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THE MINISTRY OF
FINANCE
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SOCIALIST REPUBLIC
OF VIET NAM
Independence - Freedom - Happiness
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No. 129/2008/TT-BTC
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Hanoi, December 26,
2008
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CIRCULAR
GUIDING
THE IMPLEMENTATION OF A NUMBER OF ARTICLES OF THE VALUE-ADDED TAX LAW AND
GUIDING THE IMPLEMENTATION OF THE GOVERNMENT’S DECREE NO. 123/2008/ND-CP OF
DECEMBER 8, 2008, DETAILING AND GUIDING THE IMPLEMENTATION OF A NUMBER OF
ARTICLES OF THE VALUE-ADDED TAX LAW
Pursuant to Value-Added Tax Law No. 13/2008/QH12
of June 3, 2008;
Pursuant to Tax Administration Law No. 78/2006/QH11 of November 29, 2006;
Pursuant to the Government’s Decree No. 123/2008/ND-CP of December 8, 2008,
detailing and guiding the implementation of a number of articles of the
Value-Added Tax Law;
Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008,
defining the functions, tasks, powers and organizational structure of the
Finance Ministry;
The Finance Ministry guides implementation of value-added tax (VAT) as follows:
A. SCOPE OF
APPLICATION
I. TAXABLE OBJECTS
AND TAXPAYERS
1. Taxable objects
Liable to VAT are goods and services used for
production, business and consumption in Vietnam (including goods and services
purchased from organizations and individuals abroad), except for those not
liable to VAT specified in Section II, Part A of this Circular.
2. Taxpayers
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2.1. Business organizations established and
registering business under the Law on Enterprises, the Law on State Enterprises
(now the Law on Enterprises) or the Law on Cooperatives;
2.2. Economic organizations of political
organizations, socio-political organizations, social organizations,
socio-professional organizations, people’s armed forces units, non-business
organizations and other organizations;
2.3. Foreign-invested enterprises and foreign
parties to business cooperation contracts under the Law on Foreign Investment
in Vietnam (now the Law on Investment); foreign organizations and individuals
conducting business activities in Vietnam without establishing legal entities
in Vietnam;
2.4. Individuals, households, independent
groups of business people and other business entities conducting in production,
business or import activities.
2.5. Organizations and individuals that conduct
production or business in Vietnam and purchase services (including services
associated with goods) from foreign organizations without permanent establishments
in Vietnam or overseas individuals who do not reside in Vietnam.
II. NON-TAXABLE
OBJECTS
1. Products of cultivation (including
products from plantation forests) and husbandry, cultured and fished aquatic
and marine products which have not yet been processed into other products or
have just been preliminarily processed then sold by producing or fishing
organizations or individuals themselves and at the stage of importation.
Products preliminarily processed by ordinary
methods are those which have just been cleaned, sun-dried, heat-dried, peeled,
pitted, sliced, salted, chilled or otherwise ordinarily preserved.
Example 1: Sun-drying, heat-drying, peeling,
pitting or slicing of cultivation products; cleaning, sun-drying, heat-drying,
salting or icing of cultured or fished aquatic and marine products.
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3. Water irrigation and drainage; soil
plowing and harrowing; intra-field canal and ditch dredging for agricultural
production; services of harvesting farm produce.
4. Salt products made from seawater, natural
rock salt, refined salt and iodized salt, the principal component of which has
the chemical formula NaCI.
5. State-owned residential houses sold by the
State to their current tenants.
6. Transfer of land use rights.
7. Life insurance covering human health insurance
and accident insurance in a life insurance package; student insurance and such person
insurance services as sailor or crew member accident insurance, person accident
insurance (including also insurance for accidents, life and combined
hospitalization), passenger accident insurance, tourist insurance, accident
insurance for drivers and driver assistants and persons aboard vehicles, insurance
for sterilized persons, insurance of allowance for surgical operations,
insurance for individuals’ lives, insurance for electricity users and other
kinds of insurance related to humans; insurance for livestock, plants, other
agricultural insurance services; reinsurance.
8. Financial services:
a/ Credit provision services, covering
provision of loans, discount and rediscount of negotiable instruments and other
valuable papers; guarantee; financial leasing and other lawful forms of credit
provision by Vietnam-based financial and credit institutions.
b/ Securities trading activities, including securities
brokerage, securities dealing, securities issuance underwriting, securities
investment counseling, securities depository, securities investment fund and
portfolio management, market organization services provided by stock exchanges
or securities trading centers, and other business activities specified by the
securities law.
Market organization services provided by
stock exchanges or securities trading centers include listing acceptance,
listing management, trading management, trading member management, supply of
information relating to listing management, trading management, and other
relevant services.
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d/ Derivative financial services, including
interest rate swap, forward contracts, future contracts, foreign currency put
and call options and other derivative financial services under law.
9. Healthcare and animal health services, including
medical examination and treatment and preventive medicine services for humans and
livestock, birth control services, health convalescence and functional
rehabilitation services for patients. Healthcare services cover also
transportation of patients, lease of patient rooms and beds of medical establishments;
test, screening, radiograph, blood and blood preparations for patients.
10. Public-utility post and telecommunications
services and Internet services universalized under the Government’s programs;
post and telecommunications services provided from abroad to Vietnam (incoming
services).
11. Public services, including sanitation and
water drainage in streets and residential quarters; maintenance of zoos, flower
gardens, parks and greeneries along streets and public lighting; and funeral
services. Services mentioned at this Point are irrespective of their funding
sources.
Specifically:
a/ Public services of sanitation and water
drainage in streets and residential quarters cover activities of collecting and
disposing of garbage and wastes; draining and treating wastewater. Sanitary and
water drainage services, such as cleaning and sanitizing offices of
organizations and individuals provided by business establishments are liable to
VAT.
b/ Maintenance of zoos, flower gardens, parks
and greeneries along streets covers activities of managing, planting, tending
trees and protecting birds, animals in parks, zoos, public places and national
parks.
c/ Public lighting means lighting of streets,
lanes and alleys in residential areas, flower gardens and parks.
d/ Funeral services provided by
establishments with the function of providing funeral services cover activities
of leasing houses, hearses and cars in service of funeral, burial, cremation
and disinterment.
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For maintenance, repair or construction of
works, which is funded with capital other than people’s contributions
(including contributed amounts and financial supports of organizations and
individuals) and humanitarian aid, not exceeding 50% of the total capital used
for those works, the whole value of the works is not liable to tax.
Social policy beneficiaries include people
with meritorious services under the law on people with meritorious services;
social relief beneficiaries who enjoy state budget allowances; members of
households classified as poor or living just above the poverty line; and other
cases provided for by law.
13. Teaching and vocational training specified
by law, including also teaching of foreign languages, informatics, dancing,
singing, painting, music, drama, circus, physical training, sports, child
nursing, and other jobs in order to train, retrain and raise the educational
levels and professional knowledge.
For education establishments from pre-schools
to upper secondary schools that collect charges for meals of their pupils,
these charges are not liable to VAT.
14. Radio and television broadcasting funded
with the state budget.
15. Publication, import and distribution of
newspapers, magazines and specialized bulletins, political books, textbooks,
teaching course books, law books, scientific and technical books, books printed
in ethnic minority languages, and pictures, photos and posters for propaganda
and mass agitation purposes, including those recorded in audio-visual tapes and
disks or encrypted into electronic data; printing of banknotes.
Newspapers, magazines and specialized
bulletins, including also transmission of their pages.
Political books are books disseminating the
political line of the Party and the State, serving political tasks under
specific themes or topics, serving anniversaries or traditional days of
organizations, levels, branches and localities; statistical books, books
propagating the good people and good deeds movement; books of speeches,
research and theoretical papers of Party and State leaders.
Textbooks (including those recorded in
audio-visual tapes and disks or encrypted into electronic data) are books used
for teaching and learning at the levels from preschool to upper secondary school
(including reference books for teachers and pupils, relevant to the contents of
education curricula).
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Law books are books of legal documents of the
State.
Scientific and technical books are books used
for introducing and guiding scientific and technical knowledge directly related
to production and various scientific and technical branches.
Books printed in ethnic minority languages
also include books printed bilingual in Vietnamese and an ethnic minority
language.
Propaganda and mass agitation pictures,
photos and posters are pictures, photos, posters, leaflets and brochures used
for propaganda and mass agitation purposes, slogans, leaders’ pictures, the
Party’s flag, the national flag, the Youth Union’s flag, the Young Pioneers
League’s flag.
Audio or video tapes and disks recorded with
the contents of newspapers, magazines, specialized bulletins or books specified
at this Point.
16. Mass transit by bus and tramcar means
public transportation of passengers by bus or tramcar along specified routes
within provinces, urban centers and in their vicinities under the Transport
Ministry’s regulations.
17. Goods which cannot be produced at home
and imported in the following cases:
a/ Machinery, equipment and supplies imported
for direct use in scientific research and technological development activities;
b/ Machinery, equipment, spare parts,
special-purpose means of transport and supplies which need to be imported to
serve activities of prospecting, exploring and developing oil and gas fields;
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In order to identify goods not liable to VAT
at the stage of importation specified at this Point, importers shall produce to
customs offices documents under the Finance Ministry’s guidance on customs
procedures; customs inspection and supervision; import and export duties and
tax administration regarding imports and exports.
The Planning and Investment Ministry shall
promulgate the list of machinery, equipment and supplies which can be produced
at home, for use in distinguishing them from those which cannot be produced at
home and need to be imported for direct use in scientific research and
technological development; the list of machinery, equipment, spare parts,
special-purpose means of transport and supplies which can be produced at home,
for use in distinguishing them from those which cannot be produced at home and
need to be imported for prospecting, exploring and developing oil and gas
fields; and the list of aircraft, derricks and ships which can be produced at
home, for use in distinguishing them from those which cannot be produced at
home and need to be imported to form fixed assets of enterprises or hired from
abroad for production, business or lease.
18. Weaponry and military equipment for
exclusive use in defense and security.
a/ Non-taxable weaponry and military
equipment for exclusive use in defense and security guided at this Point are
those on the list of weaponry and military equipment for exclusive use in
defense and security promulgated by the Finance Ministry after reaching
agreement with the Defense Ministry and the Public Security Ministry.
Weaponry and military equipment not liable to
VAT as guided at this Point must be finished products in complete sets or
parts, accessories and packages used exclusively for assembling and preserving
finished products. When weaponry and military equipment used exclusively in
defense and security need to be repaired, their repair services provided by
enterprises of the Defense Ministry or the Public Security Ministry are not liable
to VAT.
b/ Weaponry and military equipment (including
supplies, machinery, equipment and spare parts) used exclusively in service of
defense and security are, when imported, exempt from import duty under the
Import Tax and Export Tax Law, or are, when imported within annual quotas
approved by the Prime Minister, not liable to VAT.
Dossiers and procedures for the import of
weaponry and military equipment which are not liable to VAT at the importation
stage comply with the Finance Ministry’s guidance on customs procedures;
customs inspection and supervision; import and export duties and tax
administration regarding imports and exports.
