| THE FINANCIAL —– |
SOCIAL REPUBLIC OF VIETNAM Independence - Freedom - Happiness |
| Number: 01/VBHN-BTC | Hanoi, date 04 month 01 year 2024 |
CIRCULARS
GUIDELINES FOR IMPLEMENTING THE LAW ON VALUE ADDED TAX AND GOVERNMENT DECREE NO. 209/2013/ND-CP DATED DECEMBER 18, 2013, DETAILING AND GUIDING THE IMPLEMENTATION OF SOME ARTICLES OF THE LAW ON VALUE ADDED TAX
Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the implementation of the Value Added Tax Law and Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government detailing and guiding the implementation of a number of articles of the Value Added Tax Law, effective from January 1, 2014, is amended and supplemented by:
1. Circular No. 119/2014/TT-BTC dated August 25, 2014 of the Ministry of Finance amends and supplements a number of articles of Circular No. 156/2013/TT-BTC dated November 6, 2013, Circular No. 111/2013/TT-BTC dated August 15, 2013, Circular No. 219/2013/TT-BTC dated December 31, 2013, Circular No. 08/2013/TT-BTC dated January 10, 2013, Circular No. 85/2011/TT-BTC dated June 17, 2011, Circular No. 39/2014/TT-BTC dated March 31, 2014 and Circular No. 78/2014/TT-BTC dated June 18, 2014 of the Ministry of Finance to improve The simplified administrative procedures regarding taxes will take effect from September 1, 2014.
2. Circular No. 151/2014/TT-BTC dated October 10, 2014, of the Ministry of Finance guiding the implementation of Decree No. 91/2014/ND-CP dated October 1, 2014, of the Government on amending and supplementing a number of articles in the Decrees regulating taxes, effective from November 15, 2014.
3. Circular No. 26/2015/TT-BTC dated February 27, 2015, of the Ministry of Finance guiding value-added tax and tax management under Decree No. 12/2015/ND-CP dated February 12, 2015, of the Government detailing the implementation of the Law amending and supplementing a number of articles of the Laws on taxation and amending and supplementing a number of articles of the Decrees on taxation and amending and supplementing a number of articles of Circular No. 39/2014/TT-BTC dated March 31, 2014, of the Ministry of Finance on invoices for the sale of goods and provision of services, effective from January 1, 2015.
4. Circular No. 193/2015/TT-BTC dated November 24, 2015 of the Ministry of Finance amending and supplementing Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the implementation of the Value Added Tax Law and Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government detailing and guiding the implementation of a number of articles of the Value Added Tax Law, effective from January 10, 2016.
5. Circular No. 130/2016/TT-BTC dated August 12, 2016 of the Ministry of Finance guiding Decree No. 100/2016/ND-CP dated July 1, 2016 of the Government detailing the implementation of the Law amending and supplementing a number of articles of the Law on Value Added Tax, the Law on Special Consumption Tax and the Law on Tax Administration and amending a number of articles in tax circulars, effective from July 1, 2016.
6. Circular No. 173/2016/TT-BTC dated October 28, 2016 of the Ministry of Finance amending and supplementing the first paragraph of Clause 3, Article 15 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance (which has been amended and supplemented by Circular No. 119/2014/TT-BTC dated August 25, 2014, Circular No. 151/2014/TT-BTC dated October 10, 2014, and Circular No. 26/2015/TT-BTC dated February 27, 2015 of the Ministry of Finance), effective from December 15, 2016.
7. Circular 93/2017/TT-BTC dated September 19, 2017 of the Ministry of Finance amends and supplements Clauses 3 and 4 of Article 12 of Circular No. 219/2013/TT-BTC dated December 31, 2013 (which was amended and supplemented by Circular No. 119/2014/TT-BTC dated August 25, 2014) and repeals Clause 7 of Article 11 of Circular No. 156/2013/TT-BTC dated November 6, 2013 of the Ministry of Finance, effective from November 5, 2017.
8. Circular No. 25/2018/TT-BTC dated March 16, 2018 of the Ministry of Finance guiding Decree No. 146/2017/ND-CP dated December 15, 2017 of the Government and amending and supplementing a number of articles of Circular No. 78/2014/TT-BTC dated June 18, 2014 of the Ministry of Finance, Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance, effective from May 1, 2018.
9. Circular No. 82/2018/TT-BTC dated August 30, 2018 of the Ministry of Finance abolishes the content of example 37 stipulated in point a.4, Clause 10, Article 7 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the implementation of the Value Added Tax Law and Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government detailing and guiding the implementation of a number of articles of the Value Added Tax Law, effective from October 15, 2018.
10. Circular No. 43/2021/TT-BTC dated June 11, 2021 of the Ministry of Finance amending and supplementing Clause 11, Article 10 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the implementation of the Value Added Tax Law and Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government detailing and guiding the implementation of a number of articles of the Value Added Tax Law (as amended and supplemented by Circular No. 26/2015/TT-BTC dated February 27, 2015 of the Ministry of Finance), effective from August 1, 2021.
11. Circular No. 13/2023/TT-BTC dated February 28, 2023 of the Ministry of Finance guiding the implementation of Decree No. 49/2022/ND-CP dated July 29, 2022 of the Government amending and supplementing a number of articles of Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government detailing and guiding the implementation of a number of articles of the Law on Value Added Tax which has been amended and supplemented by Decree No. 12/2015/ND-CP, Decree No. 100/2016/ND-CP and Decree No. 146/2017/ND-CP and amending and supplementing Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance, effective from April 14. 2023.
Based on the Value Added Tax Law No. 13/2008/QH12 dated June 3, 2008 and the Law amending and supplementing a number of articles of the Value Added Tax Law No. 31/2013/QH13 dated June 19, 2013;
Based on the Law on Tax Administration No. 78/2006/QH11 dated November 29, 2006 and the Law amending and supplementing a number of articles of the Law on Tax Administration No. 21/2012/QH13 dated November 20, 2012;
Based on Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government detailing and guiding the implementation of a number of articles of the Law on Value Added Tax;
Pursuant to the Decree No. 118 / 2008 / ND-CP dated 27 / 11 / 2008 of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Finance;
At the proposal of the General Director of Taxation,
The Minister of Finance issues the following guidelines on the implementation of value-added tax:
Chapter I
GENERAL RULES
Article 1. Scope
This circular provides guidance on taxable and non-taxable subjects, taxpayers, tax calculation basis and methods, tax deductions and refunds, and the place of payment of value-added tax.
Article 2. Taxable subjects
The subjects liable to value-added tax (VAT) are goods and services used for production, business, and consumption in Vietnam (including goods and services purchased from organizations and individuals abroad), except for those exempt from VAT as guided in Article 4 of this Circular.
Article 3. Taxpayers
Value Added Tax (VAT) taxpayers are organizations and individuals producing and trading goods and services subject to VAT in Vietnam, regardless of industry, form, or business organization (hereinafter referred to as business establishments), and organizations and individuals importing goods or purchasing services from abroad subject to VAT (hereinafter referred to as importers), including:
1. Business organizations are established and registered in accordance with the Enterprise Law, the State-Owned Enterprise Law (now the Enterprise Law), the Cooperative Law, and other specialized business laws;
2. Economic organizations of political organizations, socio-political organizations, social organizations, professional social organizations, people's armed forces units, public service organizations and other organizations;
3. Enterprises with foreign investment capital and foreign parties participating in business cooperation under the Law on Foreign Investment in Vietnam (now the Investment Law); foreign organizations and individuals operating businesses in Vietnam but not establishing legal entities in Vietnam;
4. Individuals, households, independent business groups, and other entities engaged in production, business, and import activities;
5. Organizations and individuals engaged in production and business in Vietnam who purchase services (including services associated with goods) from foreign organizations without a permanent establishment in Vietnam, or from individuals abroad who are non-residents in Vietnam, are the taxpayers, except in cases where VAT declaration and payment are not required as guided in Clause 2, Article 5 of this Circular.
Regulations regarding permanent and non-resident entities are governed by the laws on corporate income tax and personal income tax.
6. Branches of export processing enterprises are established to conduct the buying and selling of goods and activities directly related to the buying and selling of goods in Vietnam in accordance with the laws on industrial parks, export processing zones, and economic zones.
Example 1: Sanko Co., Ltd. is an export processing enterprise. In addition to manufacturing for export, Sanko Co., Ltd. is also licensed to import goods for resale or export. According to the law, Sanko Co., Ltd. must establish a branch to carry out this activity. The branch must maintain separate accounting records and declare and pay VAT separately for this activity, not as part of the export manufacturing activities.
When importing goods for distribution (sales), the Sanko Co., Ltd. Branch declares and pays VAT at the import stage, and when selling (including exporting), Sanko Co., Ltd. uses invoices, declares, and pays VAT according to regulations.
Article 4. Subjects not subject to VAT
1. Agricultural products (including products from planted forests), livestock, aquaculture, and seafood that have not been processed into other products or have only undergone basic processing, produced or caught and sold by organizations and individuals, and at the import stage.
New products that have undergone conventional processing include products that have been cleaned, sun-dried, oven-dried, peeled, ground, milled without the outer layer, rubbed without the outer layer, separated from the seeds, separated from the stems, cut, salted, refrigerated (chilled, frozen), preserved with sulfur dioxide, preserved using chemicals to prevent spoilage, soaked in sulfur solution or other preservation solutions, and other conventional preservation methods.
Example 2: Company A signs a pig farming contract with Company B in which Company B provides Company A with piglets, feed, and veterinary medicine, and Company A delivers and sells the finished pig products to Company B. In this case, the pig farming fees received from Company B and the pig products delivered and sold by Company A to Company B are not subject to VAT.
Regarding pork products that Company B receives from Company A: if Company B sells the pigs (whole) or fresh pork, the products sold are not subject to VAT. However, if Company B processes the pigs into products such as sausages, smoked meat, ham, or other processed products, the products sold are subject to VAT according to regulations.
2. Products include animal breeds and plant varieties, encompassing breeding eggs, breeding animals, seedlings, seeds, cuttings, tubers, semen, embryos, and genetic material at the stages of breeding, import, and commercial trading. Animal and plant breed products exempt from VAT are those imported and traded by establishments holding a business registration certificate for animal and plant breeding issued by a state management agency. For animal and plant breed products subject to state-issued standards, they must meet the conditions stipulated by the state.
3. Irrigation and drainage; plowing and harrowing; dredging of canals and ditches in agricultural fields; agricultural product harvesting services.
3a. Fertilizers include organic and inorganic fertilizers such as: phosphate fertilizers, nitrogen fertilizers (urea), NPK fertilizers, mixed nitrogen fertilizers, phosphate fertilizers, potassium fertilizers; microbial fertilizers and other types of fertilizers;
Animal feed for livestock, poultry, aquatic animals, and other domestic animals, including processed or unprocessed products such as bran, residues, oilseed meal, fish meal, bone meal, shrimp meal, other feeds for livestock, poultry, aquatic animals, and other domestic animals, and animal feed additives (such as premixes, active ingredients, and carriers) as stipulated in Clause 1, Article 3 of Government Decree No. 08/2010/ND-CP dated February 5, 2010, on animal feed management and Clauses 2 and 3, Article 1 of Circular No. 50/2014/TT-BNNPTNT dated December 24, 2014, of the Ministry of Agriculture and Rural Development;
Offshore fishing vessels are vessels with a main engine power of 90 horsepower or more engaged in fishing or providing logistical support for fishing; specialized machinery and equipment for fishing and preserving products for fishing vessels with a total main engine power of 90 horsepower or more engaged in fishing or providing logistical support for fishing;
Specialized machinery and equipment for agricultural production include: plows; harrows; milling machines; furrowing machines; root removal machines; field leveling equipment; seed planters; transplanters; sugarcane planting machines; seedling mat production systems; tillers, furrowing machines, fertilizer spreading and application machines; pesticide sprayers; rice, corn, sugarcane, coffee, and cotton harvesting machines; root, fruit, and tuber harvesting machines; tea pruning and harvesting machines; rice threshing machines; corn shelling machines; corn shelling machines; soybean threshing machines; peanut shelling machines; coffee hulling machines; machines and equipment for processing wet coffee and paddy; agricultural product drying machines (rice, corn, coffee, pepper, cashew, etc.) and seafood drying machines; machines for collecting and loading sugarcane, rice, and straw in the fields; poultry egg incubators and hatchers; grass harvesting machines, straw and grass baling machines; milking machines and other specialized machines.
4. Salt products are produced from seawater, natural rock salt, refined salt, and iodized salt, whose main component is sodium chloride (NaCl).
5. State-owned housing is sold by the State to the current tenant.
6. Transfer of land use rights.
7. Life insurance, health insurance, student insurance, and other insurance services related to people; pet insurance, crop insurance, and other agricultural insurance services; insurance for ships, boats, equipment, and other necessary tools directly used for fishing; reinsurance.
8. The following financial, banking, and securities trading services:
a) Credit granting services include the following forms:
– Lending;
– Discounting and rediscounting of negotiable instruments and other securities;
– Bank guarantee;
– Financial leasing;
– Issuing credit cards.
In cases where credit institutions collect fees related to credit card issuance, these fees collected from customers as part of the credit granting service process (card issuance fees) according to the credit institution's lending regulations, such as early repayment fees, late payment penalties, debt restructuring fees, loan management fees, and other fees related to the credit granting process, are not subject to value-added tax (VAT).
Regular card transaction fees that are not part of the credit granting process, such as fees for reissuing credit card PINs, fees for providing transaction receipts, fees for claiming charges for card misuse, fees for reporting theft or loss of credit cards, fees for canceling credit cards, fees for converting credit card types, and other fees, are subject to VAT.
– Domestic factoring; international factoring for banks authorized to conduct international payments;
– Selling collateral for loans by credit institutions or enforcement agencies, or by the borrower themselves acting under authorization from the lender to repay secured loans, specifically:
+ The collateral for the loan being sold is an asset that is part of a secured transaction that has been registered with the competent authority in accordance with the law on registration of secured transactions.
The handling of collateral for loans shall be carried out in accordance with the provisions of the law on secured transactions.
In cases where the repayment period expires and the person with collateral is unable to repay the debt and must hand over the collateral to the credit institution for processing in accordance with the law, the parties shall follow the procedures for handing over the collateral as prescribed by law and are not required to issue a VAT invoice.
In cases where a credit institution receives collateral to substitute for the fulfillment of debt repayment obligations, the credit institution shall account for the increase in the value of the asset used for production and business activities in accordance with regulations. When the credit institution sells the asset used for business activities, if the asset is subject to Value Added Tax (VAT), the credit institution must declare and pay VAT in accordance with regulations.
Example 3: In March 2015, Enterprise A, a business entity paying VAT using the deduction method, mortgaged its production line, machinery, and equipment to borrow capital from Bank B. The loan term was one year (repayment deadline was March 31, 2016). By March 31, 2016, Enterprise A was unable to repay the debt and had to hand over the assets to Bank B. When handing over the assets, Enterprise A was not required to issue an invoice. When Bank B sold the assets that secured the loan to recover the debt, the assets sold were not subject to VAT.
Example 3a: In December 2014, Enterprise B, a business entity paying VAT using the deduction method, mortgaged its factory building and land use rights to borrow capital from Commercial Bank C. The loan term was one year, with a repayment deadline of December 15, 2016. Commercial Bank C and Enterprise B registered a secured transaction (mortgaging the factory building and land use rights) with the competent authority. By December 15, 2016, Enterprise B was unable to repay the debt, and Commercial Bank C issued a document agreeing to release the mortgage so that Enterprise B could sell the factory building to repay the bank. In January 2017, Enterprise B sold the factory building to repay the bank; the sale of the factory building was not subject to VAT.
– Credit information services are provided by units and organizations under the State Bank of Vietnam to credit institutions for use in lending activities as prescribed by the Law on the State Bank of Vietnam.
Example 4: Organization X is a unit under the State Bank of Vietnam authorized by the State Bank of Vietnam to provide credit information services. In 2014, Organization X signed contracts to provide credit information to several commercial banks to support their lending activities and other commercial banking operations. Revenue from credit information services serving lending activities is exempt from VAT, while revenue from credit information services serving other commercial banking operations not regulated by the Law on the State Bank of Vietnam is subject to VAT at a rate of 10%.
– Other forms of credit granting as prescribed by law.
b) Individual lending activities, not considered regular business or supply activities, by taxpayers who are not credit institutions.
Example 5: VC Joint Stock Company has temporarily idle funds not yet used for business operations. VC Joint Stock Company signs a contract to lend money to Company T for a period of 6 months and receives interest. The interest received by VC Joint Stock Company is not subject to VAT.
c) Securities business includes: Securities brokerage, securities trading, securities underwriting, securities investment consulting, securities custody, securities investment fund management, securities investment company management, securities portfolio management, market organization services of stock exchanges or securities trading centers, services related to securities registered and deposited at the Vietnam Securities Depository Center, lending money to customers to conduct margin trading, advances against the sale of securities, and other securities business activities as prescribed by the law on securities.
Activities include providing information, organizing auctions of shares issued by organizations, and providing technical support for online securities trading by the Stock Exchange.
d) Capital transfer includes the transfer of part or all of the capital invested in another economic organization (regardless of whether a new legal entity is established or not), the transfer of securities, the transfer of capital contribution rights, and other forms of capital transfer as prescribed by law, including the sale of a business to another business for production and business purposes, where the purchasing business inherits all the rights and obligations of the selling business as prescribed by law.
Example 6: In April 2014, Company A contributed machinery and equipment to establish Company B, a joint-stock company. The value of Company A's capital contribution was assessed by the Capital Contribution Acceptance Council at VND 2,5 billion, equivalent to 25% of Company B's capital. In November 2014, Company A sold its stake in Company B to the ABB Investment Fund for VND 4 billion. The VND 4 billion received by Company A is considered revenue from the transfer of capital and is not subject to VAT.
d) Selling debt;
e) Foreign exchange trading;
g) Derivative financial services include: interest rate swaps; forward contracts; futures contracts; options to buy and sell foreign currency; and other derivative financial services as prescribed by law;
h) Selling the collateral assets of the debt of an organization wholly owned by the State, established by the Government to handle bad debts of Vietnamese credit institutions.
