QPT RESEARCH | TAX ALERT ©2020 Q.P.T TAX AGENT COMPANY … · QPT RESEARCH | TAX ALERT ©2020 Q.P.T TAX AGENT COMPANY LIMITED Regarding the license fee payable for each lease contract,

1 QPT RESEARCH | TAX ALERT ©2020 Q.P.T TAX AGENT COMPANY LIMITED


CONTENTS

LICENSE FEE 04

Revenue for determining license fee of individuals who have more than one rental units.................................................. 05

CORPORATE INCOME TAX 08

Determine the processes of software production eligible for corporate income tax incentives ........................................... 09

Deemed corporate income tax on interest-free loans ......................................................................................................... 12

RELATED PARTY TRANSACTION & TRANSFER PRICING 14

Retrospective amending to changes the ceiling interest rate for related transactions from 20% to 30% EBITDA for the years

2017-2019 .......................................................................................................................................................................... 15

LAND RENTAL 18

Land rent reduction of 2020 for those affected by COVID-19 epidemic ............................................................................. 19

SOCIAL SECURITIES 20

Enterprises are entitled to pay lower rate of occupational accident and disease insurance ............................................... 21

Add replaceable documents in your unemployment insurance claim ................................................................................. 23

Replace the form of Report on employment movement and the list of participants in social insurance, health insurance and

unemployment insurance ................................................................................................................................................... 24


Q.P.T TAX AGENT

TAX ALERT SEPTEMBER 2020

LICENSE FEE


Revenue for determining license fee of

individuals who have more than one rental

units

Circular 302/2016/TT-BTC (hereinafter referred to as

“Circular 302”) issued by the Ministry of Finance on

November 15, 2006 clearly defines the license fee

calculated for each business location, ie the lease

contract and specifies the license fee based on the

rental revenue under the contract. However, due to

the unclear instructions, the application and

declaration may be different.

On July 9, 2020, the Ministry of Finance issued

Circular No. 65/2020/TT-BTC (hereinafter referred to

as “Circular 65”) to guide how to calculate revenue as

a basis for determining fee rates subjects.

House lessors currently have to declare and pay 3 taxes,

that is:

• License fees: the default period for tax filing and

payment is calendar year; and

• PIT and VAT: Lessor may choose to declare and

pay tax according to the payment period on the

lease or calendar year..

In the limits of this article, QPT Tax Agent only refers to

the declaration and payment of License Fee for individuals

with multiple rental units..

If an individual has more than one rental unit, he or she is

obliged to declare and pay fees for each contract, at the

district tax office that manages each rental house. This

means that if an individual has 3 houses in 2 different

localities, he or she must declare and pay tax 3 times for 3

lease contracts at 2 district tax offices that manage these

3 houses.

Q.P.T TAX AGENT


LICENSE FEE


Regarding the license fee payable for each lease contract,

Circular 302 provides guidance on how to calculate the

license fee for each contract as follows:

Rental revenues (VND per year)

License fees (VND / year)

Over 500 million 1.000.000

Over 300 million to 500 million 500.000

Over 100 million to 300 million 300.000

Under 100 million Miễn nộp

However, Circular 302 does not clearly guide how to

calculate rental revenue as a basis for calculating license

fees, there are many different interpretations. Therefore,

Circular 65 clearly guides the calculation of revenue as a

basis for calculating license fees as follows:

Revenues for determining the rates of license fees is

taxable revenue from property lease contracts of the tax

year.

• In case an individual has many rental contracts of

property at a location: the revenue as a basis for

determining the rate of license fees for that location

is the total revenue from all property lease

contracts of the tax year.

• In case an individual arises leasing property at

many locations, the revenue used as a basis for

determining the license fee for each location is the

total revenue from all property lease contracts

of all locations of the tax year, including the case

in which there are multiple lease contracts of

property at a location.

Thus, it can be understood that the revenue used as the

basis for calculating license fees is the revenue of all lease

contracts arising in the year. In the view of QPT Tax Agent,

the provisions in Circular 65 are clearer and convenient for

tax collection, but when applied in practice, there will be

some points to discuss.:

• Case 1: Individual has 2 apartments for rent in 2

localities. Assume 1 unit has revenue of 100 million

VND, and the other has a revenue of 500 million

VND. Thus, the license fee to be paid to the

managing tax office of each apartment is 1 million

dong, although the revenue of unit 1 is only 1/5 of

the second unit.

