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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:
101/1999/TT-BTC
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Hanoi,
August 20, 1999
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CIRCULAR
GUIDING THE IMPLEMENTATION OF THE LAW ON VALUE ADDED TAX FOR
LAND-ROAD TRANSPORT ACTIVITIES
Pursuant to Value Added Tax (VAT) Law
No.02/1997/QH of May 10, 1997;
Pursuant to the Government’s Decree No.28/1998/ND-CP of May 11, 1998 detailing the
implementation of the VAT Law and Decree No.102/1998/ND-CP of December 21, 1998
amending and supplementing a number of articles of Decree No.28/1998/ND-CP;
With a view to making the implementation of the Law on Value Added Tax suitable
to the transport business services, including passenger transportation,
land-road cargo transportation and taxi transport, the Ministry of Finance
hereby provides further detailed guidance on VAT applicable to such activities
as follows:
I. VAT APPLICATION SCOPE:
1. Subjects liable to VAT
include:
- Land-road transportation services, including:
passenger, cargo and taxi transportation on the Vietnamese territory.
- Other services provided by land-road transport
establishments.
2. Subjects not liable to VAT:
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- Goods and passenger transportation services
outside the Vietnamese territory.
3. VAT payers:
VAT payers are organizations and individuals
engaged in land-road transport business, including: transport companies and
units with independent cost-accounting; branches, enterprises and stations with
their cost-accounting attached to the independent cost-accounting companies and
units; business individuals and groups.
II. TAX CALCULATION METHOD
1. Method of VAT deduction:
VAT shall be determined according to the
following formula:
Payable VAT
= Output VAT - Input VAT
The output VAT shall be determined on the basis
of non-VAT prices multiplied by the VAT rate(s) inscribed in added value
invoices for sold goods or provided services.
The input VAT shall be determined on the basis
of the VAT amounts inscribed on the added value invoices for purchase of goods
and services.
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1.1. For transport units that directly sign
transportation contracts with customers: the output VAT shall be based on the
VAT calculation prices and the tax rates. The tax calculation prices being
those not yet added with VAT shall be calculated on the basis of the prices
actually paid under the transportation contracts between the companies and
their customers. In cases where the prices to be paid by the goods owners to
the transport units are those already added with VAT, the prices without VAT
shall be determined as follows:
Tax calculation
price
=
Price inscribed
in the contract with customer
1 + Tax rate
In cases where a transportation service is
provided outside the Vietnamese territory with enough legal grounds for the
separation of such service, the transport unit shall issue to the goods owner 2
added value invoices: one inscribing the freight amount collected for the
international transportation service (transportation outside the Vietnamese
territory), but given that this transportation service is not liable to VAT,
the lines for VAT rate and amount on such invoice shall be crossed out, and
another inscribing the domestic freight amount and the output VAT. To be issued
the added value invoices inscribing the international freight rate, the goods
owner must meet the following conditions:
- Having a transport contract which clearly
states the departure place being a Vietnamese border-gate, and the destination
place being a foreign province or city.
- Having an export goods declaration, in cases
where the transport unit has export goods, or a copy of the goods owner’s
export goods declaration in conformity with the transport contract signed with
the goods owner.
For the input VAT to be deducted for
determination of the payable VAT amount:
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1.2. In case of the package assignment of total
turnover in passenger and/or cargo transportation whereby the revenue package
assignment mode is to assign a total turnover in a certain package and the
expense package assignment mode implies that the transport unit shall directly
make the expenses and the package assignee’s expenses shall be calculated
according to certain norms, the VAT calculation prices shall, in principle, be
based on the assigned total turnover. The transport unit shall issue added
value invoices to goods owners if so requested by the latter. At the end of
each month, if the number of invoices issued to goods owners is not up to the
assigned level, the transport unit shall issue one more added value invoice to
the package assignee representing the deficit amount for the determination of
its output VAT. In cases where the money amount on the invoice issued to the
goods owner is larger than the assigned level, the transport unit’s turnover
and output VAT shall be totally based on the invoice already issued to the
goods owner.
For the input VAT to be deducted for
determination of payable VAT amount: Expenses directly paid by the transport
unit shall be evidenced by input added value invoices, while the assignees’
expenses shall be evidenced by input added value invoices submitted by such
assignees and based on the allowable expense limit (for example: the deductible
fuel expenses shall be evidenced by added value invoice for fuel purchase and
based on the fuel consumption norm in proportion to the assigned turnover).
