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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:
26/2000/TT-BTC
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Hanoi, May 31, 2000
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CIRCULAR
GUIDING THE IMPLEMENTATION OF THE LAW ON VALUE
ADDED TAX TO ACTIVITIES OF PUBLISHING, PRINTING AND DISTRIBUTING PUBLICATIONS
Pursuant to Law No.02/1997/QH on Value Added
Tax of May 10, 1997;
Pursuant to the Government’s
Decree No.28/1998/ND-CP of May 11, 1998 detailing the implementation of the Value
Added Tax Law and the Government’s
Decree No.102/1998/ND-CP of December 12, 1998 amending and supplementing a
number of articles of Decree No.28/1998/ND-CP;
Pursuant to the provisions of the Publication Law and the documents guiding the
implementation thereof; the Culture and Information Minister’s Decisions No.2607/VHTT-QDXB1 of August 26, 1997
promulgating the "Regulation on organization and conducting of printing
activities"; No.2051/QD-CXB of August 15, 1997 promulgating the
"Regulation on organization and conducting of publications distributing
activities"; and No.75/1999/QD/BVHTT of November 8, 1999 promulgating the
Regulation on joint ventures for publications printing and distribution.
In order to make the implementation of the VAT Law suitable to the production
and business activities of the publications publishing, printing and
distribution branch, the Ministry of Finance hereby guides the implementation
of the VAT Law to activities in the publication publishing, printing and
distribution branch, as follows:
I. VAT
APPLICATION SCOPE
1. Activities subject to VAT:
Subject to VAT are activities of publishing,
printing, exporting, importing and distributing publications of various kinds,
including:
- Books; documents; paintings; photos;
calendars; maps; atlas; musical compositions; parallel sentences, scrolls and
posters, catalogues, leaflets, advertising folders.
- Books published on other materials or audio
tapes and disks, visual tapes and disks enclosed to the books.
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2. Activities not subject to VAT:
Not subject to VAT are activities of publishing,
printing, exporting, importing and distributing publications of various kinds,
including:
- Printed newspapers (including activities of
transmitting news pages), magazines, journals, specialized bulletins.
- Political books being those propagating the
political and ideological lines of the Party and the State in service of the
political tasks, according to special subjects or themes, in service of
anniversaries, traditional days of organizations, levels, branches and
localities; books reviewing the "good people, good deeds" movement,
books containing classic works of Party and State leaders.
- Text books being those for teaching and
studying activities at all educational grades from pre-school classes to
secondary education classes.
- Teaching materials being books for lecturing
and studying activities at the universities, colleges, vocational intermediate
schools and job-training schools.
- Legal document books being collections of
legal documents, such as: directives, circulars, decrees, ordinances, laws and
the Party’s resolutions and
documents.
- Books printed in languages of ethnic minority
groups in Vietnam, which are those in service of raising the intellectual
standards of ethnic minority people, including: books printed in ethnic
minority languages and bilingual books printed in both Vietnamese language and
an ethnic minority language.
- Paintings, photos, leaflets and folders of all
kinds for propaganda and campaigning purposes; mottoes, pictures of top
leaders, the Vietnam Communist Party’s
flag, the Ho Chi Minh Communist Youth Union’s
flag, the Ho Chi Minh Pioneers’
Organization’s flag and the
national flag.
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3. VAT payers:
Liable to pay VAT are organizations and
individuals engaged in activities of publishing, printing, exporting, importing
and distributing publications subject to VAT specified at Point 1, Section I of
this Circular.
II. TAX
CALCULATION METHOD
Payable VAT shall be calculated according to the
deduction method
Payable VAT = Output VAT - deductible input VAT.
A. REGARDING OUTPUT VAT:
Output VAT shall be determined on the basis of VAT
calculation prices multiplied by (x) VAT rates:
- VAT calculation prices are those having not
yet included VAT.
- VAT rates are prescribed in the current
guiding documents and shall be uniformly applied in all processes of
publishing, printing and distribution. More concretely:
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b/ The 10% tax rate shall be applicable to all
other publications other than those not subject to VAT as specified at Point 2,
Section I, and taxable publications specified in Paragraph a, Part A, Section
II of this Circular.
