1. Regulations on VAT declaration
Article 5 of Circular 219/2013/TT-BTC stipulates the cases where VAT is not declared or calculated and paid:
“1. Organizations and individuals receiving monetary compensation (including compensation for land and assets on land when land is reclaimed according to decisions of competent State agencies), bonuses, subsidies, payments for the transfer of emission rights, and other financial income.
Businesses receiving compensation, bonuses, subsidies, emission rights transfer fees, and other financial income must prepare receipt documents in accordance with regulations. For businesses making payments, payment documents must be prepared based on the purpose of the payment.
In cases of compensation in the form of goods or services, the compensating entity must issue an invoice and declare, calculate, and pay VAT as if it were a sale of goods or services; the entity receiving compensation shall declare and deduct VAT according to regulations.
"In cases where a business receives money from an organization or individual to perform services for that organization or individual, such as repair, warranty, promotion, or advertising, it must declare and pay taxes according to regulations."
- Therefore, if a business receives compensation, bonuses, transfer payments, etc., it does not need to issue an invoice for VAT declaration, but only needs to prepare a receipt or payment voucher.
- If a business compensates its partner with goods or services, it must issue a VAT invoice and declare and pay tax as if it were selling goods.
- If a business receives money from a partner to perform repair, warranty, or promotional services, it must issue an invoice and declare and pay taxes.
2. Solution
Businesses should use the above regulations as a basis to review and adjust compensation payments to comply with state regulations.
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