Page 10 - VSIP-News-QIII-2014

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Decree 91 amending various tax decrees
The Government issued Decree 91/2014/ND-CP (“Decree 91”) on 1 October 2014, amending current Decrees on Corpo-
rate income tax, Value added tax, Personal income tax and tax administration. Decree 91 will take effect from 15 Novem-
ber 2014, except for the provisions relating to CIT which will retrospectively apply for the 2014 tax year. Decree 91 reiter-
ates and provides further guidance on the tax changes approved by the Government under Resolution 63 (please refer to
our NewsBrief dated 29 August 2014).
A. Corporate income tax (“CIT”)
1. CIT incentives
For enterprise entitled to tax incentives during the period 2009-2013, any additional profit derived from regular increases
in machinery and equipment during this period are entitled to the same CIT incentives as the existing project for the
remaining period.
Decree 91 is silent on how to define “regular” increase in machinery and equipment and how the new guidance applies to
periods which have been subject to tax audit and assessed additional CIT due to expansionprojects.
• For investment projects where the initial investment certificate application outlined multiple stages, profits
derived from the subsequent investment stages (if carried out in line with the registered timeline) are entitled to
the same CIT incentives as the first stage.
The industrial zones qualifying for CIT incentives is expanded to include urban districts which have been
established from rural districts from 1 January 2009 of Ho Chi Minh, Ha Noi, Hai Phong, Da Nang, Can Tho and
provincial cities type 1.
• Alternative CIT incentives for companies whose CIT incentives based on export criteria were terminated as a
result of Vietnam’s WTO commitments which were previously guided under Decree 122/2011/NDCP are repeated
in Decree 91. However, it is indicated in Decree 91 that alternative preferential CIT rate and exemption/ reduction
could be elected separately.
2. CIT deductible expenses
Expenditure on staff welfare is CIT deductible (but capped at one month’s average salary) if supporting documents are
available. The interesting point is that the scope of staff welfare has been expanded to cover certain benefits provided to
embers of staff.
3. CIT filings
Provisional quarterly CIT returns are no longer required from Quarter 4/2014. Companies will instead be required to make
quarterly provisional CIT payments based on estimates.
• For companies that are required to have quarterly financial statements (e.g. SoEs, listed companies), the
quarterly provisional CIT liability is to be determined based on the quarterly financial statements and tax
For other companies, the provisional CIT liability of the current year is determined based on prior year’s CIT return
and projected result of the current year.
If the provisional quarterly CIT payments account for less than 80% of the final CIT liability, the shortfall in excess of 20% is
subject to interest on overdue tax (currently as high as 25% per annum), counting from the deadline for payment of the
Quarter 4 CIT liability.