This Update highlights recent tax and custom developments in Vietnam.
Clarifications on On-spot Imports and Exports Procedures
The General Department of Customs (“GDC“) has recently received queries from various business associations as well as diplomatic agencies with regard to the customs procedures for on-spot imports and exports (“On-spot Procedures“) stipulated in Article 35 of the Decree 08/2015/NĐ-CP (“Decree“). The Decree sets out the customs procedures related to the supervision and control mechanism for on-spot import and export.
On 8 August 2023, GDC issued the Official Dispatch 4146/TCHQ-GSQL that provides clarifications on two key issues relating to the On-spot Procedures.
Exchange Rate for Foreign Contractor Tax
Enterprises have been recently questioned by the tax authorities regarding the exchange rate to be used for the computation of foreign contractor tax (“FCT exchange rate“). Most tax authorities allow the taxpayers to use the exchange rate at the bank at which they maintain their accounts, while some tax authorities in major cities request the taxpayers to use the exchange rate at the bank engaged by the taxpayers to make the payments to the foreign entities. Given that every bank has its own exchange rates policy, this inevitably causes difficulties for taxpayers who make frequent payments to overseas vendors in tax declaration and exposes them to penalties and late tax payments.
To address these issues, on 23 October 2023, the General Department of Taxation issued the Official Letter 4666/TCT-CS which prescribes the exchange rate to be used for the computation of FCT.
Restrictions on Change to Depreciation Method in Accounting Records
Sometimes enterprises may need to change their depreciation methods for assets in accounting records for internal management purposes. Any changes to the depreciation methods may have a significant impact on tax liabilities to be declared by an enterprise.
The Official Letter 23568/CTBDU-TTHT issued by Binh Duong Tax Department on 6 October 2023 provides that the depreciation methods for assets in accounting records have to be consistently applied and should not be changed within a year.
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