Circular No. 195/2015/TT- BTC dated November 24, 2015 of the Ministry of Finance guiding the Decree No. 108/2015/ND-CP dated October 28, 2015 of the Government guiding a number of Articles of the Law on Special Excise Duty and the Law on amending the Law on Special Excise Duty

CIRCULAR

Guiding the implementation of the Government’s Decree No. 108/2015/ND-CP of October 28, 2015, detailing and guiding the implementation of a number of articles of the Law on Excise Tax and the Law Amending and Supplementing a Number of Articles of the Law on Excise Tax[1]

Pursuant to November 14, 2008 Law No. 27/2008/QH12 on Excise Tax and November 26, 2014 Law No. 70/2014/QH13 Amending and Supplementing a Number of Articles of the Law on Excise 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 November 26, 2014 Law No. 71/2014/QH13 Amending and Supplementing a Number of Articles of the Laws on Taxes;

Pursuant to the Government’s Decree No. 108/2015/ND-CP of October 28, 2015, detailing and guiding the implementation of a number of articles of the Law on Excise Tax and the Law Amending and Supplementing a Number of Articles of the Law on Excise Tax;

Pursuant to the Government’s Decree No. 215/2013/ND-CP of December 23, 2013, 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 guides the implementation of the Government’s Decree No. 108/2015/ND-CP of October 28, 2015, as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular guides the implementation of the Government’s Decree No. 108/2015/ND-CP of October 28, 2015, detailing and guiding the implementation of a number of articles of the Law on Excise Tax and the Law Amending and Supplementing a Number of Articles of the Law on Excise Tax.

Article 2. Taxable objects

Subject to excise tax are goods specified in Article 2 of November 14, 2008 Law No. 27/2008/QH12 on Excise Tax, Clause 1, Article 1 of November 26, 2014 Law No. 70/2014/QH13 Amending and Supplementing a Number of Articles of the Law on Excise Tax, and Article 2 of the Government’s Decree No. 108/2015/ND-CP of October 28, 2015, detailing and guiding the implementation of a number of articles of the Law on Excise Tax and the Law Amending and Supplementing a Number of Articles of the Law on Excise Tax.

For air conditioners with a capacity of 90,000 BTU or lower that are subject to excise tax, if the indoor and outdoor units are sold or imported separately, they are still subject to excise tax like complete products (air conditioners).

Article 3. Non-taxable objects

The goods specified in Article 2 of this Circular are not subject to excise tax in the following cases:

1. Goods directly exported or sold by the manufacturers or processors, or entrusted to other businesses for export, including:

1.1. Goods directly exported by the manufacturers or processors, including goods sold to or processed for export processing enterprises, except cars of under 24 seats sold to export processing enterprises.

Establishments having goods not subject to excise tax specified at this Point must have documents proving that such goods have been exported, including:

- A sale contract or processing contract with a foreign party.

- An invoice for goods export or return of goods and payment for processing.

- An export declaration.

- A via-bank payment document.

Via-bank payment means the transfer of money from the importer’s account to an account held by the exporter opened at a bank for payment in accordance with contractual agreements and regulations of the bank. The payment document is the credit note of the exporter’s bank of the amount of money transferred from the account of the importer’s bank. In case of deferred payment, it shall be specified in the export contract, and the via-bank payment document shall be submitted when the payment is due. In case of export entrustment, the entrusted party shall make via-bank payment to the foreign party.

1.2. A manufacturer of goods subject to excise tax that temporarily exports and re-imports goods under a temporary export for re-import permit is not required to pay excise tax during the period in which payment of import and export duties is not required and has to pay excise tax when selling such goods.

1.3. Goods sold by a manufacturer or exported by an entrusted business establishment under an economic contract.

A manufacturer having goods not subject to excise tax specified at this Point must have documents proving that such goods have been exported, including:

- A contract on purchase and sale of goods for export, or an export entrustment contract, if the manufacturer entrusts a business establishment to export goods.

- An invoice on the sale of goods or delivery of goods for entrusted export.

- A written record on partial or full liquidation of the contract on sale of goods for export or on liquidation of the export entrustment contract, which must specify:

Names, quantities, categories, prices of goods that have been exported; method of payment; amount of money, serial number and date of the receipt of the via-bank payment from the foreign buyer to the exporter; amount of money and serial number and date of the payment document between the manufacturer and exporter or entrusted exporter; serial number and date of the export contract, and copies of the customs declarations of exported goods.

