THE MINISTRY OF FINANCE
Circular No. 141/2013/TT-BTC of October 16, 2013, guiding the implementation of the Government’s Decree No. 92/2013/ND-CP of August 13, 2013, detailing a number of articles, which take effect on July 1, 2013, of the Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax
Pursuant to June 3, 2008 Law No. 13/2008/QH12 on Value-Added Tax, and June 19, 2013 Law No. 31/2013/QH13 Amending and Supplementing a Number of Articles of the Law on Value-Added Tax;
Pursuant to June 3, 2008 Law No. 14/2008/QH12 on Enterprise Income Tax, and June 19, 2013 Law No. 32/2013/QH13 Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax;
Pursuant to November 29, 2006 Law No. 78/2006/QH11 on Tax Administration, and November 20, 2012 Law No. 21/2012/QH13 Amending and Supplementing a Number of Articles of the Law on Tax Administration;
Pursuant to the Government’s Decree No. 92/2013/ND-CP of August 13, 2013, detailing a number of articles, which take effect on July 1, 2013, of the Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax;
Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizations structure of the Ministry of Finance;
At the proposal of the General Director of Taxation;
The Minister of Finance guides the implementation of the Government’s Decree No. 92/2013/ND-CP of August 13, 2013, detailing a number of articles, which take effect on July 1, 2013, of the Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax, as follows:
Chapter I
ENTERPRISE INCOME TAX
Article 1. Application of enterprise income tax to enterprises that have a total annual turnover not exceeding VND 20 billion
1. To apply the enterprise income tax rate of 20% from July 1, 2013, to enterprises established under Vietnamese law, including cooperatives and revenue-generating non-business units (below referred to as enterprises) that have a total annual turnover not exceeding VND 20 billion.
Total annual turnover serving as a basis for determining an enterprise subject to the tax rate of 20% is the enterprise’s total turnover in the preceding year which is determined based on the items coded [01] and [08] in the Appendix on production and business operation results in the tax period of the preceding year, made according to form No. 03-1A/TNDN enclosed with enterprise income tax finalization declaration form No. 03/TNDN issued together with the Finance Ministry’s Circular No. 28/2011/TT-BTC of February 28, 2011, and its revising or replacing legal documents (if any).
For new enterprises established from January 1, 2013, through June 30, 2013, their turnover is determined based on the item coded [21] “Turnover arising in the period” (excluding other incomes) in the declaration of enterprise income tax temporarily calculated in the first two quarters of 2013, made according to form No. 01A/TNDN issued together the Finance Ministry’s Circular No. 28/2011/TT-BTC of February 28, 2011, and its revising or replacing legal documents (if any).
In case the total period of production and business operation of an enterprise from its establishment to the end of 2012 enterprise income tax period is less than 12 months, or its tax period is longer than 12 months according to regulations, the turnover used as a basis for determining that it is subject to the tax rate of 20% as prescribed in this Clause is its average monthly turnover in the 2012 enterprise income tax period, which must not exceed VND 1.67 billion.
For a new enterprise established during the first six months of 2013, its turnover used as a basis for determining that it is subject to the tax rate of 20% prescribed in this Clause is its average monthly turnover in the first six months of 2013, which must not exceed VND 1.67 billion.
New enterprises established from July 1, 2013 on, shall declare enterprise income tax temporarily calculated at the rate of 25% on a quarterly basis (except entities eligible for tax rate incentives). At the end of the fiscal year, if the average monthly turnover does not exceed VND 1.67 billion, the enterprises may finalize payable tax amounts at the rate tax of 20% (except incomes defined in Clause 2, Article 1 of this Circular).
2. The tax rate of 20% prescribed in Clause 1 of this Article is not applicable to the following incomes:
a/ Incomes from capital transfer, transfer of the capital contribution right; incomes from transfer of real estate (except incomes from social housing investment and trading under Article 2 of this Circular), incomes from transfer of investment projects, transfer of the right to participate in investment projects, transfer of the right to explore and exploit minerals; and incomes from production and business activities outside Vietnam;
b/ Incomes from prospecting, exploration and exploitation of oil and gas and other precious and rare natural resources and incomes from mineral mining;
c/ Incomes from provision of services liable to excise tax prescribed in the Law on Excise Tax.