19. Imported goods and goods and services
sold to organizations and individuals for use as humanitarian or non-refundable
aid in the following cases:
a/ Goods imported for use as humanitarian aid
or non-refundable aid goods with the Finance Ministry’s certification;
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c/ Presents and gifts given under the law on
gifts and presents to individuals in Vietnam;
d/ Personal effects of foreign organizations
and individuals within diplomatic immunity limits under the law on diplomatic
immunities; and personal effects brought along by overseas Vietnamese upon
their return to the country;
e/ Personal effects within duty-free luggage
limits;
The quota quantities of imported goods not
liable to VAT at the importation stage are equal to the import duty-free
quantities prescribed in the Import Tax and Export Tax Law and guiding
documents.
Goods imported by organizations and
individuals entitled to diplomatic immunities under the Ordinance on Diplomatic
Immunities are not liable to VAT. If these organizations or individuals
purchase goods and services in Vietnam and pay VAT thereon, they will be
refunded paid VAT amounts under the guidance at Point 7, Part C of this
Circular. The subjects, goods and procedural dossiers for enjoying VAT
exemption guided at this Point comply with the Finance Ministry’s guidance on
the refund of VAT to diplomatic missions, consular offices and representative agencies
of international organizations in Vietnam.
Dossiers and procedures for handling imported
goods which are not liable to VAT at the importation stage comply with the
Finance Ministry’s guidance on customs procedures; customs inspection and
supervision; import and export duties and tax administration regarding imports
and exports.
f/ Goods and services sold to foreign
organizations or individuals or international organizations for use as
humanitarian aid or non-refundable aid to Vietnam.
The procedure for international organizations
or foreigners to purchase goods and services in Vietnam for use as humanitarian
aid or non-refundable aid to Vietnam and enjoy VAT exemption: International
organizations or foreigners shall send to the sellers documents clearly stating
the names of the international organizations or foreigners purchasing goods for
use as humanitarian aid or non-refundable aid to Vietnam, the quantity or value
of the purchased goods; and written certification by the Finance Ministry of
such aid.
When selling these goods, the business
establishments shall issue invoices as guided in Section IV, Part B of this
Circular, clearly indicating on these invoices that the goods are sold to
foreign organizations or individuals or international organizations for use as
non-refundable aid or humanitarian aid and not liable to VAT, and keep the
above-said documents of international organizations or Vietnamese
representative agencies for tax declaration.
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Goods and services that are sold and
purchased between foreign countries and non-tariff zones and among non-tariff
zones.
Non-tariff zones include export processing
zones, export processing enterprises, bonded zones, bonded warehouses, special
commercial and economic zones, commercial and industrial zones and other
economic zones established and enjoying tax incentives like non-tariff zones
under the Prime Minister’s decisions. Goods purchase, sale and exchange
relations between these zones and outside areas are import and export
relations.
Dossiers and procedures for the determination
and non-collection of VAT in these cases comply with the Finance Ministry’s
guidance on customs procedures; customs inspection and supervision; import and
export duties and tax administration regarding imports and exports.
21. Technology transfer under the Technology
Transfer Law; assignment of intellectual property rights under the Intellectual
Property Law. For contracts on technology transfer accompanied by machinery and
equipment transfer, only the value of transferred technology or assigned
intellectual property rights is not liable to VAT. If the value of transferred
technology or assigned intellectual property rights cannot be separated, VAT
will be imposed on both the value of transferred technology or assigned
intellectual property rights and that of machinery and equipment.
Computer software includes software products
and software services as specified by law.
22. Gold imported in the form of bar or ingot
and gold not yet fashioned into fine-art articles, jewelry or other products.
Gold in the form of bar or ingot and
unfashioned gold shall be determined under legal provisions on gold management
and trading.
23. Export products that are unprocessed exploited
natural resources and minerals.
Unprocessed exploited natural resources and
minerals are those not yet processed into other products, including also
minerals already screened, sorted or treated for higher concentrations or other
natural resources already cut or split.
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25. Goods and services of business
individuals with average monthly incomes lower than the common minimum salary
level applicable to domestic organizations and enterprises under the Government’s
regulations on region-based minimum salary levels applicable to employees of
companies, enterprises, cooperatives, cooperation groups, farms, households,
individuals and other Vietnamese organizations.
26. The following goods and services:
a/ Goods for duty-free sale at duty-free
shops under the Prime Minister’s regulations.
b/ National reserve goods sold by the
National Reserves.
c/ Services for which charges or fees are
collected by the State under the law on charges and fees.
d/ Sweeping of bombs, land mines and
explosive objects performed by defense units at projects invested with state
budget capital.
Any change in the use purposes of goods not
liable to VAT at the importation stage must be declared for VAT payment at the
importation stage under regulations to customs offices where customs declarations
are registered. VAT will be calculated from the time of change of the use
purposes. Organizations and individuals that sell goods on the domestic market
shall declare and pay VAT to tax offices directly managing them under
regulations.
B. TAX BASES AND TAX
CALCULATION METHODS
The bases for calculating VAT are taxable
price and tax rate.
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1. Taxable prices of goods or services are
specified as follows:
1.1. For goods and services sold or provided by
production and business establishments, their taxable prices are VAT-exclusive
sale prices. For goods and services subject to excise tax. Their taxable prices
are sale prices inclusive of excise tax but exclusive of VAT.
The taxable prices of goods or services cover
also additional levies and surcharges collected in addition to the goods or
service prices which are enjoyed by business establishments, excluding those
which business establishments shall remit into the state budget. When business
establishments apply reduced sale prices or commercial discounts for their
customers (if any), taxable prices are reduced or commercially discounted sale
prices for customers.
1.2. For imported goods, their taxable prices
are import prices at border gates plus (+) import duty (if any) and plus (+) excise
tax (if any). Import prices at border gates are determined according to regulations
on dutiable prices of imported goods.
For imported goods eligible for import duty
exemption or reduction, their taxable prices are import prices plus (+) import
duty to be paid after the exemption or reduction.
1.3. For goods and services used for barter,
internal consumption, presentation as gifts, donation or payment of salaries to
laborers, their taxable prices are taxable prices of goods or services of the
same or similar types at the time such activities are carried out.
Goods and services used for internal
consumption are those manufactured or provided by business establishments for
their internal consumption, excluding those for further use in their
manufacture or business operations.
Goods for internal circulation, including
those ex-warehoused for transfer from one warehouse to another, or supplies or
semi-finished products ex-warehoused for further use in manufacture operations
of a production or business establishment are not subject to VAT calculation
and payment.
Example 2: Establishment A manufactures
electric fans and installs 50 fans at its workshops, the sale price (exclusive
of VAT) of this type of fans is VND 1,000,000/fan. The output VAT amount payable
for these internally used fans is:
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Example 3: Establishment B produces garments
and has a yarn workshop and a sewing workshop. If it transfers finished yarn
from the yarn workshop to the sewing workshop for further use in the production
process, it is not required to calculate and pay VAT for the yarn quantities
ex-warehoused to the sewing workshop.
Example 4: Production establishment C is
engaged in both manufacturing livestock feeds and raising cattle. VAT shall be
imposed on the manufactured livestock feed quantity put for sale but
establishment C is not required to calculate and pay VAT on its livestock feed
quantity used for cattle raising which is not liable to VAT. The creditable
input VAT amount on livestock feed manufacture operations shall be allocated
according to the ratio of livestock feed sale turnover to the total of
livestock feed sale turnover and livestock sale turnover.
1.4. For services of leasing such assets as houses,
offices, workshops, warehouses, wharves, yards, means of transport, machinery, equipment,
etc., their taxable prices are VAT-exclusive rents.
In case of leasing with rent paid in
installments or prepaid for a leasing term, the taxable price is each
VAT-exclusive rent installment or prepaid rent amount for that leasing term.
In case of lease of foreign machinery,
equipment or means of transport which cannot be manufactured at home for
sub-lease, the taxable price is exclusive of the rent payable to the foreign
party.
Asset rent rates are those agreed upon by
involved parties and stated in their contracts. When a rent rate bracket is
prescribed by law, rent rates must be within that bracket.
1.5. For goods sold on installment or
deferred payment, their taxable prices are lump-sum VAT-exclusive sale prices,
excluding interests on installment or deferred payments.
Example 5: A motorbike trading company sells 100
cc Honda motorbikes. The VAT-exclusive installment sale price of these
motorbikes is VND 25.5 million (including an installment payment interest of
VND 0.5 million). The taxable price is VND 25 million.
16. For goods processing, taxable prices are
VAT-exclusive processing prices under processing contracts, consisting of
remunerations, costs of fuel, power, auxiliary materials and other expenses for
the processing operation.
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1.7.1. For cases of construction and installation
involving the contracted supply of materials, taxable prices are construction
and installation prices inclusive of the VAT-exclusive value of materials.
Example 6: Construction company B enters into a
work construction contract, covering also the value of construction materials.
The VAT-exclusive total payment value is VND 1,500 million, of which the
VAT-exclusive value of construction materials is VND 1,000 million. Then the
taxable price is VND 1,500 million.
1.7.2. For cases of construction and installation
without the contracted supply of materials, the taxable price is the
construction and installation value exclusive of the VAT-exclusive value of
materials.
Example 7: Construction company B enters into a
work construction contract not covering the value of construction materials. If
the total VAT-exclusive value of the work is VND 1,500 million and the
VAT-exclusive value of construction materials supplied by investor A is VND
1,000 million, then the taxable price in this case is VND 500 million (VND
1,500 million - VND 1,000 million).
1.7.3. For cases of construction and
installation with payments to be made for each completed and taken-over
construction item or based on the value of the completed and taken-over
construction and installation volume, the taxable price is the VAT-exclusive
value of the completed and taken-over construction item or work volume.
Example 8: Textile company X (party A) hires
construction company Y (party B) to perform construction and installation work
to expand a workshop.
The total VAT-exclusive value of the work is
VND 200 billion, including:
- The construction and installation value:
VND 80 billion
- The value of equipment supplied and
installed by party B: VND 120 billion.
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- Total amount payable by party A: VND 220
billion:
- Party A shall:
+ Receive the workshop handed over, account
it as an increase of VND 200 billion (VAT-exclusive value) in the value of its
fixed assets for depreciation purpose.
+ Declare and credit the VAT amount of VND 20
billion against the output VAT on sold goods or request tax refund under
regulations.
If party A tests, takes over the work and
accepts to make payment to party B per construction item (presuming that a VND
80-billion construction and installation volume is tested, taken over and paid
for first) then the taxable price is VND 80 billion.
1.8. For real estate business activities,
taxable prices are real estate transfer prices minus (-) actual land prices (or
land rent rates) at the time of land transfer. In case land prices at the time
of transfer declared by taxpayers are not reliable for determining reasonable
taxable prices under law, land prices to be subtracted (or land rent rates) are
those set by provincial/municipal People’s Committees at the time of real
estate transfer. Land prices to be subtracted for determining taxable prices
must not exceed sums of money collected from land customers.
For establishments building and trading in
infrastructure works or building houses for sale or transfer and collecting
sums of money from customers according to the project implementation or payment
collection schedules indicated in contracts, land prices to be subtracted are
actual land prices at the time of first collection according to schedule. Land
prices to be subtracted shall be calculated according to the ratio (%) of sums
of money collected according to project implementation or payment collection
schedules indicated in the contracts to actual land prices at the time of
transfer (the time of first collection according to the project implementation
or payment collection schedule).
