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MINISTRY OF FINANCE
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SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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No. 17848/BTC-TCT
Re: VAT deduction
according to Circular No. 28/2011/TT-BTC
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Hanoi, December 29, 2011
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To:
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For uniform
implementation of Clause 3 Article 24 of the Circular No. 28/2011/TT-BTC dated
February 28, 2011 of the Ministry of Finance (hereinafter referred to as
Circular No. 28/2011/TT-BTC) on deduction of VAT on infrastructure works, the
Ministry of Finance hereby provides guidance as follows:
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- The State Treasury
where the investor opens the transaction account shall deduct VAT on payments
for infrastructural works, work items funded by state budget; payments from
state budget for infrastructural works of projects funded by ODA (counterpart fund
paid at State Treasuries for infrastructural works of ODA projects).
- State Treasuries shall
not deduct VAT on:
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+ Payments for
infrastructural works of ODA projects where their investors do not open
accounts and make payments via State Treasuries.
2. Rules:
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2.2. On principle, the
State Treasury shall record deducted VAT as budget revenue of the
administrative division in which the infrastructural work is located. Regarding
a work that involves more than one provinces (or districts), if the revenue
generated in each province (or district) can be determined, deducted VAT shall
be recorded as budget revenue of the province (or district) proportional to the
revenue generated. Regarding a work that involves more than one province (or
districts), if the revenue generated in each province (or district) cannot be
accurately determined, the investor shall determine the proportion of revenue
generated in each province (or district) and notify the State Treasury.
3. Responsibility for
deducting VAT:
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- Instruct constructors
whose infrastructural works are subject to VAT deduction to follow procedures
for declaring VAT as prescribed in Article 10 of Circular No. 28/2011/TT-BTC.
- Transmit adequate and
timely information and data about tax payers (names of building contractors,
taxpayer ID numbers, supervisory tax authorities) for State Treasuries as the
basis for circulation of documents and record state budget revenues correctly.
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3.2. Responsibilities of
State Treasuries:
- State Treasuries where
investors open accounts shall:
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+ VAT shall be deducted
and transferred to state budget according to prescribed tax rates; a receipt
for payment to state budget (the form of which is provided by the Ministry of
Finance) shall be given to the investor for the investor to present it to
contractors.
+ Record state budget
revenues according to prescribed rates (if deducted VAT is immediately recorded
as budget revenue of the administrative division of the deducting State
Treasury) or send a credit note to the State Treasury of the administrative
division that is entitled to the revenue from deducted VAT (the State Treasury
at the same level as the collecting authority where the contractor declares
tax, hereinafter referred to as “receiving State Treasury”).
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- The receiving State
Treasury shall record state budget revenues as prescribed rates according to
the documents sent by the deducting State Treasury.
4. Procedures for
deducting VAT
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- The investor shall
prepare and send documents about payment for the infrastructural works, work
items to the State Treasury for deducting VAT.
- The State Treasury
shall determine the amount of VAT to be deducted in accordance with the
provisions of Article 2 of this document. According to the amount of VAT to be
deducted and information provided by the investor on form C3-01/NS and
information provided by the tax authority, State Treasury shall issue a receipt
for payment to state budget as the basis for deducting VAT and record a state
budget revenue as prescribed; carry out payment procedures and transfer money
to the recipient.
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4.2. If VAT deducted is
recorded as budget revenue of an administrative division different from that
the deducting State Treasury:
- The deducting State
Treasury shall follow the instructions in (4.1). However, a credit not shall be
sent by the deducting State Treasury to the receiving State Treasury (the State
Treasury at the same level with the collecting authority where the contractor
declares tax) via the internal payment channel.
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4.3. The taxpayer
(building contractor) may deduct the paid VAT (deducted by the State Treasury)
when declaring VAT. If the amount paid to the investor is just enough to cover
the advance paid earlier, the State Treasury shall not deduct VAT. The taxpayer
shall declare and pay VAT as prescribed.
Directors of State
Treasuries and Provincial Departments of Taxation are responsible for
organizing the implementation of this document. Difficulties that arise during
the implementation of this document should be reported to the Ministry of
Finance for consideration.
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PP MINISTER
DEPUTY MINISTER
Do Hoang Anh Tuan
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