PwC

Updates on e-invoicing & important developments of law on

tax administrationThursday, September 26 2019

PwC

● PwC Vietnam established offices in Hanoi and HCMC in 1994.

● We also have a separate affiliated law firm in Vietnam, licensed the Vietnam’s Ministry of Justice, enabling us to offer comprehensive legal and advisory services.

● Our multi-disciplinary team have expertise across a range of skill sets and industries including professionals fluent in English and 19+ other languages such as Mandarin, Japanese, Korean, Thai, French, German. Our access to PwC’s global network is invaluable in investment projects and enables us to provide unparalleled, sound and practical advice to our clients.

● We maintain strong relationships with key ministries such as the General Department of Taxation, General Department of Customs, State Bank of Vietnam, Ministry of Finance, Ministry of Industry and Trade and major financial institutions.

What makes PwC Vietnam different

PwC is the world’s largest professional services

organisation. Drawing on the knowledge and skills of

more than 250,000 people in 158 countries, we build

relationships by providing services based on quality

and integrity.

ABOUT US

PwC

Our Hall of Frame

Vietnam Transfer Pricing Firm of the Year

(2016)

International Tax Review

Tax Controversy Leaders

(2013 – 2018)

International Tax Review

Best Vietnamese Business Tax Advisors

(2016)

Acquisition International

No.1 Professional Services Brand

(2018)

Brand Finance Global 500

IFLR1000 Recommended Law Firm(2016 )International Financial Law Review

Recommended Law Firm(2018)Legal 500

M&A Law Firm of the Year – Vietnam (2014)Acquisition International

No. 1 Globally as Alternative Legal Brand(2018)Acritas

Audit Firm Of The Year - Vietnam(2016)Acquisition International

Certificate of Merit for Contribution to the

Independent Auditing Profession

(2016)

Prime Minister of Vietnam

ABOUT US

PwC

MS. PHUNG THI NGOC ANHDirectorCorporate Tax – PwC Vietnam

ABOUT US

Ngoc Anh has more than 15 years experience in professional tax advisory in Vietnam and the US.

Ngoc Anh holds a Bachelor’s degree in International Business, Foreign Trade University of Vietnam and is a Member of the UK Association of Chartered Certified Accountants (ACCA) and Member of the Vietnam Tax Consulting Association.

Her professional experience has been focused on advising clients on inbound investments into Vietnam, operational tax compliance and advisory services, M&A and structuring services, effective cross-border transactions and structures, and tax controversy services.

Ngoc Anh has served a wide range of clients including multinational companies and local companies in sectors such as automotive, energy & resources, FMCG, F&B, manufacturing, trading and distribution, agricultural businesses, financial services and real estate.

PwC

ABOUT US

Baker McKenzie is the largest international law firm in Vietnam and

consistently rated among the best. We assist with the whole spectrum of

corporate and commercial transactions, bringing nearly three decades of

market experience to every deal aspect. We have helped facilitate meaningful

legal reform and have shaped policy by participating in the drafting process of

the Securities Law, Investment Law, Intellectual Property Law, Law on Credit

Institutions, Commercial Law, Competition Law, Land Law, Labor Code, tax

laws and several other pieces of legislation. At the same time, we help clients

proactively manage emerging opportunities and risks.

Our in-depth local knowledge - coupled with far-reaching resources in 47

countries - enables us to create effective and innovative solutions tailored to

your business strategies. Drawing on integrated capabilities across practices

and borders, we execute deals efficiently and with greater legal insight.

Mr. Thanh Vinh Nguyen

Partner of Baker McKenzie

Thanh Vinh Nguyen is a Partner in the Baker McKenzie Ho

Chi Minh City office, where he leads the Tax and Customs

practice group in Vietnam. Mr. Nguyen's practice areas

include tax and customs, trade and general commercial

matters. Mr. Nguyen practiced tax advisory work for two

international accounting firms for eight years and worked

in the compliance function of an international insurance

company. An expert in tax planning and law, Mr. Nguyen

has assisted clients with advice and structuring work as

well as contentious appeals with the tax authorities. Mr.

Nguyen is an award winning practitioner, recently

recognized by the International Tax Review in the

categories of: Indirect Tax Leader (2017) and Tax

Controversy Leader (2017) as well as being ranked as a

Leading Lawyer for Taxation in Legal 500 Asia

Pacific (2017).

Mr. Nguyen holds a Bachelor of Arts degree in English

from the University of Ho Chi Minh City and an LL.B from

the University of Law of Ho Chi Minh City.

PwC

Morning BriefingSeptember 26, 2019

AGENDA

8:30am

Registration & Refreshment

9:00am

Welcome remarks

9:10am

Presentation, followed by Q&A

10:30am

Event Ends

PwC

Requirements on E-related matters -

E-commerce activities

E-tax transactions

E-invoices

PwC

Guidance

Effectiveness

Form

New Law vs Decree 119/2018

Guidance on e-invoicing under the new law aligns with the guidance

under the new decree on e-invoicing (i.e. Decree 119/2018).

The provisions on e-invoice will take effect from 1 July 2022

However, Decree 119/2018 requires all taxpayers to apply e-invoices from

1 November 2020. This slippage in the implementation of e-invoicing and

further developments in this respect need to be closely monitored.

Draft decree amending Decree 119/2018 will be submitted to the

Government in January (or February) 2020.

With or Without code of tax authorities

Some other specific taxpayers can use e-invoices without code of

tax authorities if certain conditions should be met.

E - invoice

Implementation of e-invoicing

PwC

Practical issues that enterprises are facing regarding E-invoicing

Transition to e-invoice - manage the implementation and deployment of e-invoice system, e.g. technology infrastructure.