Basing itself on the peculiarities of each
activity, the Ministry of Finance guides the VAT declaration and calculation as
follows:
1. Regarding the publishing activities:
Publishing activities are the process of
publishing printed matters conducted from the stage of reading manuscripts to
the stage of distributing publications to consumers.
a/ For publishing houses that conduct publishing
activities by themselves:
- The output VAT shall be determined on the
basis of VAT calculation prices (x) tax rates. The publications’ cover prices are those having included VAT. Upon
calculating VAT on publications, such prices shall have to be converted into
VAT calculation prices according to the following formula:
Calculation
=
VAT Cover price (or payment price)
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- In cases where a publishing house distributes its publications through a
distributing organization, VAT calculation prices of such publications shall be
determined according to the following formula:
Calculation
=
VAT Cover price - distribution fee
price 1 + tax
rate
- In cases where a publishing house sells its
publications directly to consumers, VAT calculation price of publishing
activities shall be determined according to the following formula:
Calculation
=
VAT Cover price (or payment price)
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- For its publications consigned for sale, a
publishing house shall use the form of ex-warehouse bills of goods consigned to
agents for sale (Form No.04/XKDL-8LL issued together with the Finance Ministry’s Circular No.140/1999/TT-BTC of December 2, 1999).
Such ex-warehouse bills shall be used to monitor the publication sale
consignment. When a publication is paid for, the publishing house shall issue
an added value invoice clearly inscribing that such invoice is made together
with ex-warehouse bill No., date...; then the publishing house can base itself
on such form to add some appropriate criteria conformable to the managerial requirements
and register them with the tax agency.
- For case of barter which is considered a
sale-purchase mode, invoices are also required.
b/ For publishing houses that enter into
publishing joint ventures:
Publishing houses that enter into publishing joint
venture with domestic organizations and/or individuals shall have to comply
with the provisions of the Publication Law and the guiding documents. For all
forms of publishing joint venture, the involved publishing houses shall have to
pay VAT according to the following stipulations:
b1/ For publishing houses that enter into
publishing joint venture with business organizations and/or individuals:
- Publishing houses that perform services in the
publishing process such as editing and finalizing manuscripts, organizing the
printing-plate making, carrying out the procedures for registering publishing
plans... for which they collect managerial fees, shall declare and calculate
VAT on the collected managerial fee amounts. Such turnover shall be considered
having not included VAT.
For example: Publishing House A signs a contract
on publishing joint venture with organization B to publish a literary book with
a quantity of 10,000 copies and a cover price of 6,300 dong/copy, 7% of which
is collected as managerial fee by Publishing House A. Assuming that such
managerial fee has not included VAT, when the publication is distributed, the
publishing house shall issue added value invoice for the turnover of managerial
fee as follows:
Managerial fee: 10,000 copies x 6,300 dong/copy
x 7% = 4,410,000 dong
Output VAT = 4,410,000 dong x 10% = 441,000
dong.
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Calculation
=
VAT Cover price
- distribution fee
price 1 + tax
rate
In which: The cover price minus the distribution
fee must not be lower than the cost price of the standardized page.
After the publishing house’s director signs and approves the distribution of
publications, the publishing house shall have to issue added value invoices to
its partner to serve as basis for accounting deductible input VAT, for partners
being units that pay VAT by the deduction method, or accounting costs, for
units that pay VAT by the direct method. Vouchers of expenses for publishing
activities shall be declared by the publishing house or its partner that
directly pay the expenses for calculation of input VAT for each party.
For example:
In May 1999, Publishing House A signed a joint
publishing contract with Organization B to publish a literary book with a
quantity of 10,000 copies:
Price printed on the cover: 6,000 dong/copy
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When Publishing House A delivers books to
Organization B, VAT shall be calculated as follows:
Calculation
=
VAT 6,000 - 1,800
= 4,000 dong/copy
price 1 + 5%
Output VAT: 4,000 x 5% = 200 dong/copy
Publishing House A shall issue added value
invoices to Organization B for 10,000 copies, inscribing a VAT amount of
2,000,000 dong.
