Corporate - Significant developments

Last reviewed - 09 August 2021

Vietnam witnessed significant recent developments related to transfer pricing, e-commerce activities, and the application of e-invoices. Transfer Pricing Decree No. 20/2017/ND-CP guiding the implementation of transfer pricing (Decree 20) and guiding circular 41/2017/TT-BTC (Circular 41) entered into effect from 1 May 2017.

On 24 June 2020, the government released Decree 68 to ease up the interest deductibility cap under Decree 20 from 20% to 30% on net interest expense. Decree 68 is applicable for tax year 2019, and the changes on cap threshold of 30% applied on net interest expenses could retrospectively apply for the tax years of 2017 and 2018.

On 5 November 2020, the government issued Decree 132/2020/ND-CP, setting out new rules on transfer pricing in Vietnam. Decree 132 takes effect from 20 December 2020, but applies for the financial year 2020 and replaces Decree 20 and Decree 68.

In addition, aiming to enhance the management and taxation of e-commerce transactions, the Ministry of Finance (MoF) has circulated a draft Decree, which includes in its scope organisations operating e-commerce platforms and websites, transporters of the goods, customs brokers, as well as the exporters and importers. An e-commerce activity management system will be developed by the General Department of Customs (GDC). Export and import declarations will be processed 24/7 via this system, and the system will inter-connect and exchange information with the National Single Window and other existing management systems of the GDC. The MoF would also include the guidance in a draft circular guiding Law on Tax Administration on tax registration, declaration, and payment for foreign contractors who operate in e-commerce or do business via digital platforms and other businesses without having a physical presence in Vietnam. This is expected to affect foreign companies conducting business with Vietnamese companies and individuals using an online platform.

Regarding e-invoices, following the release of Decree 119/2018/ND-CP (Decree 119) and Circular 68/2019/TT-BTC (Circular 68) guiding the implementation of e-invoices, on 19 October 2020, the government issued Decree 123/2020/ND-CP guiding invoices and documents, including e-invoice related matters. One of this decree’s notable points is an extension of the deadline for compulsory implementation of e-invoices from 1 November 2020 until 1 July 2022. This extension gives some breathing room for companies that have not yet implemented e-invoicing.

The government also released Decree 125/2020/ND-CP setting out new rules on penalties for breaches of tax and invoicing regulations, which came into force on 5 December 2020. The decree consolidates guidance from various decrees and circulars on tax and invoicing penalties, while taking into account changes in the new law on tax administration.

The New Tax Admin Law was approved in June 2019 and took effect from 1 July 2020, except for provisions relating to e-invoices and electronic documents, which will be effective from 1 July 2022. New Decree 126/2020 implementing the Tax Admin Law was issued and took effect from 5 December 2020, subject to some transitional rules. The draft circular guiding the new Tax Admin Law and Decree 126/2020 is expected to be issued in 2021.

The National Assembly ratified Law No. 45/2019/QH14 amending the Labour Code on 20 November 2019. The amended Code took effect from 1 January 2021.

In addition, the National Assembly ratified the amended Law on Enterprises and the amended Law on Investment in June 2020. The new laws took effect from 1 January 2021 and replaced the existing laws.