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Income from expansion, invoice issuance, and letters of authorisation for tax dealings

Released at: 04:15, 20/03/2014 TAX CONSULT

Income from expansion, invoice issuance, and letters of authorisation for tax dealings

What is the most recent update on increased income due to expansion

by kpmg

Q: What is the most recent update on increased income due to expansion?

A: Official Letter No 3376/TCT-CS dated October 11, 2013 from the General Department of Taxation (GDT) notes that where foreign-invested enterprises increase their charter capital and supplement their capital-contribution members, the increased income created by such expansion will not be entitled to CIT incentives. Enterprises must separately account for the income entitled to incentives and the income not entitled to incentives or allocate based on investment capital.

Q: What is the recent guidance on invoice issuance?

A: According to Official Letter No 3723/TCT-KK dated November 5, 2013 from the GDT, where enterprises use import invoices issued on December 31, 2012 but registered on January 18, 2013 as the start date for invoice usage in the announcement of invoice issuance sent to tax authorities, such invoices shall be considered invalid. Enterprises will not be eligible for input VAT deductions and refunds for such exported goods and services. Simultaneously, enterprises will be sanctioned for the act of issuing invalid invoices under Clause 7, Article 33 of Decree No 51/2010/ND-CP.

Q: What are the requirements for letters of authorisation for individuals in transactions with tax authorities?

A: Official Letter No 3593/TCT-TNCN dated October 29, 2013 from the GDT specifies cases where individuals can authorise other individuals or organisations to conduct their transactions with tax authorities. In these cases, the letter of authorisation is not required to be notarised or certified. However, if foreigners authorise other individuals to receive their tax refunds via these individuals’ bank accounts, the letter of authorisation must be notarised/certified.

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