Example 9: Housing Investment and Development
Company A is allocated by the State 10,000 m2 of land for building
houses for sale. The company sells one house on a land area of 100 m2
at a total of VND 2 billion, exclusive of VAT, including the house sale price
and land use rights transfer price (of which the price of the house with
infrastructure works is VND 1.2 billion and the land use rights transfer price
declared by the Company is VND 8 million per m2).
The managing tax office holds that the price
declared by the Company is insufficient for determining a reasonable taxable
price under law.
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VND 2 billion - (VND 6 million x 100/m2)
= VND 1.4 billion.
The output VAT is: VND 1.4 billion x 10% =
VND 140 million
Example 10: Real Estate Business Company C
sells a villa at the price of VND 8 billion as stated in the transfer contract,
including the villa sale price of VND 5 billion and the land price of VND 3
billion. Company C collects the payment according to the project implementation
schedule. The customer makes the payment in three installments. The first
installment is 30% of the contract value (VND 2.4 billion), the second
installment is 50% of the contract value (VND 4 billion) and the third
installment is the remaining 20% (VND 1.6 billion), the taxable price for each
installment is as follows:
The taxable price for the first installment:
VND 2.4 billion - 30% x VND 3 billion = VND
1.5 billion
The taxable price for the second installment:
VND4 billion - 50% x VND 3 billion = VND 2.5
billion
The taxable price for the third installment:
VND 1.6 billion - 20% x VND 3 billion = VND 1
billion
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Example 11: Industrial Park Infrastructure
Investment and Dealing Company Y is leased by the State 500,000 m2
of land for 50 years for building technical infrastructure works for lease. The
land rent rate is VND 300,000/m2/year. After building infrastructure
works, company Y leases 5,000 m2 to company Z for 20 years for
building a factory at a VAT-exclusive land rent rate (excluding public-facility
charges) of VND 800,000/m2/year. Company Z pays the infrastructure
rent once a year.
The taxable price for an annual rent from the
lease of the infrastructure is:
(5,000 m2 x VND 800,000) - (5,000
m2 x VND 300,000) x 1 year = VND 2,500,000,000.
The VAT amount is: VND 2,500,000,000 x 10% =
VND 250,000,000.
1.9. For goods and service sale and purchase
agency and brokerage activities, remunerated or commissioned import or export
consignment activities, taxable prices are VAT-exclusive remunerations or
commissions earned from these activities.
1.10. For goods and services with payment documents
showing VAT-inclusive payment prices, such as stamps, freight or fare tickets
or construction lottery tickets, their VAT-exclusive prices shall be determined
as follows:
VAT- exclusive price
=
Payment price (ticket or stamp price)
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1.11. For electricity supplied by hydropower plants
being dependent-accounting units of the Vietnam Electricity Group, the taxable
price for determining payable VAT amounts in a locality where such a plant is
located is equal to 60% of the VAT-exclusive average commercial electricity
sale price in the previous year. In case the average commercial electricity
sale price in the previous year cannot be determined, a price for temporary VAT
calculation announced by the Group may apply but must not be lower than the
price of the preceding year. If the average commercial electricity sale price
in the previous year can be determined, declarations for difference adjustment
shall be made in the declaration period of the month when the official price is
available. The determination of the average commercial electricity sale price
in a year must be made before March 31 of the following year.
1.12. For casino, prized video game or betting
game services, taxable prices are excise tax-inclusive sums of money earned
from these activities minus prizes paid to customers.
The taxable price shall be calculated
according to the following formula:
Taxable price
=
Earned sum of money
1 + tax rate
Example 12: In a tax period, a casino service
establishment records the following Figures:
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- Cash amount paid to customers for tokens
returned after playing games: VND 10 billion.
Cash amount actually collected by the
establishment: VND 43 billion - VND 10 billion = VND 33 billion.
The cash amount of VND 33 billion is the
establishment’s turnover inclusive of VAT and excise tax.
The taxable price is calculated as follows:
Taxable price
=
VND 33 billion
=
VND 30 billion
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1.13. For transportation, loading and unloading,
taxable prices are VAT-exclusive freight or loading and unloading charge rates,
regardless of whether establishments directly undertake the transportation,
loading and unloading or hire such service.
1.14. For tourist services in the form of
tours under contracts signed with tourists at package prices (inclusive of
meal, accommodation and travel), these package prices are regarded as VAT-inclusive
prices.
In case the package price covers also air
fares for tourists coming from abroad into Vietnam and from Vietnam to abroad,
expenses for meals, lodgings and sight-seeing and some other expenses incurred
abroad (if with lawful receipts), sums of money collected from tourists to
cover these expenses may be subtracted from taxable prices (turnover).
Example 13: The Ho Chi Minh City Tourist Company
performs a package tour contract with Thailand for 50 tourists for five days in
Vietnam with a total payment of USD 32,000. The Vietnamese side has to pay for
airfares, meals, accommodation, and sight-seeing tours under the agreed
program, of which the airfares from Thailand to Vietnam and vice versa cost USD
10,000. The applicable USD/VND exchange rate is 1/17,000.
The taxable price under this contract is
determined as follows:
+ Turnover liable to VAT is:
(USD 32,000 - USD 10,000) x VND 17,000 = VND
374,000,000
+ The taxable price is:
VND 374,000,000
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VND 340,000,000
1 + 10%
Example 14: Hanoi Tourist Company performs a
contract for taking tourists from Vietnam to China on a five-day tour at the
package price of USD 400/person. If it has to pay a Chinese tourist company USD
300/person, its taxable turnover is USD 100/person (USD 400 - USD 300).
1.15. For pawning service, taxable prices are
amounts to be collected from this service, including interests receivable from
pawn loans and other proceeds from the sale of pawned articles (if any).
Revenues from this service, which are
determined as above, are VAT-inclusive prices.
Example 15: A pawning company generates in the
tax period a pawning turnover of VND 110 million.
+ The taxable price is determined as follows:
VND 110 million
=
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1 + 10%
1.16. For VAT-liable books sold at their
distribution prices (cover prices) under the Publication Law, these sale prices
shall be determined as VAT-inclusive prices for calculating selling
establishments’ VAT and turnover. For books which are sold at prices other than
their cover prices, VAT shall be calculated on the basis of actual sale prices.
1.17. For printing activities, taxable prices
are printing costs. If a printing establishment performs printing contracts
with payment prices covering also printing and paper costs, the taxable price
also includes the paper cost.
1.18. For services of assessment agency,
agency for indemnity consideration, agency for claim for compensations by third
parties and agency for handling of wholly compensated goods for remunerations
or commissions, taxable prices are earned VAT-exclusive remuneration or
commission amounts (not yet subtracted with any expenses) collected by the
insurance enterprises.
Taxable prices shall be calculated in Vietnam
dong. If taxpayers have foreign-currency turnover, they shall convert it into
Vietnam dong at the average inter-bank exchange rate announced by the State
Bank of Vietnam at the time of turnover generation, for determining taxable
prices.
2. The time of determining VAT is as follows:
- For sale of goods, it is the time of
transfer of the right to own or use goods to purchasers, regardless of whether
sellers have collected the money.
- For provision of services, it is the lime
of completing service provision or the time of billing the service provision,
regardless of whether providers have collected the money.
- For supply of electricity and clean water,
it is the date of recording water or electricity meter readings for writing on
water or electricity bills.
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- For construction and installation, it is
the time of takeover test and handover of completed works, work items,
construction or installation volumes, regardless of whether contractors have
collected the money.
- For imported goods, it is the time of
registration of customs declarations.
II. VAT RATES
VAT rates for goods and services are applied
as follows:
1. The tax rate of 0% is applicable to
exported goods and services; construction and installation of works of export
processing enterprises; goods sold to duty-free shops; international
transportation; exported goods and services not liable to VAT (except for cases
not subject to the tax rate of 0% specified at Point 1.3 of this Section.
1.1. Exported goods and services:
a/ Exported goods include:
- Goods exported abroad, including those
exported under consignment;
- Goods sold into non-tariff zones under the
Prime Minister’s regulations; goods sold to duty-free shops;
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+ Intermediary processed goods under the
commercial law regarding activities of international goods purchase and sale
and activities of goods purchase, sale and processing agency with foreign
parties.
+ Processed goods for on-spot export under
the commercial law regarding activities of international goods purchase and sale
and activities of goods purchase, sale and processing agency with foreign
parties.
+ Goods exported for sale at overseas fairs
and exhibitions.
b/ Exported services include services
provided directly to overseas organizations and individuals or those in non-tariff
zones.
Overseas organizations are foreign organizations
without permanent establishments in Vietnam and being non-VAT payers in
Vietnam;
Overseas individuals are foreigners not
residing in Vietnam and overseas Vietnamese not present in Vietnam during the
provision of services;
Organizations and individuals with business
registrations in non-tariff zones, and other cases specified by the Prime
Minister.
c/ Other goods and services:
- Construction and installation of works of
export processing enterprises.
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- Goods and services not liable to VAT upon
their exportation, except for cases not subject to the tax rate of 0% specified
at Point 1.3 of this Section;
- Aircraft and seagoing ship repair services
provided to foreign organizations and individuals.
1.2. Exported goods or services eligible for
the tax rate of 0% must meet the following conditions:
- Having a contract on sale or processing of
export goods; contract on entrusted export or entrusted processing of export
goods; contract on service provision with overseas organizations and
individuals or those in non-tariff zones;
- Having documents of via-bank payment for
exported goods or services and other documents under law;
- Having customs declarations for export
goods.
Particularly for aircraft and seagoing ship
repair services provided to foreign organizations and individuals, to be
eligible for the tax rate of 0%, aircraft and seagoing ships must, apart from
meeting the above conditions, go through import procedures upon their entry
into Vietnam and export procedures upon completion of repair.
1.3. Cases ineligible for the tax rate of 0%
include:
- Offshore re-insurance; offshore transfer of
technologies or intellectual property rights; offshore capital transfer, credit
provision or securities investment; derivative financial services;
international post and telecommunications services; exported products being
exploited natural resources or minerals not yet processed into other products;
goods and services provided to individuals without business registration in
non-tariff zones, except for other cases specified by the Prime Minister;
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- Automobiles sold to organizations and
individuals in non-tariff zones.
- Services provided by domestic business
establishments to organizations and individuals in non-tariff zones but
performed and used outside these zones, such as lease of houses, meeting halls,
offices, hotels, warehouses and storing yards; transportation of workers to and
from workplaces.
2. The tax rate of 5% is applicable to the
following goods and services:
2.1. Clean water for production and daily
life, excluding bottled or canned drinking water of all kinds and assorted
beverages subject to the tax rate of 10%.
2.2. Fertilizers; ores used for fertilizer production;
insecticides, pesticides and growth stimulants for livestock and plants.
a/ Fertilizers include organic and inorganic
fertilizers, such as phosphorous fertilizers, nitrogenous fertilizers (urea),
NPK fertilizer, mixed nitrogenous fertilizer, phosphate fertilizer, potassium
fertilizer, micro-biological fertilizer and other fertilizers.
b/ Ores used as raw materials for fertilizer
production like apatite ore used for the production of phosphorous fertilizer,
muddy soil for the production of micro-biological fertilizer.
c/ Pesticides and growth stimulants for
livestock and plants.
