On December 1, 2014, the Ministry of Finance sent Official Dispatch No. 17 526/BTC-TCT to Provincial/Municipal People's Committees, Finance Departments and Taxation Departments to inform the enforcement of some new contents in the Law on Amendments and Supplements to a Number of Articles of the Law on Taxes. These contents are important to both individuals and the business community. These laws take effect on January 1, 2015.
Important changes in tax
According to the dispatch, on November 26, 2014, the National Assembly of Vietnam adopted the Law on Amendments and Supplements to a Number of Articles of the Law on Taxes, which comes into effect on January 1, 2015. To bring the law to life, the Ministry of Finance is urgently coordinating with relevant governmental agencies to promulgate decrees to guide the law enforcement. While waiting for other State agencies to issue guidance to the law enforcement, the ministry will instruct the execution of some contents and tasks in December 2014 so as to be well-prepared for the official enactment on January 1, 2015.
Amending and supplementing personal income tax (PIT) for business individual
According to the current regulations, based on the Law on Personal Income Tax No. 04/2007/QH12 and the Law on Amendments and Supplements to a Number of Articles of the Law on Personal Income Tax No. 26/2012/QH13, personal income tax (PIT) of a business household and individual is determined on the basis on taxable income calculated in ad valorem (percentage) on revenue or taxable revenue determined by declared value minus business expenses. Business individual is deducted family allowances when taxable income is calculated and the tax rate is progressive.
According to the new law, from January 1, 2015, PIT imposed on business individual is determined on revenue by business sector. The PIT rate on distribution and provision of goods is 0.5 percent; services and construction exclusive of material contract: 2 percent; asset lease, insurance agency, lottery agency and multi-level marketing agency: 5 percent; production. Transportation and services associated with goods and building materials: 1.5 percent; and other business activities: 1 percent.
Changes in PIT: From January 1, 2015, PIT is exempted in the following cases: Income from salaries and wages of Vietnamese crew members working for foreign shipping lines or Vietnamese shipping lines operating on international transport routes; personal income of ship owners and individuals with the rights to use ships to directly provide goods and services for offshore fishing, and income of crew members working on ships.
For income from securities transfer of individual: From January 1, 2015, income tax of 0.1 percent tax will be imposed to securities transfer based on the transfer price instead of two methods of calculation now. No settlement for PIT on securities transactions shall be made.
For income from property transfer of individual: From January 1, 2015, property transfer will be imposed a PIT rate of 2 percent, based on transfer price instead of two methods of calculation now.
Changes in value-added tax (VAT): Offshore ship building is added to the list of VAT exemption. Three groups of goods subjected to VAT of 5 percent will be sent to VAT-free groups, namely Fertilisers; feeds for livestock and poultry; machinery and equipment used exclusively for agricultural production. Regarding royalties, transfers from tax-exempt entities are not subject to tax on natural water used for agriculture, forestry and salt.
LH
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