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Calculation
=
VAT 6,000
= 5,714
dong/copy
price 1 + 5%
The output VAT = 5,714 x 2,000 x 5% = 571,400
dong
Assuming that the input VAT amount is 57,000
dong
Organization B’s
payable VAT amount in June shall be 571,400 dong - 57,000 dong - 2,000,000 = -
1,485,600 dong. It means that Organization B shall still not have to pay VAT in
this month. From July on, such quantity of books shall be subject to output VAT
rather than input VAT. The unit shall have the input VAT that arises but is not
yet reimbursed in June (-1,485.600 dong) cleared against the next period’s payable VAT amount when such VAT is declared and
calculated.
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b2/ Publishing houses that enter into publishing
joint venture with business organizations and/or individuals and distribute all
joint-venture publications shall declare VAT as for cases where they conduct
publishing activities by themselves.
b3/ In cases where publishing houses enter into
joint ventures with organizations being public-service units or individuals
being authors without business and tax registrations, such publishing houses
shall have to calculate and pay the output VAT as prescribed for cases of
publishing joint ventures, pay VAT on such individuals’
behalf and have VAT deducted according to the rate prescribed by the local tax
agency on taxable income.
2. For the units engaged in printing activities
a/ For printing activities (where printing paper’s price is included in the printing unit price):
- The output VAT shall be determined on the
basis of VAT calculation price multiplied (x) by VAT rate applicable to
printing activities. VAT calculation price of printing activities is the one
having not yet included VAT.
b/ For printing activities where printing paper’s price is not included in the printing unit price:
- The output VAT shall be determined on the
basis of VAT calculation price multiplied (x) by tax rate. VAT calculation
price is the one having not yet included tax and including printing cost,
fuels, power and auxiliary materials costs and other expenses (excluding paper
cost).
- VAT rate(s) applicable to such activities
shall be those prescribed for corresponding printed products.
3. For publication distribution services:
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Calculation
=
Cover price - distribution fee VAT
in subsequent process (if any)
price 1 + tax
rate
- For retail sales of goods valued at less than
100,000 dong each or where customers do not request invoices, the distributing
units shall make retail sale lists according to the current regulations.
- For goods consigned for sale: The consigning
units shall have to separately account such goods according to ex-warehouse
bills of goods consigned to agents for sale (Form No.04/XKDL-8LL issued
together with the Finance Ministry’s
Circular No.140/1999/TT-BTC of December 2, 1999) to determine input VAT
corresponding to output VAT of the sold goods.
B. DEDUCTIBLE INPUT VAT
The deductible input VAT shall be determined
according to the following principle:
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For activities of printing publications subject
to VAT that use only imported raw material paper of special categories, if
printing units can separately account input VAT of such special-category raw
material paper, they shall be allowed to declare the whole amount of input tax
upon calculating VAT.
Those units having both goods and services
subject and not subject to VAT shall have to account input VAT of goods and
services subject to VAT in separation from those not subject to VAT, in order
to determine deductible input VAT, non-deductible input VAT and payable VAT. In
cases where a business unit cannot separately account input VAT, the method of
portioning by percentage (%) the turnover subject to VAT on the total turnover
in order to determine the deductible input VAT shall be applied.
III.
ORGANIZATION OF IMPLEMENTATION
Regarding invoices and vouchers: Units shall
issue invoices directly to their customers upon each specific case. If such
units pay VAT by the deduction method, they shall issue added value invoices,
on which the lines inscribing VAT rate and amount of activities not liable to
VAT shall be crossed. If such units pay VAT by the direct method, they shall
issue ordinary goods sale invoices.
This Circular takes effect 15 days after its
signing. Other contents not guided herein shall still be implemented according
to provisions of the Finance Ministry’s
Circulars No. 89/1998/TT-BTC of June 27, 1998, No. 175/1998/TT-BTC of December
24, 1998 and No. 106/1999/TT-BTC of August 30, 1999. The already promulgated
documents guiding the implementation of VAT which are contrary to this Circular’s guidance are now annulled.
The concerned organizations and individuals are
requested to report any problems arising in the course of implementation to the
Finance Ministry for study and solution.
FOR THE FINANCE MINISTER
VICE MINISTER
Pham Van Trong