2.3. Feeds for cattle, poultry and for other livestock,
including those kinds processed or unprocessed such as bran, oil cakes of all
kinds, fish powder, bone powder and other types of feed for cattle, poultry and
other livestock.
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Services of preliminary processing and
preservation of agricultural products include sun-drying, heat-drying, peeling,
pitting, slicing, grinding, freezing, salting or other ordinary methods of
preservation.
2.5. Cultivation, husbandry, aquatic and marine
products which are unprocessed or have been preliminarily processed by
cleaning, sun- drying, heat-drying, peeling, pitting, slicing, grinding,
freezing, salting or other ordinary methods of preservation at the trading
stage.
Unprocessed cultivation products guided at
this Point include also paddy, rice, maize, potatoes, cassava and wheat.
2.6. Preliminarily processed rubber latex in
the forms of crepe, sheets, strips or granules; preliminarily processed pine resin;
nets, net ropes and yarns for plaiting fish nets, including fishing nets,
assorted yarns and ropes for exclusive use in plaiting fishing nets, regardless
of their production materials.
2.7. Fresh and raw foods; forest products,
except for timber, bamboo shoots and products specified at Point 1, Section II,
Part A of this Circular, not yet processed, at the trading stage.
Fresh and raw foods are foods that have been
neither cooked nor processed into other products but have only been
preliminarily processed by cleaning, peeling, slicing, freezing or sun-drying,
and still remain fresh and raw, such as cattle and poultry meat, shrimps,
crabs, fishes, and other aquatic and marine products
Unprocessed forest products are forest
products exploited from natural forests and of the groups of bamboo, rattan of
various kinds, mushrooms, Jew’s ear fungus; roots, leaves, flowers, medicinal
plants, plant resins, and other forest products.
2.8. Sugar and by-products in sugar production,
including molasses, bagasse, dregs.
2.9. Products made of jute, rush, bamboo, rattan,
leaves, straw, coir, water hyacinth, and other handicraft products made of raw
materials from agricultural production are those made of or processed from
jute, rush, bamboo, rattan and leaves as main raw materials, such as jute carpets,
jute yarns, jute bags, coir carpets, mats made of jute or rush, ropes and
strings made of bamboo or coir; curtains and blinds made of bamboo of various
kinds, bamboo brooms, conical hats; preliminarily processed cotton; newsprint
paper.
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2.11. Medical equipment and instruments,
including specialized machinery and instruments for medical use, such as
scanners and radiographs of all kinds for medical examination and treatment;
devices and instruments used exclusively in surgery and wound treatment;
ambulances; blood-pressure, cardiac and vascular meters; blood transfusion
instruments; syringes and needles; contraceptive devices and other specialized
medical equipment;
Medical cotton, bandages, gauzes and medical
hygienic bandages; preventive and curative medicines, including finished
medicines, materials for manufacture of medicines other than functional foods;
vaccines, medical biologicals, distilled water for preparation of injections
and transfusion fluids; chemical supplies for diagnosis and germicides for
medical use.
2.12. Teaching and learning aids, including
models, drawings, rulers, writing boards, chalks, rulers and compasses used for
teaching and learning purposes, and specialized teaching, learning, scientific
research and laboratory equipment and instruments.
2.13. Cultural, exhibition, physical training
and sport activities; art performances; film production; film importation,
distribution and screening.
a/ Cultural, exhibition, physical training and
sport activities, except for turnover from sale of goods, rent of grounds and
fields or booths at trade fairs or exhibitions.
b/ Art performance activities, such as tuong
(classical drama), cheo (traditional operetta), cai luong
(reformed drama), singing, dancing, music, drama, circus; other art
performances and services of organizing art performances of theatres or tuong,
cheo, cai luong, singing, dancing, music, drama or circus troupes
with performance licenses granted by competent state agencies.
c/ Film production; film importation,
distribution and screening, except for products specified at Point 15, Section
II, Part A of this Circular.
2.14. Children’s toys; books of various
kinds, excluding those not liable to VAT specified at Point 15, Section II,
Part A of this Circular.
2.15.Scientific and technological services
are activities serving scientific research and technological development;
activities related to intellectual property; services on information or
consultancy on, training, retraining, popularization and application of
scientific and technological knowledge and practical experience, excluding
games online and entertainment services on the Internet.
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The above VAT rates are applicable uniformly
to each type of goods or services at the stages of importation, manufacture,
processing and trading.
Example 16: If garments are subject to the tax
rate of 10%, then these goods items are subject to the tax rate of 10% at all
the stages of importation, production, processing and trading.
An establishment that trades in many kinds of
goods or provides many kinds of services subject to different VAT rates shall
declare VAT at the VAT rate prescribed for each good or service. If this
establishment cannot identify different tax rates for its goods or services, it
shall calculate and pay tax at the highest tax rate applicable to goods or
services it manufactures, trades in or provides.
In the course of implementation, if there
arises any case involving the application of a VAT rate according to the
Preferential Import Tariff which is against the guidance provided in this
Circular, the guidance of this Circular shall be complied with. For cases
involving the application of different VAT rates to the same type of imported
and home-made goods, local tax offices and customs offices shall report these
cases to the Finance Ministry for guidance to ensure timely and uniform
application.
III. VAT CALCULATION
METHODS
Business establishments shall pay VAT by
either of the two methods: the tax credit method and the method of tax
calculation directly based on added value.
The subjects of application and the
determination of payable VAT amounts by each method are as follows:
1. The tax credit method:
1.1. The tax credit method applies to
business establishments that fully observe the accounting, invoice and document
regime under the law on accounting and keeping of invoices and documents and
register to pay tax by the tax credit method, except those applying the method
of tax calculation directly based on added value specified at Point 2 of this
Section.
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Payable VAT amount =
Output VAT amount - Credited input VAT amount
In which:
a/ The output VAT amount is equal to the
total VAT amount of goods sold or services provided indicated on value added
invoices.
The VAT amount indicated on a value added
invoice is equal to the taxable price of a taxable good sold or service
provided multiplied by (x) the VAT rate of such good or service.
In case of using vouchers stating a
VAT-inclusive payment price, the output VAT amount shall be determined to be
equal to this payment price minus (-) the taxable price specified at Point
1.10, Section II of this Part.
Business establishments paying VAT calculated
by the tax credit method shall, when selling goods or providing services,
calculate and collect VAT on the goods sold or services provided. On invoices issued
for sold goods or provided services, business establishments shall write
VAT-exclusive sale prices, VAT amounts and total amounts payable by purchasers.
If on an invoice only the payment price is indicated (except for cases in which
special-type documents may be used) but not the VAT-exclusive price and VAT
amount, the VAT amount on the goods sold or the service provided shall be
calculated based on the payment price indicated on the invoice or document.
Example 17: An enterprise sells iron and steel at
a VAT-exclusive sale price of VND 11,000,000/ton of Φ6 iron rods; the 10% VAT
amount is VND 1,100,000/ton, but if on some of its sale invoices only the sale
price of VND 12,100,000/ton is indicated, the VAT amount calculated on the
basis of sale turnover shall be determined as follows: VND 12,100,000/ton x 10%
= VND 1,210,000/ton, instead of calculation based on the VAT-exclusive price of
VND 11,000,000/ton.
Business establishments shall observe the
accounting, invoice and document regime under the law on accounting and keeping
of invoices and documents and the guidance in Section IV. Part B of this
Circular. For wrong VAT rates stated on invoices which are not yet adjusted by
business establishments themselves but are detected through inspection by tax offices,
they shall be handled as follows:
For business establishments selling goods or
providing services: If the VAT rate indicated on invoices is higher than that
prescribed in legal documents on VAT, VAT shall be declared and paid at the VAT
rate indicated on invoices. If the VAT rate indicated on invoices is lower than
that prescribed in legal documents on VAT, VAT shall be declared and paid at
the VAT rate prescribed in legal documents on VAT.
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If purchased goods and services are of the
kinds for which special-type documents indicating VAT-inclusive payment prices
are used, business establishments may base themselves on these VAT-inclusive
prices and the calculation method specified at Point 1.10, Section I, Part B of
this Circular, to determine the VAT-exclusive price and input VAT amount.
Example 18: In a tax period, company A made
payment for input services of a special type eligible for tax credit:
The total payment price is VND 110 million
(inclusive of VAT). This service is subject to the tax rate of 10%. The
creditable input VAT amount shall be calculated as follows:
VND 110 million
x 10%
=
VND 10 million
1 + 10%
The VAT-exclusive price is VND 100 million
and the VAT amount is VND 10 million.
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For business establishments purchasing goods
or services: If the VAT rate indicated on invoices is higher than that
prescribed in legal documents on VAT, the input VAT shall be credited at the
VAT rate prescribed in these legal documents. If the seller is determined as
having declared and paid tax at the tax rate indicated on invoices, the input
VAT may be credited at the VAT rate indicated on invoices but certification of
the tax office directly managing the seller is required. If the VAT rate
indicated on invoices is lower than that prescribed in legal documents on VAT,
the input VAT may be credited at the VAT rate indicated on invoices.
c/ Determination of creditable input VAT:
c. 1/ Input VAT on goods or services used for
the production of and trading in VAT-liable goods and services may be wholly
credited.
c.2/ For goods or services used for the
production of and trading in both goods or services liable and not liable to
VAT, only the input VAT amount on goods or services used for the production of
and trading in VAT-liable goods or services is creditable. Business
establishments shall separately account creditable and non-creditable VAT
amounts. If it is impossible to separately account these amounts, input VAT
will be credited according to the ratio (%) of VAT-liable turnover to total
turnover of sold goods or provided services.
c.3/ Input VAT on fixed assets used for the
production of and trading in both goods and services liable and not liable to
VAT may be wholly credited.
Input VAT on fixed assets in the following
cases will not be credited but shall be included in the historical costs of
these fixed assets: fixed assets exclusively used for the manufacture of
weaponry and military equipment used in defense and security; houses used as
office buildings and equipment exclusively used for credit operations of credit
institutions and reinsurance, life insurance or securities trading enterprises,
hospitals and schools; civil aircraft and yachts not used for commercial cargo
and passenger transportation, tourist or hotel business.
Input VAT on goods and services which form
fixed assets of enterprises, such as canteens providing shift meals, mid-shift
accommodations, free houses, locker rooms, parking lots, toilets and water
tanks for laborers working in production or business places, and houses and
healthcare stations for laborers working in industrial parks, may be wholly
credited.
