The Ministry of Finance in order to simplify the tax administrative procedures recently issued Circular No. 119/2014/TT-BTC (Circular No. 119) on 25 August 2014 to change some current circulars on tax administration, value added tax (VAT), invoicing, and personal income tax (PIT). This Circular is effective from 1 September 2014. Also the Government issued Resolution No. 63/NQ-CP on the same day to provide a number of tax relief measures.

Simplification of certain tax procedures are as follows:

Personal income tax (PIT):

For Personal income tax with respect to foreign individuals of countries having tax treaties with Vietnam and being tax residents in Vietnam, Circular No. 119 approves that their tax liability will be counted from the first month  of their arrival to Vietnam (in case of coming to Vietnam for the first time) until the month when the employment contract is terminated and they leave Vietnam. This new provision seems to address the problem under the current rule that requires foreigners being tax residents in Vietnam to declare tax for the first year based on the full calendar year when the duration of their stay in Vietnam was for 183 days or more in the first calendar year. Also under Circular No. 119, these foreign individuals are not required to conduct the procedure of certification of documents by the consulates in order to avoid double taxation in accordance with the relevant tax treaty.

 Value added tax (VAT):

  • Companies do not need to issue VAT invoices or sale invoices for exports.
  • VAT declaration and payment are also not required in these cases.
  • However, companies are still required to issue invoices for goods consumed internally even though such internal use is no longer subject to VAT and does not trigger taxable revenue.
  • Circular No.119 abolished the requirement for first time registered projects with respect to large-scale capital investment projects to be eligible for tax incentives. This means that enterprises having new investment projects with large-scale capital investment of at least VND 6,000 billion may be eligible for tax incentives regardless of whether it is a first time registered project or not.
  • For Value Added Tax (VAT), exporters are not required to pay import VAT for goods that were already exported but returned by foreign parties.