Such allowable expense limit shall be assigned by the enterprise director (or
the managing board) to each driver on the basis of his/her transport means’
particular characteristics and shall be publicized upon the package assignment
to drivers.
For example: Transport Company A assigns
driver B a turnover package of 5 million VND that must be remitted to the
company every month (such package of 5 million VND shall be subject to VAT).
All expenses for driver B shall be directly made by the company. At the end of
every month, driver B shall fully remit 5 million VND to the company. Assuming
that the fuel consumption norm for 100 km is 20 liters of petrol and the
ordinary transport freight is 2,000 VND/km. To generate the above-said assigned
turnover, driver B shall have to drive his/her car on the following minimum
distance:
5,000,000VND :
2,000 VND/km = 2,500 km
- The minimum fuel volume to be used for the car
shall be:
(2,500 km : 100
km) x 20 liters = 500 liters.
- The petrol purchase price without VAT is 4,000
VND/liter
- The VAT rate applicable to petrol is 5%.
So, the fuel volume purchased by Company A which
is allowed to be included with the input VAT to be deducted from the above-said
turnover amount of 5 million dong must be evidenced by input added value
invoices for the fuel purchase, and at the same time the fuel volume for
deduction must not exceed that inscribed on the corresponding invoices for the
purchase of 500 liters of petrol. The amount to be correspondingly paid shall
be: 500 liters x 4,000 VND/liter x 5% = 100,000 VND.
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1.3. In case of package assignment whereby the
assignee remits a turnover package to his/her company and pay by him/herself
expenses for fuel, repair, wage,... with the assignment mode clearly stating:
the assigned turnover package, the turnover portion to be enjoyed by the
assignee and that to be remitted to his/her company, the general principle for
output VAT calculation shall be: The company calculates the output VAT on the
basis of the assigned turnover remitted by the assignee, who is liable to pay
VAT by direct method on the basis of the assigned turnover portion he/she is
entitled to enjoy.
The input VAT shall be calculated only for the
expenses directly paid by the company, but shall not be deducted for the
assignee.
Where a goods owner requests the added value
invoice, the driver shall be allowed to hand over an internal transport bill to
certify the goods volume already transported. Such a bill shall be sent to the
company’s head office for the issue of an added value invoice.
For example: Transport unit A assigns driver B a
monthly turnover package that breaks down as follows:
- Monthly total turnover: 20,000,000VND
- Portion to be enjoyed by driver: 18,000,000
VND
- Portion to be remitted to company: 2,000,000
VND
So, transport unit A shall have to declare and
pay VAT by the deduction method, the prices for calculation of output VAT of
the transport unit shall be the turnover of 2,000,000 dong remitted by the
driver. Driver B shall be liable to pay VAT by the direct method and driver B’s
price for VAT calculation by direct method shall be 18,000,000 dong.
1.4. For taxi transportation: Despite the taxi
transportation’s advantage that the freight and/or fare can be managed
according to meters installed on the taxi, the transport units usually prefer
to assign a certain percentage (%) on the freight and/or fare amount actually
collected according to the meters to be enjoyed by drivers, who shall take care
of the fuel expenses and wages by themselves. The output VAT shall be
determined on the basis of the whole amount of freight and/or fare collected
according to the taximeters (not the assigned amount remitted by the drivers).
At the end of each month, the amount actually collected according to meters and
declared on the company’s taxi operation orders by the drivers shall serve as basis
for determination of actual transport turnover, which shall subsequently serve
as basis for determination of output VAT for each driver. Each month, the
transport unit shall have to make a detailed list of its drivers to serve as
basis for determination of its total output VAT in the month.
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The input VAT shall be based on the input added
value invoices directly issued by the company, while the fuel volume purchased
by drivers shall be based on the allowable expense limit. Such allowable
expense limit shall be assigned by the enterprise director (or the managing
board) to each driver on the basis of the particular characteristics of the
means assigned to him/her and shall be publicized upon the package assignment
to drivers
Example 1: A taxi driver earns in January a
total transport turnover of 5,500,000 dong from his/her customers according to
the meter on his/her taxi. He/she shall have to make a list assuming that such
turnover is collected from 50 customers for a transport distance of 5,000 km
recorded in the meter (including both transport distances with and without
passengers).