For goods bought or received by an exporter for export but eventually sold domestically instead of being exported, the exporter shall declare and pay excise tax on such goods when selling them domestically.

1.4. Goods consigned for sale at overseas fairs or exhibitions.

An establishment that consigns goods for sale at overseas fairs or exhibitions must have:

- An invitation or a written registration for participation in an overseas fair or exhibition.

- An export declaration bearing the customs office’s certification that the goods have been exported.

- A list of goods put up for sale at the fair or exhibition.

- Payment documents of goods sold at the fair or exhibition. If cash amounts paid for goods exceed the prescribed level, they shall be declared to the customs office and documents on payment into a bank shall be submitted.

2. Imported goods in the following cases:

2.1. Humanitarian aid, non-refundable aid, and gifts, including:

a/ Humanitarian aid and non-refundable aid, including imported goods funded by non-refundable aid approved by a competent agency; humanitarian aid and emergency relief goods for remediation of war, natural disaster and epidemic consequences;

b/ Gifts of overseas organizations and individuals for state agencies, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations, or people’s armed forces units;

c/ Gifts for Vietnamese individuals within the allowance prescribed by law.

2.2. Goods transited or transported through Vietnamese border gates and borders, and goods transported from/to border gates, including:

a/ Goods transported from the exporting country to the importing country through Vietnam’s border gate without going through procedures for import into Vietnam and procedures for export from Vietnam;

b/ Goods transported from the exporting country to the importing country through Vietnam’s border gate and put into a bonded warehouse without going through procedures for import into Vietnam and procedures for export from Vietnam;

c/ Goods transited or transported through Vietnam’s border gate or border under an agreement between the Governments of Vietnam and another country or between the agencies and representatives authorized by the Governments of Vietnam and another country;

d/ Goods transported from the exporting country to the importing country without passing through Vietnam’s border gate.

2.3. If temporarily imported goods are re-exported within the period in which import duty payment is not required under the law on import duty and export duty, excise tax on the re-exported goods shall not be paid.

If temporarily exported goods are re-imported within the period in which export duty payment is not required under the law on import duty and export duty, excise tax on the re-imported goods shall not be paid.

2.4. Goods temporarily imported for participation in a fair or an exhibition and re-exported within the period in which import duty payment is not required.

If such goods are not re-exported after the end of the fair or exhibition, excise tax shall be declared and paid. An organization or individual that fails to make declaration shall be sanctioned in accordance with law in addition to paying the excise tax arrears.

2.5. Belongings of foreign organizations and individuals within the diplomatic immunity allowances under the law on diplomatic immunities.

2.6. Hand-carried luggage within the import duty-free allowance of Vietnamese people and foreigners when passing through Vietnam’s border gate.

2.7. Imported goods for sale at duty-free shops as prescribed by law.

3. Goods imported from abroad into a non-tariff zone, goods sold to a non-tariff zone from inland and used within the non-tariff zone, and goods traded between non-tariff zones, except goods taken into a non-tariff zone having residents and not having solid fences, and passenger cars of under 24 seats.

Dossiers, the order and competence for allowing non-payment of excise tax in the cases specified in Clauses 2 and 3 of this Article are the same as those for allowing non-payment of and exemption from import duty in accordance with the law on import duty and export duty.

If imported goods that are not subject to excise tax at importation under Clauses 2 and 3 of this Article are used for other purposes, excise tax shall be declared and paid to the customs office under the Ministry of Finance’s guidance on customs procedures, customs inspection and supervision, import duty and export duty, and tax administration of exported and imported goods.

4. Aircraft and cruise ships used for passenger transport, cargo transport, and tourism business, and aircraft used for national defense and security purposes.

If aircraft and cruise ships that are not subject to excise tax are used for purposes other than passenger transport, cargo transport or tourism business or national defense and security, they are subject to excise tax.

A business establishment having imported aircraft or cruise ships that are used for other purposes as mentioned above shall declare and pay excise tax to the customs office under the Ministry of Finance’s guidance on customs procedures, customs inspection and supervision, import duty and export duty, and tax administration of exported and imported goods.

A business establishment having locally made aircraft or cruise ships that are used for other purposes as mentioned above shall declare and pay excise tax on their residual value after subtracting the depreciated value to its managing tax agency.