3. Principles of determination
a/ An enterprises shall account income subject to the tax rate of 20% separately from income not subject to this tax rate. If these incomes cannot be separately accounted, income subject to the tax rate of 20% is determined based on the proportion of goods and service sale turnover subject to the tax rate of 20% and the enterprise’s total turnover in the tax period.
b/ For the income separately accounted, the enterprise may offset profit against loss. The remaining income is eligible for the rate of enterprise income tax on profitable operation. The application of legal documents to the offsetting of profit against loss in certain periods is provided as follows:
- From July 1, 2013, through December 31, 2013, to apply Article 16 of June 3, 2008 Law No. 14/2008/QH12 on Enterprise Income Tax and its guiding documents;
- From January 1, 2014, to apply Clause 10, Article 1 of June 19, 2013 Law No. 32/2013/QH13 Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax, and its guiding documents.
c/ Determination of incomes subject to the tax rate of 20% from July 1, 2013:
- If an enterprise can determine its turnover, expenses and taxable income from production and business activities subject to the tax rate of 20% from July 1, 2013, this tax rate will be applied to the amount accounted by the enterprise from July 1, 2013.
- If an enterprise cannot determine its taxable income from production and business activities subject to the tax rate of 20% from July 1, 2013, income subject to the tax rate of 20% from July 1, 2013, is determined based on the average monthly income subject to the tax rate of 20% multiplied (x) by the number of months in which production and business activities are conducted, from July 1, 2013, to the end of the fiscal year, according to the following formula:
Income subject to the tax rate of 20% from July 1, 2013, to the end of the fiscal year | = | Total income subject to the tax rate of 20%, earned in the fiscal year | x | Number of months in which production and business activities are conducted, from July 01, 2013 to the end of the fiscal year |
Number of months in the fiscal year in which production and business activities are conducted |
Example 1:
In the fiscal year from April 1, 2013, through March 31, 2014, enterprise A has a taxable income of VND 1.2 billion (the total turnover earned in the preceding fiscal year does not exceed VND 20 billion). The income subject to the tax rate of 20% from July 1, 2013, through March 31, 2014 (9 months) is determined as follows:
Income subject to the tax rate of 20% from July 1, 2013 to March 31, 2014 | = | 1,200,000,000 (VND) | x | 9 (months) | = | 900,000,000 (VND) |
12 (months) |
Article 2. Application of enterprise income tax to enterprises’ income from social housing investment and trading
1. Enterprises established under Vietnamese law, including cooperatives and revenue-generating non-business units (below referred to as enterprises) engaged in social housing investment and trading may apply the tax rate of 10% for their income from the sale or lease or lease-purchase of social houses, earned from July 1, 2013, regardless of the time of signing contracts for social housing sale, lease or lease-purchase.
Social houses referred to in this Clause are houses constructed by the State, or organizations or individuals of all economic sectors and satisfy the criteria on housing, sale price, rent rate or rent-purchase price, subjects eligible and conditions for purchase, rent or rent-purchase of social houses in accordance with the housing law.
If an enterprise engaged in social housing investment and trading and signing a house transfer contract has collected advances from customers based on the construction progress before July 1, 2013, and continues with the collection from this date (the enterprise cannot yet determine expenses corresponding to turnover, and have temporarily declared and paid enterprise income tax at a percentage of the collected amount), and the time of handover of houses is from July 1, 2013, income from the transfer of houses will enjoy the tax rate of 10%.
