Many expats working in Vietnam are entitled to a lot of allowance from their Company and Housing allowance is a kind of these benefits.

For some enterprises, the housing allowance are capped at a specific amount and paid along with the monthly salary to expats staff. For others, the Company shall settle rental charge directly to the lessor.

The question is that the VAT invoice issued by the lessor for such housing allowance is deductible or not?

In accordance with the Circular 219/2013/TT-BTC providing guidance on implementation of the Law on Value Added Tax, it is regulated at the Article 14: rules for VAT input deduction that:

• In case a foreign expert is working under labour contract or holding managerial positions with Vietnam party and entitled to a housing allowance paid by Vietnam party, the Vietnam party is not allowed to claim the VAT input on housing allowance to such expats.
• In case the foreign expert is still under labour contract with oversea company, receive wages and benefits from the overseas company during their Vietnam assignment and the overseas company and the taxpayer in Vietnam sign a contract specifying that the Vietnam party shall cover the accommodation cost for the foreign experts while they are working in Vietnam, the VAT on such accommodation cost paid by Vietnam party shall be deductible.

It is also regulated at Point 9 of the same Article that:

 Input VAT that is not deductible shall be aggregated with costs to calculate corporate income tax, or aggregated with costs of fixed assets, except for the VAT on any purchase that costs 20 million VND or more without receipts for non-cash payments

In light of the above, the VAT input on housing allowance for expats shall be specified in 2 cases:

• In case that the expats are working under labour contract with Vietnam Company and/or holding a position in management board of Vietnam Company, the VAT amount for housing allowance to such expats is non-deductible but can be recorded as expense .
• In case that the expats are working under secondment, receiving wages and salaries from oversea company while the housing allowance to such expats is paid by Vietnam party (for and with the terms which are clearly stated in the agreement between Vietnam and oversea company), the VAT amount on such housing allowance is deductible.

Above is the regulation related to case of input VAT on housing allowance.

To get into details for specific cases, please feel free to contact us as at:

Unit 602A, Tower A, Handi Resco Office Building

521 Kim Ma Street, Ba Dinh District, Hanoi

+ 84 24 3974 4181/ 4182

+ 84 24 3974 3090

service@s4b.com.vn

In case of arising Valued Added Tax on imported goods/services, is it such VAT liability deductible and is there any requirement implicated?

Let us share with you the related regulation for further information and reference.

In accordance with Clause 10, Article 1, Circular 26/2015/TT-BTC, the tax payer can claim for VAT deduction if can meet the below requirements:

1. Having legitimate VAT invoices for purchases or receipts for payment of VAT on imported goods, or receipts for payment of VAT on behalf of foreign organizations that do not have Vietnamese legal status and the organizations and individuals, and the foreigners that do business or earn income in Vietnam.

2. Proofs non-cash payments for the purchases (including imported goods) that cost VND 20 million or more, except for the imports that cost below VND 20 million each, purchases that cost below VND 20 million inclusive of VAT, and imports being gifts, donations from overseas entities.

3. Bank transfer receipts are documentary evidence proving the transfer of money from the buyer's account to the seller's account.

a) Proofs of the buyer's payment to the seller's account or proofs of payments in the manners that are not conformable with applicable regulations of law are not eligible for deduction and refund of VAN on purposes that cost VND 20 million or more.

b) Any purchase that cost VND 20 million or more (VAT-inclusive) shall not be deducted if there is no bank transfer receipt

c) With regard to goods purchased under a deferred payment plan or instalment plan that cost VND 20 million or more, the taxpayer shall declare and deduct input VAT according to the sale contracts, VAT invoices, and bank transfer receipt, If the bank transfer receipt is not available before the payment deadline according to the contract, the taxpayer may still deduct input VAT.

In light of the above, the VAT on imported goods/services which are used for business activities of the tax payer can be claimed for VAT deduction and the tax payer needs to maintain below documentation:

1. Payment evidence for VAT on imported goods/services or VAT liability payment;

A copy of the submitted customs declaration or declaration of foreign contractor withholding tax should be attached along with the claim package as supporting documents;

2. Proofs non-cash payments for the purchases

It means that the VAT on imported goods is only deductible and claimable when the payment for the foreign contractor is fully made.

Above is the general regulation for cases of Conditions for deducting input VAT on imported goods and services.

To get into details for specific cases, please feel free to contact us as at:

Unit 602A, Tower A, Handi Resco Office Building

521 Kim Ma Street, Ba Dinh District, Hanoi

+ 84 24 3974 4181/ 4182

+ 84 24 3974 3090

service@s4b.com.vn