5. For automobiles specified in Clause 4, Article 3 of the Law on Excise Tax that are designed by manufacturers to be used as ambulances, prisoner vans, hearses; vehicles for inspection and control of radio frequencies; armored mobile adjustable ramp systems; mobile video production vehicles; vehicles designed to carry both seated and standing passengers and capable of carrying 24 people or more; cars running within amusement parks and sports centers and exempted from registration and banned from running on public roads, other specialized vehicles, vehicles exempted from registration, and vehicles banned from running on public roads, the Ministry of Finance shall coordinate with related ministries and agencies in providing specific guidance.

Importers of cars running within an amusement park or sports center, exempted from registration and banned from running on public roads, and thus not subject to excise tax as specified in Clause 5 of this Article shall present the following documents to the customs office with which the import declaration is registered:

- A copy of the business registration certificate which permits the importer to operate the amusement park or sports center (bearing the importer’s signature and seal).

- The importer shall write on the import declaration that “The vehicle is designed exclusively for use within the amusement park or sports center, exempted from registration and banned from running on public roads.” The importer must be responsible for the truthfulness of import documents.

The customs office with which the importer registers the import declaration shall inspect goods, and may not collect excise tax on such goods, and not issue the certificate of origin of imported vehicle to the importer.

If the vehicles designed only for running within amusement parks and sports centers, exempted from registration and banned from running on public roads, and thus not subject to excise tax, for which import procedures have been completed under Clause 5 of this Article, are used for other purposes outside amusement parks and sports centers, and subject to excise tax, the importer shall declare and pay excise tax to the customs office under the Ministry of Finance’s guidance on customs procedures, customs inspection and supervision, import duty and export duty, and tax administration of exported and imported goods. If failing to declare such use, the importer shall be sanctioned under the Law on Tax Administration and guiding documents.

6. Air conditioners of 90,000 BTU or lower and designed to be installed on vehicles only, including cars, railway carriages, ships or aircraft.

In case a business establishment imports or entrusts the import of a central air-conditioning system of over 90,000 BTU, or an importer signs a contract with a Vietnamese installation contractor for supply of a central air-conditioning system of over 90,000 BTU, and the delivery varies according to the construction progress (the system is imported in multiple shipments) in order to avoid excise tax on separate parts of the system, such as outdoor unit and indoor unit, the following papers shall be presented to the customs office:

- An import contract (or import entrustment contract in case of import entrustment) or purchase and sale contract (the original or a copy bearing the importer’s seal) for the central air-conditioning system with a Vietnamese construction contractor; the contract must demonstrate that the system is integrated, has a power of over 90,000 BTU, and is imported as a complete unit according to the manufacturer’s standards, and enclosed with a list of parts of the imported system.

- A diagram of the central air-conditioning unit connection certified by the importer and the construction contractor (if any).

- A letter of inspection of power and integrity of the imported system certifying that separate parts (indoor unit and outdoor unit) or groups of separate parts of the system cannot operate independently, issued by a competent inspection agency as prescribed by law.

If one or some separate parts can be assembled into a complete air-conditioner of 90,000 BTU or lower that can operate independently without connection to the system, each of those parts is subject to excise tax.

- The importer’s commitment to use imported goods for proper purposes and take responsibility before law for such commitment.

When considering the importer’s documents, the customs office shall issue a monitoring sheet according to Appendix I to this Circular.

Article 4. Taxpayers

1. Excise tax payers are organizations and individuals that manufacture and import goods and provide services subject to excise tax, including:

1.1. Business organizations established and registered in accordance with the Law on Enterprises, the Law on State Enterprises (now the Law on Enterprises), or the Law on Cooperatives.

1.2. Economic organizations of political organizations, socio-political organizations, social organizations, socio-professional organizations, socio-political-professional organizations, people’s armed forces units, non-business organizations, and other organizations.

1.3. Foreign-owned enterprises and foreign parties to business cooperation under the Law on Foreign investment in Vietnam (now the Law on Investment); and foreign organizations and individuals doing business in Vietnam without establishing legal entities in Vietnam.

1.4. Individuals, households, groups of independent businesspeople, and other entities engaged in manufacturing, trading and import activities.

2. Exporters that buy goods subject to excise tax from their manufacturers for export but eventually sell them domestically. When selling goods, such exporters shall fully declare and pay excise tax.