For fixed assets being passenger automobiles
of 9 seats or less (excluding automobiles used for commercial cargo or
passenger transportation, tourist or hotel business) and valued at more than
VND 1.6 billion, input VAT on the value in excess of VND 1.6 billion is not
creditable.
c.4/ Establishments engaged in agricultural
production, forestry, rearing or fishing aquatic or marine products and
organizing closed production processes, accounting their production and business
results in a centralized manner, and using products at the stage of
agricultural production, forestry; rearing and fishing aquatic or marine
products as raw materials for further production and processing into VAT-liable
products (including unprocessed agricultural, forest or aquatic products for
export or processed products liable to VAT) may declare and credit input VAT on
goods and services purchased for production and business at all stages of
capital construction investment, production and processing. If they sell goods
that are unprocessed or preliminarily processed agricultural, forest, aquatic
or marine products not liable to VAT, the VAT amount on these purchased goods
and services may be credited according to the ratio (%) of turnover from VAT-liable
goods or services to total turnover from sold goods or provided services.
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c.6/ Input VAT on goods (including also goods
purchased from outside or goods manufactured by enterprises themselves) used by
enterprises for sales promotion or advertisement in various forms to serve the
production of and trading in VAT-liable goods and services is creditable.
c.7/ Input VAT on goods and services used for
the production of or trading in goods and services not liable to VAT specified
in Section II, Part A of this Circular may be included in the historical costs
of fixed assets, the value of raw materials or business costs, except for the
following cases:
- VAT on goods and services purchased by
business establishments for use in the production of or trading in goods and
provision of services to foreign organizations and individuals or international
organizations for provision of humanitarian aid or non-refundable aid specified
at Point 19.e, Section II, Part A of this Circular, may be wholly credited;
- Input VAT on goods and services used in
prospecting, exploring and developing oil and gas fields may be wholly credited.
c.8/ Input VAT arising in a month may be
declared for credit immediately when the tax amount payable in that month is
determined, regardless of whether relevant goods or services have been
delivered for use or still remain in stock. If business establishments detect
some invoices or VAT payment vouchers not yet declared for input VAT credit,
they may make additional declaration and credit. The time limit for additional
declaration and credit is 6 (six) months from the month when missing invoices and
vouchers are detected.
Example 19: Business establishment A has one
value added purchase invoice issued on February 10, 2009. If in the tax
declaration period of February 2009, its accountants failed to declare this
invoice, it may make an additional declaration and credit no later than July
2009.
c.9/ Business establishments may either
account non-creditable input VAT amounts as expenses for enterprise income tax
calculation or include them in the historical costs of fixed assets under law.
c.10/ Corporations’ or groups’ offices that
are not directly engaged in business operations and subsidiary administrative
and non-business units such as hospitals, clinics, sanatoriums, institutes,
training schools, etc., which are not liable to pay VAT, will not be entitled
to input VAT credit or refund for goods and services purchased for their
operations.
When these units also deal in VAT-liable
goods and services, they shall separately register, declare and pay VAT for
these operations.
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1.3. Conditions for input VAT credit are
specified as follows:
a/ Having lawful value added invoices of
purchased goods or services or vouchers of VAT payment at the importation stage
or vouchers of VAT payment on foreign parties’ behalf under the Finance
Ministry’s guidance applicable to foreign organizations without the Vietnamese
legal entity status and foreigners conducting business or earning incomes in
Vietnam.
b/ Having vouchers of via-bank payment for
purchased goods and services, except for cases in which the total invoiced
value of purchased goods or services at a time is less than VND 20 million
calculated at a VAT-inclusive price.
Without via-bank payment vouchers, input VAT
on purchased goods or services with an invoiced value of more than VND 20
million calculated at a VAT-inclusive price at a time will not be credited.
These invoices shall be declared by business establishments in a separate
section in the list of invoices and vouchers of purchased goods and services.
For goods or services valued at more than VND
20 million purchased on deferred payment or installment payment, business
establishments shall declare and credit input VAT based on goods or service
purchase contracts, value added invoices and via-bank payment vouchers of these
goods or services, and at the same time write the payment time limit in the
note section of the list of invoices and vouchers of purchased goods and
services. If via-bank payment vouchers are unavailable for the reason that the
payment under contracts is not due, business establishments may still declare
and credit input VAT. If via-bank payment vouchers are unavailable when the
payment under contracts is due, they may not credit input VAT and shall declare
and reduce input VAT amounts already credited for the value of goods without
via-bank payment vouchers.
Example 21: In January 2009, Company A purchases
a goods lot from Company B for its production and business. The total value of
the purchase contract is VND 330 million (inclusive VAT at the rate of 10%). As
agreed upon in the contract, Company A shall pay for the goods lot to Company B
in May 2009.
In this case, Company A may temporarily
declare an input VAT amount of VND 30 million in the declaration period of
January 2009. When the payment is due in May 2009, Company A shall supply a
voucher of via-bank payment of VND 330 million. If Company A fails to supply
such via-bank payment voucher, its temporarily credited VAT amount (VND 30
million) of January 2009 must be declared as a reduction of the creditable VAT
amount of the declaration period of May 2009.
When the payment is due in May 2009, if
Company A can supply a via-bank payment voucher but the sum of money indicated
on this voucher is only VND 275 million, it will be allowed to credit only a
VAT amount of VND 25 million, and at the same time shall reduce the creditable
VAT amount of the declaration period of May 2009 by VND 5 million.
For goods and services purchased by clearing
the value of these goods and services against that of sold goods; clearing
debts; and authorizing a third party to make via-bank payment, all these
payments will be treated as via-bank payments if they are specifically provided
in purchase contracts. If, after such payments have been made, the remaining
value paid in cash is VND 20 million or more, VAT on this amount will be
credited only if a via-bank payment voucher is available. When declaring input
VAT invoices, business establishments shall clearly state the methods of
payment specifically provided in contracts in the note section of the list of
invoices and vouchers of purchased goods and services.
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c/ To be eligible for input VAT credit and
refund, exported goods and services (except for cases guided at Point Id and
Point le of this Section) must satisfy the conditions and procedures specified
at Items a and b of this Point, and Point 1.2, Section II, Part B of this
Circular, specifically:
c.1/ Contracts on sale of goods, processing
of goods (for cases of goods processing), provision of services to foreign
organizations or individuals. For cases of export consignment, export
consignment contracts and written records of the liquidation of export
consignment contracts (if contracts have been terminated) or written records of
periodical comparison of liabilities between the export consignor and the
export consignee, clearly stating the quantity and category of products, the
value of the goods already exported under consignment; the serial number and
date of the export contract signed between the export consignee and the foreign
party; the serial number and date of, and the sum of money indicated on, the
voucher on the via-bank payment made by the export consignee to the foreign
party; the serial number and date of, and the sum of money indicated on, the
voucher on the payment made by the export consignor to the export consignee;
the serial number and date of the export consignee’s customs declaration for
the exported goods.
c.2/ Customs declaration of exported goods,
with certification by the customs office that the goods have been exported.
For business establishments exporting
software products in the forms of documents, files or packaged databases, to
enjoy input VAT credit and refund, they shall fill in customs declarations
procedures applicable to ordinary goods.
Particularly for the following cases, customs
declarations are not required:
- Business establishments that export
services or software via electronic means. However, these business
establishments shall comply with all regulations on procedures of certification
that the purchaser has received services or software exported via electronic
means in accordance with the law on e-commerce.
- Construction and installation of works of
export processing enterprises.
- Business establishments that supply
electricity, water, stationery and goods for daily operations of export
processing enterprises.
c.3/ Via-bank payment for exported goods and
services must comply with the following guidance:
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- The following cases of payment shall also
be regarded as via-bank payment:
+ When payments for exported goods or
services are cleared against foreign loans, and business establishments satisfy
all the following conditions, procedures and dossiers:
(1) Borrowing contract (for financial loans of
under one year); or loan registration certification paper of the State Bank of
Vietnam (for loans of over one year).
(2) Voucher on transfer of money via bank by
the foreign party into Vietnam.
The method of payment for exported goods or
services by clearing against foreign loans must be stated in the export
contract.
(3) Written certification by the foreign
party of the loan clearing.
(4) Any difference between the value of
exported goods or services and the foreign loan must be paid via bank. Vouchers
on such via-bank payment are as guided at this Point.
+ When the exporting business establishment
uses payments for exported goods or services as capital contributions to an
overseas importing establishment, and this business establishment satisfies all
the following procedure and dossier requirements:
(1) It has a capital contribution contract.
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(3) In case the contributed capital amount is
smaller than the turnover from exported goods, the difference must be paid via
bank under this Point’s guidance.
+ When the goods or service-exporting
establishment applies via-bank payment for exported goods or services but the
foreign party authorizes a third party that is a foreign-based organization or
individual to make payment, and the authorized payment is stated in the export
contract (or an annex or modification note, if any).
+ When the foreign party authorizes its Vietnam-based
representative office to make payment into the exporter’s account, and the
authorized payment is stated in the export contract (or an annex or
modification note, if any).
+ When the foreign party requests a third
party being a Vietnam-based organization to make liability-clearing payment to
the foreign party by paying via bank the sum of money payable by the foreign
party to the exporter, and this request for liability-clearing payment is
stated in the export contract (or an annex or modification note, if any) and
there is a payment voucher being the credit note of the exporter’s bank of the
sum of money already received from the third party’s account, at the same time,
the exporter shall produce the written record of comparison of liabilities,
containing the certifications of the foreign party and the third party.
+ When the foreign party makes payment from
its current deposit account opened at a credit institution in Vietnam and this
payment is stated in the export contract (or an annex or modification note, if
any). Payment vouchers are credit notes of the exporter’s bank of the money
received from the current account of the foreign purchaser that has signed the
contract.
- Other cases of payment for exported goods
and services as prescribed by the Government:
+ For business establishments sending guest
laborers abroad which collect money directly from guest laborers, receipts of
cash amounts paid by these laborers are required.
+ For business establishments exporting goods
for sale at overseas fairs or exhibitions which collect and transfer home
currencies of countries where these trade fairs or exhibitions are organized,
they shall produce to customs offices documents declaring foreign-currency
amounts collected from the goods sale and transferred home and vouchers on
remittance of these amounts into banks in Vietnam.
+ In case of exporting goods or services to
pay the Government’s foreign debts, the commercial bank’s certification that
the exported goods lot has been accepted by the foreign country for debt
payment or that the document set has been forwarded to the foreign country for
debt payment is required. Payment vouchers in this case must comply with
specific guidance of the Finance Ministry.
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Exported goods or services paid with goods
must satisfy additional dossier requirements as follows:
(1) The method of payment for exported goods
with goods is stated in the export contract.
(2) The foreign party’s goods or service
purchase contract;
(3) The customs declaration of imported goods
paid for exported goods or services.
(4) The foreign party’s written certification
of the clearing payment between the exported goods or services and the imported
goods or services purchased from the foreign party.
(5) When there is a difference after the
clearing of the value of exported goods or services against that of imported
goods or services, such difference must be paid via bank. Vouchers on such
via-bank payment are as guided at this Point.
+ When goods are exported to a bordering
country under the Prime Minister’s regulations on management of border trade
with bordering countries, the guidance of the Finance Ministry and the State
Bank must be followed.
+ Some cases involving other methods of
payment for exported goods and services under relevant provisions of law.
c.4/ Value added invoices on sale of goods or
services or invoices of processing charges for processed goods.
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d.l/ Intermediary processed goods as
prescribed in the commercial law regarding activities of international goods
purchase and sale and activities of goods purchase, sale and processing agency
with foreign countries:
- Export processing contract and annexes
thereof (if any) signed with the foreign party, clearly stating the
goods-receiving establishment in Vietnam.