Q.P.T TAX AGENT


LICENSE FEE


• Case 2: 2 individuals with the same rental revenue

of 600 million. Personal A has only 1 house for rent

and only pays a license fee of 1 million, while

individual B has 3 units (each with a turnover of

VND 200 million) and has to pay a license fee of 3

million (1 million/unit) x 3 units).

• Case 3: In reality, the tax declaration and payment

of housing tax is often authorized for the lessee

because the business wants to protect deductible

rental expenses when calculating tax. It is difficult

for businesses to require the landlord to provide the

entire lease of all rental units to have a basis for

declaring revenue and charging license fees.

• Case 4: Assuming that the enterprise rents an office

house at VND 80 million/year. In the contract, the

business is obliged to declare and pay taxes on

behalf of the owner. Because the rental revenue is

80 million VND less than 100 million tax threshold,

so the enterprise does not declare and pay license

fees as well as VAT and PIT. However, then the

landlord leases another apartment to another

enterprise, assuming 60 million / year. Then the

revenue as a basis for calculating license fees is

140 million and the license fee to be paid for each

unit is VND 300,000 per year.

According to Article 4, Circular 96/2015/TT-BTC: “In

case an enterprise leases property of an individual

and there is an agreement that the enterprise pays

tax on behalf of an individual, the dossier is used to

determine payment. Deductible fees are property

lease contracts, rental payment vouchers and tax

payment vouchers on behalf of individuals”. Thus,

in this case, the Enterprise bears the non-

deductible 80 million VND rental expenses when

calculating CIT because there is no proof of

payment in lieu of the license fee of 300,000 VND

for the owner.

ĐẠI LÝ THUẾ Q.P.T

BẢN TIN THUẾ THÁNG 9 NĂM 2020

Thuế thu nhập doanh nghiệp


Q.P.T TAX AGENT


CORPORATE INCOME TAX


Determine the processes of software

production eligible for corporate income tax

incentives

On July 3, 2020, the Ministry of Information and

Communications issued Circular 13/2020/TT-BTTTT

regulating the determination of software product

manufacturing activities meeting the process effective

from August 19, 2020.

The Circular stipulates the determination of software

product production that meets the process for enjoying

corporate income tax incentives. In which, software

production process consists of 07 stages:

(1) determining requirements,

(2) analysis and design,

(3) programming, coding,

(4) testing, software testing,

(5) software product finishing, packaging,

(6) installation, transfer, user manual, maintenance,

software product warranty,

(7) release and distribute software products.

Regarding the determination of the production of software

products that meets the process, the production of a

software product of the organization or enterprise is

defined as the production of software products that meets

the process when the With that product, the organization

or enterprise will perform at least one of two steps:

(1) define requirements,

(2) analysis and design,

The production of software products to meet the process

is represented by one or more documents corresponding

to each operation of the stages performed by the

organization or enterprise:

a) Documents proving Requirement Determination

stage: Describe the idea of how to develop a product;

describe product characteristics (requirements), product

use contexts; description of proposals, survey results,

results of clarification, completion of requirements for

products; detailed professional analysis description; a

complete description of product requirements; describe

the content of process adjustment consultant; requirement

agreement, requirement review, description of product's

Q.P.T TAX AGENT




control capabilities and the bases for verifying compliance

with requirements; or documents with similar content.

b) Document proving Analysis and design stage:

Describe the request; describe development problems;

describe the appropriate techniques performed to optimize

the solution, analyze the correctness and testability of the

software, analyze the effect of software requirements on

the operating environment, list requirements are

prioritized, approved and updated as needed; describe

data model, functional model, information flow model;

software solution description; solution design, software

system design, data design, architectural design, software

unit design, component modules; designing confidentiality

and information safety for the software; customer

experience interface design; or documents with similar

content.

c) Document Programming and coding stage: Some of

the main codes show that the business has written

software code; description of the integrated software

system; or documents with similar content.

d) Documents proving Software testing: Test script,

unit test, software module; description of software testing

results, software system testing results, software function

testing results, software quality testing results; error

description evaluation; describing information security and

safety testing results for software; confirm the software

meets customer requirements; software acceptance

report; or documents with similar content.