Income from social housing investment and trading subject to the tax rate of 10% prescribed in this Clause is income from the sale, lease or lease-purchase of social houses earned from July 1, 2013. In case an enterprise is unable to account separately income from the sale, lease or lease-purchase of social houses earned from July 1, 2013, income subject to the tax rate of 10% is determined according to the ratio between the enterprise’s turnover from the sale, lease or lease-purchase of social houses and its total turnover in the same period.
2. Determination of income subject to the tax rate of 10% from July 1, 2013:
a/ If an enterprise can determine its turnover, expenses and taxable income from July 1, 2013, the tax rate of 10% will be applied to the amount accounted by the enterprise from July 1, 2013.
b/ If the fiscal year is the calendar year, or different from the calendar year, or does not start on July 1, 2013, and the enterprise cannot determine taxable income from July 1, 2013, the tax rate of 10% will be applied from July 1, 2013, to the end of the fiscal year according to the following formula:
Average monthly income subject to the tax rate of 10% | = | Turnover from sale, lease, and rent-purchase of social houses | x | Taxed income in the year (excluding other incomes) |
Total annual turnover | Number of months in which production and business activities are conducted |
Income subject to the tax rate of 10% from July 1, 2013, to the end of the fiscal year | = | Average monthly income subject to the tax rate of 10% | x | Number of months in which production and business are conducted, from July 1, 2013, to the end of the fiscal year |
Example 2:
In the fiscal year from April 1, 2013, through March 31, 2014, enterprise B has achieved the following business targets:
- The total turnover earned in the fiscal year: VND 100 billion
Of which, turnover from the sale, lease or lease-purchase of social houses: VND 24 billion.
- Taxed income in the fiscal year: VND 12 billion, including VND 2 billion of other incomes (including income from financial activities)
Income subject to the tax rate of 10% from July 1, 2013, through March 31, 2014 (9 months) is determined as follows:
Average monthly income subject to the tax rate of 10% | = | 24 (VND billion) | x | [12 ( VND billion) - 2 (VND billion] | = | 0.2 (VND billion) |
100 ( VND billion) | 12 (months) |
Income subject to the tax rate of 10% from July 1, 2013 to the March 31, 2014 | = | 0.2 (VND billion) | x | 09 (months) | = | 1.8 (VND billion) |
Chapter II
VALUE-ADDED TAX
Article 3. Application of the tax rate of 5% for social houses
1. To apply the rate of 5% from July 1, 2013, for sale, lease and lease-purchase of social houses.
2. Social houses referred to in this Article are houses defined in Clause 1, Article 2 of this Circular.
3. In case of sale or lease-purchase of social houses, the tax rate of 5% will be applied under social house sale or lease-purchase contracts which are signed from July 1, 2013 on, to sums of money paid from July 1, 2013 on, for the contracts signed before that date.
In case of lease of social houses, the tax rate of 5% will be applied based on the time of rent collection under contracts (including also advance rent collection for multiple periods) from July 1, 2013, on. In case enterprises have not received any rents since July 1, 2013, the tax rate will be applied based on the time of invoicing.
Example 3:
Construction company Y is the investor of social housing project X. In December 2012, Company Y signs a contract with Mr. B for the sale of an apartment in project X. Mr. B is eligible to buy social houses. The transaction between Company Y and Mr. B is conformable with the law on social house sale and purchase. Under the contract, Mr. B shall pay Company Y in installments as follows:
The 1st installment: 20% of the value of the apartment at the time of signing the contract - December 2012.
The 2nd installment: 30% of the value of the apartment in May 2013.
The 3rd installment: 25% of the value of the apartment in December 2013.
The 4th installment: 25% of the value of the apartment in April 2014.
Mr. B has paid such installments in accordance with the contract. Under the above regulations, the value-added tax rate of 5% will be applied to the 3rd installment (December 2013) and the 4th installment (in April 2014) paid by Mr. B to Company Y.
4. If an investor of a social housing project converts commercial houses into social houses in accordance with the housing law, the value-added tax rate of 5% for sale, lease and lease-purchase of social houses from July 1, 2013, prescribed in this Article will be applied from the date of issuance of a competent agency’s decision on change of the use purpose of the project.