- Value added invoice clearly stating the
processing charge and the quantity of processed goods returned to the foreign
party (on the basis of the charge indicated in the contract signed with the
foreign party) and the name of the goods-receiving establishment designated by
the foreign party;
- Bill on delivery of intermediary processed
products (referred to as the delivery bill for short), with certifications of
the deliverer and the recipient of intermediary processed products and
certification of the customs office managing the processing contract of the
deliverer and recipient.
- Payment for goods processed for foreign
countries must be made via bank under the guidance at Item c.3 of this Point.
The procedures for delivery and receipt of
intermediary processed goods and delivery bills are as guided by the General
Department of Customs.
Example 22: Company A signs with a foreign party
a contract to process 200,000 pairs of shoe soles for export. The processing
charge is VND 800 million. The contract clearly states that the shoe soles will
be delivered to company B in Vietnam for production of finished shoes.
In this case, company A is regarded as
undertaking the intermediary processing of products for export. On the voucher
to deliver shoe soles to company B, company A should write clearly the
quantity, category and specifications of products delivered. The whole turnover
of VND 800 million from the processing of shoe soles is subject to the VAT rate
of 0%.
d.2/ Processed goods for on-spot export under
the commercial law regarding activities of international goods purchase and
sale and activities of goods purchase, sale and processing agency with foreign
countries:
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- Customs declaration of on-spot exports and
imports, with the certification of the customs office that the goods have been
delivered to the enterprise in Vietnam designated by the foreign party.
- Payment for goods sold to a foreign trader
but delivered in Vietnam must be made via bank in a freely convertible foreign
currency. Via-bank payment vouchers are as guided at Point 1.2.c.3 of this
Section.
- Value added invoice of on-spot exported
goods, clearly stating the name of the foreign purchaser, the goods-receiving
enterprise and the goods delivery place in Vietnam.
- On-spot exported goods of foreign-invested
enterprises must comply with the provisions of their investment licenses.
d.3/ For goods and supplies exported by
Vietnamese enterprises for the execution of overseas construction projects,
procedures and dossiers for Vietnamese enterprises executing these overseas
construction projects to enjoy input VAT credit or refund must satisfy the
following requirements:
- There is a customs declaration of exports.
- Exported goods and supplies must be
consistent with the list of goods exported for the execution of an overseas
construction project approved by the director of the Vietnamese enterprise
executing that project.
- There is an export consignment contract
(for export consignment).
d.4/ For goods and supplies sold by domestic
business establishments to Vietnamese enterprises for the execution of overseas
construction projects and delivered overseas under signed contracts, procedures
and dossiers for selling domestic business establishments to enjoy input VAT
credit or refund for exported goods must satisfy the following requirements:
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- Exported goods and supplies must be
consistent with the list of goods exported for the execution of an overseas
construction project approved by the director of the Vietnamese enterprise
executing that project.
- There is a sale and purchase contract
signed between the domestic business establishment and the Vietnamese
enterprise executing an overseas construction project, clearly stating conditions
on goods delivery, goods quantity, category and value;
- There is a consignment contract (in case of
export consignment);
- There is a via-bank payment voucher;
- There is a value added invoice on goods
sale.
For business establishments with exported goods
or goods regarded as exported goods mentioned at Point d above, if they have
the customs office’s certification (for exported goods) but lack other
procedures and documents as required for each particular case, they are not
required to calculate output VAT but are not entitled to input VAT credit.
Particularly for cases involving intermediary processed goods and on-spot
exported goods, if the business establishments lack one of the documents as
required, they shall calculate and pay VAT as for domestically consumed goods.
For business establishments providing export services, if they do not satisfy
the condition on via-bank payment or the condition for being regarded as
via-bank payment, they will be neither entitled to the VAT rate of 0% and input
VAT credit nor required to calculate output VAT.
e/ For business households paying VAT
directly calculated on the basis of value added which have been permitted to
pay VAT by the credit method, they may credit VAT on goods and services
purchased from the month they are permitted to pay tax by the credit method.
For goods and services purchased before that month, they are not entitled to
input VAT credit.
1.3. Business establishments may not
calculate and credit input VAT in the following cases: Value added invoices are
issued at variance with law provisions, i.e., they are not written with VAT
(except for special cases in which value added invoices may be written with
VAT-inclusive payment prices); the seller’s name, address or tax identification
number is not written or written incorrectly, making the seller unidentifiable;
VAT payment invoices and vouchers are fake; invoices are erased or improperly
modified, sham invoices (invoiced goods or services are not actually sold);
invoices are written with a value not true to the real value of goods or
services purchased, sold or exchanged.
2. Method of calculation of VAT directly on
the basis of added value
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a/ Business individuals and households that
fail to observe or inadequately observe the accounting, invoice and document
regime prescribed by law.
b/ Foreign organizations and individuals that
conduct business in Vietnam not under the Investment Law and fail to observe or
inadequately observe the accounting, invoice and document regime prescribed by
law.
c/ Entities trading in gold, silver, gems and
foreign currencies.
In case business establishments that pay VAT
by the tax credit method are engaged in trading in and fashioning gold, silver
and gems, they shall separately account gold, silver and gem trading activities
subject to the method of tax calculation directly on the basis of added value.
2.2. Determination of payable VAT amounts:
The payable VAT amount by the method of tax
calculation directly on the basis of value added is equal to the added value of
the taxable goods or service multiplied by (x) the VAT rate applicable to that
goods or service.
a/ The added value of a goods or service is
equal to the payment price of the goods sold or the service provided minus (-)
the payment price of the corresponding goods or service purchased.
Payment price of a goods sold or service
provided is the actual sale price stated in the goods or service sale invoice,
which is inclusive of VAT and surcharges enjoyable by the seller, regardless of
whether the money has been collected.
Payment price of a goods or service purchased
is equal to the VAT-inclusive value of the purchased or imported goods or
service used for the production of or trading in the corresponding VAT-liable
goods or service sold.
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- For production and business activities, it
is the difference between sale turnover and turnover of purchased supplies,
goods and services used in production and business. When business
establishments cannot account turnover of purchased supplies, goods and
services corresponding to turnover of sold goods, the added value shall be
determined as follows:
The cost of goods sold is equal to (=) the
turnover left at the beginning of the period plus (+) the purchase turnover in
the period minus (-) the turnover left at the end of the period.
Example 23: Establishment A produces wood
articles. In a month, it sells 150 products and earns a total sale turnover of
VND 25 million.
The value of supplies and materials purchased
from outside for the production of these 150 products is VND 19 million, of
which:
+ Principal raw material (timber): VND 14
million.
+ Other materials and services purchased from
outside: VND 5 million.
The applicable VAT rate is 10%. The VAT
amount payable by establishment A shall be calculated as follows:
+ The added value of the sold products:
VND 25 million - VND 19 million = VND 6
million.
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VND 6 million x 10% = VND 0.6 million.
- For construction and installation, it is
the difference between amounts earned from the construction and installation of
works or work items minus (-) the cost of materials and supplies, cost of power,
transportation, services purchased from outside, and other expenses for the
construction and installation of works or work items.
- For transport activities, it is the
difference between collected freight, loading and unloading charges minus (-)
the cost of petrol and oil, spare parts and other expenses for transportation
activities.
- For food and drink catering activities, it
is the difference between amounts earned from the sale of foods and drinks,
service charges and other revenues minus (-) prime costs of goods and services
purchased for the food and drink catering.
- For trading in gold, silver, gems and
foreign currencies, the value added is the difference between turnover from the
sale of gold, silver, gems or foreign currencies minus (-) prime costs of sold
gold, silver, gems or foreign currencies.
- For business establishments paying VAT
calculated by the tax credit method and trading in gold, silver, gems or
foreign currencies subject to application of the method of tax calculation
directly based on value added, they shall separately account input VAT amounts
for declaration of VAT amounts payable for different goods and services subject
to different tax calculation methods.
If they cannot separately account input VAT,
the creditable input VAT amount shall be determined according to the proportion
of the turnover of goods and services subject to VAT calculated by the tax
credit method to the total turnover of goods sold in the period.
- For other business activities, it is the
difference between amounts earned from business activities minus (-) prime
costs of goods and services purchased for the performance of such business
activities.
- Business establishments paying VAT
calculated directly on the basis of added value may not include the value of
assets purchased from outside, invested or constructed for use as fixed assets
in the turnover from purchased goods or services for the purpose of added value
calculation.
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The ratio (%) of the added value to turnover
to serve as a basis for determining the value added is specified as follows:
- Commercial activities (goods distribution
and supply): 10%.
- Services and construction (except for
construction with the contracted supply of materials): 50%.
- Production, transportation, services
associated with the supply of goods, construction with the contracted supply of
materials: 30%.
c/ For business activities, individuals and
households that fail to observe or inadequately observe the accounting, invoice
or voucher regime prescribed by law, VAT shall be paid according to a
percentage (%) prescribed by the Finance Ministry.
IV. GOODS AND SERVICE
PURCHASE AND SALE INVOICES AND VOUCHERS
Business establishments, when purchasing or
selling goods and services, shall abide by the regime on invoices and vouchers
as prescribed by law.
1. Business establishments paying VAT by the
tax credit method, when selling goods or providing services shall use value
added invoices. When making invoices, business establishments shall fully and
correctly fill in all items on the invoices. A value added invoice must
indicate the VAT-exclusive sale price, charge and surcharge collected in
addition to the sale price (if any), VAT and VAT-inclusive total payment price.
If the VAT-exclusive sale price is not indicated separately from VAT and only
the payment price is indicated, output VAT must be calculated on the basis of
the payment price, except for cases in which special vouchers are used.
Business establishments paying tax calculated
directly on the basis of value added, when selling goods or providing services,
shall use sale invoices.
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2.1. Production and business establishments paying
VAT by the tax credit method, when selling goods or services not liable to VAT selling
goods and services to VAT-exempt entities; and selling gold, silver, gems or
foreign currencies, shall use value added invoices. On these value added
invoices only the line for writing the sale price is written with the VAT-exclusive
price while the lines for writing the tax rate and VAT amount are left blank
and crossed out. In case of selling goods or services not liable to VAT or to
VAT-exempt entities, invoices must clearly state that goods are not liable to
VAT or are sold to a VAT-exempt entity.
2.2. For export and import business establishments
paying VAT by the tax credit method which import goods under other establishments’
consignment, when delivering the goods, they shall make vouchers as follows:
If the import consignee, when delivering
goods imported under consignment, has paid VAT at the importation stage, it
shall make a value added invoice for use by the import consignor as a basis for
declaration and credit of input VAT on goods imported under consignment. When
the import consignee does not pay VAT at the importation stage, when delivering
imported goods, it shall fill in an ex-warehousing-cum-internal transport bill
enclosed with an internal transfer order under regulations for use as a voucher
for circulation of the goods on the market. Only after paying VAT at the importation
stage for goods imported under consignment can the establishment make an
invoice according to this provision.
