On 22 April 2019, General Department of Taxation issued official letter no. 1590/TCT-DNNCN as guidance on tax treatment for salary paid to the owner who is directly involved in managing the company’s daily business activities of single-member limited liability company (owned by one individual)
1. As to PIT on salary paid to owner of single-member limited liability company (owned by one individual)
According to article 90, Labour law no. 10/2012/QH13 dated 18/06/2012 which is further interpreted at point a, d, clause 2, article 2, Circular 111/2013/TT-BTC dated 15/8/2013 issued by Minister of Finance and Enterprise Registration Certificate, salary received by the director of Single-member limited liability company (owned by one individual) are not classified as income earned from employement and hence, not subject to personal income tax.
2. As to corporate income tax:
At article 4, Circular 96/2015/TT-BTC dated 22/6/2015 issued by Minister of Finance which is amended at Circular 78/2014/TT-BTC dated 18/6/2014, salary, insurance, rental charges and other services paid for the director of single-member limited liability company (owned by one individual), (regardless of direct involvement in daily business activities) are disallowed for corporate income tax purpose.
On 27 February 2019, Ministry of Labour, Invalids and Social Affairs, Department of Industrial Relations and Wage issued official letter no. 113/QHLĐTL-CSLĐ as guidance on payment of severance allowance to employees of which labour contract terminated after the effective date of Decree no. 148/2018/NĐ-CP; Ministry of Labour, Invalids and Social Affairs has the following comments: if labour contract had been entered into and taken effective before 01/05/2013, terms and conditions of the labour contract includes ones on probation period; therefore if such labour contract is terminated after the effective date of Decree no. 148/2018/NĐ-CP (15/12/2018), total working time entitled for severance allowance, Unemployment assistance also includes probation period.
On 03 June 2019, Ministry of Labour, Invalids and Social Affairs, Department of Employment issued official letter no. 482/CVL-BHTN as guidance on payment of severance allowance to employees of which labour contract terminated after the effective date of Decree no. 148/2018/NĐ-CP; Ministry of Labour, Invalids and Social Affairs has the following comments:
According to Clause 1 and 2, Article 48 Labour Law, if labour contract is terminated as per clause 1, 2, 3, 5, 6, 7, 9 and 10, Article 36 of this Law, the employer is responsible for severance allowance to employees who have worked at least 12 months; for each working year, employee shall get an allowance equivalent to ½ of monthly salary; total working time entitled to severance allowance is calculated by using total working time for one employer minus the periods in which the employee has joined Unemployment insurance regime and employer had already paid off severance allowance.
In conclusion, if the labour contract is terminated in 2019, the company is responsible for severance allowance as mentioned above. Total working time for one employer, or the period in which employee has joined Unemployment insurance regime are determined as per clause 3, Article 14, Decree no. 05/2015/NĐ-CP dated 12 January 2015 and as amended in Decree no. 148/2018/NĐ-CP dated 24 October 2018 issued by the Government.
1. Report of labour change in 06.2019 (if any)
- Deadline: before 03/07/2019
- Legal grounds: Clause 2 Article 16 Circular 28/2015/TT-BLĐTBXH dated 31/7/2015.
If there’s any change in number of labour used (increase/ decrease), employer is required to report such change to local Job service center on or before the 3rd of next month.
2. Report on use of PIT certificate Q2/2019
- Deadline: On or before 30/07/2019
- Legal grounds: Article 5 Circular 37/2010/TT-BTC:
As to certificate printed from computer, operating companies shall submit report on use of PIT certificate to the relevant tax department on or before the 30th of the first month of next quarter.
3. Payment of CIT instalment for Q2.2019
- Legal grounds: Article 17 Circular 151/2014/TT-BTC dated 10/10/2014:
The company is required to estimate and make payment for CIT instalment, on or before the 30th of the first month of next quarter; no CIT instalment declaration is required.
4. Payment of Social insurance, Health insurance, Unemployment insurance for 07.2019
- Legal grounds: Article 7 Decision 595/QĐ-BHXH dated 14/4/2017
On or before last date of the month, company is required to withhold Social insurance, Health insurance, Unemployment insurance based on SHUI salary of employees who take part in SHUI regime.
And make payment for such insurance as per regulation to Social Deparment at District level, branches of company shall make payment to Social Department at it operating site.
5. Payment of Union fee for 07.2019
- Deadline: on or before 30/07/2019
It’s company’s obligation regardless of establishment of local labour union.
Union fee is charged at 2% of SHUI salary fund, and payment is made at the same time of payment for SHUI contribution.
6. 06.2019 PIT declaration
- Deadline: on or before 20/07/2019
- Legal grounds: Point a, Clause 3, Article 10 Circular 156/2013/TT-BTC dated 06/11/2013.
During May 2019, if company withheld PIT from salary disbursement, it is required to submit PIT return to relevant tax department on or before the 20th of next month.
Note: above regulation only applies to companies which are required to report PIT on monthly basis; if there’s no PIT withheld in the month, no reporting is required.
7. Report of invoice use in 06.2019
- Legal grounds: Article 27 Circular 39/2014/TT-BTC dated 31/3/2014.
Companies are required to report invoice use to relevant tax department (even though there’s no invoice used) on or before the 20th of next month.
Below companies are required to report invoice use on monthly basis:
- Companies which print their own invoices, and commit breaches of regulations on invoices; and were fined for administrative violations of tax evasion and tax fraud.
- Company of which tax risk is significant, and which is required to purchase invoices from tax department.
Note: Monthly reporting of invoice use must be done in 12 months since establishment date or from the date it is required to purchase invoice from tax deparment.
8. 06.2019 VAT declaration
- Legal grounds: Clause 15, Circular 151/2014/TT-BTC dated 10/10/2014 and Point a, Clause 3, Article 10 Circular 156/2013/TT-BTC dated 06/11/2013.
Company of which previous year’s income from goods sold and service renderred is higher than 50 billion VND is required to report monthly VAT on or before the 20th of next month.