Chapter II

TAX BASES

Article 5. Taxable price

The price as the basis for calculating excise tax on a goods or service is the selling price of the goods or service exclusive of excise tax, environmental protection tax (if any) and value-added tax (VAT), which shall be specifically determined as follows:

1. Excise tax on imported goods (except petrol of all types) sold by the importer and on locally made goods shall be calculated as follows:

Of which, the selling price exclusive of VAT shall be determined under the law on VAT; environmental protection tax shall be determined under the law on environmental protection tax.

a/ In case an importer of goods subject to excise tax (except petrol of all types), or a manufacturer of goods subject to excise tax sells goods via its dependent cost-accounting subsidiaries, the taxable price is the selling price set by such subsidiaries. For goods sold by an agent at the price fixed by the importer (except importers of petrol) or manufacturer (the agent only receives commissions), the taxable price is the selling price set by the importer or manufacturer inclusive of commission;

b/ In case an importer of goods subject to excise tax (except automobiles of under 24 seats and petrol of all types), or a manufacturer of goods subject to excise tax (except automobiles of under 24 seats) sells such goods to trading establishments, the taxable price is the selling price set by such importer or manufacturer and must not be over 7% lower than the average price of the same products sold by the trading establishments in the month.

If the selling price set by the importer of goods subject to excise tax (except cars of under 24 seats and petrol of all types), or by a manufacturer of goods subject to excise tax (except cars of under 24 seats) is over 7% lower than the average price of the same products sold by the trading establishments in the month, the taxable price shall be imposed by the tax agency under the law on tax administration.

The trading establishments mentioned at this Point must neither have a parent company-subsidiary relationship with the importer or manufacturer, nor have the same parent company with the importer or manufacturer, and must be the first link of the commercial distribution chain that has a sale and purchase contract with the manufacturer or importer, or with the parent company or a subsidiary that has the same parent company with the importer or manufacturer of goods subject to excise tax. The parent company-subsidiary relationship shall be determined under the Law on Enterprises.

Example 1: Beer B Corporation owns beer B trademark and sells main ingredients to manufacturers of beer B.

Such manufacturers then sell beer B to a single-member limited liability beer B company which is a subsidiary of Beer B Corporation.

The subsidiary sells beer B to regional joint stock trading companies that are its subsidiaries.

Such joint stock companies sign contracts to sell the beer to their level-1 agents, which do not have any parent company-subsidiary relationship with Beer B Corporation, its subsidiary, or the regional joint-stock companies); the level-1 agents sell the beer to level-2 agents, restaurants, consumers, etc.

The manufacturer shall calculate, declare and pay excise tax on the selling prices set by the regional joint-stock companies, provided such prices must not be over 7% lower than the average price of the same products sold by level-1 agents in the month.

Example 2: Beer X Corporation owns beer X trademark. Under a business cooperation contract, Beer X Corporation, which holds the production technology, sells ingredients, bottles and labels to beer production units which then sell beer X to the Corporation.

The Corporation resells the beer to single-member limited liability beer X company which is a subsidiary of the Corporation.

- The subsidiary signs contracts to sell canned and bottled beer X to level-1 agents (which do not have any parent company-subsidiary relationship with Beer X Corporation or its subsidiary); the level-1 agents sell beer X products to level-2 agents, restaurants, consumers, etc.

The manufacturer shall calculate, declare and pay excise tax on the selling prices of canned and bottled beer X set by the subsidiary, provided such prices must not be over 7% lower than the average price of the same products sold by level-1 agents in the month.

- The subsidiary of Beer X Corporation sells draft beer to joint stock beer X company which is another subsidiary of the Corporation); joint stock beer X company sign contracts to sell draft beer to independent agents.

The manufacturer shall calculate, declare and pay excise tax on the selling price of draft beer set by the joint stock company, provided such price must not be over 7% lower than the average price of the same products sold by such independent agents in the month.

c/ For importers, manufacturers or assemblers that sells cars of under 24 seats to trading establishments:

For imported cars of under 24 seats, the taxable price is the selling price set by the importer which must not be lower than 105% of the cost price of an imported car. The cost price of an imported car is the price on which import duty is calculated plus import duty (if any) plus excise tax at importation. If the selling price set by the importer is lower than 105% of the cost price of an imported car, the taxable prices shall be imposed by the tax agency under the law on tax administration.