A value added invoice on delivery of goods
imported under consignment must indicate:
a/ The VAT-exclusive sale price covering the
value of goods actually imported at CIF price, import duty, excise tax and
other amounts payable according to regulations at the importation stage (if
any).
b/ The VAT rate and VAT amount according to
the VAT amount already paid at the importation stage.
c/ The total payment amount (= a + b).
The import consignee shall issue a separate
value added invoice for the commission paid for the consigned import.
2.3. Production and business establishments
(including export processing ones) which pay VAT by the tax credit method and
export VAT liable goods, when exporting goods, shall use value added invoices.
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In case of export of goods under consignment
(including export of processed goods under other establishments’ consignment),
when delivering goods to the export consignee, the consignor shall use an
ex-warehousing-cum-internal transport bill. After the goods are actually
exported as certified by the customs office, basing itself on the export
consignee’ voucher for comparison and certification of the quantity and value
of the actually exported goods, the export consignor shall issue a value added
invoice for VAT payment and refund declaration. In this case, the export
business establishment shall keep the second original. If the export business
establishment has registered with the tax office for printing and circulating
by itself invoices which will be used for exported goods and issued to foreign
customers, it shall use those invoices for tax declaration, payment and refund.
2.4. Use of invoices and vouchers for goods
and services used for sales promotion or advertisement, samples goods, or
donated, presented as gifts or internally consumed:
a/ For goods and services used for sales
promotion or advertisement, samples goods for goods production and trading or
service provision (products, goods and services used for sales promotion,
advertisement or sample goods are specified by the commercial law on trade
promotion activities), business establishments shall issue value added invoices
clearly indicating the names and quantities of goods and that these goods are
used free of charge for sales promotion, advertisement or sample goods, leaving
the VAT rate line blank and crossed out.
b/ For goods and services used for donation
or presentation as gifts, barter or wage payment to laborers or for internal
consumption, business establishments shall issue to customers value added
invoices (or sale invoices) with all items filled in, including the calculated
VAT amount, like sale invoices.
Establishments using goods and services for
internal consumption rather than for their production or business, such as
transportation, aviation, railway, post and telecommunications, on which output
VAT is not required to be calculated, must issue specific regulations on
eligible beneficiaries and limit quantities of goods or services for internal
consumption, which are approved in writing by competent authorities.
2.5. For goods and services sold at reduced
prices which are stated on their invoices, these invoices must clearly state
the reduced prices, VAT and VAT-inclusive total payment price.
If the price reduction is based on the
quantity or sales turnover of the actually purchased goods or service, which
must reach a certain level, the reduced sum of money for the sold goods shall
be adjusted on the sale invoice of goods or service of the last purchase or
those in the next period. This invoice must show its serial number and the
reduced sum of money.
2.6. For production and business
establishments which deliver and transfer goods to their dependent
cost-accounting affiliates such as branches and shops in other localities
(provinces or centrally run cities) for sale or transfer among branches and
affiliates; or which deliver goods to commission agents for sale at fixed
prices, basing themselves on the mode of business organization and
cost-accounting, they may opt for either of the following two ways of using
invoices and vouchers:
a/ Using value added invoices as a basis for
VAT declaration and payment in each unit and at each independent stage;
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Dependent cost-accounting affiliates,
branches, shops and establishments acting as sale agents, when selling goods,
shall issue invoices as prescribed to purchasers, and at the same time make a
list of goods sold and send it to establishments which have transferred or
delivered the goods or consigned goods for agency sale (commonly referred to as
goods-delivering establishments) so that these establishments can issue value
added invoices for actually sold goods, then hand them to dependent
cost-accounting affiliates, branches, shops and establishments acting as sale
agents.
For establishments with a large sale volume
and turnover, such a list may be made every 5 or 10 days. When goods sold are
subject to different VAT rates, different lists must be made for sold goods
subject to each VAT rate.
Dependent cost-accounting affiliates,
branches, shops and establishments acting as sale agents shall make VAT
declaration and payment for goods volumes delivered for sale to purchasers and
may make input VAT declaration and credit according to value added invoices of
goods-delivering establishments.
2.7. Business establishments acting as goods
collection and purchase agents in various forms, when delivering goods to the
collection and purchase-consigning establishments, shall issue invoices for
goods they collect and purchase and for commissions they enjoy (if any).
2.8. When business establishments purchase
goods for which sellers have issued invoices and which the business
establishments have received, if the business establishments return part or the
whole of these goods after detecting that they are of wrong specifications or
poor quality, before returning such goods to the sellers, they shall issue
invoices clearly stating that the goods are returned to the sellers due to
wrong specifications or poor quality, and the VAT amount. These invoices serve
as a basis for the seller to adjust the sales turnover and output VAT amount
and the purchaser to adjust the purchase value and input VAT amount.
When the purchaser has no invoices, upon the
return of goods, the purchaser and seller shall make a written record or
written agreement clearly stating the type, quantity and value of the returned
goods calculated according to the VAT-exclusive price and VAT amount written on
the sale invoice (serial number and date of the invoice), the reason for the
return of goods together with the invoice to the seller. This written record
shall be kept together with the sale invoice for use as a basis to adjust the
seller’s declared sale turnover and VAT amounts.
When the seller has delivered goods and issued
an invoice while the purchaser has not yet received the goods but, after
detecting that goods are of wrong specifications or poor quality, the purchaser
returns part or the whole of the goods, upon return of the goods, the purchaser
and the seller shall make a written record clearly stating the type, quantity,
the VAT-exclusive value and VAT amount of the returned goods as stated on the
sale invoice (serial number, sign and date of the invoice). The goods shall be
returned to the seller together with the invoice so that the latter can
re-issue a value added invoice for the received goods and use it as a basis for
the seller to adjust the sales turnover and output VAT amount.
2.9. When a business establishment has sold
or supplied goods or services and issued an invoice but then has adjusted the
sale price (up or down) because its goods or services are of poor quality or
wrong specifications, the seller and purchaser shall make a written record
thereof or a written agreement clearly stating the quantity and specifications
of the goods, the level of price increase (decrease) as indicated on the sale
invoice (serial number and date of the invoice and time), the reason for price
increase (decrease), and at the same time the seller shall issue an invoice
with an adjusted price. That invoice must indicate the adjusted (increased or
decreased) sale price (without any negative (-) figures), VAT amount for goods
or services on invoice No....sign.... Basing themselves on the invoice with the
adjusted price, the seller and purchaser shall declare their adjusted purchase
and sale turnovers, output and input VAT amounts. In case the tax rate
indicated on the sale invoice is higher than the prescribed tax rate, if the
purchaser is unidentifiable, no invoice with an adjusted VAT amount will be
issued.
2.10. Business establishments which deliver
goods for mobile sale shall use ex-warehousing-cum-internal transport bills
together with internal transfer orders under regulations and, when selling
goods, issue invoices as prescribed.
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2.12. For construction establishments having
construction and installation projects which are executed for a long time and
for which payment is made according to the implementation progress or completed
and taken-over work volume, they shall issue invoices of payment for the
completed and taken-over construction volume. Value added invoices must indicate
the VAT-exclusive turnover and VAT amount. When construction works have been
completed and invoices of payment for the work value have been issued but the
payable value of the construction volume is reduced in the process of approving
the settlement of the value of capital construction works, invoices and
vouchers for the adjusted payable construction value shall be issued.
2.13. For business establishments which are
allocated or leased land by the State for building houses for sale or lease or
infrastructure for sale or lease, for transportation services with turnover
from international transportation; and international tour services, invoices
shall be issued with the following details:
a/ The line for the sale price shall be
written with the VAT-exclusive sale price of the house or infrastructure (the
house sale price and the land price or rent rate or infrastructure rent rate
are written separately), transportation or package tour service turnover.
b/ The line for the taxable price being the
price determined under Point 1.8, Section I, Part B of this Circular;
transportation or tourist service turnover minus expenses arising overseas such
as those for meals, accommodation and travel.
c/ The lines for the VAT rate and amount and
the payment price shall be written as prescribed.
If a business establishment dealing in real
estate, building infrastructure or houses for sale or transfer collects money
from purchasers according to project implementation or money collection
schedules stated in contracts, upon collecting money, it shall issue value
added invoices. Such an invoice must indicate the collected sum of money, land
price to be subtracted from VAT calculation turnover, VAT rate and VAT amount.
To-be-subtracted land price shall be calculated according to the ratio (%) of
the sum of money collected according to the project implementation or money
collection schedule stated in the contract, to that to be subtracted at the
time of transfer (the time of first money collection according to progress or schedule).
2.14. Financial leasing establishments which
lease VAT-liable assets shall issue invoices as prescribed.
Financial leasing establishments, when
leasing assets liable to VAT, shall issue value added invoices (for assets
purchased at home) or vouchers of VAT payment at the importation stage (for
imported assets). Total VAT amounts written on financial leasing service
invoices must match VAT amounts written on value added invoices (or vouchers of
VAT payment at the importation stage).
For cases in which assets purchased for
financial leasing are not liable to VAT and value added invoices or vouchers of
VAT payment at the importation stage are not available. VAT must not be written
on invoices.
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Financial leasing service establishments are
not required to declare and pay VAT for financial leasing services. They shall
only make tax declaration and calculation for VAT-liable assets financially
leased to other establishments according to invoices issued as prescribed
above.
Financial leasing service establishments are
not required to submit VAT returns for financial leasing services but shall
submit only lists of invoices of goods or services sold and lists of invoices
of goods and services purchased, filling in the section for VAT for purchased
goods and services only the VAT amounts of leased assets according to value
added invoices issued for turnover from financial leasing services in the
declaration period. Taxpayers shall submit tax declaration dossiers for assets
financially leased to other establishments.
In case the lessee fails to perform the
contract and thus the lessor has to recover the assets, the lessor shall notify
the lessee thereof and clearly determine the VAT amounts already paid and not
yet paid. When the lessor continues to lease these assets to another
establishment, it shall calculate the VAT amount not fully collected for
continued collection under the new contract.
In case assets are leased for a period of
time before the lessor sells them to the lessee or another establishment, the
lessor shall calculate VAT for the sold assets, issue value added invoices and
may only credit input VAT on the assets not yet fully collected.
In case the lessor and the lessee jointly
pool capital lor the purchase of the assets and the lessor only collects the
rent (principal and interest) corresponding to its contributed capital amount,
the invoice on the purchase of the assets for lease shall be managed by the
lessor until the asset ownership is transferred to the lessee. The VAT amount
corresponding to the capital amount contributed by the lessor shall be included
in the first-time receipt.
In case a financial leasing contract has been
completed, the VAT amount has been fully paid by the lessee and the two parties
agree to continue the lease, the invoice issued for the subsequent turnover will
be VAT-exclusive.
2.15. For foreign currency trading establishments
conducting foreign currency- purchasing and -selling activities abroad, they shall
make detailed lists of trading turnovers for each kind of foreign currency.
They shall keep all vouchers on transactions with overseas purchasers or sellers
under the accounting law. For foreign currency-purchasing and –selling activities
conducted at home, invoices must be issued under regulations.
2.16. For establishments purchasing and
selling gold, silver and gems, if they purchase them from non-business
individuals who have no invoices, they shall make lists of purchased goods.
2.17. Export processing enterprises, when
selling goods or services, shall use sale invoices (or invoices issued by
themselves) according to the Finance Ministry’s regulations.
