Flexible tax policies give businesses room to move

1. Our company is headquartered in Bac Ninh province and we recently set up a branch in Ho Chi Minh City. The headquarters has signed labor contracts with all employees, including those working for the branch. Could we centralise compulsory insurance contributions for employees at both the headquarters and the branch in HCMC?

In accordance with Decision 888/QD-BHXH which took effect from July 1, 2018, a company can choose to centralise its compulsory insurance contributions to the managing social insurance authority of the headquarters (i.e. Bac Ninh), or separately contribute for employees in the province where the branch is located. Before July 1, 2018, the branch would have had to contribute social insurance to its locating province.

2. We are a manufacturing company, established in March 2020 in Thang Long II Industrial park. We rent 2.5 hectares of land from the industrial park developer but have only utilized half of the area for first factory. The other half is left unused, but we plan to set up a second factory in 2024. Could we claim a corporate income tax (CIT) deduction for the land rental fee paid for the whole area?

Following the revenue-expense matching principle, the current CIT regulations only allow CIT deductions for expenses corresponding to revenue generation. Given this, as half of the land is not utilized for any business or production purposes, the tax authorities are of the view that the corresponding rental expenses should not be deductible for CIT calculation purposes.

3. We are a trading company with headquarters in Hanoi and an accounting-dependent branch in HCMC. The branch is registered to use VAT invoices for its sales with the HCMC Tax Department and separately record the input VAT and output VAT incurred. Do we have to centralise our VAT declarations, including those incurred at the HCMC branch, to the Hanoi Tax Department?

Following Circular 80/2021/TT-BTC, as the branch directly sells goods using its own invoices registered with the tax authority of the locating province, and being able to separately record the input VAT and output VAT, the branch can directly file VAT declarations to the HCMC Tax Department. Centralisation of VAT declarations is not required in this case.

* Please email [email protected] if you have questions on tax issues.