Vietnam: Tuition paid by employers considered staff welfare; VAT updates

Vietnam: Tuition paid by employers; VAT updates

Guidance in an official letter states that if a company directly pays tuition and fees for children of employees according to company policies and properly documented, these payments are considered to be deductible expenses for corporate income tax calculation purposes, subject to a cap.

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Read a January 2016 report prepared by the KPMG member firm in Vietnam: Technical Update: Tax and Legal Services

 

Other items included in the report include:

Corporate income tax

  • The tax authorities will only acknowledge corporate income tax finalization submissions of dossiers that include financial statements or audited financial statements.

Value added tax (VAT)

  • Adjusted invoices must be issued when a company issues an invoice with an incorrect foreign exchange rate. 
  • There are changes to certain provisions on VAT refund management.
  • Services performed in Vietnam with respect to the production of products that will be exported entirely will be considered “export services” with a VAT rate of 0%.

Individual (personal) income tax

  • To be eligible to work in Vietnam, foreign “experts” must have a bachelor’s degree (or equivalent) relevant to the intended job in Vietnam, and have at least three years of work experience in the profession.

Foreign contractor tax (FCT)

  • Management fees allocated to permanent establishments in Vietnam are exempted from the FCT.
  • If a company rents from a foreign company machineries and equipment satisfying all conditions of a financial lease asset, and the foreign company is a financial lease company, then the income from this activity will be subject to FCT at the corporate income tax rate of 5%; VAT is not applicable.

Export duty, import duty, customs procedures

  • Guidance is provided on implementing certain provisions of import duties, export duties, and customs procedures.
  • Guidance is also provided on the export tariff schedule and preferential import tariff schedule for taxable items.
  • There is a circular concerning the rules of origin in Vietnam—effective 1 January 2016.

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