CHANGE IN WITHHOLDING TAX RATE ON INTEREST OF BONDS AND
CERTIFICATES OF DEPOSIT.
On 22 April 2010 the Ministry of Finance issued Circular 64/2010/TT-BTC providing amendment and addition to Circular 134/2008/TT-BTC. The key revision is to extend the definition of “interest income” to include “interest on bonds and certificates of deposits” – this would mean that interest earned from investment in bonds (except for tax exempt bonds) and certificates of deposit are now subject to 10% withholding tax same as offshore loan interest. Sales of bonds and certificates of deposits are continued to be subject to deemed tax of 0.1% on gross proceeds.
This is a fundamental change. Pursuant to the previous Circular 72/2006/TT-BTC amending Circular 100/2004/TT-BTC guiding CIT and VAT treatment in respect of securities, interest income earned from investment in bonds is taxed at 0.1% on the total sum of the face value of the bonds plus the interest.
Accordingly, the newWHT rate under Circular 64 applicable to the bond interest will be much higher. Circular 64/2010/TT-BTC will be effective 45 days after the date of signing.

2009 PIT OVERPAYMENTS.
Readers of our News Brief dated 15 January and 12 February may recall that the General Department of Taxation (“GDT”) issued guidance allowing employers to undertake PIT finalization on behalf of their employees and pay any additional tax due. However, the guidance was silent on how to deal with overpayments.
The Ministry of Finance (“MoF”) issued Official Letter 4238/BTC-TCT on 8 April 2010 to confirm that withholding organizations (i.e. employers) are allowed to offset any PIT overpayments against underpayments among its employees.
If the position with respect to all employees of an employer is an overpayment, the employer is required to refund overpayments to employees and apply to the tax authority to obtain a refund. Official Letter 4283 emphasizes that no PIT refund dossiers are required to be submitted. The tax authorities will refund amounts to employers within 5 working days of request.
This is welcome guidance which will help to ease the administrative burden for individual taxpayers.

VIETNAM TAX UPDATES - NEW CIRCULAR ON CIT
APRIL 2010.

In this newsletter, Grant Thornton summarizes selected tax and legal issues that may be of interest to investors in Vietnam.
Tax treatment of fixed asset revaluation gain Circular No. 40-TT-BTC 23 March 2010... Read more

TAX WATCH UPDATE - MAY 2010.

In this issue, we update some recent changes on Corporate Income Tax, Value Added Tax and Customs Duty and other Vietnamese regulations for your reference and would be happy to address any queries that you may have after you have had the opportunity to consider the changes and the impacts and/or opportunities... Read more