đ) Documents proving Completing and packing

products: A full introduction to software products;

instructions for installation (in case of package delivery),

instructions on how to use the product or using the service

(for the user or service tenant); copy of model registration

certificate (if any); a copy of registration certificate of

intellectual property rights (if any); or documents with

similar content.

e) Documents proving product installation, transfer,

instruction, warranty and maintenance: Minutes or

contract of transfer (product package or right to use the

product under rental form); instructions for installing

software products (in case of package delivery); describe

Q.P.T TAX AGENT




the results of software product installation (on the

customer's system in case of package delivery or on the

service delivery system in the case of software product

leasing); training content, instructions (users or service

tenants); describe the software product testing after

handover or software product on the service delivery

system; describe the post-delivery software product error

correction activity or software product on the service

delivery system; describe the post-handover support in the

service lease process; description of product warranty

after handover or service lease process; describe the

software product maintenance (on the customer's system

or on the service delivery system).

Organizations and enterprises engaged in software

product production are solely responsible for the accuracy

of information in dossiers of proposals for tax incentives

for software production and self-determination of

production activities. software that meets the process;

send and update information on software products and

stages in the production of software products that satisfy

the process and deductible tax rates to the Ministry of

Information and Communications (the Information

Technology Department) for synthesis ; to ensure that their

operations in the production of software products and

software products do not violate intellectual property laws

and other relevant laws.

Thus, from August 19, 2020, in order to enjoy preferential

corporate income tax on software product manufacturing

activities, the products of organizations and enterprises

must meet the requirements specified in the Circular.

Circular 13/2020/TT-BTTTT regulates the determination of

software product manufacturing activities that meet the

process.

Q.P.T TAX AGENT




Deemed corporate income tax on interest-free

loans

On August 10, 2020, the General Department of Taxation

issued Official Letter No. 3231/TCT-CS guiding the Tax

Department of Nam Dinh Province regarding tax policies

applicable to activities of lending money to domestic

enterprises and lending activities money from foreign

entity is free of interest at Smart Shirts Garments

Manufacturing Bao Minh Company Limited. Accordingly,

Smart Shirts Garments Manufacturing Bao Minh Company

Limited interest-free loan transaction is defined as non

arm’s length transaction. Therefore, interest income is re-

determined by the tax authority according to the interest

rate on the same or equivalent loan in the market..

The scenario: Smart Shirts Garments Manufacturing Bao

Minh Company Limited borrow money from a foreign

company, then lend money to DT Y Yen Company Limited

without interest.

The General Department of Taxation has based on the

provisions in order to guide the above case:

• Clause 2, Article 36 of the Law on Tax Administration

No. 78/2006/QH11 dated November 29, 2006 on

principles of tax deeming,

• Item b, Clause 3, Article 5 of Circular No. 123/2012/TT-

BTC dated July 27, 2012 of the Ministry of Finance

guiding the turnover for calculating CIT taxable income,

• Clause 8 Article 4 of Circular No. 219/2013/TT-BTC

dated December 31, 2013 of the Ministry of Finance

regulating the subjects not subject to VAT,

• Clause 1 Article 1, Clause 3 Article 7 of Circular No.

103/2014/TT-BTC dated August 6, 2014 of the Ministry

of Finance guiding the implementation of tax obligations

applicable to foreign business organizations and

individuals. in Vietnam or having income in Vietnam, on

taxable subjects and determination of VAT-liable income

of foreign contractors.

• Clause 3 a Article 20 of Circular No. 156/2013/TT-BTC

and the method of paying VAT directly on VAT, paying

CIT at the rate of% calculated on turnover.

Q.P.T TAX AGENT




Accordingly, the specific tax policy applicable to this case

is as follows:

Value added tax:

Single lending from non-credit instutional tax payer, not

subject to VAT.

Corporate income tax:

From 2017 to 2018, Smart Shirts Garments Manufacturing

Bao Minh Co., Ltd. lent money to Y Yen DT DT Company

Limited without interest, this is a loan activity without

market transaction prices, so this loan belongs to the area

subject to the tax administration's implementation as

prescribed in point e Clause 1 Article 37 of the Law on Tax

administration No. 78/2006/QH11.

