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Along with a broad range of international investors and Portuguese companies our clientele also includes the European Commission, as well as public authorities in Portugal and other European countries.
Vietnam: Tax, Land Rental Payment Deadlines and 2% VAT Reduction Extended till End of 2024
23.08.2024
The Vietnamese government is easing financial pressures by extending tax and land rental deadlines and prolonging the 2% VAT reduction on certain goods and services through the end of 2024. The experts at ECOVIS AFA VIETNAM provide a detailed overview of these recent measures, which impact various tax and land rent obligations.
On 17 June 2024, the Government recently issued Decree No. 64/2024/ND-CP (Decree 64) extending the payment deadlines for Value Added Tax (VAT), Corporate Income Tax (CIT), Personal Income Tax (PIT) and land rent in 2024. Then, on 30 June 2024, the Government also issued Decree No. 72/2024/ND-CP (Decree 72) extending the 2% VAT reduction on certain goods and services for the second half of 2024.
1. VAT (excluding import VAT)
1.1. Extension of VAT payment deadline
The Government has extended the tax payment deadline for VAT payable (including the amount allocated to local governments at provincial level) of the tax period from May to September 2024 for monthly VAT returns and the second quarter of 2024, the third quarter of 2024 for quarterly VAT returns of businesses and organisations eligible for the extension.
The extension period is five months for VAT of May 2024, June 2024, and the second quarter of 2024, four month extension for VAT of July 2024, three month extension for VAT of August 2024, two month extension for VAT of September 2024 and the third quarter of 2024. The extension period is calculated from the end of the VAT payment deadline in accordance with the provisions of the tax management law.
Enterprises and organizations are eligible for an extension to declare and submit monthly and quarterly VAT declarations in accordance with current legislation, but are not required to pay the VAT due on the VAT declaration.
1.2. Extension of 2% VAT reduction
On 28 December 2023, Decree 94/2023/ND-CP was issued, in accordance with Resolution No. 110/2023/QH15, and implemented a 2 percent VAT reduction on goods and services that were taxed at 10% VAT, with certain exceptions.
Under Decree 72, the Vietnamese government has extended the VAT reduction to the end of 2024 but has not expanded the scope of goods and services eligible for the reduced tax rate. The Decree 72 included a comprehensive list of goods and services excluded from the 2% VAT reduction, detailing specific product codes and HS codes. This was to be effective from 01 July 2024 to 31 December 2024.
Sectors excluded from the 2% VAT reduction are telecommunications, IT, finance, banking, insurance, real estate, metals, prefabricated metal products, refined petroleum, chemical products, and products and services subject to special consumption tax.
2. CIT
With regard to corporate income tax, the government has extended the deadline for the payment of the quarterly advance payment of corporate income tax for the second quarter of 2024 for businesses and organizations eligible for the above-mentioned extension.
The extension period is three months from the end of the corporate income tax payment deadline according to the provisions of the tax management law.
3. VAT and PIT of household businesses and individual businesses
The government has extended the deadline for the payment of the amount of tax due in 2024 for business households and individual business owners operating in the specified economic sectors and fields.
Business households and individual business owners must pay the extended tax amount under this clause by 30 December 2024.
4. Land rental
The deadline for the payment of 50% of the land rent payable in 2024 (the amount payable in the second period of 2024) has been extended for businesses, organizations, households, and individuals eligible for the extension who are leasing land directly from the State in the form of annual land rent payments on the basis of a decision or contract by a competent State authority.
The extension period is two months from 31 October 2024.
This Decree will be effective from the date of signing until 31 December 2024.
The above content has been researched and summarised by ECOVIS AFA VIETNAM from widely published legal documents and articles. If you would like to discuss more in-depth issues, please contact us using the information below:
CFC Taiwan: Implications of New Regulations for Offshore Trusts and Broader APAC Insights
22.08.2024
Taiwan’s new CFC regulations, effective January 1, 2023, tighten tax rules for offshore trusts held by Taiwanese residents. A recent July 2024 ruling requires offshore trustees to register with Taiwan’s tax authorities and adhere to new reporting standards. The experts from TAK ASSOCIES and ECOVIS Taiwan CPA Firm explore these developments and their broader impact across the Asia-Pacific region.
General overview of Control of Foreign Corporations
On January 1st, 2023, a new regulation called Control of Foreign Corporations (CFC) came into force in Taiwan (Article 43-3 of the Income Tax Act, as amended on July 27, 2016), as part of a move by the Taiwanese authorities to expand the taxation of offshore entities. Taiwan has already implemented several laws and regulations to combat tax evasion, starting with general regulations on transfer pricing, and more specifically with some laws such as the Place of Effective Management, aimed at taxing in Taiwan the profits of companies located abroad, but managed from Taiwan.
