On the sidelines of a press conference to inform Circular 151 on October 28, 2014, Vietnam Business Forum interviewed Mr Nguyen Van Nam, General Director of the General Department of Taxation, on new contents of this circular. Le Hien reports.
If Circular 151 is aggressively and thoroughly applied, how much time does a taxpayer reduce in tax declaration?
Circular 151 was designed to remove some tax administrative procedures in order to reduce time and expenses for taxpayers. The document redefines various procedures related to corporate income tax, value added tax, personal income tax, and tax administration. For example, it defines the simplification of personal income tax payments and VAT declaration procedures. With the streamlining of tax administrative procedures, the tax sector expects to reduce by more than 88 hours tax declaration and payment time for taxpayers.
Could you mind talking about new points in Circular 151?
Regarding corporate income tax (CIT), the Circular adds provisions allowing enterprises to calculate amortisations into expenses except for welfares for employees. The value of welfares cannot exceed median one-month salary value of the taxed year.
In addition, the Circular increases the period of income tax exemption on incomes from executing scientific research and technological development contracts, incomes from sale of tested products, incomes from products made by new technologies for the first time in Vietnam to encourage enterprises to invest and develop scientific and technological products.
With respect to VAT, the Circular adds the sale of mortgaged assets for debt repayment by authorised debtor to the list of items which are not subjected to VAT.
The adjusted quarterly revenue subjected to VAT from the total revenue from sale of goods and supply of services in the preceding year from less than VND20 billion to VND50 billion downwards will be declared on quarterly basis. This will help reduce the time for VAT payment by 29.36 hours a year and reduce eight times of VAT declaration a year.
As personal income tax (PIT), the Circular specifies that accommodation benefit in the form of an employer owned house is exempt from PIT in the following cases: Employees working in industrial zones, or houses located in economic zones, in regions with difficult or especially difficult socioeconomic conditions
If individuals and households pay lump-sum tax, they do not have to settle tax on this income. Individuals operating as insurance agents, lottery agents, multi-level marketers who are withheld PIT by income-paying organisation are not required to finalise PIT on income from these activities.
As tax administration, the Circular abolishes regulations on quarterly temporary CIT declaration. Enterprises will pay an interim amount of quarterly tax and the final value will be made on annual basis. This method will reduce the time for paying CIT by 47 hours a year and reduce CIT filings by 4 times a year.
Do facilitations and incentives for taxpayers affect State budget revenue?
One of highlighted contents in tax administration specified in Circular 151 is the expansion of entities imposed quarterly VAT declaration. In previous years, a VAT payer with total revenue from sale of goods and supply of services in the preceding year from VND20 billion or less had to declare VAT quarterly. But now, the value for this work has been raised to VND50 billion.
Currently, small and medium businesses account for a large proportion in Vietnam. According to statistics, 84 percent of the companies declared VAT quarterly when the limit was VND20 billion. When the value is raised to VND50 billion, 91 percent of the enterprises will do. Affirmatively, Circular 151 will change procedures and delay the arrival of taxes to the State budget by 3 months, not reduce it.
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