9. Medical services, veterinary services, including examination, treatment, and prevention of diseases for humans and animals; family planning services; health care and rehabilitation services for patients; and care services for the elderly and people with disabilities; Transporting patients, providing room and bed rental services at medical facilities; testing, imaging, blood and blood products for patients.
Services for the elderly and disabled include medical care, nutrition, and the organization of cultural, sports, and recreational activities, as well as physiotherapy and rehabilitation for the elderly and disabled.
In cases where a medical treatment package (as regulated by the Ministry of Health) includes the use of medication, the revenue from the medication included in the medical treatment package is also exempt from Value Added Tax (VAT).
10. Public postal and telecommunications services and universal Internet access under government programs; Postal and telecommunications services from abroad to Vietnam (inbound).
11. Services for maintaining zoos, flower gardens, parks, street trees, public lighting; funeral services. The services mentioned in this clause are not distinguished by the source of funding. Specifically:
a) Services for maintaining zoos, flower gardens, parks, street trees, and protecting forests owned by the State, including activities related to management, planting, and caring for trees, and protecting birds and animals in parks, zoos, public areas, national forests, and national parks;
b) Public lighting includes lighting for streets, alleys, neighborhoods in residential areas, flower gardens, and parks. Revenue from public lighting activities is not subject to tax.
c) Funeral services provided by establishments engaged in the business of funeral services include activities such as renting funeral homes, funeral vehicles, burial, cremation, reburial, relocation of graves, and grave maintenance.
12. Maintenance, repair, and construction using funds contributed by the people (including contributions and sponsorships from organizations and individuals), and humanitarian aid funds for cultural and artistic works, public service facilities, infrastructure, and housing for social policy beneficiaries.
In cases where funds other than public contributions and humanitarian aid are used, and these other funds do not exceed 50% of the total funds used for the project, the entire value of the project is exempt from tax.
In cases where funding sources other than public contributions and humanitarian aid exceed 50% of the total funding used for the project, the entire value of the project is subject to Value Added Tax (VAT).
Social policy beneficiaries include: people with meritorious service as defined by the law on people with meritorious service; social welfare beneficiaries receiving subsidies from the state budget; people belonging to poor and near-poor households, and other cases as prescribed by law.
13. Teaching and vocational training as prescribed by law, including teaching foreign languages, computer science; teaching dance, singing, painting, music, drama, circus, physical education, sports; childcare and teaching other professions aimed at training and improving cultural level and professional knowledge.
In cases where educational institutions at all levels, from preschool to high school, collect fees for meals, transportation for students, and other fees in the form of collecting and disbursing funds on behalf of others, these fees are also exempt from tax.
Income from student and trainee accommodation; and training activities (including organizing exams and issuing certificates within the training process) provided by training institutions are exempt from Value Added Tax (VAT). If the training institution does not directly organize training but only organizes exams and issues certificates within the training process, then the exam and certificate issuance activities are also exempt from VAT. However, if the provision of exam and certificate issuance services is not part of the training process, then it is subject to VAT.
Example 7: Training Center X is authorized to provide training for the issuance of insurance agent professional certificates. Training Center X assigns the training task to Unit Y, and Training Center X organizes the examination and issues insurance agent professional certificates. In this case, the examination and certificate issuance activities of Training Center X are not subject to Value Added Tax (VAT).
14. Broadcasting radio and television using state budget funds.
15. Publishing, importing, and distributing newspapers, magazines, specialized newsletters, political books, textbooks, educational materials, legal texts, scientific and technical books, books printed in minority languages, and propaganda posters, including in the form of audio or video tapes or discs, electronic data; money, printing money.
Newspapers, magazines, and specialized newsletters, including the distribution of newspaper pages, magazines, and specialized newsletters.
Political books are books that propagate the political line of the Party and the State, serving political tasks according to specific themes and topics, serving anniversaries and traditional days of organizations, levels, sectors, and localities; statistical books, books promoting good deeds and exemplary individuals; and books containing speeches and theoretical research by Party and State leaders.
Textbooks are books used for teaching and learning at all levels from preschool to high school (including reference books for teachers and students that are appropriate to the educational curriculum).
Textbooks are books used for teaching and learning in universities, colleges, vocational high schools, and vocational training centers.
Legal texts books are printed books containing the legal regulations of the State.
Science and technology books are books used to introduce and guide people on scientific and technical knowledge directly related to production and other scientific and technical fields.
Books printed in minority languages include bilingual books printed in both the standard Vietnamese script and the minority language.
Propaganda posters, pictures, and leaflets are used for propaganda and promotion purposes, including slogans, images of leaders, Party flags, national flags, Youth Union flags, and Young Pioneer flags.
16. Public passenger transport includes public passenger transport by bus and tram (including electric trains) on routes within the province, within urban areas, and on adjacent routes outside the province as prescribed by traffic laws.
17. Goods that are not produced domestically may be imported in the following cases:
a) Machinery, equipment, spare parts, and materials imported for direct use in scientific research and technological development activities;
b) Machinery, equipment, spare parts, specialized transport vehicles, and materials that need to be imported to carry out exploration and development activities for oil and gas fields;
c) Aircraft (including aircraft engines), drilling rigs, and ships of types not yet manufactured domestically, imported to create fixed assets for enterprises or leased from foreign countries for use in production, business, leasing, or subleasing.
To determine whether goods are exempt from VAT at the import stage as stipulated in this clause, importers must present to the customs authorities the documents as guided by the Ministry of Finance on customs procedures; customs inspection and supervision; export tax, import tax and tax management for exported and imported goods.
The list of machinery, equipment, spare parts, and materials that can be produced domestically, serving as a basis for distinguishing them from those that cannot be produced domestically and need to be imported for direct use in scientific research and technological development; the list of machinery, equipment, spare parts, specialized transport vehicles, and materials that can be produced domestically, serving as a basis for distinguishing them from those that cannot be produced domestically and need to be imported for oil and gas exploration and development; and the list of aircraft, drilling rigs, and ships that can be produced domestically, serving as a basis for distinguishing them from those that cannot be produced domestically and need to be imported to create fixed assets for enterprises or leased from foreign countries for use in production, business, leasing, or subleasing, are issued by the Ministry of Planning and Investment.
18. Weapons and specialized equipment for national defense and security.
a) Weapons and specialized equipment for national defense and security purposes, as listed in the Catalogue of Weapons and Specialized Equipment for National Defense and Security, issued jointly by the Ministry of Finance, the Ministry of National Defense, and the Ministry of Public Security.
Weapons and specialized equipment used for national defense and security are exempt from Value Added Tax (VAT) if they are complete, integrated products or parts, components, and specialized packaging used for assembling and preserving complete products. In cases where weapons and specialized equipment used for national defense and security require repair, the repair services provided by enterprises under the Ministry of National Defense and the Ministry of Public Security are also exempt from VAT.
b) Weapons and equipment (including supplies, machinery, equipment, and spare parts) specifically for national defense and security that are imported are exempt from import tax according to the provisions of the Law on Export and Import Taxes or are imported under annual quotas approved by the Prime Minister.
The documentation and procedures for importing weapons and military equipment that are exempt from VAT at the import stage are guided by the Ministry of Finance on customs procedures; customs inspection and supervision; export and import taxes; and tax management for exported and imported goods.
19. Imported goods and goods and services sold to organizations and individuals for humanitarian aid and non-refundable assistance in the following cases:
a) Imported goods in the case of humanitarian aid or non-refundable aid must be certified by the Ministry of Finance or the Department of Finance;
b) Gifts to state agencies, political organizations, socio-political organizations, socio-professional organizations, social organizations, socio-professional organizations, and people's armed forces units shall be made in accordance with the law on gifts and presents;
c) Gifts and presents to individuals in Vietnam must comply with the regulations of the law on gifts and presents;
d) Goods belonging to foreign organizations or individuals that meet diplomatic immunity standards as prescribed by law on diplomatic privileges and immunities; goods that are personal belongings of Vietnamese people residing abroad who bring them back to Vietnam;
d) Items carried by passengers within the duty-free baggage allowance;
Imported goods are exempt from VAT at the import stage according to the import tax exemption levels stipulated in the Law on Export and Import Taxes and its implementing regulations.
Imported goods of organizations and individuals subject to diplomatic immunity under the law on diplomatic privileges and immunities are exempt from Value Added Tax (VAT). If a diplomatic immunity holder purchases goods or services in Vietnam that are subject to VAT, they are eligible for a VAT refund as guided in Clause 7, Article 18 of this Circular.
The subjects, goods, and documentation procedures for enjoying diplomatic immunity privileges as guided in this Article shall be implemented in accordance with the Ministry of Finance's guidance on VAT refund for diplomatic missions, consular offices, and representative offices of international organizations in Vietnam.
e) Goods and services sold to foreign organizations and individuals, and international organizations for humanitarian aid and non-refundable aid to Vietnam.
The procedure for international organizations and foreigners to purchase goods and services in Vietnam for humanitarian aid or non-refundable aid to Vietnam without paying VAT is as follows: international organizations and foreigners must send a written document to the seller, clearly stating the name of the international organization or foreigner purchasing the goods and services for humanitarian aid or non-refundable aid to Vietnam, the quantity or value of the goods purchased; and confirmation from the Ministry of Finance or the Department of Finance regarding this aid.
When selling goods, businesses must issue invoices in accordance with the law on invoices, clearly stating on the invoice that the goods are sold to foreign organizations or individuals, or international organizations for non-refundable aid or humanitarian aid, and that VAT is not applicable. Businesses must also retain a copy of the international organization's document or the Vietnamese representative office's document as a basis for tax declaration. If a foreign organization or individual, or international organization, purchases goods or services in Vietnam for non-refundable aid or humanitarian aid that are subject to VAT, they are eligible for VAT refund as guided in Clause 6, Article 18 of this Circular.
20. Goods transshipped or in transit through Vietnamese territory; temporarily imported goods for re-export; temporarily exported goods for re-import; raw materials and supplies imported for the production and processing of goods for export under export production and processing contracts signed with foreign parties.
Goods and services are traded between foreign countries and free trade zones, and between free trade zones themselves.
Free trade zones include: export processing zones, export processing enterprises, bonded warehouses, bonded zones, foreign trade warehouses, special economic and trade zones, trade and industrial zones, and other economic zones established and enjoying tax incentives as free trade zones according to the Prime Minister's Decision. Trade and exchange of goods between these zones and the outside world are considered export and import transactions.
The procedures and documentation for determining and handling cases where VAT is not collected follow the guidelines of the Ministry of Finance on customs procedures; customs inspection and supervision; export and import taxes; and tax management for exported and imported goods.
21. Technology transfer as stipulated in the Law on Technology Transfer; transfer of intellectual property rights as stipulated in the Law on Intellectual Property. In cases where a technology transfer or intellectual property rights transfer contract includes the transfer of machinery and equipment, the value of the technology and intellectual property rights transferred is exempt from VAT; if the value cannot be separated, VAT is calculated on the entire value of the technology and intellectual property rights transferred together with the machinery and equipment.
Computer software includes software products and software services as defined by law.
22. Imported gold in the form of bars, ingots, and other types of gold not yet crafted into handicrafts, jewelry, or other products.
Gold in the form of bars, ingots, and other unworked gold is defined according to the regulations of the law on gold management and trading.
23. Exported products are natural resources and minerals that have been extracted but not yet processed into other products.
Export products are goods processed directly from primary raw materials, which are resources and minerals, where the total value of resources and minerals plus energy costs accounts for 51% or more of the product's production cost, except for certain cases as stipulated in Clause 1, Article 1 of Decree No. 146/2017/ND-CP.
a) Resources and minerals are resources and minerals of domestic origin, including: metallic minerals; non-metallic minerals; crude oil; natural gas; coal gas.
b) The determination of the proportion of resource, mineral, and energy cost values in the production cost is carried out according to the following formula:
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The proportion of the value of resources, minerals, and energy costs in the production cost of a product. |
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Value of resources and minerals + energy costs |
|
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Total cost of product production |
In which:
The value of resources and minerals used in processing is determined as follows: For resources and minerals directly extracted, it is the direct and indirect costs of extracting the resources and minerals, excluding the cost of transporting the resources and minerals from the extraction site to the processing site; for resources and minerals purchased for further processing, it is the actual purchase price, excluding the cost of transporting the resources and minerals from the purchase site to the processing site.
Energy costs include: fuel, electricity, and heat energy.
The value of resources, minerals, and energy costs is determined according to the book value recorded in the accounting system, in accordance with the Product Costing Summary Table.
The cost of producing a product includes: direct material costs, direct labor costs, and manufacturing overhead costs. Indirect costs such as selling expenses, administrative expenses, financial expenses, and other expenses are not included in the cost of producing a product.
The ratio of the value of resources, minerals, and energy costs to the production cost of the product is determined based on the previous year's financial statements, and this ratio is applied consistently throughout the export year. In the case of the first year of exporting the product, the ratio of the value of resources, minerals, and energy costs to the production cost is determined according to the investment plan and is applied consistently throughout the export year; if there is no investment plan, the ratio of the value of resources, minerals, and energy costs to the production cost is determined based on the actual cost of the exported product.
c) If a business does not export but sells to another business for export, the business purchasing these goods for export must declare VAT as if it were a similar product directly manufactured and exported by the business.
d) Provincial and city tax departments shall coordinate with specialized state management agencies in their respective areas, according to the functions and duties of each agency, to guide enterprises engaged in the production and export of products from natural resources and minerals. Based on the characteristics of the products and the production process, they shall determine whether the exported products are processed or unprocessed natural resources and minerals, and make declarations in accordance with regulations.
In cases where businesses declare processed products as other products, but the production process is not sufficient to determine whether the exported product is a different product, the Tax Department is responsible for reporting to the General Department of Taxation to coordinate with relevant Ministries and specialized state management agencies. Based on the export product production process of the business, they will determine whether the exported product is an unprocessed or processed resource or mineral, in accordance with the law.
24. Artificial products used to replace body parts of patients, including products that are permanent implants in the human body; crutches, wheelchairs and other specialized devices for disabled persons.
25. Goods and services of household and individual businesses with annual revenue of one hundred million dong or less.
Determining whether a household or individual business falls under the category of VAT exemption is carried out according to the guidelines of the law on tax administration.
26. The following goods and services:
a) Goods sold duty-free at duty-free shops as stipulated by the Prime Minister.
b) National reserves sold by the national reserve agency.
c) Activities that collect fees and charges from the State in accordance with the law on fees and charges.
d) Mine and unexploded ordnance clearance carried out by defense units for projects funded by the state budget.
Goods exempt from import VAT under this Article, if their intended use changes, must be declared and import VAT paid to the customs authority where the customs declaration was registered. Organizations and individuals selling goods to the domestic market must declare and pay VAT to the tax authority directly managing them as prescribed.
Article 5. Cases where Value Added Tax (VAT) does not need to be declared or paid.
1. Organizations and individuals receive monetary compensation (including compensation for land and assets on land when land is recovered according to the decision of a competent State agency), bonuses , subsidy money, emission rights transfer money and other financial revenues.
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.
Example 10: P&C Limited Company receives interest income from purchasing bonds and dividends from purchasing shares of other businesses. P&C Limited Company is not required to declare or pay VAT on the interest income from bond purchases and dividends received.
Example 11: If business A receives compensation of 50 million VND from business B for contract cancellation, business A should issue a receipt and is not required to declare or pay VAT on this amount.
Example 12: If company X purchases goods from company Y, and company X makes an advance payment to company Y, and company Y pays interest on that advance payment, then company X is not required to declare or pay VAT on the interest received.
Example 13: Company X sells goods to Company Z for a total payment of 440 million VND. According to the contract, Company Z makes deferred payment over 3 months, with a late payment interest rate of 1% per month on the total contract price. After 3 months, Company X receives from Company Z the total contract value of 440 million VND and late payment interest of 13,2 million VND (440 million VND x 1% x 3 months). In this case, Company X is not required to declare or pay VAT on this 13,2 million VND.
Example 14: Insurance company A and Company B sign an insurance contract in the form of cash insurance. When an insured risk occurs, insurance company A compensates Company B with cash in accordance with insurance laws. Company B is not required to declare or pay VAT on the insurance compensation received.
Example 15: ABC Dairy Joint Stock Company pays distributors (organizations and individuals engaged in business) to carry out promotional programs (according to the law on trade promotion activities), marketing, and product display for the Company (the distributor receives this money to perform services for the Company). When receiving the money, if the distributor is a VAT taxpayer using the deduction method, they issue a VAT invoice and calculate VAT at a rate of 10%. If the distributor is a VAT taxpayer using the direct method, they use a sales invoice and determine the amount of tax payable according to the percentage (%) of revenue as prescribed.
2. Organizations and individuals producing and trading in Vietnam who purchase services from foreign organizations without a permanent establishment in Vietnam, or from individuals abroad who are non-residents of Vietnam, including the following cases: repair of transport vehicles, machinery, and equipment (including spare parts and materials); advertising and marketing; investment and trade promotion; brokerage of goods sales and services abroad; training; sharing of international postal and telecommunications service charges between Vietnam and foreign countries where these services are performed outside Vietnam; and leasing of transmission lines and satellite bandwidth from foreign countries as prescribed by law.
3. Organizations and individuals not engaged in business activities and not VAT taxpayers selling assets.
Example 16: If Mr. A, an individual not engaged in business, sells a 4-seater car to Mr. B for 600 million VND, Mr. A is not required to declare or calculate VAT on the proceeds from the sale of the car.
Example 17: Mr. E, an individual not engaged in business, mortgaged a 5-seater car to VC Bank to borrow money. When the payment deadline according to the contract arrived, Mr. E was unable to pay VC Bank, so the mortgaged car was sold at foreclosure to recover the debt. The proceeds from the sale of the mortgaged car are not subject to VAT declaration and calculation.
4. Organizations and individuals transferring investment projects for the production and business of goods and services subject to value-added tax to enterprises and cooperatives.
