E-invoices to serve on-site goods export, import

1. Corporate Income Tax (“CIT”)

(i) Taxpayers not generating revenue in 2019 do not qualify for 30% CIT reduction in 2021

According to Decree No. 92/2021/ND-CP, enterprises with revenue in 2021 not exceeding VND200 billion ($8.48 million) and sufferring a decline in revenue compared to 2019 will be entitled to a 30% CIT reduction in 2021.

To clarify this policy, on July 21, 2022 the General Department of Taxation (GDT) issued Official Letter No. 2594/TCT-CS confirming that where an enterprise did not generate revenue in 2019 (i.e. failing one of the two conditions as regulated under Decree No. 92/2021/ND-CP), it would not be eligible for a 30% CIT reduction in 2021.

Where an enterprise was established in 2019 and its period of operation was less than three months and it generated revenue, the revenue criterion of 2019 to assess eligibility for the 30% CIT reduction in 2021 will be determined by the actual monthly average revenue multiplied by 12 months.

(ii) Output Value Added Tax (VAT) included in the VAT invoice issued but uncollectable upon a donation/sponsorship in-kind is not deductible for CIT calculation purpose

According to Official Letter No. 1585/TCT-CS dated May 16, 2022 of GDT, goods imported by organizations and individuals to support the prevention of Covid-19 pandemic are not subject to VAT. However, an output VAT invoice must be issued upon the donation/ sponsorship of such goods. The uncollectable output VAT which is recorded into the expenses of the taxpayers shall not be deductible for CIT due to the lack of a legal framework.

2. VAT and invoices

(i) Use of e-invoices for on-the-spot export and import of goods

According to Official Letter No. 8042/BTC-TCHQ dated August 12, 2022 of the Ministry of Finance (MoF), where a domestic enterprise applying the VAT-credit method provides goods to an export processing enterprise (EPE) or an enterprise located in a non-tariff zone, the procedure for on-the-spot export and import will be as follows:

- For on-the-spot export declaration: A copy of delivery note cum internal shipping shall be used instead of an e-VAT invoice according to Decree No. 123/2020/ND-CP.

- For on-the-spot import declaration: a copy of e-VAT invoice must be attached to the customs declaration dossier to be submitted via the electronic customs system.

(ii) Timing of e-invoice issuance for EPE

As per Decree 123, the timing of e-invoice issuance shall be (i) upon the transfer of goods ownership/right to use goods to the buyer, or (ii) upon the completion of customs clearance if the taxpayers declare VAT under the deduction method.

To clarify the timing of e-invoice issuance for EPE, the MoF has confirmed under the Official Letter No. 8404/BTC-CS dated August 23, 2022 that an EPE needs to issue e-sale invoice upon the transfer of ownership of the goods. Official Letter No. 8404 was copied to all provincial tax departments for consistent implementation.

(iii) E-VAT invoice is not required for export customs clearance

According to Official Letter No. 2054/TCHQ-GSQL dated June 3, 2022 of the General Department of Customs (GDC), the GDC opined on the use of e-VAT invoices for exported goods as follows:

- In accordance with customs regulations, a commercial invoice but not an e-VAT invoice shall be required under the export customs dossier

- The timing to issue an e-VAT invoice for exported goods is upon the completion of export customs procedure as prescribed in Decree No. 123/2020/ND-CP.

3. Personal Income Tax (PIT) and policies for employees

(i) Regarding the use of e-receipts and e-certificates of PIT withholding

On July 12, 2022, the GDT issued Official Letter No. 2455/TCT-DNNCN providing guidance on the use of e-receipts and e-certificates of PIT withholding as follows:

- The GDT is currently in the process of developing a standard data format for e-receipt. In the temporary absence of guidance from the GDT, enterprises may continue to use the printed receipts, paper receipts purchased from tax authorities or e-receipt under Circular No. 32/2011/TT-BTC;

- From July 1, 2022, tax authorities will no longer sell printed PIT withholding certificates. Taxpayers can create e-certificates of PIT withholding from their software according to Decree No. 123/2020/ND-CP. During the transition period when there is no e-certificates of PIT withholding, enterprises can use the PIT withholding certificate in its own form. Remaining PIT withholding certificates purchased from tax authorities could be used after July 1, 2022.

(ii) PIT declaration for individuals entering business cooperation contract (“BCC”) with enterprises

According to Official Letter No. 1805/TCT-DNL dated May 27, 2022 of the GDT, where an enterprise signs a BCC with an individual, the tax declaration of such individual will be implemented as follows:

- If the individual signing the BCC is a non-business individual, the enterprise shall declare VAT on the total revenue generated from the BCC and PIT on the income portion earned by the individual, regardless of the revenue sharing method under the BCC.

- If the individual signing the BCC is a business individual who pays tax under the presumption method and their registered business activities are the same with that of the BCC, the individual shall declare tax corresponding to the actual revenue shared from the BCC.

Please contact KPMG if you need further consultancy on matters of concern.