Receiving and storing e-invoices (e.g. e-format vs. paper converted e-invoice)

Date of 'making e-invoice' is different from the date of 'electronically signing e-invoice‘. How to deal with?

Long description: is billing attachment acceptable?

How secure the data will be if it is kept in the server of the e-invoice solution provider?

If the buyer's e-signature is required on the e-invoice? If yes, what if the buyer do not have e-signature?

How to avoid duplicate claims in certain sectors, e.g. insurance?

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PwC

Draft Circular guiding Decree 119/2018/ND-CP

• Using e-invoices with verification codes is required for enterprises classified as high tax risk, including enterprises which have in the past been penalized for tax evasion.

• Regarding the timing of e-invoice issuance, the draft circular stipulates that for e-invoices without verification codes, the timing of e-invoice issuance will be the time the seller electronically signs the e-invoices, which contradicts recent guidance in some rulings which specify the date of the invoice

• How to handle cases where invoices are wrongly issued after being granted a verification code, and guidance on the issuance of amended e-invoices for trade discounts.

• The transfer of e-invoice data to the tax authorities, including guidance on the timing and type of data transfer. In addition, sellers also need to upload invoices to their websites.

• Credit institutions, banks, and payment intermediaries need to report banking transactions to the tax authorities if required

PwC

Final Draft Circular guiding Decree 119/2018/ND-CP

• The MoF has recently conducted a meeting on the final draft version of the Circular guiding the implementation of e-invoices, after gathering all comments on the draft version of the Circular. The official Circular is expected to be released soon.

• Compared with the current draft version, some changes have been made, including the below:

E-signature of the buyer is specifically mentioned as not a compulsory item on e-invoices.

More details on the required format of e-invoices (i.e. xml. would be required).

More guidance on transfer of data (invoices with verification or non-verification codes) to the GDT portal.

Specify cases which are considered as high risk enterprises whereby e-invoices with verification code are specified.

Shorten the period that the enterprise is required to use e-invoices with verification code from 2 years to only 1 year.

All detailed guidance on using electronic stamp are removed

PwC

New Law

Penalties and

interest

Transfer pricing

E-Commerce

taxTax

dispute

Procedure and timeline

for tax declaration

and payment

▪ Law No. 38/2019/QH14 adopted on 13 June

2019 (“New Law”)

▪ The New Law comes into force from 1 July 2020

▪ Provisions on e-invoice will come into force from

1 July 2022

New Law on Tax Administration

PwC

Due date for Current Law New Law

Quarterly tax declaration and payment 30th day following the last day of each quarter

the last day of the first month of the subsequent quarter.

Annual finalization declarationwithin 90 days following the last day of a fiscal year

the last day of the third month of the subsequent fiscal year (excluding PIT finalization declaration of individuals directly conducting their PIT finalization)

PIT finalization declaration of individuals directly finalizing PIT

within 90 days following the last day of a tax year

the last day of the fourth month of the subsequent tax year

New Law on Tax Administration

PwC

Tax authorities will have to pay interest of 0.03%/day if:

✓ taxpayers so request in case a decision handling administrative appeal or a court award provides that the tax, penalty or interest payable by taxpayers is less than the amount previously assessed by the tax authorities.

✓ tax authorities delay in issuing tax refund decisions due to the tax authorities' fault.

Tax authority Taxpayers

Interest

Interest

Tax authorities will also have to pay interest on tax redundantly paid by taxpayers

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Taxpayers will not be subject to administrative penalty and

late payment interest if they have already complied with

guidelines and decisions of the tax authorities or other

competent authorities in relation to their tax liabilities.

However, this would imply that taxpayers still need to pay

tax additionally assessed by the tax authorities even if the

assessment is not in line with the previous guidance of the

tax authorities.

Recognition of the validity of tax rulings

PwC

Longer duration of tax audit

Duration of a tax audit is increased from 5 working days to 10 working days. Specifically, under the New Law, a tax audit conducted at taxpayers' site must not exceed 10 working days with one time of extension of another 10 working days.

PwC

Taxpayers who are subject to coercive measures

for tax collection will be provisionally suspended

from exiting Vietnam.

Delay in exiting Vietnam in case of outstanding tax liabilities

PwC

New rules on e-commerce tax

• New rules provided under the New Law on Tax Administration(Applicable from 1 July 2020)

Tax collection

Commercial Banks

Vietnamese Contracting

Party

Offshore Supplier

(no PE)• Main players:

✓ Vietnamese end-users✓ Local banks✓ Offshore suppliers having no PE

PwC

Case 1

E-Commerce Transactions

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Case 2

E-Commerce Transactions

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Case 3

E-Commerce Transactions

PwC

New rule on e-commerce tax – Grey areas

• Tax registration and payment applies to foreign companies without a permanent establishment conducting e-commerce, business on digital platform or providing other services to customers in Vietnam

✓ It seems to apply to all services provided on a cross-border basis

• Whether foreign service providers having a PE must directly conduct tax registration, filing and payment or it is an option?

• Whether the withholding regime continues to be applicable

✓ “By default” withholding obligation of local customers being business entities?

• In which circumstance a particular entity (bank, foreign service provider without PE or customer) is responsible for tax declaration and payment

✓ No double or triple taxation?

✓ Tax base on agent commission or whole proceeds?

• Which entity will conduct the procedure of claiming tax treaty protection?

• Role of third-party payment processors?

✓ Banks are still liable for withholding tax?

PwC

New rule on e-commerce tax – Coming guidelines

Government and the Ministry of Finance will issue a decree and circular respectively to provide implementing guidelines to the law.

Comments can be contributed during drafting process.

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Q & AThank you