5. In case an invoice is made out for the sale, lease or lease-purchase of social houses with the tax rate of 10% but from July 1, 2013, the tax rate of 5% is applied under this Article, the enterprise shall issue an adjusted invoice. If the adjustment leads to changes in the contents of the sale, lease or lease-purchase contract, the enterprise shall make an annex for adjustment.
Article 4. 50% reduction of the value-added tax rate for commercial houses
1. To grant a 50% reduction of the value-added tax rate from July 1, 2013, through June 30, 2014, for the sale, lease and lease-purchase of commercial houses which are complete apartments with a floor area of under 70 square meters each and a sale price of under VND 15 million per square meter.
2. Commercial houses being complete apartments mentioned in this Article are apartments completed and tested before acceptance according to the investor’s design and can be moved in right after handover, and satisfy the conditions specified in Clauses 3 and 4 of this Article.
3. The 50% reduction of value-added tax rate for the sale or lease-purchase of commercial houses must meet the following conditions:
a/ A commercial house for sale or lease-purchase must a complete apartment with a floor area of under 70 square meters and a sale price of under VND 15 million per square meter.
b/ The taxable sale price or lease-purchase price of a commercial house must be specified in the contract.
The taxable sale price or lease-purchase price of under VND 15 million per square meter specified in this Clause is the sale price or lease-purchase price inclusive of value-added tax of 10% and work maintenance charge as prescribed.
For commercial houses sold by mode of installment or deferred payment, the taxable sale price is the lump-sum sale price inclusive of value-added tax of 10% and maintenance charge but exclusive of the installment or deferred payment interest and other interests.
Example 4:
In October 2013, Mr. C buys an apartment with a floor area of 54 square meters from construction company E at VND 14,000,000 per square meter, exclusive of value-added tax and maintenance charge.
The sale price inclusive of value-added tax of 10% and maintenance charge is 15,680,000 VND/m2 (= VND 14,000,000 + VND 1,400,000 (value-added tax of 10%) + VND 280,000 (maintenance charge of 2%). This case is ineligible for the 50% reduction of value-added tax rate.
c/ The 50% reduction of value-added tax rate for commercial house sale or lease-purchase contracts which are signed before July 1, 2013, and those signed during July 1, 2007, and the end of June 30, 2014, will be applicable to sums of money paid during July 1, 2007, and June 30, 2014.
Example 5:
In April 2013, construction company X signs a contract with Mr. A for the sale of an apartment with a floor area of 54 square meters at 11,000,000 VND/m2, exclusive of value-added tax and maintenance charge. Under the contract, Mr. A shall pay Company X by installments, as follows:
The 1st installment: 20% of the value of the apartment at the time of signing the contract in April 2013.
The 2nd installment: 60% of the value of the apartment in August 2013.
The 3rd installment: 20% of the value of the apartment in August 2014.
Mr. A has paid such installments in accordance with the contract. According to the above regulations, the 50% reduction of value-added tax rate will be applied to the sum of money paid by Mr. A to Construction Company X in the 2nd installment (in August 2013).
4. The 50% reduction of value-added tax rate for commercial houses which are apartments for lease must meet the following conditions:
a/ An apartment for lease has a floor area of under 70 square meters and a value equal to that of an apartment of the same type with a sale price of VND 15 million per square meter.
An apartment of the same type is an apartment in the same area with floor area, characteristics and location similar to an apartment for lease at the time of signing the contract.
b/ The taxable sale price of an apartment of the same type serving as a basis for determining the value-added tax reduction specified in this Clause is the price inclusive of value-added tax of 10% and maintenance charge as prescribed.
c/ The 50% reduction of value-added tax rate for lease of commercial houses is calculated on the rent amount paid under the lease contract (regardless of the time of its signing) signed during July 1, 2013, and the end of June 30, 2014 (including advance rent payment for many years).
