According to the Draft Decree amending and supplementing a number of articles in the Decrees stipulating corporate income tax, personal income tax, and value-added tax, there will be many changes in tax related to business activities from January 1, 2017.
Article table of contents
Through the process of evaluating the implementation of support and development for enterprises in practice, along with reviewing the legal system on taxation, many regulations have been found to be inadequate, not keeping up with reality, and affecting the production and business activities of enterprises. Therefore, in order to support and facilitate enterprises in coping with the complex fluctuations of the above-mentioned economy, overcoming the shortcomings and inadequacies in legal regulations not in line with reality, affecting production and business, and the competitiveness of enterprises, while promoting the implementation of Resolution 35/NQ-CP, the Ministry of Finance submitted to the Government of Vietnam the issuance of a Decree amending and supplementing a number of articles of the Decrees on corporate income tax (CIT), personal income tax (PIT), and value-added tax (VAT).
The draft amendment includes the following 03 Decrees:
- Decree 218/2013/ND-CP detailing and guiding the implementation of the Law on Corporate Income Tax;- Decree 65/2013/ND-CP detailing a number of articles of the Law on Personal Income Tax and the Law amending and supplementing a number of articles of the Law on Personal Income Tax;- Decree 209/2013/ND-CP detailing and guiding the implementation of a number of articles of the Law on Value-Added Tax;
Some key points amended and supplemented are as follows:
Guidelines for determining activities of processing agricultural and aquatic products eligible for tax incentives
Income from processing agricultural and aquatic products eligible for incentives does not include income from the purchase of agricultural and aquatic raw materials and the conduct of common preliminary processing (cleaning, drying, drying, seed separation, stalk separation, cutting, grinding, chopping, peeling, shelling, hulling, breaking, polishing, seed soaking, airtight canning, cold preservation, and other common preservation methods), not yet processed into other products. Income from the processing of agricultural and aquatic products eligible for tax incentives will be specifically guided by the Ministry of Finance in the documents.
Determining the excess provision for enterprise reserves
This is an expense that is not deductible when determining the taxable income of the enterprise. The provision for bad debts of the enterprise (including credit institutions, foreign bank branches) is the excess amount based on the following ratios:
- 10% of the value for overdue debts under 6 months;- 30% of the value for overdue debts from 6 months to under 1 year;- 50% of the value for overdue debts from 1 year to under 2 years;- 70% of the value for overdue debts from 2 years to under 3 years;- 100% of the value for overdue debts from 3 years or more.
Supplementing the tax collection method for income from capital transfer activities of foreign enterprises
The corporate income tax payable by foreign enterprises having a permanent establishment in Vietnam and paying tax on taxable income arising in Vietnam, which is not related to the activities of a permanent establishment; Foreign enterprises without a permanent establishment in Vietnam are subject to tax on taxable income arising in Vietnam calculated as a percentage of revenue from the sale of goods and services in Vietnam. Specifically, income from capital transfer, the corporate income tax payable is calculated by the taxable income from each transfer multiplied by the tax rate.
Furthermore, the draft Decree also supplements guidelines for tax incentives for investment projects with a minimum capital scale of 6,000 billion VND, contributions to voluntary pension funds, and the purchase of voluntary pension insurance for employees.
For further details on the amendments and supplements to the Decrees detailing a number of articles of the Law on Personal Income Tax and the Law amending and supplementing a number of articles of the Law on Personal Income Tax and the Decree detailing and guiding the implementation of a number of articles of the Law on Value-Added Tax, see Draft.