Example 18: Joint Stock Company P is undertaking an investment project to build an industrial alcohol production plant. By March 2014, the investment project had been completed to 90% of the design plan, with an investment value of 26 billion VND. Due to financial difficulties, Joint Stock Company P decided to transfer the entire ongoing investment project to Joint Stock Company X for a transfer price of 28 billion VND. Joint Stock Company X received the investment project to continue producing industrial alcohol. Joint Stock Company P is not required to declare or pay VAT on the value of the project transferred to Joint Stock Company X.
5. Businesses and cooperatives paying VAT using the deduction method that sell unprocessed agricultural, livestock, aquatic, and marine products, or products that have only undergone basic processing, to businesses and cooperatives in the commercial trading stage are not required to declare or pay VAT. On the VAT invoice, the selling price should be recorded as the price excluding VAT, and the tax rate and VAT amount lines should be left blank or crossed out.
In cases where businesses and cooperatives paying VAT using the deduction method sell unprocessed or only minimally processed agricultural, livestock, and aquatic products to other entities such as households, individual businesses, and other organizations and individuals, they must declare and pay VAT at a rate of 5% as guided in Clause 5, Article 10 of this Circular.
Households, individual businesses, enterprises, cooperatives, and other economic organizations that pay VAT using the direct calculation method on the value added when selling agricultural, livestock, aquaculture, or wild-caught products that have not been processed into other products or have only undergone basic processing in the commercial trading stage shall declare and pay VAT at a rate of 1% on revenue.
Example 19: Food company B, a business entity paying VAT using the deduction method, purchases rice from organizations and individuals who directly grow and sell it. At the stage of purchasing from these organizations and individuals, the rice is not subject to VAT.
If Food Company B sells rice to Import-Export Company C, Food Company B is not required to declare or pay VAT on the rice sold to Import-Export Company C.
If Food Company B sells rice to Company D (a manufacturer of vermicelli and rice noodles), Food Company B is not required to declare or pay VAT on the rice sold to Company D.
On the VAT invoice issued to Import-Export Company C, Limited Liability Company D, and Food Company B, the selling price is clearly stated as the price excluding VAT, and the tax rate and VAT amount lines are left blank or crossed out.
Food company B, which sells rice directly to consumers, shall declare and pay VAT at a rate of 5% as guided in Clause 5, Article 10 of this Circular.
Example 20: Company A, a limited liability company paying taxes using the deduction method, purchases green coffee beans from coffee farmers. Company A then sells these green coffee beans to household business H. The revenue of Company A from selling green coffee beans to household business H is subject to a 5% tax rate.
Example 21: After purchasing tea leaves from a tea-growing household, Mr. X's household sells them to Mr. Y's household. Mr. X's household must calculate and pay VAT at a rate of 1% on the revenue from selling tea leaves to Mr. Y's household.
In cases where agricultural, livestock, or aquatic products that have not been processed into other products or have only undergone basic processing are sold to businesses or cooperatives that have already issued invoices, declared, and calculated VAT, both the seller and the buyer must adjust the invoices to avoid declaring and paying VAT as guided in this section.
6. Fixed assets currently in use, for which depreciation has already been deducted, when transferred at their book value between a business entity and wholly-owned subsidiary units, or between wholly-owned subsidiary units, to serve the production and business activities of goods and services subject to VAT, are not required to be invoiced and VAT not declared or paid. The business entity transferring the fixed assets must have a Decision or Order for asset transfer accompanied by documentation proving the asset's origin.
In cases where fixed assets are revalued upon transfer or transferred to a business producing goods or services not subject to VAT, a VAT invoice must be issued, and VAT must be declared and paid in accordance with regulations.
7. Other cases:
Businesses are not required to declare and pay taxes in the following cases:
a) Contributing assets to establish a business. Assets contributed to the business must include: a memorandum of understanding on capital contribution for production and business activities, a joint venture or cooperation agreement; a valuation report of the assets by the Capital Contribution Acceptance Council of the contributing parties (or a valuation document from an organization with the function of asset valuation as prescribed by law), along with a set of documents on the origin of the assets.
b) Transfer of assets between dependent accounting units within an enterprise; transfer of assets during division, separation, merger, acquisition, or conversion of enterprise type. For asset transfers between dependent accounting units within a business establishment; and for asset transfers during division, separation, merger, acquisition, or conversion of enterprise type, the business establishment transferring the assets must have an asset transfer order, accompanied by documentation proving the origin of the assets, and is not required to issue an invoice.
In cases where assets are transferred between independent accounting units or between member units with full legal personality within the same business establishment, the business establishment transferring the assets must issue a VAT invoice and declare and pay VAT in accordance with regulations, except as guided in Clause 6 of this Article.
c) Collection of claims from third parties in insurance activities.
d) Collections of fees that are not related to the sale of goods or services by the business establishment.
d) Revenue from goods and services sold on consignment and commission revenue earned from agency activities selling at the prices stipulated by the principal, including commissions for services such as: postal services, telecommunications, lottery ticket sales, airline tickets, car, train, and ship tickets; international transport agency; agency for aviation and maritime services subject to a 0% VAT rate; and insurance sales agency.
e) Revenue from goods and services and commission revenue earned from agency activities selling goods and services that are exempt from VAT.
g) Businesses are exempt from paying VAT on imported goods that were previously exported but returned by the foreign party. However, when these returned goods are sold domestically, the business must declare and pay VAT according to regulations.
h. Organizations and businesses that receive fees from state agencies for performing collection and disbursement activities on behalf of state agencies.
The fees for collecting and disbursing funds on behalf of state agencies that are not subject to VAT declaration and payment as stipulated in this point are the fees received from the following activities: collecting voluntary social insurance and voluntary health insurance contributions for the Social Insurance agency; paying preferential allowances to meritorious individuals and other allowances for the Ministry of Labor, War Invalids and Social Affairs; collecting taxes from individual households for the tax agency; and other collection and disbursement activities on behalf of state agencies.
Chapter II
TAX BASIS AND METHODOLOGY
Section 1. BASIS FOR TAX CALCULATION
Article 6. Basis for tax calculation
The basis for calculating value-added tax is the taxable price and the tax rate.
Article 7. Taxable price
1. For goods and services sold by production and business establishments, the selling price is the price excluding VAT. For goods and services subject to excise tax, the selling price includes excise tax but excludes VAT.
For goods subject to environmental protection tax, the selling price includes the environmental protection tax but excludes value-added tax; for goods subject to both excise tax and environmental protection tax, the selling price includes both excise tax and environmental protection tax but excludes value-added tax.
2. For imported goods, the import price is the price at the customs point plus (+) import tax (if any), plus (+) special consumption tax (if any), plus (+) environmental protection tax (if any). The import price at the customs point is determined according to the regulations on the tax base for imported goods.
In cases where imported goods are exempt from or subject to reduced import duties, the VAT taxable value is the import price plus (+) the import duty determined according to the tax rate payable after the exemption or reduction has been applied.
3. For products, goods, and services (including those purchased from outside or produced by the business itself) used for exchange, gifts, donations, or as payment in lieu of salary, the VAT taxable price is the price of similar or equivalent goods and services at the time these activities occur.
Example 22: Unit A manufactures electric fans and exchanges 50 fans with unit B for iron and steel. The selling price (excluding tax) is 400.000 VND/unit. The VAT taxable price is 50 x 400.000 VND = 20.000.000 VND.
For giving away invitations (with a clear statement that no fee is charged) to watch art performances, fashion shows, beauty and model contests, and sports competitions authorized by competent state agencies in accordance with the law, the taxable value is determined to be zero (0). The art performance organizing facility determines and is responsible for the number of invitations and the list of organizations and individuals to whom the facility gives away invitations before the performance or sports competition takes place. In case the facility commits fraud by still collecting money for invitations, it will be handled according to the provisions of the law on tax management.
Example 23: Company X was licensed by the competent authority to organize the "Miss Vietnam 20xx" contest. In addition to the printed tickets for sale to the audience, the company printed some invitations to give away free of charge to some delegates to attend and support the contest. These invitations have a list of organizations and individuals receiving them. When declaring value-added tax, the taxable value for the gifted invitations is determined to be zero (0). If the tax authority discovers that Company X still collects money when giving away invitations, Company X will be handled according to the provisions of the law on tax management.
4. Taxable price for products, goods, and services consumed internally.
Goods transferred internally, such as goods exported for internal warehouse transfer, materials, semi-finished products, to continue the production process within a production or business facility, or goods and services exported or supplied by a business for use in its business operations, are not subject to Value Added Tax (VAT).
In cases where a business entity manufactures or constructs its own fixed assets (self-made fixed assets) to serve the production and business of goods and services subject to VAT, the business entity is not required to issue invoices upon completion, acceptance, and handover. The input VAT incurred in the creation of these self-made fixed assets can be declared and deducted according to regulations.
In cases where machinery, equipment, materials, or goods are exported in the form of loans, borrowings, or returns, if there is a contract and relevant transaction documents, the business establishment is not required to issue invoices, calculate, or pay VAT.
Example 24: Unit A is a business that manufactures electric fans. If Unit A uses 50 fans in its production workshops to serve its business operations, then Unit A is not required to pay VAT on the export of these 50 electric fans.
Example 25: Garment manufacturing facility B has a yarn workshop and a sewing workshop. Facility B exports finished yarn from the yarn workshop to the sewing workshop for further production. Facility B is not required to calculate and pay VAT on the yarn exported to the sewing workshop.
Example 26: Joint Stock Company P built a rest area for its workers within its production and business area. Joint Stock Company P does not have any subordinate units, teams, or groups carrying out this construction activity. Upon completion and acceptance of the rest area, Joint Stock Company P is not required to issue an invoice. The input VAT for the construction of the rest area is declared and deducted according to regulations.
Example 27: Company Y is a bottled water manufacturer. The market price of one bottle of bottled water, excluding VAT, is 4.000 VND. If Company Y sells 300 bottles of bottled water for use in company meetings, Company Y is not required to declare or calculate VAT.
Example 28: Company Y is a bottled water manufacturer. The market price of one bottle of bottled water, excluding VAT, is 4.000 VND. If Company Y exports 300 bottles of bottled water for purposes other than production and business operations, then Company Y must declare and calculate VAT on these 300 bottles of water for non-production and business activities at a taxable value of 4.000 x 300 = 1.200.000 VND.
Specifically, for businesses that use goods and services for internal consumption or internal circulation to serve production and business activities such as transportation, aviation, railways, and postal and telecommunications services, output VAT is not calculated, provided the business has a written document. Clearly define the subjects and limits on goods and services for internal use, according to the prescribed authority.
5. For products, goods, and services used for promotion as prescribed by the law on commerce, the taxable price is determined to be zero (0); in case goods and services used for promotion are not carried out in accordance with the law on commerce, they must be declared and taxed as goods and services used for internal consumption, gifts, donations, etc.
Some specific forms of promotion are implemented as follows:
a) For promotional activities involving providing free samples of goods or services for customers to try, giving away goods to customers, or providing services free of charge, the taxable value of the samples is determined to be 0.
Example 29: Company P produces carbonated soft drinks. In 2014, the company conducted a promotion in May 2014 and December 2014 in the form of buying 10 products and getting 1 product free. The promotion program in May 2014 was carried out in accordance with the procedures and regulations of the law on commerce. Accordingly, for the number of free products when purchasing products in May 2014, Company P determined the tax value to be zero (0).
In the event that the promotional program in December 2014 was not conducted in accordance with the procedures and regulations of commercial law, Company P Limited must declare and calculate VAT on the number of complimentary products given with purchases made in December 2014.
b) For sales or service provision at a price lower than the previous selling price, the VAT taxable price is the reduced selling price applied during the registered or announced promotional period.
Example 30: Company N operates in the telecommunications sector, specializing in selling mobile phone scratch cards. The company registered a promotional campaign in accordance with commercial law, offering lower prices than the previous selling price for the period from April 1, 2014 to April 20, 2014. Accordingly, the selling price of a scratch card with a face value of 100.000 VND (including VAT) was reduced to 90.000 VND during the promotional period.
The VAT taxable value for a 100.000 VND scratch card during a promotional period is calculated as follows:
c) For sales and service promotions that include vouchers or service coupons, the accompanying vouchers or service coupons do not need to be declared or subject to VAT.
6. For asset leasing activities such as leasing houses, offices, workshops, warehouses, docks, yards, transportation vehicles, machinery, and equipment, the rental amount excludes VAT.
In the case of leases where rent is paid periodically or in advance for a specific lease term, the taxable value is the rent paid periodically or in advance for the lease term, excluding VAT.
The rental price for a property is determined by mutual agreement between the parties in the contract. If the law stipulates a price range for rentals, the rental price will be determined within that range.
7. For goods sold on an installment or deferred payment basis, the price is calculated based on the one-time selling price of the goods excluding VAT, and does not include installment or deferred payment interest.
Example 31: A motorcycle company sells motorcycle X, 100cc model, with an installment price of 25,5 million VND/unit (excluding VAT) (of which the selling price is 25 million VND, and the installment interest is 0,5 million VND). The VAT taxable price is 25 million VND.
8. For goods processing, the processing price is the price stated in the processing contract, excluding VAT, and includes labor costs, fuel costs, power costs, auxiliary materials costs, and other costs related to the processing of goods.
9. For construction and installation, the value is the project, project item, or completed work delivered, excluding VAT.
a) In cases where construction and installation include the supply of materials, the construction and installation price includes the value of the materials excluding VAT.
Example 32: Construction company B receives a construction contract including the value of materials. The total payment value excluding VAT is 1.500 million VND, of which the value of construction materials excluding VAT is 1.000 million VND. Therefore, the VAT taxable value is 1.500 million VND.
b) In cases where construction and installation services do not include the supply of materials, machinery, and equipment, the taxable value is the construction and installation value excluding the value of materials, machinery, and equipment before VAT.
Example 33: Construction company B undertakes a construction project without including the cost of construction materials. The total project value excluding VAT is 1.500 million VND. The value of raw materials and construction supplies provided by investor A, excluding VAT, is 1.000 million VND. In this case, the VAT taxable value is 500 million VND (1.500 million VND – 1.000 million VND).
c) In the case of construction and installation, payment is made based on project items or the value of completed construction and installation work, which is the price calculated based on the value of the project item or the value of the completed work, excluding VAT.
Example 34: Textile company X (referred to as Party A) hires construction company Y (referred to as Party B) to carry out the construction and installation of an expansion of its production factory.
The total value of the project, excluding VAT, is 200 billion VND, including:
– Construction value: 80 billion VND
– Value of equipment supplied and installed by Party B: 120 billion VND
– VAT 10%: 20 billion VND {= (80 + 120) x 10%}
– The total amount that Party A must pay is: 220 billion VND
– Party A:
+ Upon receiving the factory building, the value of the fixed asset was increased by VND 200 billion for depreciation purposes (excluding VAT).
+ The VAT amount of 20 billion VND can be declared and deducted from the output tax of goods sold or a refund can be requested in accordance with regulations.
If Party A accepts, hands over, and approves payment to Party B for each item of the project (assuming the 80 billion VND construction value is accepted, handed over, and approved for payment first), then the VAT taxable value is 80 billion VND.
10. For real estate transfer activities, the value-added tax base shall be determined in accordance with the provisions of Clause 1, Article 1 of Government Decree No. 49/2022/ND-CP dated July 29, 2022.
11. For agency and brokerage activities in the buying and selling of goods and services, and import/export consignment activities for which fees or commissions are received, the taxable value is the fee or commission received from these activities excluding VAT.
12. For goods and services where the payment document records the price including VAT, such as stamps, transport tickets, and lottery tickets.... The price excluding tax is determined as follows:
13. The tax base for electricity production activities of Vietnam Electricity Group shall be determined in accordance with the provisions of Clause 1, Article 1 of Government Decree No. 49/2022/ND-CP dated July 29, 2022.
14. For casino services, electronic games with prizes, and entertainment businesses with betting, the revenue from these activities includes excise tax minus the amount paid out as prizes to customers.
The taxable value is calculated using the following formula:
Example 41: A casino business has the following data for the tax period:
– The amount collected from exchanging money for customers before they played at the exchange counter was: 43 billion VND.
– The amount of money returned to customers after playing is: 10 billion VND.
Actual revenue received by the business: 43 billion VND – 10 billion VND = 33 billion VND
The figure of 33 billion VND represents the business's revenue, including VAT and excise tax.
The VAT taxable price is calculated as follows:
15. For transportation and loading/unloading services, the price is the transportation and loading/unloading fee excluding VAT, regardless of whether the company directly provides the transportation and loading/unloading services or subcontracts them.
16. For tour packages, where the contract is signed with the customer at a package price (including food, accommodation, and transportation), the package price is determined as the price including VAT.
The taxable value is determined using the following formula:
In cases where the package price includes airfare for transporting tourists from abroad to Vietnam, from Vietnam to abroad, accommodation, meals, sightseeing, and other expenses abroad (if legally documented), the amounts collected from customers to cover these expenses are deductible from the price (revenue) for VAT calculation. Input VAT for package tour services is declared and fully deductible according to regulations.
Example 42: Ho Chi Minh City Tourism Company entered into a package tour contract with Thailand for 50 tourists for 05 days in Vietnam, with a total payment of USD 32.000. The Vietnamese side is responsible for all costs including airfare, meals, accommodation, and sightseeing according to the agreed program; of which the airfare from Thailand to Vietnam and back alone is USD 10.000. Exchange rate: 1 USD = 20.000 Vietnamese Dong.
The VAT taxable price under this contract is determined as follows:
+ Taxable revenue subject to VAT is:
(32.000 USD – 10.000 USD) x 20.000 VND = 440.000.000 VND
+ The VAT taxable price is:
Ho Chi Minh City Tourism Company is entitled to fully deduct input VAT related to VAT-taxable tourism activities.
Example 43: A Hanoi travel company executes a contract to bring tourists from Vietnam to China at a package price of 400 USD/person for five days. The Hanoi travel company has to pay the Chinese travel company 300 USD/person, so the taxable price (revenue) of the Hanoi travel company is 100 USD/person (400 USD – 300 USD).