In case enterprises lease out houses from July 1, 2013, through June 30, 2014, but have received no rent yet, the 50% reduction of value-added tax rate will be granted for the rent amount paid during July 1, 2013, and June 30, 2014.
5. Making out invoices for the sale, lease or lease-purchase of commercial houses eligible for value-added tax reduction:
When making out invoices for the sale, lease or lease-purchase of commercial houses eligible for value-added tax reduction, enterprises shall write “10% x 50%” on the line of value-added tax rate; the tax amount after reduction on the line of value-added tax amount, ; and the amount paid by the buyer on the line of total amount.
Example 6:
Continued from example 5, construction company X shall make out and hand to Mr. A an invoice in the 2nd installment with the following details:
On the column “Description of goods and services”: Write the 2nd installment - 50% reduction of value-added tax rate.
Unit price: 11,000,000 x 60 (m2) x 60% = VND 396,000,000.
Quantity: 01 (installment).
Value-added tax rate: 10% x 50%.
Value-added tax amount: VND 19,800,000.
Total amount: VND 415,800,000.
Example 7:
In October 2013, construction company A signs a contract with Mr. B for the sale of a completed apartment ready for use with a floor area of 50 square meters at 12,000,000 VND/m2, exclusive of value-added tax and maintenance charge. Under the contract, Mr. B shall pay to Company A a lump sum at the time of signing the contract, and the apartment will be handed over in November 2013.
The sale of the apartment is eligible for 50% reduction of value-added tax rate (the price, inclusive of value-added tax of 10% and maintenance charge of 2%, is 12,000,000 + 1,200,000 (value-added tax of 10%) + VND 240,000 (maintenance charge) = 13,440,000 VND/m2).
At the time of collection, Company A shall make out and hand to Mr. B an invoice with the following details:
On the column “Description of goods and services”: Write sale of an apartment eligible for 50% reduction of value-added tax rate.
Unit price: 12,000,000 x 50 (m2) = VND 600,000,000.
Quantity: 01 (apartment).
Value-added tax rate: 10% x 50%.
Value-added tax amount: VND 30,000,000.
Total amount: VND 630,000,000.
6. Declaration of reduced value-added tax amount:
a/ Procedures for declaration of reduced value-added tax amount comply with the Law on Tax Administration, the Law Amending and Supplementing a Number of Articles of the Law on Tax Administration and their guiding documents.
b/ Invoice made for the sale, lease or lease-purchase of commercial houses eligible for value-added tax reduction shall be listed in the group of “Goods and services subject to the tax rate of 10% ” on the list of invoices of sold goods and services, enclosed with the value-added tax declarations made by taxpayers paying value-added tax by the credit method. Write “50% reduction for commercial houses” on the line of “Notes”.
7. From July 1, 2013, if an invoice is made out without a 50% reduction of value-added tax rate for the sale, lease or lease-purchase of a commercial house under this Article, an adjusted invoice must be made together with additional declaration as prescribed. If the tax rate adjustment leads to changes in the contents of the sale, lease, or lease-purchase commercial house contract, the enterprise shall make an annex for such adjustment.
Chapter III
ORGANIZATION OF IMPLEMENTATION
Article 5. Effect
This Circular takes effect on November 30, 2013, and applies to enterprise income taxation periods and value-added taxation periods starting from July 1, 2013.
Article 6. Implementation responsibilities
1. Provincial-level People’s Committees shall direct functional agencies in organizing the implementation of the Government’s regulations and the Finance Ministry’s guidance.
2. Tax offices at all levels shall disseminate to organizations and individuals and guide them in implementing this Circular.
3. Organizations regulated by this Circular shall comply with the guidance of this Circular.
Any problems arising in the course of implementation should be promptly reported to the Ministry of Finance for study and settlement.-
For the Minister of Finance
Deputy Minister
DO HOANG ANH TUAN
Vietnamese
Circular 141/2013/TT-BTC DOC (Word)
Circular 141/2013/TT-BTC PDF (Original)
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