- Regarding the issue of invoices for
determination of output VAT:
At the end of January, 25 passengers request
added value invoices, the transport unit shall base itself on the list of
turnover amounts collected by its driver to issue 25 added value invoices to 25
passengers (for example: a turnover of 3,000,000 VND, and VAT on such invoice
is 300,000 VND). The remaining turnover amount of 2,000,000 VND shall be listed
by the unit for the determination of an output VAT of 200,000 VND, so the total
output VAT of the transport unit in the month shall be 500,000 dong. In cases
where in February a passenger who was transported by taxi in January (among
those passengers whose fare and/or freight made up the total turnover amount of
2,000,000 dong, for which the transport unit has drawn the list for
determination of its January output VAT) requests an added value invoice, the
transport unit shall issue the added value invoice to such passenger and
clearly record this reduction in its February list.
- Regarding the determination of deductible
input VAT:
Assuming that the petrol consumption norm for
100 km is 7 liters. The input petrol volume calculated for determination of the
transport unit’s input VAT shall be based on the added value invoices for
petrol purchase, but the maximum volume to be deducted shall be:
5,000 km
X 7
liters = 350 liters
100 km
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1.5. In cases where the transport unit acts as a
transport agent (its turnover includes amounts it collects or pays on behalf of
goods owners), the non-VAT price shall be the total of amounts collected from
customers which shall serve as basis for the direct issuance of invoices by the
transport unit to its customers (including amounts collected on the customers’
behalf) and determination of such transport unit’s output VAT.
The input VAT of such transport unit shall be
based on its input added value invoices, those submitted by the drivers which
shall be deducted according to the above-said general principle, and input VAT
vouchers of amounts paid on behalf of the customers.
1.6 For transport cooperatives: Transport
cooperatives are liable to pay VAT by the deduction method, while the
cooperative members are liable to pay VAT by the direct method. Due to
particular characteristics of transport cooperatives, the output VAT, input VAT
and deductible input VAT shall be calculated as follows:
a/ In cases where the transport cooperative
directly signs a transportation contract and subsequently organizes its members
to take part in the transport activities, and all expenses for such transport
activities are directly paid by the cooperative, the input VAT shall be
determined on the basis of all amounts collected from its customers.
Deductible input VAT for determination of the
cooperative’s payable VAT amount shall be based on the above-said general
principles:
For example: Transport cooperative A signs a transportation
contract with customer B, with a total turnover without VAT of 10,000,000 VND.
Cooperative A organizes its members to carry out the transportation. The output
VAT of the transport cooperative shall be 10,000,000 VND x 10% = 1,000,000 VND
and the cooperative shall issue an added value invoice to customer B on the
basis of the tax calculation price and the above-said output VAT. The
deductible input VAT shall be based on the input added value invoices of the
cooperative and cooperative members directly engaged in the transportation (for
petrol, oil, water, telephone,...). Expenses which are variable depending on
the cooperative members’ turnovers such as that for fuels,... must be based on
the fuel consumption norm publicized by the cooperative’s management board
within the entire cooperative on the basis of particular characteristics of
each type of transport means.
b/ Any cooperative that provides service of
recommending customers to its members shall enjoy only a commission remitted by
its members. Such cooperative shall pay VAT on the basis of its turnover being
commissions remitted by its members.
For example: Transport cooperative A has a
customer who hires the transportation of a goods lot, with a total payment value
of 10,000,000 VND. The cooperative does not directly sign a contract therefor,
but assigns 3 cooperative members B, C and D with transport means to directly
conduct transactions with such customer, and subsequently collect from such
cooperative members a commission of 1,000,000 VND. In this case, cooperative A
shall be the VAT payer by the deduction method, with the VAT calculation price
on the added value invoices being 1,000,000 VND; and the added value invoices
on such commission amount shall be issued by the cooperative to the 3
cooperative members according to the commission level remitted by each member.
Cooperative A’s deductible input VAT is evidenced by its input added value
invoices. Such 3 cooperative members’ input invoices shall not be deducted when
determining the payable VAT amount of cooperative A.