17. For pawnshop services, the amount to be collected from this service includes interest receivable from pawn loans and other income arising from the sale of pawned goods (if any), which is determined as the price including VAT.
The taxable value is determined using the following formula:
Example 44: A pawnshop company had pawnshop revenue of 110 million VND during the tax period.
The VAT taxable price is determined as follows:
18. For books subject to VAT sold at the published price (cover price) as stipulated in the Publishing Law, that selling price is determined as the price including VAT for the purpose of calculating VAT and the establishment's revenue. In cases where books are sold at a price other than the cover price, VAT is calculated on the selling price.
19. For printing activities, the taxable price is the printing fee. If the printing establishment fulfills printing contracts and the payment includes both the printing fee and the cost of the paper, then the taxable price includes the cost of the paper.
20. For insurance claims adjuster services, claims settlement agents, third-party reimbursement agents, and claims processing agents who receive 100% of the service fee or commission, the VAT taxable value is the service fee or commission received (before deducting any expenses) by the insurance company, excluding VAT.
21. For cases of purchasing services as stipulated in Clause 5, Article 3 of this Circular, the taxable price is the payment price recorded in the service purchase contract excluding value added tax.
22. The taxable price for goods and services specified in Clauses 1 to 21 of this Article includes surcharges and additional fees collected in addition to the price of goods and services that the business receives.
If a business applies a trade discount to customers (if any), the VAT taxable price is the selling price after the trade discount has been applied. If the trade discount is based on the quantity or sales volume of goods and services, the discount amount for the goods sold is adjusted on the sales invoice for the last purchase or the subsequent period. If the discount amount is determined at the end of the discount program (period), an adjustment invoice is issued along with a list of the invoices to be adjusted, the adjusted amount, and the adjusted tax. Based on the adjustment invoice, the seller and buyer declare adjustments to their sales revenue, output tax, and input tax.
The taxable value is determined in Vietnamese Dong. … (repealed)
Article 8. Time of determining VAT
1. For the sale of goods, the time of sale is the moment of transfer of ownership or the right to use the goods to the buyer, regardless of whether payment has been received or not.
2. For service provision, the time of completion of service provision or the time of invoice issuance for service provision is the time when the invoice is issued, regardless of whether payment has been received or not.
For telecommunications services, the deadline for completing data reconciliation regarding telecommunications connection service charges under economic contracts between telecommunications service businesses is no later than two months from the month in which the telecommunications connection service charges are incurred.
3. For electricity and clean water supply services, the date on which the electricity and water consumption readings are taken from the meters is used to record the charges on the bill.
4. For real estate business activities, infrastructure construction, and building houses for sale, transfer, or lease, the time of payment is based on the project's progress or the payment schedule stipulated in the contract. Based on the amount received, the business entity declares the output VAT generated during the period.
5. For construction and installation, including shipbuilding, the time of acceptance and handover of the project, project item, or completed construction and installation volume is the time of acceptance and handover, regardless of whether payment has been received or not.
6. For imported goods, the time of customs declaration registration is the date of import.
Article 9. 0% Tax Rate
1. 0% tax rate: applies to exported goods and services; construction and installation activities abroad and in non-taxable zones; international transportation; goods and services that are exempt from VAT when exported, except for cases where the 0% tax rate does not apply as guided in Clause 3 of this Article.
Exported goods and services are goods and services sold or supplied to organizations and individuals abroad and consumed outside Vietnam; sold or supplied to organizations and individuals in non-taxable zones; and goods and services provided to foreign customers in accordance with the law.
a) Exported goods include:
Goods exported abroad, including export consignment;
Goods sold into duty-free zones as stipulated by the Prime Minister; goods sold to duty-free shops;
Goods sold where the point of delivery or receipt is outside Vietnam;
– Spare parts and replacement materials for repairing and maintaining vehicles, machinery, and equipment for foreign parties and for consumption outside Vietnam;
– Cases considered as exports according to the law:
+ Goods processed for re-export in accordance with commercial law regulations on international trade and agency activities for buying, selling, and processing goods with foreign countries.
+ Goods exported locally in accordance with the law.
+ Goods exported for sale at trade fairs and exhibitions abroad.
b) Export services include services provided directly to organizations and individuals abroad and consumed outside Vietnam; and services provided directly to organizations and individuals within free trade zones and consumed within those free trade zones.
Individuals residing abroad are foreigners who are not residents of Vietnam, Vietnamese citizens residing abroad, and those who are outside Vietnam during the period of service provision. Organizations and individuals within the free trade zone are those with business registration and other cases as stipulated by the Prime Minister.
In cases where services are provided and the service activities take place both in Vietnam and outside Vietnam, but the service contract is signed between two taxpayers in Vietnam or with a permanent establishment in Vietnam, the 0% tax rate only applies to the portion of the service value performed outside Vietnam, except for the provision of insurance services for imported goods, which is subject to a 0% tax rate on the entire contract value. If the contract does not separately specify the portion of the service value performed in Vietnam, the taxable value is determined according to the percentage (%) of costs incurred in Vietnam relative to the total costs.
Businesses providing services that are taxpayers in Vietnam must have documentation proving that the services were performed outside of Vietnam.
Example 45: Company B signs a contract with Company C to provide consulting, surveying, and design services for Company C's investment project in Cambodia (Company B and Company C are Vietnamese businesses). The contract includes services performed in Vietnam and services performed in Cambodia. The value of the services performed in Cambodia is subject to a 0% VAT rate; for the revenue from services performed in Vietnam, Company B must declare and calculate VAT according to regulations.
Example 46: Company D provides consulting, surveying, and feasibility study services for an investment project in Laos to Company X. The contract value received by Company D is 5 billion VND, including VAT, for the services performed in Vietnam. The contract between the two companies does not specify the revenue performed in Vietnam and the revenue performed in Laos. Company D calculated the costs performed in Laos (surveying and exploration costs) at 1,5 billion VND and the costs performed in Vietnam (compilation and report preparation) at 2,5 billion VND.
Revenue for services performed in Vietnam, including VAT, is determined as follows:
If Company D has documentation proving that it sent personnel to Laos to conduct surveys and explorations, and also has documents proving that it purchased certain goods for the survey and exploration activities in Laos, then the revenue from the services performed in Laos is subject to a 0% tax rate and is determined to be VND 1,875 billion (5 – 3,125 = VND 1,875 billion).
c) International transport as defined in this clause includes the transport of passengers, baggage, and goods on international routes from Vietnam to abroad or from abroad to Vietnam., or both the departure and arrival points are abroad, regardless of whether there is a direct means of transport or not. In cases where the international transport contract includes a domestic transport segment, the international transport includes the domestic segment.
Example 47: Company X, a transportation company in Vietnam, owns international transport vessels. The company undertakes the transportation of goods from Singapore to South Korea. The revenue earned from transporting goods from Singapore to South Korea is revenue from international transportation activities.
d) Services provided directly by the aviation and maritime industries to organizations abroad or through agents, including:
The following aviation services are subject to a 0% tax rate: airline catering services; aircraft landing and takeoff services; aircraft parking services; aircraft security services; security screening of passengers, baggage, and cargo; baggage conveyor services at the terminal; ground handling and technical services; aircraft protection services; aircraft towing and pushing services; aircraft guidance services; rental of passenger boarding bridges; flight operations services; transportation of flight crews, cabin crew, and passengers within the aircraft parking area; cargo loading and counting; and passenger service charges for international flights departing from Vietnamese airports.
The following maritime services are subject to a 0% tax rate: tugboat services; maritime pilotage; maritime rescue; port and mooring services; loading and unloading; mooring and unmooring; opening and closing cargo hatches; cleaning of ship holds; counting and delivery; and ship registration.
d) Other goods and services:
Construction and installation activities of works abroad or in free trade zones;
– Goods and services that are exempt from VAT when exported, except for cases where the 0% tax rate does not apply as guided in Clause 3 of this Article;
– Repair services for aircraft and ships provided to foreign organizations and individuals.
2. Conditions for applying the 0% tax rate:
a) For exported goods:
– There are contracts for the sale and processing of goods for export; and contracts for entrusted export.
– There must be proof of payment for exported goods through a bank and other documents as required by law;
– A customs declaration form as prescribed in Clause 2, Article 16 of this Circular is required.
Specifically for cases where goods are sold and the point of delivery and receipt is outside Vietnam, the business entity (the seller) must have documents proving the delivery and receipt of goods outside Vietnam, such as: a purchase contract signed with the seller abroad; a sales contract signed with the buyer; documents proving the goods were delivered and received outside Vietnam, such as: commercial invoices according to international practice, bills of lading, packing slips, certificates of origin, etc.; bank payment documents including: bank documents from the business entity paying the seller abroad; bank payment documents from the buyer paying the business entity.
Example 48: Company A and Company B (both Vietnamese businesses) sign a contract for the purchase and sale of lubricating oil. Company A buys lubricating oil from companies in Singapore and then sells it to Company B at a Singaporean seaport. If Company A has: a contract for the purchase of lubricating oil signed with companies in Singapore, a sales contract between Company A and Company B; documents proving the goods were delivered to Company B at a Singaporean seaport, bank payment documents showing payments made by Company A to the lubricating oil sellers in Singapore, and bank payment documents showing payments made by Company B to Company A, then the revenue received by Company A from selling lubricating oil to Company B is subject to a 0% VAT rate.
b) For export services:
– Having a service supply contract with an organization or individual abroad or within a free trade zone;
– There must be proof of payment for export services through a bank and other documents as required by law;
Specifically for aircraft and ship repair services provided to foreign organizations and individuals, in order to be eligible for the 0% tax rate, in addition to the above-mentioned conditions regarding contracts and payment documents, the aircraft and ships brought into Vietnam must undergo import procedures, and after repairs are completed, they must undergo export procedures.
c) For international transport:
– There is a contract for the transportation of passengers, baggage, and goods between the carrier and the charterer for international routes from Vietnam to abroad or from abroad to Vietnam, or with both the origin and destination points located abroad, in forms consistent with legal regulations. For passenger transportation, the transportation contract is the ticket. International transportation businesses must comply with the legal regulations on transportation.
– There must be proof of payment through a bank or other forms of payment considered equivalent to bank payment. For cases involving the transportation of individual passengers, proof of direct payment is required.
d) For services in the aviation and maritime industries:
d.1) Aviation services subject to a 0% tax rate are performed within international airports, airfields, and international air cargo terminals and meet the following conditions:
– Having a service supply contract with an organization abroad, a foreign airline, or a service supply request from an organization abroad or a foreign airline;
– There must be documentation of payment for services through a bank or other forms of payment considered equivalent to bank payments. In cases where services provided to foreign organizations or foreign airlines are infrequent, unscheduled, and without a contract, there must be documentation of direct payment from the foreign organization or foreign airline.
The above terms and conditions regarding contracts and payment documents do not apply to passenger service charges for international flights departing from Vietnamese airports.
d.2) Maritime services subject to a 0% tax rate performed in port areas and meeting the following conditions:
– Having a service supply contract with an organization abroad, a shipping agent, or a service supply request from an organization abroad or a shipping agent;
– There must be documentation of payment for services through a bank of an organization abroad, or documentation of payment for services through a bank of the shipping agent to the service provider, or other forms of payment considered equivalent to bank payments.
3. Cases where the 0% tax rate does not apply include:
– Reinsurance abroad; technology transfer, transfer of intellectual property rights abroad; capital transfer, credit granting, securities investment abroad; derivative financial services; outbound postal and telecommunications services (including postal and telecommunications services provided to organizations and individuals in free trade zones; provision of pre-coded mobile phone scratch cards for export or entry into free trade zones); exported products that are natural resources and minerals as guided in Clause 23, Article 4 of this Circular; imported tobacco, alcohol, and beer that are subsequently exported; goods and services provided to individuals not registered for business in free trade zones, except for other cases as prescribed by the Prime Minister.
When tobacco, alcohol, and beer are imported and then exported, output VAT is not calculated upon export, but input VAT cannot be deducted.
– Gasoline and diesel sold to vehicles of businesses in the free trade zone are purchased domestically;
– Motor vehicles sold to organizations and individuals within the free trade zone;
– Services provided by businesses to organizations and individuals within the free trade zone include: renting houses, halls, offices, hotels, warehouses; transportation services for workers; food and beverage services (excluding industrial meal services and food and beverage services within the free trade zone);
– The following services provided in Vietnam to organizations and individuals abroad are not subject to the 0% tax rate:
+ Sports competitions, artistic performances, cultural events, entertainment, conferences, hotels, training, advertising, travel and tourism;
+ Online payment services;
+ Services provided are related to the sale, distribution, and consumption of products and goods in Vietnam.
Article 10. 5% Tax Rate
1. Clean water for production and domestic use, excluding bottled and canned drinking water and other soft drinks, is subject to a 10% tax rate.
2. Ores for the production of fertilizers; pesticides and growth stimulants for livestock and crops, including:
a) Ores for fertilizer production are ores used as raw materials for fertilizer production, such as apatite ore used to produce phosphate fertilizers, and peat used to produce bio-fertilizers;
b) Pesticides include plant protection products listed in the Plant Protection Products List issued by the Ministry of Agriculture and Rural Development and other types of pesticides;
c) Growth stimulants for livestock and plants.
3. (repealed)
4. Services for digging, dredging canals, ditches, ponds and lakes serving agricultural production; cultivating, caring for, and controlling pests and diseases for crops; preliminary processing and preservation of agricultural products (excluding dredging of inland canals and ditches as stipulated in Clause 3, Article 4 of this Circular).
Agricultural product processing and preservation services include drying, peeling, shelling, cutting, milling, refrigeration, salting, and other common preservation methods as guided in Clause 1, Article 4 of this Circular.
5. Agricultural, livestock, aquatic, and marine products that have not been processed or have only undergone preliminary processing and preservation (the form of preliminary processing and preservation is guided in Clause 1, Article 4 of this Circular) at the commercial trading stage, except for the cases guided in Clause 5, Article 5 of this Circular.
Unprocessed agricultural products as referred to in this section include paddy rice, rice, corn, potatoes, cassava, and wheat.
6. Processed rubber latex such as crepe latex, sheet latex, bun latex, granulated latex; processed rosin; nets, ropes and threads for weaving fishing nets, including fishing nets, threads and ropes specifically used for weaving fishing nets, regardless of the manufacturing material.
7. Fresh food products at the commercial trading stage; unprocessed forest products at the commercial trading stage, excluding wood, bamboo shoots, and products specified in Clause 1, Article 4 of this Circular.
Fresh food includes foods that have not been cooked or processed into other products, only minimally processed such as cleaning, peeling, cutting, freezing, or drying, but which, after this minimal processing, are still considered fresh food, such as livestock meat, poultry, shrimp, crab, fish, and other aquatic and seafood products. In the case of food that has been marinated with spices, a tax rate of 10% applies.
Unprocessed forest products include products harvested from natural forests belonging to the following groups: rattan, bamboo, reeds, mushrooms, wood ear mushrooms; roots, leaves, flowers, medicinal plants, tree resin and other forest products.
Example 49: Company A produces seasoned fresh barracuda fish using the following process: fresh barracuda fish are caught, filleted, then marinated with sugar, salt, sorbitol, packaged, and frozen. Therefore, the seasoned fresh barracuda fish product is not subject to the 5% VAT rate but is subject to the 10% VAT rate.
8. Sugar; by-products of sugar production, including molasses, bagasse, and sludge.
9. Products made from jute, sedge, bamboo, rattan, reed, rush, rush, leaves, straw, coconut shell, coconut husk, water hyacinth, and other handicrafts produced using recycled agricultural materials are products manufactured and processed from main raw materials such as jute, sedge, bamboo, rattan, rush, rush, rush, leaves, such as: jute mats, jute yarn, jute bags, coconut fiber mats, mats made from jute and sedge; rush brooms, ropes, ties made from bamboo, reed, coconut fiber; bamboo, reed, and rush curtains and blinds; bamboo brooms; conical hats; bamboo chopsticks, reed chopsticks; Raw cotton; newsprint paper.
10. (repealed)
11. Medical equipment and instruments include medical machinery and instruments: various types of scanning, imaging, and X-ray machines used for examination and treatment; specialized equipment and instruments for surgery, wound treatment, ambulances; blood pressure, heart, and pulse measuring instruments; blood transfusion equipment; syringes; contraceptive devices; medical instruments and equipment with import licenses or registration certificates or acceptance forms for standard declaration dossiers as prescribed by law on health or according to the List of medical equipment under specialized management of the Ministry of Health, with commodity codes determined according to the List of Vietnamese Export and Import Goods issued with Circular No. 14/2018/TT-BYT dated May 15, 2018, of the Minister of Health and any amendments or supplements (if any).
Cotton, bandages, medical gauze and sanitary pads; preventive and curative medicines including finished drugs and drug raw materials, excluding functional foods; vaccines; medical biological products, distilled water for preparing injectable drugs and infusions; caps, clothing, masks, surgical drapes, gloves, lower limb covers, shoe covers, towels, specialized medical gloves, breast implants and dermal fillers (excluding cosmetics); medical testing chemicals and disinfectants.
12. Teaching and learning aids include models, drawings, blackboards, chalk, rulers, compasses, and other specialized equipment and tools for teaching, research, and scientific experiments.
13. Cultural activities, exhibitions, physical education and sports; performing arts; film production; import, distribution and screening of films.
a) Cultural activities, exhibitions, and physical education and sports, excluding revenue from: sales of goods, rental of venues and booths at fairs and exhibitions.
b) Performing arts activities such as: traditional opera, folk opera, reformed opera, singing, dancing, music, drama, circus; other performing arts activities and services for organizing performing arts by theaters or troupes of traditional opera, folk opera, reformed opera, singing, dancing, music, drama, circus with operating licenses issued by competent State agencies.
c) Film production; import, distribution and screening of films, except for the products mentioned in Clause 15, Article 4 of this Circular.
14. Children's toys; Books of all kinds, except books exempt from VAT as guided in Clause 15, Article 4 of this Circular.
