh City, Hanoi and Hai Phong and
those in provincial cities type 1.
• CIT incentives are available for both a “new project” and “business expansion”.
• A “new project” is a project that has been issued an investment certificate for the first time and need not be
a new company. It can also be an investment project issued its investment certificate before 2014 but
generating its first revenue after 1 January 2014. However, it is necessary that an amended investment certificate
be issued after January 2014.
• “Business expansion” requires that there be a project in an encouraged sector or location and one of the
following conditions is met:
i. The historical cost of the fixed assets increases at least VND20B for investment in an encouraged sector
or VND10b for investment in an encouraged location; or
ii. The historical cost of the fixed assets increase at least 20% compared with the total historical cost of
fixed assets before the business expansion; or
iii. The design capacity increases at least 20% compared to the design capacity before the business expansion.
• For a project provided CIT incentives because of its sector, profit from the sale of scraps, foreign exchange
differences in relation to its main activities and other direct income (except interest from term deposit) are
entitled to the CIT incentives.