Foreign contractor withholding tax:

Based on the above regulations and guidance and the

actual situation at the enterprise to handle in accordance

with the law.

Thus, for interest-free lending, even though the lender

does not receive any income from the loan (interest is

zero), there is still a possibility of income tax arrears. The

enterprise whose loan income is re-determined by the tax

authority according to the interest rate of loans of the same

or equivalent type in the market. In cases where the lender

is a foreign company, the domestic borrower is likely to be

retrospectively collected from the contractor's corporate

income tax re-determined by the tax authority at the

interest rate applicable to the same type of loan or

equivalent on the market.

Q.P.T TAX AGENT


RELATED PARTY TRANSACTION & TRANSFER PRICING


Q.P.T TAX AGENT




Retrospective amendments to changes the

ceiling interest rate for related transactions

from 20% to 30% of EBITDA

Decree No. 68/2020/ND-CP dated June 24, 2020 of the

Government amending and supplementing Clause 3,

Article 8 of the Government's Decree No. 20/2017/ND-CP

dated February 24, 2017 on tax administration for

enterprises with associated transactions. Accordingly, the

ceiling interest rate at the enterprise with associated

transactions is increased to 30% EBITDA compared to the

old rate of 20% EBITDA, applied for the tax period of 2019

and retroactively for the tax period of 2017 and 2018..

On July 14, 2020, the General Department of Taxation

issued Official Letter No. 2835/TCT-TTKT guiding the

implementation of Decree No. 68/2020/ND-CP to detail

the retroactive handling for each year 2017, 2018 and

2019.

During the implementation process, the General

Department of Taxation guides a number of contents

related to the provisions on effective application of the

Decree for the tax finalization period of 2019 and the

retroactive handling for 2017 and 2018. as follows:

1. For the tax finalization period in 2019:

Decree No. 68/2020/ND-CP stipulates: “1. The Decree

takes effect from the date of signing and applies from the

corporate income tax period of 2019. ”

Thus, for enterprises that have declared tax finalization in

2019 according to the tax period due before March 31,

2020, additional declarations of corporate income tax

finalization (CIT) are made according to Decree No.

68/2020 / ND-CP amending and supplementing Clause 3,

Article 8 of Decree No. 20/2017/ND-CP.

For enterprises that have not reached the tax finalization

declaration period in 2019, they will comply with the

amended and supplemented regulations in Decree No.

68/2020/ND-CP.

Q.P.T TAX AGENT




2. For the retrospective amendments for the corporate

income tax period of 2017 and 2018:

a. Scope of amendments:

The retrospective amending of controlled interest

expenses under Clause 3, Article 8 of Decree No.

20/2017/ND-CP for the years 2017 and 2018 is only

applicable to the provisions of Point a, Clause 3, Article 8

of the Decree. Decree No. 20/2017/ND-CP, which is

amended and supplemented in Article 1 of Decree No.

68/2020/ND-CP, specifically:

- Raising the threshold of interest expense from 20% to

30%;

- Apply the method of calculating net interest expenses

(borrowing interest minus (-) deposit interest, loan interest

income);

- Provisions shall not be applied retroactively to the

provisions of the amendment and supplementation at

Points (b) (carrying forward deductible expenses) and (c)

(extending the subjects of exemption) in Decree No.

68/2020 / ND-CP for years 2017, 2018.

b. Offsetting corporate income tax paid in 2017 and

2018:

In case of applying the scope recalculation as prescribed

in Decree No. 68/2020 / ND-CP, if the CIT amount is

reduced, the corresponding late payment amount will be

reduced (if any), specifically:

In case of no inspection or examination:

The taxpayer shall offset the difference between the CIT

amount and the corresponding late payment interest

against the CIT amount in 2020. If the year 2020 is not fully

offset, it will be offset against the payable corporate

income tax for the next 5 years from 2020. At the end of

the above time limit, the remaining corporate income tax

amount that has not been fully cleared yet shall be

handled.

In case having tax inspection, audit conclusion, decision:

Taxpayers request the Tax Department, the Tax Bureau to

directly manage them to re-determine the payable CIT

amount. Based on the request of the taxpayer; Relevant

documents, including documents of the enterprise and

documents, records of the inspection team, the directly

Q.P.T TAX AGENT




managing tax agency shall re-determine the payable CIT

amount, the corresponding late payment interest. currently

offset the difference to the corporate income tax amount in

2020.