15. Science and technology services are activities that provide technical support for scientific research and technological development; activities related to intellectual property; technology transfer, technical standards and regulations, measurement, product and goods quality, radiation safety, nuclear and atomic energy; information, consulting, training, dissemination, and application services of scientific and technological achievements in socio-economic fields under science and technology service contracts as stipulated in the Law on Science and Technology, excluding online games and internet entertainment services.
16. Selling, renting, and lease-purchasing social housing in accordance with the Law on Housing. Social housing refers to housing constructed by the State or organizations and individuals from various economic sectors, meeting the criteria for housing, selling prices, rental prices, lease-purchase prices, and eligibility conditions for purchasing, renting, or lease-purchasing social housing as stipulated by the Law on Housing.
Article 11. 10% Tax Rate
A 10% tax rate applies to goods and services not specified in Articles 4, 9, and 10 of this Circular.
The VAT rates specified in Articles 10 and 11 are applied uniformly to each type of goods and services at all stages of import, production, processing, or commercial trading.
Example 50: If a 10% tax rate applies to clothing, then this tax rate of 10% applies to the import, production, processing, or commercial trading stages of the product.
Scrap and waste materials recovered for recycling and reuse are subject to VAT at the rate applicable to the specific scrap and waste materials being sold.
Businesses that trade in multiple types of goods and services with different VAT rates must declare VAT according to each rate prescribed for each type of goods and services; if the business does not determine each rate separately, it must calculate and pay VAT at the highest rate applicable to the goods and services it produces or trades.
During implementation, if the value-added tax rate in the VAT rate schedule under the Preferential Import Tax Rate List is inconsistent with the guidance in this Circular, the guidance in this Circular shall be followed. In cases where the applied VAT rate is inconsistent for the same type of imported and domestically produced goods, the local tax authority and local customs authority shall report to the Ministry of Finance for timely guidance on consistent implementation.
Section 2. METHODS OF TAX CALCULATION
Article 12. Methods of tax deduction
1. The tax deduction method applicable to businesses that fully comply with accounting, invoicing, and documentation regulations as prescribed by law includes:
a) Operating businesses with annual revenue from the sale of goods and provision of services of one billion VND or more and fully complying with accounting, invoicing, and documentation regulations as prescribed by law, excluding household and individual businesses paying taxes using the direct calculation method as guided in Article 13 of this Circular;
b) Business establishments that voluntarily register to apply the tax deduction method, except for household and individual businesses paying tax using the direct calculation method as guided in Article 13 of this Circular;
c) Foreign organizations and individuals providing goods and services for the purpose of conducting oil and gas exploration, development, and exploitation activities shall pay taxes using the withholding method, with the Vietnamese party declaring and withholding the tax on their behalf.
2. Annual revenue of one billion VND or more, used as the basis for determining whether a business entity is subject to value-added tax under the deduction method as guided in point a, clause 1 of this Article, is the revenue from the sale of goods and provision of services subject to VAT and is determined as follows:
a) Annual revenue is determined by the business entity based on the total of the "Total revenue from goods and services sold subject to VAT" item on the monthly VAT tax return for the tax period from November of the previous year to the end of October of the current year before the year of determining the VAT calculation method, or on the quarterly VAT tax return for the tax period from the 4th quarter of the previous year to the end of the 3rd quarter of the current year before the year of determining the VAT calculation method. The period of application of the stable tax calculation method is 2 consecutive years.
Example 51: Enterprise A was established in 2011 and is operating in 2013. To determine the method for calculating VAT for 2014 and 2015, Enterprise A determined its revenue as follows:
Add up the "Total revenue from goods and services sold subject to VAT" item on the monthly VAT tax return for 12 months (from the tax period of November 2012 to the end of the tax period of October 2013).
If the total revenue, as determined above, is 1 billion VND or more, enterprise A will apply the tax deduction method for two years (2014 and 2015).
If the total revenue as determined above is less than 1 billion VND, enterprise A shall switch to applying the direct calculation method as prescribed in Article 13 of this Circular for 2 years (2014 and 2015), except in the case where enterprise A voluntarily registers to apply the tax deduction method as prescribed in Clause 3 of this Article.
b) In the case of a newly established enterprise in 2013 that operated for less than 12 months in 2013, the estimated revenue for the year is determined as follows: The sum of the "Total revenue from goods and services sold subject to VAT" item on the VAT declaration for the tax period of the operating months is divided by the number of operating months and multiplied by 12 months. If, according to the above method, the estimated revenue is 1 billion VND or more, the enterprise applies the tax deduction method. If the estimated revenue according to the above method is less than 1 billion VND, the enterprise applies the direct calculation method for two years, except in cases where the enterprise voluntarily registers to apply the tax deduction method.
Example 52: Enterprise B was established and started operating in March 2013. To determine the tax calculation method for 2014 and 2015, Enterprise B calculated estimated revenue as follows: Take the total revenue of goods and services sold subject to VAT on the VAT tax return for the tax periods of March, April, May, June, July, August, September, October, and November, divide by 9 months, then multiply by 12 months.
If the estimated revenue is 1 billion VND or more, Enterprise B will apply the tax deduction method. If the estimated revenue, determined using the above method, is less than 1 billion VND, Enterprise B will apply the direct calculation method for the years 2014 and 2015, unless Enterprise B voluntarily registers to apply the tax deduction method.
c) If the business files tax returns quarterly starting from July 2013, the method for determining annual revenue is as follows: The sum of the "Total revenue from goods and services sold subject to VAT" item on the VAT tax return for the tax periods of October, November, and December 2012, the first six months of 2013, and on the VAT tax return for the third quarter of 2013. If, according to this method, the revenue is 1 billion VND or more, the business applies the tax deduction method. If the revenue, according to this method, is less than 1 billion VND, the business applies the direct calculation method for two years, except in cases where the business voluntarily registers to apply the tax deduction method.
d) For businesses that temporarily cease operations for the entire year, the revenue will be determined based on the revenue of the year preceding the year of temporary suspension.
For businesses that temporarily cease operations for a period during the year, revenue is determined based on the number of months or quarters of actual business activity, as guided in point b of this section.
If, in the year preceding the temporary suspension of business operations, the business establishment did not operate for a full 12 months, revenue shall be determined based on the actual number of months or quarters of business as guided in point b of this section.
3. Businesses that voluntarily register to apply the tax deduction method, including:
a) Operating enterprises and cooperatives with annual revenue from the sale of goods and provision of services subject to VAT of less than one billion VND have fully complied with accounting regulations, bookkeeping, invoices, and supporting documents as prescribed by law.
b) Newly established businesses resulting from investment projects of existing businesses pay value-added tax using the deduction method.
Newly established businesses that make investments according to investment projects approved by competent authorities are eligible to voluntarily register to apply the tax deduction method.
Newly established enterprises and cooperatives with investment projects that are not subject to approval by competent authorities under investment law, but whose investment plans have been approved by authorized persons within the enterprise, are eligible to register for the tax deduction method.
c) Newly established enterprises and cooperatives that have made investments, purchased, or received capital contributions in the form of fixed assets, machinery, equipment, tools, or have lease agreements for business premises.
d) Foreign organizations and individuals doing business in Vietnam under contractor contracts or sub-contractor contracts.
d) Other economic organizations that can account for input and output VAT, excluding enterprises and cooperatives.
The method of calculating tax for business establishments is determined according to the Value Added Tax Declaration Form as guided in Article 11 of Circular No. 156/2013/TT-BTC dated November 6, 2013 of the Ministry of Finance (amended and supplemented by Article 1 of Circular No. 119/2014/TT-BTC).
(dated August 25, 2014 and Article 2 of Circular No. 26/2015/TT-BTC dated February 27, 2015 of the Ministry of Finance).
4. Other cases:
a) In cases where a business establishment engages in the buying, selling, or processing of gold, silver, and precious stones, the business establishment must separately account for these activities and pay taxes using the direct calculation method on value added as guided in Article 13 of this Circular.
b) For businesses currently paying VAT using the deduction method that have established branches (including branches established from investment projects of the business), if the branch is required to file separate VAT returns according to the law on tax administration, the tax calculation method for the branch shall be determined according to the tax calculation method of the operating business. If the branch does not directly sell goods, does not generate revenue, or the branch is located in the same province or city as the business's head office but does not file separate tax returns, then centralized tax filing shall be carried out at the business's head office.
c) For newly established enterprises and cooperatives not falling under the cases guided in Clause 3 of this Article, the direct calculation method as guided in Article 13 of this Circular shall apply.
d) (repealed)
5. Determine the amount of VAT payable:
In which:
a) Output value-added tax equals the total value-added tax on goods and services sold as recorded on value-added tax invoices.
The value-added tax (VAT) stated on the VAT invoice is equal to the taxable price of the goods and services sold multiplied by the VAT rate applicable to those goods and services.
In cases where the payment document shows the price including VAT, the output VAT is determined by subtracting the taxable price as stipulated in Clause 12, Article 7 of this Circular from the payment price.
Businesses subject to the tax deduction method must calculate and pay VAT on the goods and services sold. When issuing invoices for goods and services, businesses must clearly state the selling price excluding tax, VAT, and the total amount payable by the buyer. If the invoice only shows the payment price (except in cases where specific documents are permitted), and does not show the price excluding tax and VAT, then the VAT on the goods and services sold must be calculated based on the payment price stated on the invoice or document.
Example 54: A business sells iron and steel. The selling price excluding VAT for F6 iron is 11.000.000 VND/ton; VAT at 10% equals 1.100.000 VND/ton. However, when selling, some invoices only record the selling price as 12.100.000 VND/ton. In this case, the VAT calculated on the sales revenue is determined as: 12.100.000 VND/ton x 10% = 1.210.000 VND/ton instead of calculating it on the excluding VAT price of 11.000.000 VND/ton.
Businesses must comply with accounting regulations, bookkeeping, invoices, and supporting documents as prescribed by law. If an invoice incorrectly states the value-added tax rate and the business has not yet corrected it, and the tax authority discovers the error during an inspection, the following procedures will apply:
For businesses selling goods and services: If the VAT rate stated on the invoice is higher than the rate stipulated in the relevant VAT regulations, then VAT must be declared and paid according to the rate stated on the invoice; if the VAT rate stated on the invoice is lower than the rate stipulated in the relevant VAT regulations, then VAT must be declared and paid according to the VAT rate stipulated in the relevant VAT regulations.
b) Input VAT equals (=) the total VAT amount recorded on VAT invoices for the purchase of goods and services (including fixed assets) used for the production and business of goods and services subject to VAT, the VAT amount recorded on tax payment documents for imported goods or VAT payment documents on behalf of foreign parties as guided by the Ministry of Finance applicable to foreign organizations without legal personality in Vietnam and foreign individuals doing business or having income arising in Vietnam.
In cases where purchased goods or services are of a type for which specific documents record the payment price as the price including VAT, the business entity may use the price including VAT and the calculation method guided in Clause 12, Article 7 of this Circular to determine the price excluding VAT and input VAT.
The amount of deductible input VAT is determined according to the principles and conditions for VAT deduction stipulated in Articles 14, 15, 16, and 17 of this Circular.
Example 55: During the period, Company A paid for input services that are deductible and are of a specific type:
The total payment is 110 million VND (including VAT). This service is subject to a 10% tax rate. The deductible input VAT is calculated as follows:
The price excluding tax is 100 million VND, and the VAT is 10 million VND.
In cases where invoices incorrectly state the value-added tax rate and businesses have not yet corrected it themselves, the tax authorities will handle the matter as follows upon inspection:
For businesses purchasing goods and services: If the VAT rate stated on the purchase invoice is higher than the rate stipulated in the relevant VAT regulations, input tax deductions should be based on the rate stipulated in those regulations. If it can be determined that the seller has declared and paid tax at the correct rate stated on the invoice, input tax deductions can be made based on the rate stated on the invoice, but this must be confirmed by the tax authority directly managing the seller. If the VAT rate stated on the invoice is lower than the rate stipulated in the relevant VAT regulations, input tax deductions should be based on the rate stated on the invoice.
For businesses selling goods and services: In cases where a business has declared and paid VAT at the import stage upon importing goods, and when selling to consumers, has issued invoices recording the VAT rate on the sales VAT invoice as equal to the VAT rate declared and paid at the import stage, but the declared VAT rate (at both the import and domestic sales stages) is lower than the rate stipulated in the legal regulations on VAT, and the business cannot collect additional money from the customer, the amount collected from the customer according to the VAT invoice shall be determined as the price including VAT at the rate stipulated in the legal regulations on VAT. This serves as the basis for correctly determining the VAT payable and the revenue for corporate income tax calculation.
Example 56: In March 2014, business A (a VAT taxpayer using the deduction method) imported a product called "CHAIR MM" and declared and paid VAT at the import stage at a rate of 5%. In May 2014, business A sold one "CHAIR MM" product to customer B for 100 million VND excluding VAT. Because a 5% VAT rate was applied at the time of import, business A issued a VAT invoice to customer B stating: taxable price is 100 million VND; VAT rate is 5%; VAT is 5 million VND; total payment including VAT is 105 million VND. Customer B paid the full 105 million VND.
In 2015, the tax authorities discovered that business A had incorrectly applied the VAT rate to the product "CHAIR MM" sold to customer B (the correct VAT rate should have been 10%). Since the transaction between business A and customer B had already concluded, business A had no basis to collect additional payment from customer B (customer B refused to pay the increased tax). The tax authorities recalculated the VAT payable by business A and determined the taxable income for corporate income tax purposes as follows:
The total payment of VND 105 million by customer B is determined to include VAT at a rate of 10%. The correct amount of VAT payable is determined as follows:
The additional VAT amount that business establishment A still has to pay is:
9,545 million – 5 million = 95.455 million VND.
The taxable revenue for corporate income tax purposes from the sale of the item "CHAIR MM" to customer B is determined as follows:
105 million – 9,545 million = 95.455 million VND.
Article 13. Direct calculation method based on value added
1. The VAT payable calculated using the direct method on added value is equal to the added value multiplied by the VAT rate applicable to the purchase, sale, and processing of gold, silver, and precious stones.
The added value of gold, silver, and precious stones is determined by subtracting the corresponding purchase price from the selling price of gold, silver, and precious stones.
The payment price for gold, silver, and gemstones sold is the actual selling price recorded on the gold, silver, and gemstone sales invoice, including the processing fee (if any), value-added tax, and any additional surcharges or fees received by the seller.
The payment price for purchased gold, silver, and precious stones is determined by the value of gold, silver, and precious stones purchased or imported, including VAT, used for the purchase, processing, and sale of gold, silver, and precious stones.
In cases where a negative value-added tax (VAT) of gold, silver, or precious stones arises during a tax period, it can be offset against a positive value-added tax (VAT) of gold, silver, or precious stones. If there is no positive value-added tax, or if the positive value-added tax is insufficient to offset the negative VAT, it can be carried forward to the next period of the year. At the end of the calendar year, negative VAT cannot be carried forward to the following year.
2. The value-added tax payable using the direct calculation method on value added is calculated as a percentage multiplied by revenue, applied as follows:
a) Applicable subjects:
– Businesses and cooperatives currently operating with annual revenue below the threshold of one billion VND, except in cases where they voluntarily register to apply the tax deduction method as stipulated in Clause 3, Article 12 of this Circular;
Newly established enterprises and cooperatives, except in cases of voluntary registration as guided in Clause 3, Article 12 of this Circular;
– Households and individual businesses;
– Foreign organizations and individuals doing business in Vietnam not under the Investment Law, and other organizations that do not implement or do not fully implement accounting, invoicing, and documentation regulations as prescribed by law, except for foreign organizations and individuals providing goods and services to conduct activities related to the search, exploration, development, and exploitation of oil and gas.
– Other economic organizations that are not enterprises or cooperatives, except in cases where they register to pay taxes using the deduction method.
b) The percentage rate for calculating VAT on revenue is stipulated for each activity as follows:
– Distribution and supply of goods: 1%;
– Services and construction not including materials: 5%;
– Production, transportation, services related to goods, and construction with material procurement included: 3%;
– Other business activities: 2%.
c) Revenue for calculating VAT is the total actual amount of goods and services sold as recorded on sales invoices for goods and services subject to VAT, including surcharges and additional fees received by the business.
In cases where a business has revenue from the sale of goods or provision of services that are not subject to VAT, and revenue from the export of goods or services, the percentage (%) on revenue does not apply to this revenue.
Example 57: Company A Limited is a business that declares and pays VAT using the direct method. Company A Limited has revenue from selling computer software and providing business establishment consulting services. Company A Limited is not required to pay VAT at a percentage rate on revenue from the sale of computer software (because computer software is not subject to VAT) but must declare and pay VAT at a rate of 5% on revenue from business establishment consulting services.
Businesses operating in multiple sectors with different tax rates must declare VAT separately for each sector corresponding to the prescribed rates; if the taxpayer cannot determine the revenue for each sector, or if a single business contract includes activities in multiple sectors with different tax rates that cannot be separated, the highest tax rate of the sector in which the business operates will be applied.
3. For households and individuals conducting business and paying VAT using the lump-sum method, the tax authority shall determine the revenue and VAT payable as a percentage of the revenue of the lump-sum taxpayer, as guided in Clause 2 of this Article, based on the tax declaration documents and data of the lump-sum taxpayer, the tax authority's database, the results of actual revenue investigations, and the opinion of the commune/ward tax advisory council.
In cases where households or individuals pay taxes using the lump-sum method for multiple business activities, the tax authorities will determine the amount of tax payable based on the proportion of their main business activity.
4. The list of business sectors subject to VAT at a percentage rate on revenue, as guided in Clauses 2 and 3 of this Article, is issued together with this Circular.
Chapter III
TAX DEDUCTIONS AND REFUNDS
Section 1. TAX DEDUCTIONS
Article 14. Principles for deducting input value-added tax.
1. Input VAT on goods and services used for the production and business of goods and services subject to VAT is fully deductible, including uncompensated input VAT on VAT-taxable goods that have been lost or damaged.
