Disposing costs of damaged/defective goods not deductible when calculating CIT:

On 20 March 2023, the General Department of Taxation issued Official Letter No. 796/TCT-CS detailing tax policies on damaged and defective products during production. Details are as follows:

Based on Clause 1, Article 3 of Decree No. 126/2020/ND-CP, Article 4 of Circular No. 96/2015/TT-BTC stipulating deductible and non-deductible expenses when determining taxable income, in principle, when a company has defective or damaged goods during the production process that cannot be recycled and must be disposed/destroyed, other than cases prescribed by the Law on CIT, the value of the destroyed goods is not deductible when determining CIT taxable income.

Guidance on PIT finalization from Ha Noi Tax Department:

The Hanoi Tax Department released Official Letter No. 6097/CTHN-TTHT on February 16, 2023, advising PIT finalization and highlighting some key elements

• When a company pays wages and salaries to employees working at branches in other provinces and declares the withheld PIT to the appropriate provincial tax authority, there is no need to calculate the PIT payables in each province at the finalization stage
• In case of direct PIT finalization, the PIT finalization return will be submitted to the local tax authority managing the income-paying organization, where the family circumstance deduction is applied
• If the resident individual earns overseas salaries or wages, such individual shall submit a PIT return to the tax authority managing the locality where the individual works in Vietnam or where the individual resides (if the place of work is not in Vietnam)

Value Added Tax (“VAT”) and Corporate Income Tax (“CIT”) incentives for computer programming activities:

On 1 March 2023, Hanoi Department of Tax released 2 Official Letters 8442/CTHN-TTHT and 8441/CTHN-TTHT on VAT and CIT incentives for software production activities and VAT incentives for software services:

1. Regarding VAT: In case a company manufactures software and provide software services in accordance with the law of Vietnam, revenues from such activities are not subject to VAT, according to Clause 21, Article 4, Circular No. 219/2013/TT-BTC of the Ministry of Finance.
2. Regarding CIT: In case the company implements a new project that satisfies the conditions of new investment projects which generates income from software manufacturing according to the provisions of the law of Vietnam, CIT incentives for the project shall be determined as follows:

• Incentives on tax rates: tax rate at 10% in a period of 15 years. The period of application of the preferential tax rate is calculated continuously from the first year the enterprise has revenue from the new investment project entitled to tax incentives.
• Incentives on tax exemption and reduction: CIT exemption for 4 years and 50% reduction of payable tax for the next 9 years.
  Tax exemption and reduction period starts from the first year the Company has taxable income from the new investment project entitled to tax incentives; in case the company has no taxable income for three (03) years from the year it first generates revenues from the new investment project, the tax exemption and reduction period shall automatically start from the 4th year that the new investment project generates revenue