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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: 25/1999/TT-BTC
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Hanoi, March 08,
1999
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CIRCULAR
GUIDING THE SETTLEMENT OF TAX ON CAPITAL
CONSTRUCTION WORKS, NEWLY BUILT SHIPS AND SHIP OVERHAULS, WHICH WERE COMPLETED
IN 1998 BUT BY DECEMBER 31, 1998, THE PROCEDURES FOR THE PAYMENT THEREFOR HAD
NOT BEEN CARRIED OUT
Pursuant to Article 28 of the Law on Value Added
Tax; Article 21 of Decree No.28/1998/ND-CP of May 11, 1998 of the Government
detailing the implementation of the Law on Value Added Tax and Clause 5,
Article 1 of Decree No.102/1998/ND-CP of the Government amending and
supplementing a number of Articles of Decree No.28/1998/ND-CP.
In order to remove difficulties confronted by
production or construction establishments; the Ministry of Finance hereby
guides the application of tax policy to capital construction works, newly built
ships and ship overhauls, which were already completed, but by December 31,
1998, the procedures for hand-over and payments therefor had not been carried
out, as follows:
I.
OBJECTS OF APPLICATION
Subject to this Circular are production or
construction establishments that pay value added tax by the tax deduction
method and perform the contracts for:
- Capital construction and installation:
Including construction and installation projects, project items and work
pieces.
- Building or overhaul of sea-going ships and
river-coastal ships used for transport of goods, passengers and other special
purposes.
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II. TAX
RATES, INVOICES AND THE PROCEDURES FOR TAX DECLARATION, PAYMENT AND ACCOUNTING
1.
The tax rate applicable to the objects specified in Section I above shall be
the turnover tax rate and calculated on the turnover stated in the payment
invoices:
- For construction and installation projects,
project items and work pieces which were already completed with contracted
supply of materials: 4%, without contracted supply of materials: 6%.
- For sea-going ships and river-coastal ships:
For new building: 1%, for overhauls: 2%.
2. The procedures regarding invoices and
vouchers:
- The payment invoices billed by production or
construction establishments for capital construction projects or ships
mentioned in Section I above, must be the value added tax (VAT) invoices. Such
invoices shall state the total payment prices which have included turnover tax.
For example:
Party B bills a payment invoice for the completed
capital construction volume to Party A according to the price of 100 million
VND determined in the contract signed in 1998, the price shall be determined
and VAT invoice shall be billed as follows:
+ Payment price: (clearly stating the value of
project or of capital construction volume actually completed in 1998 according
to the contractual price or agreed upon by the two parties to pay): 100 million
dong.
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+ Total taxed payment price: 100 million dong.
3. The procedures for tax declaration and
payment:
The parties (party A and party B) which are
subject to this Circular shall base themselves on VAT invoices to declare and
calculate the payable turnover tax amount according to provisions of the Law on
Turnover Tax and the documents guiding the implementation thereof, the paying
party (party A) shall not be entitled to deduct such tax amount.
4. Accounting and cost-accounting:
Objects specified in Section I of this Circular
shall conduct the cost-accounting and final settlement of the results of their
capital construction, ship building or overhaul activities as follows:
- The turnover to serve the calculation of
income subject to enterprise income tax shall be the payment price already with
turnover tax. The accountant shall reflect the turnover tax according to the
payment price, writing:
Debit: Accounts 111, 112, 131
Credit: Account 511 (According to the payment
price)
- The payable turnover tax shall be deducted to
calculate the income subject to enterprise income tax. The payable turnover tax
shall be written as follows:
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Credit: Account 333.1 (Turnover tax details)
- The units that purchase products or services
subject to turnover tax according to stipulations in Section I of this Circular
shall be entitled to account the value of capital construction products or
newly built ships calculated according to the invoiced payment price which has
already been imposed with turnover tax, to serve as basis for calculation of
fixed asset depreciation.
III. THE
ORDER AND COMPETENCE FOR TAX SETTLEMENT
1. The dossiers and procedures:
a/ The written request of the concerned
establishment.
b/ The contract:
- For capital construction activities, it shall
be construction and installation contract between party A and party B made
strictly according to the capital construction regime.
- For ship building and overhaul, it shall be
the economic contract between the customer and the party contracted to build or
overhaul ship(s).
c/ The record on inspection and acceptance upon
completion of work volume by December 31, 1998:
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+ In cases where the project was already
completed but the hand-over procedures has not been carried out, a record on
technical inspection and acceptance is required.
+ In cases where the project was already
completed but the record on inspection and acceptance upon completion of work
volume and minute on the technical inspection and acceptance have not yet been
made, a record on determination of value of completed work volume with party A�s certification is required.
- For the ship building or overhaul services,
there must be:
+ The record on technical and quality inspection
made by the product quality control section of the concerned unit with the
customer’s certification. In cases
where there is no customer’s certification, the concerned unit must be
authorized by the customer to conduct the technical and quality inspection.
Particularly for newly built ships, the registry agency’s
certification is required.
+ The record certifying the value of the newly
built ship or the value of ship overhaul between party A and party B.
The above dossiers must be the originals, all
copies thereof must be certified by the directors of the concerned enterprises.
2. The tax settlement order
Within 10 days after receiving the dossiers, the
provincial/municipal tax department shall assume the prime responsibility and
coordinate with the Department for management of the State�s capital and property at enterprises in verifying
such dossiers, if they deem all the conditions and procedures prescribed in
this Circular are fully met, they shall forward such dossiers together with
their written comments to the Ministry of Finance (the General Department of
Tax).
Within 10 days after receiving the dossiers, the
General Department of Tax shall have to complete the procedures then submit
such dossiers to the Ministry of Finance for settlement.
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This Circular takes effect after its signing and
applies to objects specified in Section I of this Circular. For unfinished
products which are expected to be completed in 1999, if the concerned units
suffer losses due to VAT payment, they shall be considered for reduction of
payable VAT according to Article 28 of the VAT Law.
The tax agencies shall have to guide and inspect
the implementation and handle things in time till June 30, 1999 at the latest.
Any problems arising in the course of implementation shall be reported by the
provincial/municipal tax departments and concerned units to the Ministry of
Finance for study and settlement.
THE MINISTRY OF
FINANCE
Pham Van Trong