Cases of uncompensated losses eligible for input VAT deduction include: natural disasters, fires, losses not covered by insurance, goods that have deteriorated in quality or expired and must be destroyed. Businesses must have complete documentation to prove these uncompensated losses in order to claim the tax deduction.
In cases where goods experience natural losses due to their physical and chemical properties during transportation or handling, such as gasoline and oil, the input VAT on the actual quantity of goods lost naturally, provided it does not exceed the prescribed loss limit, can be declared and deducted. The input VAT on the quantity of goods lost exceeding the limit is not deductible or refundable.
Input VAT on goods and services used to create fixed assets such as canteens, rest areas, changing rooms, garages, toilets, water tanks serving workers in production and business areas, and housing and medical stations for workers in industrial zones is fully deductible.
In the case of housing for workers in industrial zones, where the business rents the housing in accordance with the law on design standards and rental prices for workers' housing in industrial zones, the VAT on the rental amount in this case is deductible. If the business constructs or purchases housing outside industrial zones to serve workers in those zones, and the construction or purchase complies with the law on design standards for workers' housing in industrial zones, then the VAT on the construction or purchase of the housing for workers is fully deductible.
In cases where a business employs foreign experts in Vietnam who hold managerial positions and receive salaries under employment contracts signed with the business in Vietnam, the business is not allowed to deduct the VAT on the rental income provided to these foreign experts.
In cases where foreign experts remain employees of a foreign enterprise, are assigned by that foreign enterprise, receive salaries and benefits from that foreign enterprise while working in Vietnam, and there is a written contract between the foreign enterprise and the Vietnamese business establishment stating that the Vietnamese enterprise is responsible for the accommodation costs of the foreign experts during their time working in Vietnam, then the VAT on the housing rental costs for the foreign experts working in Vietnam paid by the Vietnamese business establishment is deductible.
2. Input VAT on goods and services (including fixed assets) used simultaneously for the production and sale of goods and services subject to VAT and those not subject to VAT is only deductible for the input VAT on goods and services used for the production and sale of goods and services subject to VAT. Businesses must separately account for deductible and non-deductible input VAT; if separate accounting is not possible, the deductible input VAT is calculated based on the percentage ratio between VAT-taxable revenue and revenue not subject to VAT declaration and payment, compared to the total revenue from goods and services sold, including revenue not subject to VAT declaration and payment that cannot be separately accounted for.
Businesses dealing in goods and services subject to and exempt from VAT shall provisionally allocate the deductible input VAT on purchased goods, services, and fixed assets on a monthly/quarterly basis. At the end of the year, the business shall calculate and allocate the deductible input VAT for the year to declare and adjust the input VAT that was provisionally allocated and deducted monthly/quarterly.
3. Input VAT on fixed assets, machinery, and equipment, including input VAT on leasing of these assets, machinery, and equipment, and other input VAT related to assets, machinery, and equipment such as warranties and repairs, in the following cases, is not deductible but is included in the original cost of the fixed asset or deductible expenses as stipulated in the Corporate Income Tax Law and its implementing regulations: Fixed assets specifically used for the production of weapons and equipment for national defense and security; fixed assets, machinery, and equipment of credit institutions, reinsurance businesses, life insurance businesses, securities businesses, medical examination and treatment facilities, training facilities; civil aircraft, yachts not used for the purpose of transporting goods, passengers, tourism, or hotels.
For fixed assets such as passenger cars with 9 seats or fewer (excluding cars used for transporting goods and passengers, tourism, hotels; cars used as models and for test drives in the automotive business) with a value exceeding 1,6 billion VND (excluding VAT), the input VAT corresponding to the value exceeding 1,6 billion VND is not deductible.
4. VAT deductions in certain specific cases are as follows:
a) For businesses with a closed-loop production system and centralized accounting that use products not subject to VAT through various stages to produce goods subject to VAT, the input VAT at each stage is fully deductible.
Example 58: Enterprise X invests in building a raw material area and a factory to produce and process pangasius fillets, basa fish, and frozen shrimp for export. The enterprise organizes a closed-loop production process from farming, including cases where it outsources farming, but invests entirely in seeds, ponds, lakes, fences, irrigation systems, boats, and other input materials such as animal feed, veterinary medicine, and veterinary services, to the processing of shrimp and fish for export. Enterprise X is entitled to deduct all input VAT on fixed assets and on purchased goods and services that do not constitute fixed assets at all stages of production and processing.
Example 58a: Enterprise A invests in building a raw material area and a factory for a closed-loop production process from farming (including outsourcing farming where Enterprise A invests entirely in seeds, ponds, lakes, fences, irrigation systems, boats, and other input materials such as animal feed, veterinary medicine, veterinary services, etc.) to processing frozen pangasius fillets for export and domestic sale. During the production process, Enterprise A also purchases pangasius from other enterprises or farmers. Before being brought to the factory, the purchased pangasius are raised together in Enterprise A's own ponds and lakes. Both the pangasius raised by Enterprise A and the purchased pangasius are processed into pangasius fillets through the following steps and procedures: Raw fish – cleaning – head removal, skinning – internal organ removal – filleting – salting – freezing – export. Company A is allowed to declare and deduct VAT as follows:
– Enterprise A is entitled to deduct the full input VAT on fixed assets and on goods and services purchased that do not constitute fixed assets at the factory serving the preliminary processing of pangasius fillets according to the above-mentioned procedure.
– Pangasius fillets sourced from enterprise A's own farming for export are subject to a 0% tax rate, and the enterprise is entitled to deduct all input VAT related to the export of pangasius fillets. If the enterprise farms pangasius and then processes it into pangasius fillets for both export and domestic sale, the input VAT is allocated according to the percentage of export revenue/Total Revenue (export revenue and domestic sales revenue).
Example 59: Enterprise Y invests in building a raw material area and a factory to produce and process products from fresh milk (pasteurized fresh milk, yogurt, cheese, etc.). The enterprise organizes a closed production system from the livestock stage, including cases where it outsources livestock farming but invests entirely in the breeding stock (cows, goats), barns, fences, milking equipment, barn and barn sanitation systems, and other input materials such as animal feed, veterinary medicine, veterinary services, to the processing stage into dairy products. Enterprise Y is entitled to deduct the entire input VAT on fixed assets and on purchased goods and services that do not constitute fixed assets at all stages of production and processing.
b) For production and business establishments with investment projects implemented in multiple stages, including newly established production and business establishments with a closed-loop production plan, centralized accounting, and using products not subject to VAT to produce goods subject to VAT, but providing goods and services not subject to VAT during the basic construction investment phase, the input VAT during the investment phase to form fixed assets is fully deductible. The business establishment must separately account for the input VAT not used for investment in fixed assets serving the production and business activities of goods and services not subject to VAT, and declare deductions according to the percentage (%) ratio between VAT-taxable sales and total sales of goods and services.
For businesses with investment projects to continue production and processing, and with a written commitment to continue producing VAT-taxable products, they are allowed to declare and deduct VAT from the initial construction investment phase. Regarding input VAT incurred during the construction investment phase, if the business has declared, deducted, or received a refund but is later determined to be ineligible for further deduction or refund, the business must declare and adjust the amount of VAT deducted or refunded. If the business fails to make the adjustment and the tax authority discovers this during an inspection, the tax authority will collect the outstanding amount, recover the refund, and impose penalties as prescribed. The business is fully responsible before the law for all information reported and commitments made to the tax authority regarding VAT deduction and refund.
In cases where an establishment sells unprocessed or minimally processed agricultural, forestry, or aquatic products that are exempt from VAT, the VAT on purchased goods and services can be deducted based on the percentage of VAT-taxable goods and services sold compared to the total sales of goods and services sold.
Example 60: Enterprise A has an investment project in a rubber plantation, incurring input VAT on goods and services in the construction investment stage. The enterprise does not yet have raw materials to further process into VAT-taxable products (including unprocessed products for export or processed products subject to VAT), but has a project to build a rubber processing plant (subject to VAT) and commits to further processing the cultivated products into VAT-taxable products. In this case, the company is entitled to deduct the entire input VAT.
If a business sells rubber latex from an entire project that is not subject to VAT, then the business is not entitled to deduct the VAT.
In cases where a business uses a portion of the rubber latex harvested from a project to produce VAT-taxable products and sells the rest, the input VAT deduction should be carried out as follows:
– Input VAT on fixed assets (rubber plantations, processing plants, etc.): the enterprise is entitled to deduct the entire amount (including VAT incurred during the construction investment phase).
– Input VAT on goods and services: deduction is made based on the percentage (%) of sales of goods and services subject to VAT compared to the total sales of goods and services sold.
c) For business establishments with investment projects, including newly established establishments that invest in both the production and sale of goods and services not subject to VAT and the production and sale of goods and services subject to VAT, the input VAT on fixed assets during the capital construction investment phase may be provisionally deducted according to the percentage ratio between the revenue from goods and services subject to VAT and the total revenue from goods and services sold, as per the business's production and business plan. The provisionally deducted VAT amount will be adjusted according to the percentage ratio between the revenue from goods and services subject to VAT and the total revenue from goods and services sold over three years from the first year of revenue generation.
Example 61: Enterprise Z was newly established from an investment project in the transportation sector. The business plan under the investment project generates revenue from public passenger transportation by bus and non-bus, from advertising sales, and from repair and maintenance services for transportation vehicles; in which revenue from public passenger transportation by bus accounts for 30% of the total revenue from goods and services sold. The initial investment phase for basic construction, including purchasing vehicles, building bus stops, and workshops, lasted for two years, from June 2014 to May 2016. During this two-year period, the input value-added tax (VAT) on fixed assets during the capital construction investment phase and on goods and services purchased for the establishment of the business (establishment costs) is provisionally deductible at a rate of 70% and refundable according to regulations (except for VAT on fixed assets such as cars registered for use as public buses, which is not deductible). The business commenced operations and generated revenue from June 2016. By the end of May 2019, if the proportion of revenue from public passenger transport by bus during the three years from June 2016 accounted for 35% of the total revenue from goods and services sold, the enterprise shall declare and adjust the value-added tax (VAT) on fixed assets that had been deducted and refunded downwards by a rate of 5% (= 70% - 65%) and pay this adjusted reduction in VAT for the May 2019 tax period. The enterprise will not be penalized for late payment and will not be charged late payment interest on the adjusted reduction in deductible VAT on fixed assets.
5. Input VAT on goods (including goods purchased from outside or goods produced by the enterprise itself) that the enterprise uses for giving away, gifting, promoting, advertising in various forms, or for the production and business of goods and services subject to VAT, is deductible.
6. The VAT amount already paid according to the tax assessment decision of the customs authority is fully deductible, except in cases where the customs authority imposes penalties for fraud or tax evasion.
7. Input VAT on goods and services used for the production and business of goods and services not subject to VAT as guided in Article 4 of this Circular shall not be deductible, except in the following cases:
a) The VAT on goods and services purchased by a business for the production and sale of goods and services supplied to foreign organizations and individuals, and international organizations for humanitarian aid and non-refundable aid as guided in Clause 19, Article 4 of this Circular, is fully deductible;
b) Input VAT on goods and services used for the exploration, prospecting, and development of oil and gas fields up to the first day of extraction or the first day of production is fully deductible.
8. Input VAT incurred in a given period shall be declared and deducted when determining the tax payable for that period, regardless of whether the goods have been used or are still in storage.
In case a business establishment discovers that the input VAT amount when declaring and deducting is incorrect, it may declare and deduct additional information before the tax authority or competent authority announces the tax inspection decision. Tax inspection at the taxpayer's headquarters.
9. Non-deductible input VAT may be accounted for as an expense for the purpose of calculating corporate income tax or included in the original cost of fixed assets, except for VAT on goods and services purchased in individual transactions with a value of twenty million dong or more without non-cash payment documentation.
10. The head office of a corporation or group that does not directly engage in business activities, and its affiliated administrative and public service units such as hospitals, clinics, nursing homes, institutes, training schools, etc., which are not VAT taxpayers, are not entitled to deduct or claim a refund of input VAT on goods and services purchased to serve the operations of these units.
If these entities engage in the business of goods and services subject to VAT, they must register, declare, and pay VAT separately for these activities.
Example 62: The General Corporation A's office does not directly engage in production or business activities, and uses funds contributed by its subsidiaries for its operations. However, if the General Corporation A's office rents out unused office space, the General Corporation A's office must account for and declare taxes separately for this office rental activity. Input VAT on goods and services used for the General Corporation A's operations is not deductible or refundable.
11. Input VAT on goods and services used for activities providing goods and services that are not declared or subject to VAT payment as guided in Article 5 of this Circular (except for Clauses 2 and 3 of Article 5) is fully deductible.
12. Businesses are allowed to declare and deduct VAT on purchased goods and services by authorizing another organization or individual, with the invoice bearing the name of the authorized organization or individual, in the following cases:
a) If the insurance company authorizes the insured to repair the property; and the cost of property repair, along with replacement parts and materials, is invoiced with VAT in the name of the insured, and the insurance company pays the corresponding insurance premium according to the insurance contract, then the insurance company is entitled to declare and deduct the corresponding VAT on the insurance compensation paid according to the VAT invoice in the name of the insured; if the insurance compensation paid by the insurance company to the insured is worth 20 million VND or more, payment must be made through a bank.
b) Before establishing the business, if the founders authorize an organization or individual in writing to make payments on their behalf for certain expenses related to business establishment, procurement of goods and materials, the business is allowed to declare and deduct input VAT based on VAT invoices issued in the name of the authorized organization or individual. Payment to the authorized organization or individual must be made through a bank for invoices with a value of twenty million dong or more.
13. In cases where individuals or non-business organizations contribute assets to a limited liability company or joint-stock company, the documentation for the contributed assets shall be a capital contribution certificate and an asset handover record. If the contributed assets are newly purchased, unused assets with a valid invoice accepted by the capital contribution handover committee, the value of the capital contribution shall be determined according to the value recorded on the invoice, including VAT; the recipient of the capital contribution is entitled to deduct the VAT recorded on the asset purchase invoice from the contributing party.
14. Businesses that pay value-added tax using the direct calculation method on value added, when switching to the tax deduction method, are entitled to deduct the value-added tax on purchased goods and services incurred from the first tax declaration and payment period under the tax deduction method.
Businesses that previously paid value-added tax (VAT) using the deduction method, when switching to the direct calculation method based on value-added tax, may deduct the VAT on purchased goods and services incurred during the period of tax payment under the deduction method that had not been fully deducted from deductible expenses when determining taxable corporate income. This excludes the VAT on purchased goods and services incurred during the period of tax payment under the deduction method that is refundable according to the guidance in Article 18 of this Circular and according to the provisions of legal documents in effect before the effective date of this Circular.
Example 63: Company A Limited is applying the tax deduction method in 2014 and 2015 and is not eligible to apply the tax deduction method from January 1, 2016. Company A Limited has submitted a tax refund request to the tax authority from the tax period of November 2014 to the end of the tax period of October 2015 (the end of the revenue determination period to determine the tax calculation method for 2016 and 2017), the requested refund amount is 350 million VND, and on the VAT tax return for the tax period of November 2015, Company A Limited has uncredited input tax of 50 million VND. Company A Limited is considered and processed for tax refund according to regulations for the tax refund request submitted to the tax authority (requested refund amount is 350 million VND); The input tax amount of 50 million VND that was not deducted on the VAT return for the tax period of November 2015 will be carried forward to the tax period of December 2015. If the company still has uncredited input VAT on the VAT return for the tax period of December 2015, this amount will be included as a deductible expense when determining taxable corporate income.
14st. Input value-added tax (VAT) on goods, services, and fixed assets used in production: fertilizers, machinery, specialized equipment for agricultural production, offshore fishing vessels, animal feed, poultry feed, aquatic feed, and other animal feed consumed domestically, cannot be declared or deducted but must be included in deductible expenses when determining taxable income for corporate income tax purposes, except for the VAT on purchased goods, services, and fixed assets shown on VAT invoices and VAT payment documents for imported goods arising before January 1, 2015, which meet the conditions for deduction and refund and are eligible for refund as stipulated in Article 18 of Circular No. 219/2013/TT-BTC dated December 31, 2013, and this Circular.
15. Businesses are not allowed to deduct input VAT in the following cases:
– VAT invoices used in violation of legal regulations, such as: VAT invoices that do not record VAT (except in specific cases where VAT invoices are used to record the payment price as the price including VAT);
– The invoice does not include or incorrectly includes one of the following details: the name, address, or tax identification number of the seller, making it impossible to identify the seller;
– Invoices that do not record or incorrectly record one of the details such as the name, address, or tax code of the buyer, making it impossible to identify the buyer (except in cases guided in Clause 12 of this Article);
– Fake VAT invoices and tax payment documents, invoices that have been altered or erased, and fictitious invoices (without accompanying goods or services);
– Invoices that record values that do not reflect the actual value of goods, services purchased, sold, or exchanged.
16. Other specific cases shall be handled according to separate guidelines issued by the Ministry of Finance.
Article 15. Conditions for deducting input value-added tax
1. Possess a valid value-added tax (VAT) invoice for purchased goods and services, or a VAT payment receipt for imported goods, or a VAT payment receipt on behalf of a foreign party as guided by the Ministry of Finance applicable to foreign organizations without legal personality in Vietnam and foreign individuals doing business or generating income in Vietnam.
2. There must be non-cash payment documents for goods and services purchased (including imported goods) worth twenty million dong or more, except in cases where the value of imported goods and services per transaction is less than twenty million dong, goods and services purchased per transaction according to the invoice are less than twenty million dong including VAT, and in cases where the business imports goods as gifts from organizations or individuals abroad.
Non-cash payment documents include bank payment documents and other non-cash payment documents as guided in Clauses 3 and 4 of this Article.
