This column is prepared in collaboration with KPMG Vietnam.
► Our company has a number of expatriate employees that were assigned from other countries to work in Vietnam in April 2014 and qualified for Vietnamese tax residency in 2014. Are they required to calculate personal income tax (PIT) for their worldwide income from January 2014 or from April 2014?
If the expatriates come from countries with a Double Taxation Avoidance Agreement with Vietnam their taxable income shall be their worldwide income calculated from April 2014 rather than January 2014. Family relief shall also be counted from April 2014.
► Our company in Vietnam has some expatriates assigned from the parent company in Japan. These expatriates are remunerated by both the parent company and our company. In addition, our company in Vietnam is responsible for paying housing rental expenses during their assignment in Vietnam. For PIT calculation purposes, how would the taxable housing benefit be determined?
The taxable housing benefit shall be based on the actual housing rental amount but capped at 15 per cent of the expatriates’ total assessable income, including both the income paid by the parent company and the company in Vietnam.
► Our company exports goods to overseas customers. We satisfy the conditions to apply a value added tax (VAT) rate of 0 per cent on exported goods. However, we have not registered our bank account information with the local tax authority. Would we be qualified for the VAT rate of 0 per cent on the exported goods? In addition, we use this bank account to make payments for goods from a local supplier that also has not registered their bank account details with the local tax authority. Would we be allowed to claim input VAT on the purchased goods?
Based on current VAT regulations, VAT treatment should be as follows:
- With respect to the VAT rate for the exported goods, if the company meets all the conditions for applying a 0 per cent VAT rate for exported goods it will be still qualify for a VAT rate of 0 per cent. Regarding the issue of bank account registration, a tax administrative penalty will be applied.
- - For the question of input VAT creditability, it will be creditable only if the company and/or the supplier register bank accounts before tax authorities carry out a tax audit.
► Our company entered into two goods insurance contracts: one covers compensation for input VAT on the goods and the other does not. If the goods were to be damaged, will the relevant input VAT of the goods be creditable and what supporting documents are needed for each case?
In both cases the relevant input VAT of the damaged goods will be creditable. Supporting documents will be (i) a VAT invoice to the insurer if the input VAT is covered under the contract; or (ii) a receipt note to the insurer if the input VAT is not covered.