Example 3: The CIF price of an imported car is USD 20,000; import duty on this model is 70%, and excise tax is 45%. Assuming that the exchange rate at the time of importation is 22,500 VND/USD, then the VAT-exclusive selling price on the importer’s invoice is VND 1,164,712,500. Accordingly, excise tax payable by the importer when selling such cars is as follows:

Unit of calculation: VND

Example 4: In the same situation as example 3, but the VAT-exclusive selling price on the importer’s invoice is VND 1,100,000,000. In this case the VAT-exclusive taxable price set by the importer is lower than 105% of the cost price of an imported car. Thus the tax agency shall impose the selling price under the law on tax administration.

Example 5: In the same situation as example 3, but the VAT-exclusive selling price on the importer’s invoice is VND 1,186,897,500 (higher than 105% of the cost price of an imported car). Accordingly, excise tax payable by the importer when selling such cars is as follows:

Unit of calculation: VND

The taxable price of a car of under 24 seats manufactured or assembled in Vietnam is the selling price of the same type of products manufactured which must not be over 7% lower than the average price set by trading establishments. The average selling price set by trading establishments for comparison is the selling price of a car without additional equipment and parts requested by the customer. If the selling price set by the manufacturer or assembler is over 7% lower than of the average price of the same products sold by the trading establishment in the month, the taxable price shall be imposed by the tax agency under the law on tax administration.

2. For imported goods, taxable prices at importation shall be determined as follows:

Taxable price = Price on which import duty is calculated + Import duty

The taxable price shall be determined under the law on import duty and export duty. If imported goods are eligible for import duty exemption or reduction, the taxable price must not include the exempted or reduced import duty amount.

3. For goods subject to excise tax, the taxable price is exclusive of VAT, environmental protection tax (if any) and excise tax, and inclusive of the package value.

For bottled beer, if a deposit for the bottles has been paid and the manufacturer and customers make quarterly statements of the deposit, the deposit on the unrecovered bottles shall be included in the revenue subject to excise tax.

Example 6: The VAT-exclusive price for a liter of boxed beer in 2016 is VND 21,000. The excise tax rate on beer is 55%. The taxable price shall be determined as follows:

Example 7: In the second quarter of 2016, the VAT-exclusive price for a 24-bottle pack of Hanoi beer is VND 124,000. The taxable price shall be determined as follows:

Example 8: In the third quarter of 2016, company A sells 1,000 bottles of beer to customer B and receives a deposit of VND 1,200 for a bottle. The total deposit is VND 1,200,000. At the end of the quarter, according to the statement of company A and customer B, 800 empty bottles are recovered and 200 bottles are not recovered. Accordingly, company A returns VND 960,000 to customer B. The deposit on unrecovered bottles is VND 240,000 (200 bottles x VND 1,200/bottle) and shall be included in the company’s revenue subject to excise tax.

4. The taxable price of processed goods is the taxable price of goods sold by the hiring party or the selling price of products of the same or similar type at the time of selling, exclusive of VAT, environmental protection tax (if any) and excise tax.

If the hiring party sells processed goods to a trading establishment, the taxable price shall be determined under Point b or c, Clause 1 of this Article.

5. For goods manufactured under a business cooperation contract between the manufacturer and the establishment that uses or owns the trademark (brand name) or manufacturing technology, taxable prices are selling prices exclusive of VAT and environmental protection tax (if any) set by such establishment. Taxable prices for goods manufactured under a franchise license and sold by Vietnam-based branches or representative offices of a foreign company in Vietnam are the selling prices set by such branches or representative offices.

If such branches or representative offices sell the goods to another trading establishment, the taxable prices shall be determined under Point b or c, Clause 1 of this Article.

6. Taxable prices of goods sold under a deferred payment plan or an installment plan are selling prices exclusive of VAT, environmental protection tax (if any), and excise tax of goods sold with one-off payment, exclusive of deferred payment interest or installment interest.

7. Taxable prices of goods or services used for the activity of exchange, internal use, giving as gifts or sales promotion are taxable prices of goods or services of the same or similar type at the time such activity arises.

8. Where an exporter buys goods subject to excise tax from a manufacturer and sells them domestically instead of exporting, the taxable price in this case is the selling price exclusive of excise tax, environmental protection tax (if any) and VAT, and shall be determined as follows:

If the selling price (inclusive of VAT, environmental protection tax (if any) and excise tax) declared by the exporter as the basis for determination of taxable price is over 7% lower than the selling price on the market, the taxable price shall be imposed by the tax agency in accordance with the Law on Tax Administration and guiding documents.