3. Bank payment documents are understood as documents proving the transfer of funds from the buyer's account to the seller's account opened at payment service providers using payment methods compliant with current laws, such as checks, payment orders, collection orders, bank cards, credit cards, mobile phone SIM cards (electronic wallets), and other prescribed payment methods (including cases where the buyer pays from their account to the seller's account in the name of the owner of a private enterprise, or the buyer pays from their account in the name of the owner of a private enterprise to the seller's account).
a) Documents showing the buyer depositing cash into the seller's account or payment documents in forms not in accordance with current legal regulations are not eligible for VAT deduction or refund for goods and services purchased with a value of twenty million dong or more.
b) Goods and services purchased in individual transactions with invoices of twenty million dong or more (including VAT) are not eligible for VAT deduction if there is no bank payment document.
c) For goods and services purchased on deferred payment or installment plans with a value of twenty million dong or more, businesses shall base their input value-added tax declaration and deduction on the written purchase contract, value-added tax invoice, and bank payment documents for the goods and services purchased on deferred payment or installment plans. If bank payment documents are not yet available because the payment due date according to the contract has not yet arrived, the business may still declare and deduct input value-added tax.
In cases where a business entity does not have bank payment documents upon payment, it must declare and adjust the amount of VAT already deducted downwards for the value of goods and services for which there are no bank payment documents in the tax period in which the cash payment occurred (even if the tax authorities and other relevant agencies have already decided to inspect or audit the tax period in which the declared and deducted VAT arose).
4. Other non-cash payment methods eligible for input VAT deduction include:
a) In the case of goods and services purchased using the method of offsetting the value of goods and services purchased with the value of goods and services sold or borrowed, and this payment method is specifically stipulated in the contract, there must be a reconciliation record and confirmation between the two parties regarding the offsetting of goods and services purchased with goods and services sold or borrowed. In the case of offsetting debts through a third party, there must be a debt offsetting record of three (3) parties as a basis for tax deduction.
b) In cases where goods and services are purchased through debt offsetting methods such as borrowing or offsetting debts through a third party, and this payment method is specifically stipulated in the contract, there must be a written loan agreement prepared beforehand, along with documentation of money transfer from the lender's account to the borrower's account for the loan amount, including cases of offsetting the value of purchased goods and services against the amount the seller provides to the buyer, or asks the buyer to disburse on their behalf.
c) In cases where goods and services purchased are paid for through a third party via bank transfer (including cases where the seller requests the buyer to pay through a bank to a third party designated by the seller), the payment by authorization or payment to the third party as designated by the seller must be specifically stipulated in the contract in written form, and the third party must be a legal entity or natural person operating in accordance with the law.
In cases where, after using the aforementioned payment methods, the remaining amount to be paid in cash is 20 million VND or more, tax deductions are only allowed if there is proof of payment through a bank.
d) In cases where goods and services purchased are paid for through a bank into a third-party account opened at the State Treasury for the purpose of enforcing collection of money or assets held by other organizations or individuals (according to a decision of a competent state agency), input VAT is also deductible.
Example 68:
Company A purchased goods from Company B and Company A still owes Company B money. However, Company B still owes taxes to the state budget. Based on the Tax Administration Law, the tax authorities collect money and assets from Company B held by Company A to enforce an administrative tax decision. When Company A transfers money to the state budget collection account, this is considered a bank payment, and the corresponding input VAT on the purchased goods can be declared and deducted.
Example 69:
Company C entered into an economic contract with Company D for the supply of goods, and Company D still owes Company C money for those goods.
In accordance with the decision of the competent state authority, the entire amount owed by Company D to Company C must be collected and transferred to the account of the competent state authority opened at the State Treasury to resolve the "Dispute over the goods purchase and sale contract" between Company C and its partner.
When Company D transfers the money to the account of the competent state agency (this transfer is not specifically stipulated in the sales contract between Company C and Company D), this case is also considered payment through a bank, and the input VAT corresponding to the sales of the purchased goods is declared and deducted.
5. In cases where goods or services are purchased from a single supplier with a value under twenty million dong, but multiple purchases are made on the same day totaling twenty million dong or more, tax deductions are only allowed if there is proof of payment through a bank. The supplier must be a taxpayer with a tax identification number, directly declaring and paying VAT.
In cases where the taxpayer is a business establishment with subsidiary stores that share the same tax identification number and invoice template, and the invoice includes the "Store Number" field to distinguish the business's stores and bears the seal of each store, then each store is considered a separate supplier.
Article 16. Conditions for deducting and refunding input tax on exported goods and services.
Goods and services exported (except for the cases guided in Article 17 of this Circular) must meet the conditions and procedures specified in Clause 2 of Article 9 and Clause 1 of Article 15 of this Circular to be eligible for input VAT deduction and refund, specifically as follows:
1. Contracts for the sale of goods, processing of goods (in the case of goods processing), and provision of services to foreign organizations or individuals. For export consignment cases, this includes the export consignment contract and the contract termination agreement (if the contract has ended) or the periodic debt reconciliation statement between the consignor and the consignee, clearly stating: the quantity, type of products, and value of the consigned goods exported; the number and date of the export contract signed by the consignee with the foreign country; the number, date, and amount recorded on the bank payment documents with the foreign country by the consignee; the number, date, and amount recorded on the payment documents made by the consignee to the consignor; and the number and date of the customs declaration for exported goods by the consignee.
2. Customs declaration for exported goods that have completed customs procedures in accordance with the Ministry of Finance's guidelines on customs procedures; customs inspection and supervision; export tax, import tax and tax management for exported and imported goods.
For businesses exporting software products in the form of documents, files, or hard-packaged databases to be eligible for input VAT deduction and refund, the business must ensure that customs declaration procedures are the same as for regular goods.
The following cases do not require a customs declaration form:
– For businesses exporting services and software via electronic means, a customs declaration is not required. The business must fully comply with the regulations regarding procedures for confirming that the buyer has received the exported services or software via electronic means, in accordance with the law on e-commerce.
Construction and installation activities of works abroad or in free trade zones.
– Businesses providing electricity, water, stationery, and goods for daily life of export processing enterprises, including: food, consumer goods (including personal protective equipment: trousers, shirts, hats, shoes, boots, gloves).
3. Goods and services for export must be paid for through a bank.
a) Bank payment is the transfer of funds from the importer's account to the exporter's account at a bank, using payment methods consistent with the contract agreement and bank regulations. The payment document is the credit advice from the exporter's bank confirming receipt of funds from the importer's bank account. In the case of deferred payment, an agreement must be included in the export contract, and the business must provide bank payment documentation by the payment deadline. In the case of export consignment, there must be bank payment documentation from the foreign party to the consignee, and the consignee must pay for the exported goods through the consignor's bank. If the foreign party pays directly to the consignor, the consignor must provide bank payment documentation, and such payment must be stipulated in the contract.
b) The following payment methods are also considered bank payments:
b.1) In cases where exported goods and services are used to offset foreign loan payments, the business entity must meet the following conditions, procedures, and documentation requirements:
– Loan agreement (for financial loans with a term of less than 01 year); or loan registration confirmation certificate from the State Bank of Vietnam (for loans with a term of more than 01 year).
– Documents proving the transfer of funds from a foreign party to Vietnam via a bank.
The method of payment for exported goods and services offsetting foreign loan debt must be stipulated in the export contract.
– Confirmation from the foreign party regarding the offsetting of the loan debt.
– If, after offsetting the value of exported goods and services against foreign loan debt, there is a difference, the difference must be settled through a bank. Bank payment documents should follow the instructions in this section.
b.2) In cases where an exporting business uses the proceeds from the export of goods and services to contribute capital to an importing business abroad, the business must meet the following conditions, procedures, and documentation requirements:
– Capital contribution agreement.
– The use of proceeds from the export of goods and services to contribute capital to an importing entity abroad must be stipulated in the export contract.
– If the capital contribution is less than the revenue from exported goods, the difference must be paid through a bank as instructed in this section.
b.3) In cases where the foreign party authorizes a third party, such as an organization or individual abroad, to make the payment, the payment under authorization must be stipulated in the export contract (contract appendix or contract amendment document – if any).
b.4) In cases where the foreign party requests a third party, an organization in Vietnam, to settle outstanding debts with the foreign party by making a bank payment of the amount the foreign party owes to the exporting business, and the request for debt settlement is stipulated in the export contract (contract appendix or contract amendment document – if any) and is supported by a bank statement from the exporting party confirming receipt of funds from the third party's account, the exporting party must also present a debt reconciliation statement certified by both the foreign party and the third party.
b.5) In cases where the foreign party (importer) authorizes a third party, such as an organization or individual abroad, to make the payment; and the third party requests a Vietnamese organization (fourth party) to offset the debt with the third party by making a bank payment of the amount the importer owes to the Vietnamese exporting business, the exporting business must meet the following conditions and provide the following documents:
– The export contract (contract addendum or contract amendment document – if any) stipulates the authorization for payment and debt offsetting between the parties.
– A payment document is a bank statement confirming that the Vietnamese exporting business has received funds from a third-party account.
– A reconciliation statement of accounts payable with confirmation from the relevant parties (between the exporting business and the importing party, or between a third party abroad and a fourth party which is an organization in Vietnam).
b.6) In cases where the foreign party authorizes its representative office in Vietnam to make payments into the exporter's account, and such payment authorization is stipulated in the export contract (contract appendix or contract amendment document – if any).
b.7) In cases where the foreign party (except when the foreign party is an individual) makes payment from their current account opened at credit institutions in Vietnam, this payment must be stipulated in the export contract (contract appendix or contract amendment document – if any). The payment document is the credit advice from the exporting bank confirming receipt of the amount from the current account of the foreign buyer who signed the contract.
In the case of exports to foreign buyers that are private enterprises, and payment is made through the current account of the private enterprise owner opened at a credit institution in Vietnam and is stipulated in the export contract (contract appendix or contract amendment document – if any), then it is considered payment through a bank.
When inspecting tax deductions and refunds for exported goods paid through current accounts, tax authorities need to coordinate with the credit institution where the foreign buyer has opened an account to ensure that payments and money transfers are made for the correct purpose and in accordance with the law. Individuals entering the country carrying money across the border must clearly declare the amount as payment for each specific sales contract and export declaration; they must also present the sales contract and export declaration for customs officials to verify. If the individual entering the country is not a representative of a foreign enterprise directly signing a sales contract with a Vietnamese enterprise, they must have a power of attorney (Vietnamese or English translation, along with the original in the language of the country bordering the Vietnamese border) from the foreign organization or individual who signed the aforementioned sales contract. This power of attorney is only valid for one instance of bringing money into Vietnam and must clearly state the amount of money brought in according to the specific sales contract.
b.8) In the event that the foreign party makes payment through a bank but the payment amount on the document does not match the amount due as agreed in the contract or contract addendum, then:
– If the amount paid on the bank payment document is less than the amount agreed upon in the contract or contract addendum, the business must clearly explain the reason, such as: bank transfer fees, price reduction due to poor quality or shortage of goods (in this case, there must be a written agreement on price reduction between the buyer and seller)...;
– If the payment amount on the bank payment document is greater than the amount due as agreed in the contract or contract addendum, the business must clearly explain the reason, such as: making a single payment for multiple contracts, advance payment for goods, etc.
Businesses must commit to being legally responsible for the reasons provided to the tax authorities and any related amendments (if applicable).
b.9) In cases where the foreign party makes payment through a bank but the bank payment document does not have the name of the bank agreed upon in the contract, if the document clearly shows the name of the payer, the name of the beneficiary, the export contract number, and the payment value in accordance with the signed export contract, then it shall be accepted as a valid payment document.
b.10) In cases where a business exports goods and services to a foreign party (second party) and simultaneously imports goods and services from another foreign party or purchases goods from an organization or individual in Vietnam (third party); if the business has an agreement with the second and third parties that the second party will make bank payments to the third party for the amount the business still owes to the third party, then the offsetting of payments between the parties must be stipulated in the export contract, import contract, or purchase contract (contract appendix or contract amendment document – if any), and the business must present a reconciliation statement of accounts payable with confirmation from the relevant parties (between the business and the second party, and between the business and the third party).
b.11) In cases where goods are exported abroad but, due to objective reasons, the foreign party refuses to accept the goods, and the business finds a new customer in the same country as the original buyer to sell the goods, the tax refund application includes all export documents related to the export contract signed with the original customer (contract, customs declaration for exported goods, invoice), a letter of explanation from the business regarding the discrepancy in the buyer's name (in which the business commits to taking full responsibility for the accuracy of the information and ensuring there is no fraud), and all export documents related to the export contract signed with the new customer (contract, sales invoice, bank payment documents as prescribed, and other documents – if any).
c) Other payment methods for exported goods and services as stipulated by the Government:
c.1) In cases of labor export where the labor export business directly collects money from the worker, there must be a receipt for the money collected from the worker.
c.2) In the case of a business exporting goods for sale at trade fairs and exhibitions abroad, if it receives and transfers foreign currency cash back to Vietnam in the country hosting the trade fair or exhibition, the business must have documentation declaring to the Customs authorities the foreign currency received from the sale of goods transferred back to Vietnam and documentation of depositing the money into a bank in Vietnam.
c.3) In the case of exporting goods or services to repay foreign debt to the Government, there must be confirmation from the foreign trade bank that the export shipment has been accepted by the foreign party for debt repayment, or confirmation that the documents have been sent to the foreign party for debt repayment; payment documents shall be prepared according to the guidelines of the Ministry of Finance.
c.4) In the case of goods and services exported and paid for in kind, this refers to the export of goods (including processing of goods for export) and services to foreign organizations or individuals (hereinafter referred to as the foreign party), but the payment between the Vietnamese enterprise and the foreign party is made by offsetting the value of exported goods and services, or the processing fee for exported goods, against the value of goods and services purchased from the foreign party.
Goods and services exported and paid for in kind require the following additional documentation:
– The method of payment for exported goods must be stipulated in the export contract.
– Contracts for the purchase of goods and services from foreign parties.
– Customs declaration form for imported goods to be offset against exported goods and services.
– A document confirming with the foreign party the amount of offsetting payments between exported goods and services and imported goods and services purchased from the foreign party.
– In cases where there is a difference between the value of exported goods and services and the value of imported goods and services after offsetting, the difference must be settled through a bank. Bank payment documents shall follow the instructions in this section.
c.5) In the case of exporting goods to countries sharing a common border, as stipulated by the Prime Minister's regulations on managing border trade activities with countries sharing a common border, the procedures shall be carried out according to the guidelines of the Ministry of Finance and the State Bank of Vietnam.
c.6) In some cases, exported goods and services may have other forms of payment as prescribed by relevant laws.
d) Cases of exports without bank payment documents that are eligible for tax deduction and refund:
d.1) In the event that the foreign party becomes insolvent, the exporting entity must provide a written explanation clearly stating the reason and may use one of the following documents as a substitute for bank payment documents:
– Customs declaration form for goods imported from Vietnam, registered with the customs authority in the importing country (01 copy); or
– A complaint filed with the court or competent authority in the country where the buyer resides, accompanied by a notification or confirmation from that authority regarding the acceptance of the complaint (one copy); or
– A foreign court ruling in favor of the business (01 copy); or
– Documents from a competent foreign organization confirming (or notifying) that the foreign buyer is bankrupt or insolvent (01 copy).
d.2) In cases where exported goods are found to be substandard and must be destroyed, the exporting entity must provide a written explanation clearly stating the reasons and may use the destruction record (or confirmation of destruction) of the goods from the foreign agency (one copy), along with bank payment documents for the destruction costs that are the responsibility of the exporting entity, or documents proving that the destruction costs are the responsibility of the buyer or a third party (one copy).
If the importer is required to handle the destruction of goods abroad, the destruction record (or document confirming the destruction) shall bear the name of the importer.
d.3) In the event of damage to exported goods, the exporting entity must provide a written explanation clearly stating the reason and may use one of the following documents as a substitute for the bank payment document:
– A certificate confirming the loss outside the Vietnamese border issued by the relevant competent authority (01 copy); or
– A record of goods loss during transportation outside Vietnam's borders, clearly stating the cause of the loss (01 copy).
If the exporting entity has received compensation for goods damaged outside Vietnam's borders, it must include a copy of the bank payment receipt (one copy).
Copies of the documents mentioned in points d.1, d.2, and d.3 of this section must be certified as true copies by the exporting entity. If the language used in the documents or third-party confirmations replacing bank payment documents is not English or does not include English, a notarized translation must be included. If the relevant parties issue, use, and store documents electronically, a printed copy must be provided.
The exporting entity is solely responsible for the accuracy of any documents that substitute for bank payment documents in the aforementioned cases.
4. Commercial invoice. The date for determining export revenue for tax calculation purposes is the date of confirmation of completion of customs procedures on the customs declaration form.
Article 17. Conditions for deducting and refunding input VAT for certain cases where goods are considered as exports.
1. Goods processed for re-export in accordance with commercial law regulations on international trade and agency activities for buying, selling, and processing goods with foreign countries:
a) Export processing contracts and any contract addendums (if any) signed with foreign countries, clearly stating the receiving facility in Vietnam.
b) The VAT invoice must clearly state the processing price and the quantity of goods processed and returned to the foreign country (according to the price stipulated in the contract signed with the foreign party) and the name of the receiving establishment as designated by the foreign party.
c) The Product Transfer Form for onward processing (hereinafter referred to as the Transfer Form) must have sufficient confirmation from the party transferring and the party receiving the onward processing products, as well as confirmation from the Customs authority managing the processing contract of the party transferring and the party receiving the products.
d) Goods processed for foreign countries must be paid for through a bank in accordance with the guidelines in Article 16 of this Circular.
Regarding the procedures for receiving and delivering processed products and the Transfer Slip, these should be carried out according to the guidelines of the General Department of Customs.
Example 70: Company A signs a contract with a foreign company to manufacture 200.000 pairs of shoe soles for export. The processing price is 800 million VND. The contract clearly states that the shoe soles will be delivered to Company B in Vietnam to produce finished shoes.
In this case, Company A falls under the category of processing goods for export in transit. When preparing the transfer documents for shoe soles to Company B, Company A clearly states the quantity, type, and specifications of the products delivered, and the entire revenue of 800 million VND received from processing shoe soles is subject to a 0% VAT rate.
