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CIT, Foreign employees, PIT, & minimum wage

Released at: 07:35, 05/12/2014 TAX CONSULT

CIT, Foreign employees, PIT, & minimum wage

Official Letter No.15495/BTC dated October 27, 2014 confirms that the input VAT of purchased goods or services used for oil exploration and development activities up to the first date of commercial discovery or the first date of production are fully creditable.

How will VAT refunds for oil exploration projects with no commercial discovery be treated under current regulations?

Official Letter No.15495/BTC dated October 27, 2014 confirms that the input VAT of purchased goods or services used for oil exploration and development activities up to the first date of commercial discovery or the first date of production are fully creditable. Where the Product Sharing Contract without commercial discovery is terminated by competent authorities, tax authorities will not re-collect the refunded input VAT. 

If a company purchases goods and services via e-commerce websites and makes payment by debit cards or credit cards, can they claim VAT input credits and deductible expenses on their Corporate Income Tax (CIT)? 

Based on recent Official Letters No. 3997/TCT-DNL and 4621/TCT-DNL, payment via debit cards and credit cards in general were confirmed as non-cash payments. In addition, goods and services purchased via e-commerce websites (and settled via debit cards or credit cards) are creditable for VAT purposes and deductible for CIT purposes, as regulated under Circular No.78/2014/TT-BTC.

Are foreign employees employed under an internal transfer scheme subject to work permit requirements?

According to Decree No.102/2013/ND-CP dated September 5, 2013 from the government, employees that are internally mobilized within an enterprise that is engaged in one of the eleven service industries noted in the commitment on services between Vietnam and the WTO will not be subject to work permit requirements. The Ministry of Industry and Trade recently issued Circular No.41/2014/TT-BCT dated November 5, 2014 stipulating procedures to determine cases that are not subject to work permit requirements, effective from December 22, 2014.

How will PIT exemptions for non-contractual compensation be treated?
According to Official Letter No. 14891/BTC-TCT dated October 20, 2014 from the Ministry of Finance, compensation for non-contractual damages in accordance with current regulations shall not be subject to PIT. Liability for compensation for non-contractual damages is stipulated under the Civil Code 2005.

How will the minimum wage change from January 1, 2015?

The government recently issued Decree No.103/2014/ND-CP, replacing Decree No.182/2013/ND-CP, stipulating region-based minimum wage levels for all types of enterprises. The minimum salary in 2015 will increase by VND250,000-VND400,000, or 13-14.8 per cent, compared to 2014, depending on the region. Regional minimum wages shall be the minimum amount for employers and employees to negotiate on in labor contracts. These new wage levels are applicable from January 1, 2015.    n

This column is prepared in cooperation with KPMG Vietnam

  • TAGS
  • CIT
  • Foreign employees
  • PIT
  • minimum wage

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