9. Taxable prices of services are prices set by the service provider, exclusive of VAT and excise tax, which shall be determined as follows:

VAT-exclusive service prices as the basis for determination of taxable prices of some particular services are prescribed below:

a/ For golf business (including operation of golf training courses), the taxable price  is the VAT-exclusive revenue from selling membership cards and golf tickets, including training tickets, charges for course maintenance, buggies, caddies, deposits (if any) and other amounts paid by golf players and members. If the deposit is returned, tax thereon shall be deducted from tax payable in the subsequent period or refunded under regulations. If a golf business establishment also sells other goods and services that are not subject to excise tax such as hotel, food and beverage, goods and games, these goods and services are not subject to excise tax.

Example 9. A golf business establishment does business in hotel, food and beverage, goods and games that are not subject to excise tax, so these business activities are not subject to excise tax.

b/ For casino and prize-winning electronic games, the taxable price is the revenue from the casino or prize-winning electronic games, exclusive of the prizes given to players, which is (=) the amount (exclusive of VAT) collected from players at the money-exchange counter before playing or at game machines minus (-) the amount exchanged back to players;

c/ For betting business, the taxable price is the revenue from selling betting tickets minus (-) prizes given to players (exclusive of VAT), not including sold entrance tickets to watch entertainment events associated with the betting business;

d/ For discotheque, massage and karaoke business, the taxable price is the VAT-exclusive revenue from services provided within the discotheque, massage and karaoke business, including revenues from food and drink and associated services (e.g., showering and sauna in a massage establishment).

Example 10: VAT-exclusive revenue of a discotheque (including revenue from food and drink) of establishment A in a tax period is VND 100,000,000.

dd/ For lottery business, the taxable price is the VAT-exclusive revenue from selling lottery tickets in the forms permitted by law.

10. The taxable prices of goods or services specified in Clauses 1 thru 9 of this Article are inclusive of surcharges (if any) collected by business establishments, in addition to goods selling prices or service provision charges (if any). Particularly, the taxable price of tobacco is inclusive of mandatory contributions and supportive funds specified in the Law on Prevention and Control of Tobacco Harms.

Taxable prices shall be calculated in Vietnam dong. In case a taxpayer earns revenue or fixes a taxable price in a foreign currency, it shall be converted into Vietnam dong at the actual exchange rate prescribed by the Law on Tax Administration and guiding documents.

For imported goods, the exchange between Vietnam dong and a foreign currency to determine the taxable price must comply with the law on import duty and export duty.

11. In case the manufacturer or trading establishment fails to comply with invoicing regulations, the tax agency shall impose the revenue according to its practical manufacture and business situation under the Law on Tax Administration, and determine the payable excise tax amount.

12. Time for determination of excise tax:

- For goods: The time of earning revenue is the time of transferring the right to own or use the goods to the buyer, regardless of whether or not the payment is collected.

- For services: The time of earning revenue is the time of completion of service provision or issuance of the invoice to the service buyer, regardless of whether or not the payment is collected.

- For imported goods: It is the time of registration of the customs declaration form.

13. Manufacturers and importers of goods or providers of services subject to excise tax shall comply with accounting and invoicing regulations when buying and selling goods and providing services and transporting goods as prescribed by law.

When a manufacturer sells or delivers goods to branches, subsidiaries or agents, it shall use invoices. If a branch or store is located in the same province with the manufacturer, or goods are moved from one warehouse to another, a manufacturer may use the ex-warehousing-cum-internal transport slip enclosed with the internal transfer order.

Manufacturers of goods subject to excise tax using brand names shall register such brand names as prescribed.

Article 6. Excise tax rates

1. Excise tax rates are specified in Clause 4, Article 1 of November 26, 2014 Law No. 70/2014/QH13 Amending and Supplementing a Number of Articles of the Law on Excise Tax and Article 5 of the Government’s Decree No. 108/2015/ND-CP of October 28, 2015.

2. In case a manufacturer manufactures various types of goods or provides various types of services subject to various excise tax rates, it shall declare and pay excise tax at a corresponding rate on each type of goods or service. If it cannot determine a specific excise tax rate on each type of goods or service, it shall calculate and pay excise tax at the highest rate on all of its goods or services.