2. Goods exported locally in accordance with the law:
a) A contract for the sale of goods or a processing contract specifying delivery in Vietnam;
b) Customs declaration form for goods exported or imported on-site, with customs procedures already completed;
c) A value-added tax invoice or export invoice clearly stating the name of the foreign buyer, the name of the receiving enterprise, and the delivery location in Vietnam;
d) Goods sold to foreign traders but delivered in Vietnam must be paid for through a bank in freely convertible foreign currency. Bank payment documents shall comply with the guidelines in Clause 3, Article 16 of this Circular. In cases where the local importer is authorized by the foreign party to make payment to the local exporter, the currency of payment shall comply with the provisions of the law on foreign exchange.
d) Goods exported domestically by foreign-invested enterprises must comply with the regulations specified in the investment license.
3. For goods and materials exported by Vietnamese enterprises for the purpose of carrying out construction projects abroad, the procedures and documentation required for Vietnamese enterprises to deduct or receive a refund of input VAT must meet the following conditions:
a) Customs declaration form as prescribed in Clause 2, Article 16 of this Circular.
b) Exported goods and materials must conform to the List of Exported Goods for Construction Projects Abroad, as approved by the Director of the Vietnamese enterprise undertaking the construction project abroad.
c) Export consignment contract (in the case of export consignment).
4. For goods and materials sold by domestic businesses to Vietnamese enterprises for the purpose of carrying out construction projects abroad and delivering goods abroad according to the signed contract, the procedures and documentation for domestic businesses to claim input VAT deduction or refund for exported goods must meet the following conditions:
a) Customs declaration form as prescribed in Clause 2, Article 16 of this Circular.
b) Exported goods and materials must conform to the List of Exported Goods for Construction Projects Abroad, as approved by the Director of the Vietnamese enterprise undertaking the construction project abroad.
c) A sales contract signed between a domestic business establishment and a Vietnamese enterprise undertaking a construction project abroad, clearly specifying the delivery conditions, quantity, type, and value of goods.
d) Consignment contract (in the case of export consignment).
d) Bank payment documents.
e) VAT invoice for the sale of goods.
In cases where businesses have exported goods or goods considered as exported, as guided in Articles 16 and 17 of this Circular, if they have confirmation from the Customs authority (for exported goods) but lack other necessary procedures and documents for each specific case, they are not required to calculate output VAT but are not allowed to deduct input VAT. Specifically, for goods processed for re-export and goods exported on-site, if any of the required procedures or documents are missing, VAT must be calculated and paid as if the goods were for domestic consumption. For businesses providing export services, if they do not meet the conditions for payment through a bank or are not considered to have made payment through a bank, they are not eligible for the 0% VAT rate, are not required to calculate output VAT, but are not allowed to deduct input VAT.
Section 2. TAX REFUND
Article 18. Subjects and cases eligible for VAT refund
1. Businesses paying VAT using the deduction method may deduct any uncredited input VAT in the following period if they have any remaining uncredited input VAT.
In cases where a business has uncredited VAT amounts arising before the July 2016 tax period (for monthly declarations) or before the third quarter of 2016 (for quarterly declarations), and meets the conditions for VAT refund as guided in Clause 1, Article 18 of Circular No. 219/2013/TT-BTC, the tax authority shall process the refund in accordance with the law.
Example: Company A files its VAT returns quarterly. In the third quarter of 2016, the remaining uncredited VAT amount is 80 million VND. Company A is allowed to deduct this amount in the fourth quarter of 2016. If there is still uncredited VAT remaining in the fourth quarter of 2016, the first quarter of 2017, and the second quarter of 2017, Company A can carry forward this remaining VAT to continue deducting it in the third quarter of 2017 and subsequent tax periods.
2. Businesses are entitled to a value-added tax refund for investment projects as stipulated in Clause 3, Article 1 of Government Decree No. 49/2022/ND-CP dated July 29, 2022.
3. (replaced)
4. Tax refund for exported goods and services.
a) Businesses that, during the month (for monthly declarations) or quarter (for quarterly declarations), have exported goods and services, including cases where: imported goods are subsequently exported to a non-taxable zone; imported goods are subsequently exported abroad, and have uncredited input value-added tax of VND 300 million or more, are entitled to a monthly or quarterly value-added tax refund; if the uncredited input value-added tax in the month or quarter is less than VND 300 million, it may be deducted in the following month or quarter.
Businesses that export goods and services and sell goods and services domestically during the month/quarter must separately account for the input VAT used for the production and sale of exported goods and services. If separate accounting is not possible, the input VAT for exported goods and services will be determined based on the ratio of revenue from exported goods and services to total revenue from goods and services for the VAT declaration periods from the period following the previous refund period to the current refund request period.
If the input VAT on exported goods and services (including separately accounted input VAT and input VAT allocated according to the above ratio) is 300 million VND or more after offsetting it against the VAT payable on domestically consumed goods and services, the business is entitled to a VAT refund for exported goods and services. The VAT refund for exported goods and services shall not exceed the revenue from exported goods and services multiplied by 10%.
The entities eligible for tax refunds in certain export cases are as follows: For consignment exports, it is the entity that consigns the goods for export; for processing for re-export, it is the entity that signs the processing export contract with the foreign party; for goods exported for construction projects abroad, it is the enterprise that exports goods and materials for construction projects abroad; for goods exported domestically, it is the business entity that exports the goods domestically.
b) Businesses are not entitled to a value-added tax refund in the following cases: Imported goods that are subsequently exported, but the exported goods are not exported within the customs operational area as stipulated by customs law; exported goods are not exported within the customs operational area as stipulated by customs law.
c) The tax authority shall implement a refund-first, audit-later procedure for taxpayers producing goods for export who have not been penalized for smuggling, illegal cross-border transportation of goods, tax evasion, tax fraud, or commercial fraud for two consecutive years; and who are not classified as high-risk taxpayers according to the Law on Tax Administration and its implementing regulations.
5. Businesses paying value-added tax using the tax deduction method are entitled to a refund of value-added tax when undergoing ownership changes, business transformation, mergers, consolidations, divisions, separations, dissolutions, bankruptcies, or cessation of operations, if there is an overpayment of value-added tax or an uncredited amount of input value-added tax.
Businesses in the investment phase that have not yet commenced production and business operations but are subject to dissolution, bankruptcy, or cessation of operations, and have not generated output value-added tax from their main business activities according to the investment project, are not required to adjust the declared, deducted, or refunded value-added tax amounts. The business must notify the directly managing tax authority of the dissolution, bankruptcy, or cessation of operations as prescribed by law.
In cases where a business has completed all procedures as prescribed by law regarding dissolution or bankruptcy, the VAT refund amount that has already been processed will be handled according to the provisions of the law on dissolution, bankruptcy, and tax management; the VAT refund amount that has not yet been processed will not be granted.
If a business ceases operations and does not generate output VAT from its main business activities, it must return the refunded VAT to the state budget. However, if there is a sale of VAT-taxable assets, the corresponding input VAT on those assets does not need to be adjusted.
Example: In 2015, enterprise A was in the investment phase and had not yet started production and business operations. Enterprise A incurred input VAT for the investment phase, which was refunded by the tax authority in August 2015, amounting to VND 700 million. Due to difficulties, in February 2016, enterprise A decided to dissolve and sent a document to the tax authority stating its intention to dissolve. During the period when enterprise A had not yet completed the legal procedures for dissolution, the tax authority had not yet recovered the refunded VAT. Twenty days before enterprise A had completed all legal procedures for official dissolution in October 2016, the enterprise sold one (01) invested asset. In this case, enterprise A does not have to adjust the corresponding input VAT of the sold asset (the amount of tax already refunded by the tax authority). For assets not sold, enterprise A must declare adjustments to repay the refunded VAT.
6. VAT refund for programs and projects using non-refundable official development assistance (ODA) funds or non-refundable aid, and humanitarian aid.
a) For projects using non-refundable ODA funds: the program/project owner or the main contractor, or the organization designated by the foreign donor to manage the program/project, is entitled to a refund of the VAT paid on goods and services purchased in Vietnam for use in the program/project.
b) Organizations in Vietnam that use humanitarian aid funds from foreign organizations or individuals to purchase goods and services for non-refundable aid and humanitarian aid programs and projects in Vietnam are entitled to a refund of the VAT paid on those goods and services.
Example: The Red Cross receives 200 million VND in aid from an international organization to purchase humanitarian aid for people in provinces affected by natural disasters. The value of the purchased goods before tax is 200 million VND, and the VAT is 20 million VND. The Red Cross will be refunded 20 million VND according to regulations.
The refund of VAT paid for programs and projects using non-refundable official development assistance (ODA) funds shall be carried out according to the guidelines of the Ministry of Finance.
7. Entities entitled to diplomatic privileges and immunities under the law on diplomatic privileges and immunities that purchase goods and services in Vietnam for their own use are entitled to a refund of the value-added tax paid as shown on the value-added tax invoice or on the payment document indicating the price including value-added tax.
8. Foreign nationals and Vietnamese citizens residing abroad holding passports or entry documents issued by competent foreign authorities are entitled to a VAT refund on goods purchased in Vietnam and carried with them upon departure. The VAT refund process follows the Ministry of Finance's guidelines on VAT refunds for goods purchased in Vietnam by foreign nationals and Vietnamese citizens residing abroad and carried with them upon departure.
9. Businesses that have received a tax refund decision from a competent authority in accordance with the law, and in cases of value-added tax refunds under international treaties to which the Socialist Republic of Vietnam is a signatory.
Article 19. Conditions and procedures for VAT refund
1. Businesses and organizations eligible for VAT refund as guided in points 1, 2, 3, 4, and 5 of Article 18 of this Circular must be businesses paying tax using the deduction method, have been granted a business registration certificate or investment license (professional license) or establishment decision by a competent authority, have a seal in accordance with the law, maintain accounting books and accounting documents in accordance with the law on accounting; and have a bank deposit account under the business's tax code.
2. In cases where a business has already declared a VAT refund request on its VAT return, the input tax amount for which a refund has been requested cannot be carried forward to the deductible tax amount of the following month.
3. The procedure for VAT refund is carried out in accordance with the Law on Tax Administration and its implementing regulations.
Article 20. Place of tax payment
1. Taxpayers declare and pay VAT in the locality where production and business activities take place.
2. Taxpayers who declare and pay VAT using the deduction method and have dependent production facilities located in provinces or centrally-governed cities different from the province or city where their head office is located must pay VAT in both the locality where the production facility is located and the locality where the head office is located.
3. In cases where enterprises or cooperatives applying the direct method have production facilities in provinces or cities other than their head office, or conduct itinerant sales outside the province, they shall declare and pay VAT at a percentage rate on revenue generated outside the province at the locality where the production facility or itinerant sales location is located. Enterprises or cooperatives are not required to pay VAT at a percentage rate on revenue at their head office for revenue generated outside the province that has already been declared and taxed.
4. In cases where a telecommunications service business conducts postpaid telecommunications services in a province or centrally-governed city different from the province or city where its head office is located, and establishes a dependent branch that pays VAT using the deduction method and also participates in the postpaid telecommunications service business in that locality, the telecommunications service business shall declare and pay VAT for postpaid telecommunications services as follows:
– Declare VAT on revenue from postpaid telecommunications services for the entire business establishment to the tax authority directly managing the head office.
– Pay VAT at the locality where the head office is located and at the locality where the dependent branches are located.
The VAT payable at the locality where the dependent branch is located is determined at a rate of 2% (for postpaid telecommunications services subject to VAT at a rate of 10%) on the revenue (excluding VAT) of postpaid telecommunications services at the locality where the dependent branch is located.
5. The declaration and payment of VAT shall be carried out in accordance with the provisions of the Law on Tax Administration and its implementing regulations.
Chapter IV
ORGANIZATION OF IMPLEMENTATION
Article 21. Enforcement
1. This Circular takes effect from January 1, 2014, replacing Circular No. 06/2012/TT-BTC dated January 11, 2012 and Circular No. 65/2013/TT-BTC dated May 17, 2013 of the Ministry of Finance.
2. For businesses that file VAT returns quarterly from July 1, 2013, they are entitled to a VAT refund before the January 2014 tax period (for monthly filing) or before the first quarter of 2014 (for quarterly filing) if they have uncredited input VAT for three consecutive tax periods.
Example 85: In May and June 2013, Company A filed monthly tax returns, and then in the third quarter of 2013, it filed quarterly tax returns. If in May, June, and the third quarter of 2013, there was uncredited input VAT, then at the end of the third quarter of 2013, Company A is entitled to a VAT refund.
Example 86: In June 2013, Company B filed its tax returns monthly, and in the third quarter of 2013, it filed its tax returns quarterly. If in June 2013, the third quarter of 2013, and the fourth quarter of 2013, there was an outstanding input VAT that had not been fully deducted, then at the end of the fourth quarter of 2013, Company B would be entitled to a VAT refund.
3. In cases prior to the January 2014 tax period (for monthly declarations) or prior to the first quarter of 2014 (for quarterly declarations), eligible businesses entitled to VAT refunds as guided by Circular No. 06/2012/TT-BTC dated January 11, 2012, and Circular No. 65/2013/TT-BTC dated May 17, 2013, of the Ministry of Finance, shall be entitled to VAT refunds as guided by the aforementioned Circular No. 06/2012/TT-BTC and Circular No. 65/2013/TT-BTC.
In cases where, by the end of the December 2013 tax period (for monthly declarations) or by the end of the fourth quarter of 2013 (for quarterly declarations), a business has not yet had three consecutive tax periods with uncredited input VAT, the uncredited input VAT from 2013 that is not eligible for refund will be carried over to 2014 for declaration and deduction, and the refund will be applied according to the guidance in Clause 1, Article 18 of this Circular.
Example 87: If Enterprise A has input VAT that has not been fully deducted for three months (October 2013, November 2013, December 2013), then Enterprise A is entitled to a VAT refund as guided in Clause 1, Article 18 of Circular No. 06/2012/TT-BTC dated January 11, 2012 of the Ministry of Finance.
Example 88: In October 2013, Enterprise B incurred VAT payable. In November 2013 and December 2013, there was uncredited input VAT. By the end of the December 2013 tax period, Enterprise B did not meet the conditions for VAT refund as guided in Circular No. 06/2012/TT-BTC. Therefore, the uncredited VAT from November and December 2013 will be carried over to 2014 for consideration of VAT refund as guided in Clause 1, Article 18 of this Circular.
Example 89: In Q3/2013, Enterprise C incurred tax payable. In Q4/2013, there was input VAT that had not been fully deducted. The uncredited input VAT from Q4/2013 is carried over to 2014 for consideration of VAT refund according to the guidance in Clause 1, Article 18 of this Circular.
4. For VAT invoices for the purchase of fixed assets issued before January 1, 2014, businesses shall deduct VAT according to the guidelines in Circular No. 06/2012/TT-BTC dated January 11, 2012 and Circular No. 65/2013/TT-BTC dated May 17, 2013 of the Ministry of Finance; for VAT invoices for the purchase of fixed assets issued from January 1, 2014 onwards, businesses shall deduct VAT according to the guidelines in this Circular.
5. For VAT invoices for the purchase of agricultural, livestock, and aquatic products that have not been processed into other products or have only undergone basic processing, issued before January 1, 2014, the Tax Department is requested to require businesses to declare them in the List of Purchased Goods and Services under the VAT Tax Return for the tax period of December 2013 or the fourth quarter of 2013, and submit them to the tax authority within the prescribed deadline.
Article 22. Organization for collecting Value Added Tax (VAT)
1. The Tax Authority is responsible for organizing and managing the collection of value-added tax (VAT) and VAT refunds for business establishments.
2. The Customs agency is responsible for organizing and managing the collection of Value Added Tax (VAT) on imported goods.
During the implementation process, if any difficulties or obstacles arise, units and businesses are requested to promptly report them to the Ministry of Finance for timely resolution.
CONSOLIDATED DOCUMENT AUTHORIZATION
KT MINISTER
DEPUTY
Cao Anh Tuan
APPENDIX
LIST OF BUSINESS SECTORS SUBJECT TO VALUE ADDED TAX (VAT) AS A PERCENTAGE OF REVENUE
(Issued together with Circular No. 219/2013/TT-BTC dated August 31, 2013 of the Ministry of Finance)
1) Distribution and supply of goods: 1%
– Wholesale and retail sales of various goods (excluding goods sold by agents at fixed prices with commission).
2) Services and construction without material procurement: 5%
– Accommodation services, hotel, guesthouse, and lodging business;
– Services for renting houses, land, shops, factories, and other personal property and belongings;
– Services for renting warehouses, machinery, and transportation vehicles; loading and unloading goods and other supporting services related to transportation such as operating terminals, selling tickets, and vehicle parking;
– Postal services, mail and parcel delivery;
– Brokerage, auction, and agency commission services;
– Legal consulting services, financial consulting, accounting, auditing; services for handling tax and customs administrative procedures;
– Data processing services, portal rental, information technology and telecommunications equipment;
– Office support services and other business support services;
– Services include sauna, massage, karaoke, nightclub, billiards, internet, and games;
– Tailoring and laundry services; Haircutting, hairstyling, and shampooing;
– Other repair services include: computer repair and repair of household appliances;
– Consulting, design, and construction supervision services for basic construction projects;
– Other services;
– Construction and installation services that do not include the supply of materials (including the installation of industrial machinery and equipment).
3) Production, transportation, services related to goods, and construction with material procurement included: 3%
– Manufacturing, processing, and crafting of goods;
– Extraction and processing of minerals;
– Freight transport, passenger transport;
– Services accompanying the sale of goods, such as training, maintenance, and technology transfer services, are offered alongside the sale of products.
– Food and beverage services;
– Repair and maintenance services for machinery, equipment, vehicles, cars, motorcycles, and other motor vehicles;
– Construction and installation with material supply included (including installation of industrial machinery and equipment).
4) Other business activities: 2%
– Production activities involving products subject to VAT under the deduction method with a VAT rate of 5%;
– Activities involving the provision of services subject to VAT under the deduction method with a VAT rate of 5%;
– Other activities not listed in groups 1, 2, and 3 above.