2. Method of direct payment on added value:
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b/ In cases of package assignment as stipulated
at Point 1.3, Section II above, the assigned drivers shall be liable to pay VAT
by the direct method. The VAT calculation price shall be the level
presumptively assigned by the transport unit to the drivers.
c/ In cases where a transport cooperative merely
recommends customers to its members and enjoys a part of commissions remitted
by such members, the cooperative members shall be the VAT payer by the direct
method on the basis of turnover they are entitled to enjoy. Cooperative members
who conduct business activities on their own shall pay VAT by the direct
method. If customers request invoices, the cooperative shall issue sale
invoices on its members’ behalf (the tax agency shall supply sale invoices, so
that the cooperatives can bill invoices on their respective members’ behalf).
Input VAT on vouchers for goods and/or services
purchased by VAT payers by direct method shall not be deducted when determining
payable VAT amount.
For example: Also according to the example at
Point 1.6.b above, 3 cooperative members B, C and D shall be the VAT payers by
the direct method. The turnover for VAT determination of such 3 cooperative
members shall be 10,000,000 dong. If customers request invoices, transport
cooperative A shall issue ordinary sale invoices to such customers on the 3
cooperative members’ behalf.
III. VAT DECLARATION AND
PAYMENT
1. VAT declaration and payment by units that pay
tax by the deduction method:
1.1. Companies with independent cost-accounting
shall declare and pay VAT at the localities where they are headquartered. If
such companies or units have their branches and/or outlets with dependent
cost-accounting operating in the same localities where they are headquartered,
VAT shall be declared and paid concentratedly by such companies or units on
their respective branches’ and/or outlets’ behalf, while such branches and
outlets shall have to make VAT lists and send them to their parent companies or
units for the general declaration and payment of VAT into the State budget.
Branches and outlets that conduct business
activities outside the localities where their parent companies are
headquartered shall have to declare and pay VAT by themselves in the localities
where they conduct business (localities mentioned herein are understood
provinces and centrally-run cities).
1.2. VAT reimbursement: Companies and units
engaged in provision of services subject to VAT shall have to declare and pay
VAT. If their deductible input VAT amounts are larger than the output ones and
the differences therebetween are eligible for VAT reimbursement, the service
business companies and units shall compile dossiers applying for tax
reimbursement according to regulations, then file them to the tax agency for
consideration of tax reimbursement to them.
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a/ Subjects that pay VAT by the direct method
specified in Item a, Point 2, Section II above shall declare and pay VAT
directly to the tax authority directly managing the tax collection.
b/ Subjects paying VAT by the direct method
specified in Item b, Point 2, Section II above shall have to declare and pay
VAT: On the general principle, transport units or cooperatives shall have to
make tables listing turnover amount generated by each individual who is
assigned turnover package or each cooperative member for the concentrated tax
declaration and payment for the assigned individuals and cooperative members.
If the assigned individuals or cooperative members fail to declare their
transport turnovers not true to the actual ones, the tax authority may base
itself on the actual local situation and consult the opinions of the Union of
Cooperatives and provincial/municipal Communications and Public Work Services
to fix the taxable turnover.
3. Regarding the invoices and vouchers: The
transport units shall directly issue invoices to their customers on the case by
case basis as follows: If a transport unit is liable to pay VAT by the
deduction method, the added value invoices shall be issued with the VAT rate
and amount lines thereon crossed out due to reason that the transport service
is not subject to VAT. For subjects that pay VAT by the direct method, the
ordinary sale invoices shall be issued. Passenger transportation units that use
tickets instead of invoices shall have to register with tax authorities and pay
tax according to the prescribed regime.
IV. ORGANIZATION OF
IMPLEMENTATION
1. The Vietnam Land Road Administration, the
provincial/municipal Communications and Transport Services and the
provincial/municipal Tax Departments shall guide the concerned units to make
the VAT declaration, calculation and payment according to this Circular’s
guidance.
2. This Circular takes effect 15 days after its
signing. Other contents which are not guided in this Circular shall still comply
with the provisions of the Ministry of Finance’s Circular No.89/1998/TT-BTC of
June 27, 1998 and Circular No.175/1998/TT-BTC of December 24, 1998. All
previously issued documents guiding the implementation of VAT applicable to the
concerned units which are inconsistent with this Circular shall be annulled.
The concerned units shall have to promptly report problems to the Ministry of
Finance for consideration and appropriate solution.
FOR THE MINISTER OF FINANCE
VICE MINISTER
Pham Van Trong
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