Chapter III

TAX REFUND, TAX DEDUCTION, TAX REDUCTION

Article 7. Tax refund

Excise tax payers are entitled to tax refund for:

1. Goods temporarily imported and re-exported, including:

a/ Imported goods on which excise tax has been paid but which are still stored at the border gate under customs supervision, then re-exported abroad;

b/ Imported goods on which excise tax has been paid for delivery or sale to foreign partners via agents in Vietnam; and imported goods for sale to foreign ships on international routes through Vietnam’s ports and Vietnamese ships on international routes as prescribed by the Government;

c/ Goods temporarily imported for re-export for business purpose, for which paid excise tax on the quantity of re-exported goods shall be refunded;

d/ Imported goods on which excise tax has been paid but which are re-exported, for which paid excise tax on the quantity of re-exported goods shall be refunded;

dd/ Goods temporarily imported to participate in a fair or an exhibition, or for display or serve other purposes for a limited period of time on which excise tax has been paid, for which the paid tax shall be refunded upon re-export;

e/ Imported goods on which excise tax has been paid as declared but the actual quantity of imported goods is smaller than the declared quantity; and imported goods on which excise tax has been paid but which are damaged or lost during importation for plausible reasons;

g/ With regard to imported goods the quality or categories of which is or are not consistent with the contract or import permit (due to the fault of the foreign goods owner), if a competent agency has inspected, the foreign goods owner has certified, and goods are allowed to be imported, the customs office shall inspect and verify the payable excise tax amount. Excessively paid tax shall be refunded and tax arrears shall be fully paid.

If goods are re-exported to the foreign goods owner, paid excise tax on the quantity of re-exported goods shall be refunded.

If goods are returned to the foreign goods owner within the period in which import duty payment is not required, the customs office shall examine the procedures and not collect excise tax on the quantity of returned goods.

2. For materials imported for manufacturing or processing goods for export, paid excise tax on the quantity of materials used for manufacturing or processing goods that have been actually exported shall be refunded.

The provisions on excise tax refund in Clauses 1 and 2 of this Article only apply to goods that have been actually exported; dossiers, procedures, order and competence for settling the refund of excise tax on imported goods are similar to those for import duty refund prescribed in the law on import duty and export duty.

3. When making finalization upon merger, division, splitting, dissolution, bankruptcy, ownership transformation, assignment, sale, contracting or lease of state enterprises that have paid excise tax excessively, excise tax refund may be claimed.

4. Excise tax shall be refunded in the following cases:

a/ The refund is decided by a competent agency under law;

b/ The refund is required under a treaty to which the Socialist Republic of Vietnam is a contracting party;

c/ Paid excise tax is higher than payable excise tax.

The procedures, dossiers, order and competence for excise tax refund in the cases specified in Clauses 3 and 4 of this Article must comply with the Law on Tax Administration and guiding documents.

Article 8. Tax deduction

1. A taxpayer that manufactures goods subject to excise tax from materials subject to excise tax is entitled to deduction of the paid excise tax on the quantity of materials imported or purchased from another domestic manufacturer when determining the payable excise tax. The deductible excise tax amount equals the excise tax amount on the materials used for manufacturing goods sold. Excise tax amount that has not yet been fully deducted in a period may be further deducted in the next period.

For biofuels, the deductible excise tax amount in a tax period shall be based on the amount of paid excise tax on a unit of material of mineral petrol purchased in the previous period for manufacturing biofuels.

Example 11: In October, Group AB imports 5,000 liters of RON 92 mineral petrol, pays VND 5,000,000 in excise tax at importation; buys 3,000 liters of RON 92 mineral petrol from refinery D and pays VND 3,300,000 in excise tax. It mixes such mineral petrol and ethanol to have 2,000 liters of E5 biofuel.

In November, Group AB sells 1,000 liters of E5 biofuel to its subsidiaries.

The proportion of RON 92 mineral petrol in biofuel is 95.06%; ethanol, 4.94%.

Deductible excise tax in November shall be calculated as follows:

(VND 5,000,000 + VND 3,300,000)/8,000 liters x 95.06% x 1,000 liters = VND 986,247.

In December, Group AB sells E5 biofuel that was manufactured in October and November. The deductible amount of excise tax on biofuel sold in December shall also be based on the paid amount of excise tax on mineral petrol imported or purchased in November from refinery D.