+ In case of necessity, the supervisory tax authority shall

coordinate with the inspection teams, examine, review and

determine taxpayers' data at the tax office's headquarters..

+ Similar to the case where no inspection or examination

has passed, if the year 2020 is not sufficiently offset, it will

be offset against the corporate income tax payable for the

next 5 years from 2020. At the end of the above time limit,

the CIT amount will not be processed. the rest are not fully

compensated.

c. Location, form of implementation:

The payable tax amount shall be re-determined at the tax

office, without repeating inspection or re-examination at

the taxpayer's head ofice; not making adjustments to

conclusions and inspection decisions in 2017 and 2018.

In case of sanctioning of tax administrative violations or

being handled according to the order of complaint, no

adjustment of fines for tax-related administrative violations

shall not be adjusted.

Q.P.T TAX AGENT


Land Rental


Q.P.T TAX AGENT


LAND RENTAL


Land rent reduction in 2020 for those affected

by COVID-19 epidemic according to

Resolution 84/NQ-CP dated May 29, 2020

On August 10, 2020, the Prime Minister issued Decision

22/2020/QD-TTg on reducing land rent by 2020 for those

affected by COVID-19 according to Resolution 84 / NQ-

CP on May 29, 2020.

Accordingly, reducing 15% of the payable land rent in

2020, no reduction on the outstanding land rent of the

years prior to 2020 and late payment interest (if any) for:

Enterprises, organizations, households and individuals

that are directly leased land by the State under decisions

or contracts of competent state agencies in the form of

annual land rental payment must stop their production and

business. 15 days or more due to the influence of the

Covid-19 epidemic.

This provision also applies to the cases where the land

lessee has many different production and business

activities but only stops one production and business

activity in the land or parcel of land directly leased by the

State.

The Decision also provides detailed guidance on the

application for land rent reduction in Article 4. Accordingly,

the land tenant is obliged to submit 01 application for land

rent reduction from August 10, 2020 to December 31,

2020. include

• Application form for land rent reduction

• Land lease decision or Land lease contract issued

by a competent authority.

Applications submitted after this date (from January 1,

2021 onwards) will not be accepted.

Q.P.T TAX AGENT


SOCIAL SECURITIES


Q.P.T TAX AGENT


SOCIAL SECURITIES


Enterprises are entitled to pay lower rate of

occupational accident and disease insurance

This is notable content in Decree No. 58/2020/ND-CP

issued by the Government on May 27, 2020 and effective

from July 15, 2020.

Currently, every month, employers must contribute to the

Insurance Fund for Occupational Accidents and Diseases

with the rate of 0.5% of the salary fund as a basis for

paying social insurance premiums for the employees.

However, in the coming time, the employer will be

proposed to reduce the contribution to 0.3% of the salary

fund as a basis for paying social insurance if they meet the

prescribed conditions.

Clause 1, Article 4 stipulates the contribution rate to the

Insurance Fund for Occupational Accidents and Diseases

1. Employers shall pay monthly premiums on the salary

fund for paying social insurance premiums for laborers

specified at Points a, b, c, d, e and h, Clause 1, Article 2

and Clause 2, Article 2 of the Law on Bao. social

insurance, except for the domestic worker, according to

one of the following levels:

a) The normal premium rate is equal to 0.5% of the salary

fund as a basis for payment of social insurance, and also

applies to employees who are cadres, civil servants, public

employees and people of the armed forces. Party and

State agencies, socio-political organizations, the military,

the police, public non-business units using the state

budget;

b) The premium rate is equal to 0.3% of the salary fund as

a basis for paying social insurance premiums applicable to

enterprises that satisfy the conditions specified in Article 5

of this Decree.

Q.P.T TAX AGENT


SOCIAL SECURITIES


Article 5 of the Decree specifies the cases in which a lower

than normal rate is applied to the Insurance Fund for

Occupational Accidents and Diseases:

Enterprises operating in industries with high risks of

occupational accidents and occupational diseases are

entitled to a payment rate of 0.3% of the salary fund as a

basis for social insurance payment if the following

conditions are met:

• Within 03 years up to the time of the proposal, they

will not be sanctioned for administrative violations

in the form of a fine, will not be examined for penal

liability for their violations of the law on occupational

safety and sanitation and protection. social

insurance;

• Perform periodic reports on occupational accidents

and occupational safety and sanitation reports

accurately, fully and on time in 03 consecutive

years preceding the proposed year;

• The frequency of occupational accident of the year

preceding the proposed year must decrease by

15% or more compared with the average frequency

of occupational accident of the 03 years preceding

the proposed year or not to have an occupational

accident. counted from 03 consecutive years

preceding the year of proposal.

