This month we look at a proposal for structural changes to Vietnam’s taxation system in this September 2017 publication of our Tax Updates from Domicile Corporate Services. We also look at other releases from the authorities that we believe are of interest to taxpayers in Vietnam.

PROPOSAL FOR CHANGES TO VIETNAM TAX RATES & STRUCTURE

In August 2017, the Ministry of Finance (“MOF”) released a document proposing changes to a range of taxes in Vietnam. Although the Vietnam Government has since announced that it has declined to accept the draft proposal, the release gives an indication of where the Vietnamese authorities see their tax base and income needs heading.

Changes to VAT

A recommendation was that Value Added Tax (“VAT”) rates were to increase from 10% to 12% for standard VAT, and from 5% to 6% for the reduced rate. In addition, the minimum requirement for non-cash (bank) payments to ensure expenses were creditable for VAT and deductible for Corporate Income Tax (“CIT”) was to be decreased from 20,000,000 VND to 10,000,000 VND.

Changes to CIT

Corporate Income Tax was recommended to be decreased from the standard 20% at present to 15% for small taxpayers and to 17% for other taxpayers.

Changes to PIT

Personal Income Tax (“PIT”) bands were to be relaxed, with the lowest 5% rate applied for the first 10,000,000 VND per month instead of the current 5,000,000 VND. In addition, the threshold after which withholding tax is required on payments for service contracts was to be increased from 2,000,000 VND to 5,000,000 VND.

We will see what changes in the future as the Government further considers its options.

For more information, click Vietnam Tax Update September 2017 – Domicile


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