A CFC is defined as a foreign corporate entity registered in a jurisdiction with low tax rates, where more than 50% of the paid-up shares are held (or controlled) directly or indirectly by a Taiwan tax resident individual or corporate entity.
Under the CFC rules, a low tax rate jurisdiction refers to a jurisdiction where:
corporate income tax is 14% or less; or
income is taxed on a territorial basis (i.e. foreign-sourced income is not taxable in that country). This includes territories such as Hong Kong or Singapore.
Practical impact on foreign trusts
Since 2023, taxpayers in Taiwan must report their interests owned in foreign countries as soon as they meet the above requirements, as required by CFC regulations.
One issue has been raised as to how taxpayers can report their income distributed by discretionary trusts. Indeed, by definition, the beneficiaries of discretionary trusts do not know in advance how much they will receive.
To address this issue, the Taiwan Ministry of Finance (MOF) issued an interpretation on January 4th, 2024, to clarify the rules. According to this interpretation:
For discretionary trusts, the rule requires CFC income to be allocated on an average basis based on the number of beneficiaries. Two issues may arise from this rule: (1) it does not address potential discrepancies between the CFC income currently reported and actual distributions that may be received in the future; (2) there is concern that the ruling suggests an equal allocation among beneficiaries regardless of each beneficiary’s actual situation. Furthermore, such an approach does not take into consideration who in fact would have direct or indirect control of the trust, which could be unfair to some beneficiaries.
The ruling imposes reporting obligations on foreign trustees based on Article 92-1 of the Taiwan Income Tax Act, which should apply to domestic trustees. This could pose practical challenges, as this article pertains specifically to domestic trustees and domestic withholding, which are required to complete particular tax forms. It was unclear how to assess the level of compliance for foreign trustees.
A surprising move in July 2024
On July 10th, 2024, the MOF surprised the business community by issuing a new ruling requiring offshore trustees to register with the Taiwan tax authorities when a Taiwan tax resident settlor transfers the shares or capital of a Controlled Foreign Corporation located in a low-tax country or region outside of Taiwan as trust assets. The MOF pointed out that this new ruling was to complement the January 2024 ruling, which imposes the Alternative Minimum Tax (AMT) on the settlor/beneficiary of offshore trusts when CFC is involved.
Under the new ruling, offshore trustees are required to prepare detailed books, income statements, distribution statements, and other records for all trust assets, including both CFC and non-CFC assets, in accordance with Taiwan’s Income Tax Act (ITA). Offshore trustees without a physical presence in Taiwan must appoint a local agent for registration, obtain a tax identification number, and manage all related reporting and withholding responsibilities going forward.
Even more surprisingly, the ruling states that it is applicable from January 1st, 2024, making it retroactive, and potentially non-compliant for offshore trustees! This new ruling requires all interested parties (including foreign trustees) to reassess their situation with regard to compliance (including potential penalties), automatic exchange of information (Common Reporting Standards or CRS) and also money-laundering regulations.
Looking beyond
The move by the Taiwanese tax authorities should not only be considered a local initiative, since several APAC countries have also implemented CFC rules (South Korea with a much lower threshold for CFC eligibility – 10% , Mainland China, Japan, Australia, etc.).
We are excited to share the news that ECOVIS Ruide Shanghai, founded in 2004, celebrates its 20th anniversary this year! We marked this significant milestone with a special celebration in June. Over the past 20 years, our journey has been shaped by the support of our clients and the entire ECOVIS International network, through both triumphs and challenges.
Over the past two decades, ECOVIS Ruide Shanghai has weathered rain and shine on its way to success: the team has grown from 10 to over 70 people; the number of clients has grown from 56 to over 300; the office space has grown from 300 to nearly 800 square metres. The support of clients and employees has not only witnessed the growth of ECOVIS RUIDE CHINA over 20 years, but also seen the establishment and expansion of ECOVIS International in China.
As a member of ECOVIS International, adhering to the service concept of “Compliance in Finance & Controlling”, we provide one-stop global services for Chinese enterprises and foreign-invested enterprises established in China.
We have noticed that in recent years, especially following the end of the epidemic, more and more Chinese companies are focusing on global expansion and the demand for overseas services from Chinese companies is increasing. Our firm has been actively participating in outbound services for Chinese enterprises going global since 2020, and, after a long period of exploration and experimentation, combined with our professional knowledge and globalization model, we have successfully won several cases this year, helping Chinese enterprises to develop their investment smoothly and eliminating language barriers for Chinese enterprises in overseas services.
ECOVIS Ruide Shanghai has now established a dedicated project team and will continue to strive to expand the influence of our ECOVIS brand in the future.