Q.P.T TAX AGENT


SOCIAL SECURITIES


Add replaceable documents in your

unemployment insurance claim

The Government promulgates Decree 61/2020/ND-CP

amending and supplementing a number of articles of

Decree 28/2015/ND-CP detailing unemployment

insurance, which will take effect from July 15,. 2020

This Decree has added three more papers that can be

used in the application for unemployment insurance

benefits in addition to the labor contract or the decision of

termination...

That is:

• Employer's confirmation that contains specific

information about employee information; type of

labor contract signed; The reason and the time of

terminating the labor contract with the employee;

• Confirmation of competent State agency that the

enterprise or cooperative dissolves, goes bankrupt

or decision to dismiss, dismiss or dismiss the

appointed positions in case the employee is

business manager, cooperative manager;

• The employee does not have documents to confirm

the termination of the labor contract because the

employer does not have a legal representative and

the person is authorized by the legal representative,

the Department of Labor and Trade The

Department of Planning and Investment is

responsible for submitting a written request to the

Department of Planning and Investment to confirm

and reply to the above content within 10 working

days.

This Decree takes effect from July 15, 2020.

Q.P.T TAX AGENT


SOCIAL SECURITIES


Replace the form of Report on employment

situation and the list of participants in social

insurance, health insurance and

unemployment insurance

On August 18, 2020, Vietnam Social Security issued

Decision 1040 / QD-BHXH on issuing the form of report on

employment situation and list of participation in social

insurance, health insurance and insurance.

unemployment insurance.

This Decision issued the form of the Employer Status

Report and the list of participation in social insurance,

health insurance, unemployment insurance (Form D02-

LT), replacing form D02-TS - TB list Participation in social

insurance, health insurance, unemployment insurance,

occupational accident and disease insurance, issued

together with Decision No. 595 / QD-BHXH 2017.

Accordingly, the employer is responsible for making a

report on the use of employees and a list of participating

in social insurance, health insurance, unemployment

insurance for the unit or enterprise to register; arrears,

adjustment of payment of social insurance, health

insurance, unemployment insurance, labor accident and

occupational disease insurance; issue social insurance

books, health insurance cards and report the use of

employees to the employees of the units.

In addition, the employer shall make a report on the use of

employees and a list of participating in social insurance,

health insurance, unemployment insurance when there is

an occurrence of labor, wages and arrears. for the

employees of the unit.

The Decision takes effect from the date of signing

18/08/2020.

ĐẠI LÝ THUẾ Q.P.T

BẢN TIN THUẾ THÁNG 9 NĂM 2020


Q.P.T TAX AGENT

TAX ALERT AUGUST 2020

CONTACTS

QPT RESEARCH

Quang Dang (Mr.), ACCA, CPA Yen Pham (Ms.), ACCA

Director – Tax Practitioner Depurty Director – Tax Practitioner

0938 753 116 037 370 0906

[email protected] [email protected]

FOLLOW QPT

QPT RESEARCH

This Material is prepared by QPT Research Team, a function of QPT Tax Agent Company Limited (“QPT Tax Agent” or “QPT”. This material

purpose is to provide general information about new legisations. It does not express opinion of Tax authorities and should not be used as

professional advice from QPT Tax Agent’s tax practioners. Readers should take responsible for indenpendently assessing relevance, accuracy,

completeness of information in the Material. QPT shall not take any responsible for any damage, any cost or any expense occurred by any

person or any organization under any circumstance, relating to apply information in this Material into a specific tax issue, unless it is agreed in

written in advance by QPT. Please discuss with us your specific tax issues by accessing website www.qpt.com.vn

©2020 Q.P.T Tax Agent Company Limited. All rights reserved.

https://www.facebook.com/qpttaxagent2706/

http://www.qpt.com.vn/