Tax update May 2022
1. Corporate income tax (CIT)
Amending guidance on making a provision for the devaluation of investment securities
On April 7, 2022, the Ministry of Finance (MoF) issued Circular No.24/2022/TT-BTC amending and supplementing several articles of Circular No.48/2019/TT-BTC to provide guidance on provisions among enterprises. Specifically, investment securities for which provision for devaluation can be made will not include government bonds, government-guaranteed bonds, and municipal bonds.
Circular No.24/2022/TT-BTC will take effect from May 25, 2022. The ending balance of provision for government bonds, government-guaranteed bonds, and municipal bonds that enterprises made before the effective date of this circular shall be reversed and recorded as a reduction to expenses for fiscal year 2022.
Scrutinizing donation and sponsorship expenses in-kind for Covid-19 prevention
On February 16, 2022, the General Department of Taxation (GDT) issued Official Letter No.438/TCT-CS requesting local tax departments to enhance the scrutiny on donation and sponsorship expenses contributed in-kind for Covid-19 prevention activities, especially medical equipment, biological products, and medical supplies in order to detect and strictly handle cases where taxpayers sought to take advantage of the government’s policies for profiteering purposes.
Tax departments shall coordinate with relevant competent authorities to verify invoices, supporting documents, customs declarations (if any) and make a price comparison with the same type of products in the market; and accordingly, detect cases in which the expenses of donation and sponsorship were not properly declared for CIT purposes.
Deferring the CIT incentive scheme for the first year of operation with less than 12 months is only applicable to the CIT exemption and reduction.
According to Official Letter No.756/TCT-CS dated March 16, 2022 of GDT, in a case where the first year that a taxpayer generates income from a new investment project is less than 12 months, the taxpayer may choose to enjoy the tax exemption or reduction period (where applicable) from that tax year or register with the tax authority to defer the CIT exemption and reduction to the next tax year. This deferral scheme is not applicable to the incentivized tax rate.

Workers at a factory in Vietnam. Photo courtesy of Vietnam News Agency.
2. Value Added Tax (VAT) and invoices
Enhancing the tax inspection against VAT refund fraud
On February 11, 2022, the GDT issued Notice No.43/TB-TCT instructing local tax departments and relevant departments to enhance inspections of VAT refunds for anti-fraud as follows:
- Enforce the scrutiny and detection of suspicious signs of taxpayers claiming VAT refunds; inspect and verify invoices and origin of goods from the first to the last stage of the supply chain to prevent violations in VAT refund and promptly report to the GDT complicated cases and cases involving various localities or having a systematic violation.
- Strengthen VAT refund inspections, scrutinize and verify taxpayers with high risk of VAT refund for exported goods, with a special focus on typical products like tapioca starch, cashew nuts, rubber, wood chips, agricultural products, etc.
- Study the possible amendment of tax refund policies and dossiers, including regulations on the non-cash payment requirement, the legal basis to delay VAT refunds for further investigation, and the legal basis to claw back the refunded tax in case taxpayers purchase goods and services from intermediary suppliers (at the commercial stage) who are determined run-away taxpayers.
- Propose solutions to enhance information exchange with tax authorities of importing countries to verify the business partners of taxpayers displaying signs of high risks with respect to VAT refunds.
*Please contact KPMG if you need further consultancy on the matters of concern.
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