2. Payers of excise tax on goods subject to excise tax at importation (except petrol) are entitled to deduction of the excise tax amount paid at importation from excise tax payable on goods sold domestically. The deductible excise tax amount equals excise tax on goods subject to excise tax that are sold after import, and must not exceed the excise tax on goods sold domestically. In special cases, the taxpayer may include the excise tax amount that is not fully deducted because of a force majeure event in expenses when calculating enterprise income tax.

Conditions for excise tax deduction are prescribed below:

- When importing materials subject to excise tax to manufacture goods subject to excise tax, and when importing goods subject to excise tax, the receipt of excise tax payment at importation is the basis for excise tax deduction.

- If materials are purchased from a domestic manufacturer:

+ The purchase and sale contract which shows that the materials are directly manufactured by the seller; and a copy of the business registration certificate of the seller (bearing the seller’s signature and seal).

+ Via-bank payment document.

+ VAT invoice for bought materials. The amount of excise tax paid by the buyer when buying materials equals (=) taxable price multiplied by (x) excise tax rate, in which:

Excise tax shall be deducted upon excise tax declaration. Payable excise tax shall be calculated according to the following formula:

If payable excise tax or paid excise tax on the quantity of materials used for manufacturing goods sold in the period cannot be calculated accurately, the figures of the previous period may be used to calculate the deductible excise tax amount and the actual amount shall be determined at the end of the quarter or year. In any case, the deductible excise tax amount must not exceed the excise tax on the quantity of materials according to economic-technical norms applied to such products. The manufacturer shall register such economic-technical norms with the managing tax agency.

Example 12: In a tax period, establishment A:

+ Imports 10,000 liters of alcohol and pays VND 250 million in excise tax at importation (according to the receipt of excise tax payment at importation).

+ Uses 8,000 liters of alcohol to manufacture 12,000 bottles of alcohol.

+ Sells 9,000 bottles of alcohol; excise tax on these 9,000 bottles is VND 350 million.

+ Excise tax on the quantity of imported alcohol corresponding to 9,000 bottles that are sold is VND 150 million.

Excise tax payable by establishment A in this period is:

VND 350 million - VND 150 million = VND 200 million.

Example 13: In a tax period, establishment B:

+ Imports 100 air conditioners of 12,000 BTU and pays VND 100 million in excise tax at importation (according to the receipt of excise tax payment at importation).

+ Sells 100 air conditioners domestically; excise tax on these air conditioners is VND 120 million.

Excise tax payable by establishment B in this period is:

VND 120 million - VND 100 million = VND 20 million.

Example 14: In a tax period, establishment B:

+ Imports 100 air conditioners of 12,000 BTU and pays VND 100 million in excise tax at importation (according to the receipt of excise tax payment at importation).

+ Sells 100 air conditioners domestically; excise tax on these air conditioners is VND 90 million because of a force majeure event.

Establishment B is entitled to deduction of VND 90 million in excise tax. Establishment B may include the excise tax amount that is not yet deducted (VND 10 million) in expenses when calculating enterprise income tax.

Enterprises permitted to manufacture E5 and E10 biofuels shall declare and deduct excise tax at tax agencies of the localities where their head offices are located. The amount of excise tax on E5 and E10 biofuels not yet fully deducted in a period may be cleared against the amount of excise tax payable on other goods and services.

Taxpayers shall use excise tax declaration form No. 01/TTDB and form No. 01-1/TTDB on determination of deductible excise tax (if any) on purchased materials and imported goods issued together with this Circular.

Article 9. Tax reduction

Excise tax reduction must comply with Article 9 of Law No. 27/2008/QH12 on Excise Tax.

Procedures and dossiers for tax reduction must comply with the Law on Tax Administration and guiding documents.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 10. Effect

1. This Circular takes effect on January 1, 2016.

2. This Circular replaces the Ministry of Finance’s Circular No. 05/2012/TT-BTC of January 5, 2012, guiding the implementation of the Government’s Decree No. 26/2009/ND-CP of March 16, 2009, and Decree No. 113/2011/ND-CP of December 8, 2011, detailing a number of articles of the Law on Excise Tax.

Article 11. Organization of implementation

1. Tax agencies shall organize and manage the collection, refund and reduction of excise tax for business establishments.

2. Customs offices shall organize and manage the collection and refund of excise tax on imported goods.

3. Any difficulties and problems that arise in the course of implementation should be reported to the Ministry of Finance for timely settlement.-

For the Minister of Finance
Deputy Minister
DO HOANG ANH TUAN