On April 17, 2024, the Ninh Binh Provincial Tax Department issued Official Letter No. 1489/CTNBI-TTHT guiding the contractor tax policy, specifically as follows:

In case in 2024, the Company has a contract to sell goods to a Company that is a foreign organization subject to declaration and payment of tax according to the method of proportion on revenue. Because the forwarded goods are defective, the buyer and seller have a record of determining the value of damage to compensate, when paying compensation to Company X, the Company must be obliged to calculate, deduct and declare tax on behalf of Foreign Company X,  as follows:

– For VAT: The compensation amount is not required to declare and pay VAT according to the provisions of Clause 1, Article 5 of the Circular No. 219/2013/TTBTC mentioned above;

– For CIT: In case Company X receives compensation but that amount is not greater than the value of damage (no taxable income), it is not required to declare and pay CIT