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VN-NZ Tax Treaty, VAT, & PIT

Released at: 08:34, 20/10/2014 TAX CONSULT

VN-NZ Tax Treaty, VAT, & PIT

On May 28 the General Department of Taxation issued Official Letter No 1966 announcing the effective date and applicable date of the agreement between Vietnam and New Zealand on the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income...

Q: What date will the Tax Treaty between Vietnam and New Zealand become effective?

A: On May 28 the General Department of Taxation issued Official Letter No 1966 announcing the effective date and applicable date of the agreement between Vietnam and New Zealand on the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, as follows:

  • Effective date: from May 5, 2014
  • Applicable date: in Vietnam, from January 1, 2015
  • Applicable date: in New Zealand:
  • For withholding tax on income, profits or gains, amounts paid or credited: from January 1, 2015;
  • For other New Zealand taxes: from April 1, 2015.

Q: What is the tax treatment for air ticket expenses paid by employees/individuals’ ATM/credit cards?

A: On June 18 the General Department of Taxation issued Official Letter No 2272 stating that air ticket expenses and relevant input VAT paid from employees/individuals’ ATM/credit cards will not be deductible and creditable for corporate income tax and value added tax purposes.

Q: How will personal income tax (PIT) be applied to foreign experts carrying out Official Development Assistance (ODA) projects in Vietnam?

A: On June 18 the General Department of Taxation issued Official Letter No 2269 providing guidance on foreign experts working for sub-contractors of ODA projects in Vietnam. They will not be entitled to PIT exemptions in accordance with Decision No 119/2009/QD-TTg dated October 1, 2009 from the Prime Minister.

Q: Has there been any determination on creditable input VAT for taxpayers conducting gold/silver/precious stone trading subject to direct VAT methods and other VAT-applicable goods/services subject to the VAT credit method?

A: On June 6 the Ministry of Finance (MoF) issued Official Letter No 7512 on the creditability of input VAT on goods and/or services used for gold/silver/precious stones trading subject to direct VAT methods and other VAT-applicable goods/services subject to the VAT credit method. According to OL No 7512:

  • Taxpayers should separately recognise the input VAT for each business and use the appropriate VAT method for each activity;
  • If taxpayers cannot recognise input VAT separately as above, the amount of input VAT to be creditable will be determined based on the ratio (per cent) of the revenue of the VAT-applicable goods/services activities subject to the VAT credit method against total revenue.

Total revenue includes revenue from the VAT-applicable goods/services activities subject to VAT credit methods, revenue from non-applicable activities, and the positive balance between the selling price and the purchase price in gold/silver/precious stone trading.

  • TAGS
  • VAT
  • TAX
  • PIT

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