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a/ Asset-contributing parties are non-business
individuals or organizations:
a.1/ When non-business individuals or organizations
contribute their assets as capital to limited liability or joint-stock
companies, vouchers for these assets are written certifications of capital
contributions and written records of delivery and receipt of assets. If
contributed assets are brand-new and unused and accompanied by lawful invoices
accepted by the capital delivery and receipt council, the value of these
contributed assets is the VAT-inclusive value indicated on the invoices. The
contributed capital-receiving party may make declaration for credit of the VAT
amount indicated on the asset purchase invoice of the capital-contributing
party.
a.2/ When an individual uses his/her own
property or the value of land use rights for setting up a private enterprise or
law firm, he/she is not required to carry out procedures for the transfer of
property ownership or land use rights to the private enterprise. If he/she has
no lawful voucher evidencing the cost of his/her property, a document on the
value of the property made by a valuation organization defined by law is
required as a basis for accounting the value of fixed assets.
b/ Asset-contributing or -transferring
parties are business establishments:
b.1/ For assets contributed as capital to
enterprises, the following documents are required: written record of the
contribution as capital for production and business, joint-venture or
affiliation contract: written record of the valuation of the asset by the
council for delivery and receipt of contributed capital amounts of the
capital-contributing parties (or written valuation of a specialized valuation
organization as defined by law), enclosed with a dossier set on the origin of
the asset.
b.2/ For assets transferred between dependent
cost-accounting member units of the same business establishment; assets
transferred upon division, splitting, consolidation, merger or transformation
of enterprises, business establishments with transferred assets must have asset
transfer orders enclosed with the dossier sets on the origin of transferred
assets, and are not required to issue invoices.
For assets transferred between independent
cost-accounting units or member units with the full legal entity status in the
same business establishment, business establishments with transferred assets
shall issue added value invoices, declare and pay VAT according to regulations.
Business establishments are not required to
make VAT declaration and payment for the following:
- Sums of money received as compensation for
land, supports for land and resettlement due to land recovery;
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- Assets transferred among dependent
cost-accounting units in the same enterprise;
- Assets transferred upon division,
splitting, consolidation, merger or transformation of enterprises;
- Payments claimed from third parties in
insurance activities;
- Amounts collected on others’ behalf not
related to the sale of goods and services of business establishments.
2.19. Business establishments receiving monetary
supports from other business establishments shall, upon receipt of these supports,
issue receipts and account these supports as other incomes for enterprise income
tax declaration and payment under regulations.
Business establishments providing monetary
supports shall issue spending vouchers according to support purposes stated in
support contracts.
2.20. Business establishments delivering goods
in the form of lending, borrowing or return of goods shall issue value added
invoices under regulations applicable to the case of ordinary goods purchase
and sale.
C. VAT REFUND
Taxpayers entitled to and cases of VAT refund
are specified as follows:
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The refundable tax amount is the input tax
amount not yet fully credited by the time of request for tax refund.
Example 24: Enterprise A declares input and
output VAT amounts as follows:
(Unit of calculation: VND million)
Tax declaration
month
Input tax
creditable in the month
Output tax arising
in the month
Payable tax
Accumulative input
tax amount not yet credited
December 2008
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100
-100
-100
January 2009
300
350
+50
-50
February 2009
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200
-100
-150
In the above example, enterprise A has an
accumulative input tax amount for three consecutive months larger than the
output VAT amount. Enterprise A is entitled to a VAT refund of VND 150 million.
2. For business establishments that have been
newly founded under investment projects and made business registration and
registered to pay VAT by the tax credit method, or under oil and gas field
exploration and development projects which are still at the investment stage
and have not yet started operating, if the investment duration has lasted for
one year or more, they may be entitled to VAT for goods and services used for
investment in every year. If the accumulated VAT amount on purchased goods and
services used for investment is VND 200 million or more, the establishments
will be entitled to VAT refund.
3. For operating business establishments that
pay VAT by the tax credit method, if they have new investment projects which
are still at the investment stage, they shall make declarations for clearing
VAT amounts on purchased goods and services used for new investment projects
against VAT amounts on production and business activities they are conducting.
After clearing, any uncredited VAT amount of VND 200 million or more on
purchased goods and services used for investment will be refunded for
investment projects.
For operating business establishments (except
for enterprises applying accounting within the whole system) that pay VAT by
the tax credit method, if they have investment projects on new production
facilities in provinces or centrally run cities other than those in which they
are headquartered, which are still at the investment stage, have neither
commenced operation nor made business or tax registration, and have VAT amounts
of VND 200 million or more on purchased goods and services used for investment,
these VAT amounts will be refunded for investment projects. In these cases,
business establishments shall make separate tax declarations and refund
dossiers.
4. If in a month, a business establishment
exports goods or services and has an uncredited input VAT amount of VND 200
million or more on exported goods in that month, the business establishment
will be considered for VAT refund on a monthly basis. If in a month, a business
establishment both exports and domestically sells goods or services and has an
uncredited input VAT amount of VND 200 million or more on exported goods or
services in that month, even after being cleared against the output VAT on
domestically sold goods or services, the business establishment will be considered
for VAT refund on a monthly basis. If after being cleared against the output
VAT on domestically sold goods or services, its uncredited input VAT amount is
less than VND 200 million, it will not be considered for VAT refund.
Entities entitled to VAT refund in some cases
of export include establishments consigning their goods for export, in case of
export consignment; establishments undertaking to process export goods and
entering into contracts directly with foreign parties, in case of entrusted export
processing; establishments entering into export processing contracts with
foreign parties, in case of intermediary processing; and enterprises having
their goods and supplies exported for overseas construction works, in case of
goods exported for overseas construction works.
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6. Refund of paid VAT amounts for programs
and projects funded with non-refundable official development assistance (ODA)
or non-refundable or humanitarian aid:
6.1. For projects funded with non-refundable ODA:
Program or project owners or principal contractors or organizations designated
by foreign parties to manage programs or projects will be entitled to refund of
VAT amounts paid for goods and services purchased in Vietnam for use for these
programs and projects.
6.2. Vietnamese organizations that use humanitarian
aid money of foreign organizations or individuals to purchase goods and
services for programs or projects funded with non- refundable or humanitarian
aid in Vietnam will be entitled to refund of VAT amounts paid for these goods
and services.
Example 25: The Red Cross Society is provided
with VND 200 million as aid from international organizations to purchase
humanitarian aid goods for inhabitants in the provinces hit by natural
disasters. The VAT-exclusive value of purchased goods is VND 200 million and
the VAT amount is VND 20 million. The Red Cross Society will be refunded a tax
amount of VND 20 million.
The refund of paid VAT amounts for non-refundable
ODA-funded programs and projects complies with the Finance Ministry’s guidance.
7. Persons entitled to diplomatic privileges
and immunities under the Ordinance on Diplomatic Privileges and Immunities who
purchase goods or services in Vietnam for use will be refunded paid VAT amounts
indicated on value added invoices or payment vouchers indicating VAT-inclusive
payment prices.
8. Business establishments having tax refund
decisions of competent authorities under law.
Business establishments and organizations
eligible for VAT refund as guided at Points 1, 2, 3, 4, 5, 6 and 8 of this Part
must be those paying VAT by the credit method, possessing business registration
certificates or investment licenses (practice licenses), having seals required
by law, keeping accounting books and documents under the accounting law; and
having deposit bank accounts with their tax identification numbers.
In case business establishments have made tax
refund application dossiers, input VAT amounts requested to be refunded must
not be cleared against creditable VAT amounts of the month following the month
of making refund dossiers.
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Taxpayers shall make VAT declaration and
payment in localities where they conduct production or business. The VAT
declaration and payment comply with the Tax Administration Law and guiding
documents.
In some specific cases, the VAT declaration
and payment and procedures for transfer of vouchers are guided as follows:
1. Taxpayers that declare and pay VAT by the
credit method and have dependant accounting production establishments
(including also processing and assembling establishments) located in provinces
or centrally run cities other than those where they are headquartered shall pay
VAT both in localities where their production establishments are located and
localities where they are headquartered.
Dependent accounting production
establishments that conduct cost-accounting activities shall register for tax
payment by the credit method in localities where they conduct production
activities and use value added invoices as a basis for tax declaration and
payment in these localities when delivering their semi-finished or finished
products to other establishments, including their headquarters.
In case dependant production establishments
fail to conduct cost-accounting activities, taxpayers at headquarters shall pay
VAT equal to 2% (for goods subject to the VAT rate of 10%) or 1 % (for goods
subject to the VAT rate of 5%) of VAT-exclusive turnover of products they
produce or products of the same category in localities where they are located.
VAT amounts already paid by taxpayers for their dependent accounting production
establishments will be cleared against their payable VAT amounts in localities
where they are headquartered.
Example 26: Enterprise A is headquartered in Ho
Chi Minh City and has a dependent accounting production establishment in Ba Ria
- Vung Tau producing products subject to the VAT rate of 10%. These products
are sold by Enterprise A. As a result, Enterprise A shall make declare and pay
on behalf of its dependent accounting establishment a monthly VAT amount equal
to 2% of the turnover calculated at the VAT-exclusive sale price of goods
produced by its dependent accounting production establishment in Ba Ria - Vung
Tau. VAT amounts paid for the dependent accounting establishment may be cleared
against Enterprise A’s payable amounts.
2. Procedures for transfer of vouchers
between the State Treasury and tax offices
Taxpayers shall pay VAT amounts arising in
localities where they are headquartered to the State Treasury offices of the
same level with tax offices to which they have made tax registration and
declaration, and concurrently pay VAT according to prescribed percentages (%)
for their affiliated production establishments located in provinces or
centrally run cities other than those where they are headquartered. Tax payment
vouchers shall be made for each State Treasury office, clearly indicating state
budget revenue accounts of localities in which budget revenues arise.
In case taxpayers pay tax in cash at State
Treasury offices in localities where they are headquartered, these State
Treasury offices shall transfer money and state budget revenue vouchers to
concerned State Treasury offices for accounting tax amounts of dependent
accounting production establishments as state budget revenues.
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I. ORGANIZATION OF VAT COLLECTION
1. Tax offices shall organize the management
of VAT collection and refund for business establishments.
2. Customs offices shall organize the
management of the collection of VAT on imports.
II. IMPLEMENTATION EFFECT
1. This Circular takes effect 15 days after
its publication in “CONG BAO” and applies from January 1, 2009. It replaces the
Finance Ministry’s Circulars No. 32/2007/TT-BTC of April 9, 2007, and No.
30/2008/TT-BTC of April 16, 2008.
2. Shipbuilding establishments that enter
into contracts with customers before the effective date of this Circular to
build ships at prices inclusive of VAT at the rate of 5% but cannot complete
the building of ships for takeover test and handover by December 31, 2008, will
continue enjoying the tax rate of 5% for these contracts. Before March 31,
2009, they shall notify in writing their managing tax offices of lists of
uncompleted shipbuilding contracts to be carried forward to 2009, enclosed with
copies of these contracts.
Any problems arising in the course of
implementation should be promptly reported by business units and establishments
to the Finance Ministry for timely solution.
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