Conditions for some imported medical equipment to be eligible for the 5% VAT rate

On 11 June 2021, the Minister of Finance issued Circular 43/2021/TT-BTC amending and supplementing Clause 11, Article 10 of Circular 219/2013/TT-BTC dated 31 December 2013 (changed and supplemented by Circular 26/2015/TT-BTC dated 27 February 2015).

Accordingly, in addition to a number of specifically listed equipment such as syringes and needles; contraceptive equipment etc., the medical equipment, if having one of the following documents, will be eligible for the 5% VAT rate:

  • Import license;
  • Certificate of Free Sale;
  • Receipt of dossiers for publication of standards in accordance with the health law or in accordance with the List of medical equipment subject to the specialized management of the Ministry of Health with product codes according to the List of exported and imported goods of Vietnam attached to Circular No.14/2018/TT-BYT dated 15 May 2018 of the Minister of Health and other relevant amendments and supplements (if any).

(Currently, Circular 219/2013 stipulates that other specialized medical tools and equipment as certified by the Ministry of Health are subject to the VAT rate of 5%).

Circular 43/2021/TT-BTC takes effect from 1 August 2021.

Value-added Tax (VAT), Personal Income Tax (PIT), and tax administration applied to business households and individuals

On 1 June 2021, the Ministry of Finance issued Circular No. 40/2021/TT-BTC guiding VAT, PIT, and tax management applied to business households and individuals.

Business households and individuals having incomes from production and business activities at VND 100 million or less for the calendar year are not required to pay VAT and PIT. Business households and individuals are responsible for accurate and complete tax declaration and timely submission of tax returns.

Business households and individuals may declare and pay their taxes according to 3 methods, including periodic declaration, spot-declaration/payment (each time the business incurs taxes), or fixed tax payment method. Regulations related to the selection of these methods are detailed in the Circular.

This Circular takes effect from 1 August 2021.

CIT incentives for projects manufacturing supporting industry products

On 4 June 2021, the Government issued Decree No. 57/2021/ND-CP supplementing Point g, Clause 2, Article 20 of Decree No. 218/2013/ND-CP on CIT incentives for investment projects manufacturing supporting industry products.

According to Decree No. 57/2021/ND-CP:

  • Enterprises with new or expanded investment projects implemented before 1 January 2015, which manufacture products specified in the list of supporting industry products preferred for development;
  • Satisfy all requirements for investment projects manufacturing supporting industry products prescribed in Law No. 71/2014/QH13; and
  • Have been granted a certificate of incentives for production of supporting industry products by the competent authority, shall be entitled to CIT incentives. Details of cases entitled to incentives, as well as how to determine the incentive applicable period are specified in Article 1 of this Decree.

Previously, the Government issued Decree 12/2015/ND-CP amending Decree 218/2013/ND-CP but did not provide transitional provisions for projects to produce supporting industrial products that are licensed and operated. active before 01 January 2015.

This Decree takes effect from 4 June 2021.

Application of Advance Pricing Arrangement (“APA”) in tax management of enterprises with related party transactions

On 18 June 2021, the Ministry of Finance issued Circular No. 45/2021/TT-BTC guiding the application of APA in tax management of enterprises with related party transactions. Details are as follows:

  • Subject of application: Organizations producing, trading goods/services that pay corporate income tax under declaration method, have transactions with related party, and have been requested to apply APA.
  • Transactions to which a taxpayer can request application of APA must be:
  1. Actually occurred transactions that will continue to arise during the APA implementation period.
  2. Transactions which nature can be verified in order to determine tax obligations, can be analyzed, compared, to which comparable subjects can be chosen according to regulations set forth in Article 6 and 7 of Decree No. 132/2020/ND-CP, based on information and data in conformity with Point b, Clause 6, Article 42 of the Law on Tax Administration.
  3. Transactions that are not subject to tax disputes.

Transactions that are conducted transparently, not for the purpose of evading taxes or taking advantage of the tax treaties.

APA implementation process:

  • Consultation prior to filing an APA application is no longer mandatory.
  • APA application process still includes: submission of application dossier, evaluation, negotiation, and APA implementation.
  • A timeline for the above process was not specified by the Circular.

This Circular takes effect from 3 August 2021.

Tax Newsletter July 2021