Circular No. 218/2015/TT-BTC dated December 31, 2015 of the Ministry of Finance providing for the policy and tax management for traders engaged in purchase, sale and exchange of goods in border markets, border- gate markets and markets in border-gate economic zones according to the Decision No. 52/2015/QD-TTg dated October 20, 2015 of the Prime Minister on the management of border trade with neighboring countries

CIRCULAR

Guiding policies and tax administration for traders that purchase, sell or exchange goods in border markets, border-gate markets or markets in border-gate economic zones under the Prime Minister’s Decision No. 52/2015/QD-TTg of October 20, 2015[1]

Pursuant to November 29, 2006 Law No. 78/2006/QH10 on Tax Administration; November 20, 2012 Law No. 21/2012/QH13 Amending and Supplementing a Number of Articles of the Law on Tax Administration; and 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. 51/2010/ND-CP of May 14, 2010, and Decree No. 04/2014/ND-CP of January 17, 2014, providing goods sale and service provision invoices;

Pursuant to June 14, 2005 Commercial Law No. 36/2005/QH11;

Pursuant to the Government’s Decree No. 12/2015/ND-CP of February 12, 2015, detailing the implementation of the Law Amending and Supplementing a Number of Articles of the Laws on Taxes and amending and supplementing a number of articles of the decrees on taxes;

Pursuant to the Government’s Decree No. 187/2013/ND-CP of November 20, 2013, detailing the implementation of the Commercial Law regarding international goods sale and purchase and goods sale, purchase, processing and transit activities with foreign countries;

Pursuant to the Prime Minister’s Decision No. 52/2015/QD-TTg of October 20, 2015, on management of border trade with neighboring countries;

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 promulgates the Circular guiding policies and tax administration for traders that purchase, sell or exchange goods in border markets, border-gate markets or markets in border-gate economic zones as follows:

Part I

GENERAL GUIDANCE

Article 1. Scope of regulation

This Circular guides policies and tax administration for traders that purchase, sell or exchange goods in border markets, border-gate markets or markets in border-gate economic zones.

Article 2. Subjects of application

1. Traders that purchase, sale or exchange goods in border markets, border-gate markets or markets in border-gate economic zones specified in Article 18 of the Prime Minister’s Decision No. 52/2015/QD-TTg of October 20, 2015, include:

- Traders that are business individuals bearing Vietnamese citizenship and having registered for permanent residence in border areas.

- Traders that are Vietnamese enterprises and business households established and registered in accordance with the law on business registration.

- Traders that are business individuals bearing the citizenship of a neighboring country, possessing any of the following valid papers: border identity card, border laissez passer, passport or another entry and exit paper issued in accordance with the law of the neighboring country, and having been granted a business registration certificate by a Vietnamese competent agency according to regulations.

- Traders that are enterprises or business households of a neighboring country that possess a business registration certificate granted in accordance with the law of the neighboring country.

2. Tax agencies, customs offices and related agencies, organizations and individuals.

Part II

POLICIES, USE OF INVOICES AND TAX ADMINISTRATION FOR TRADERS THAT PURCHASE, SELL AND EXCHANGE GOODS IN BORDER MARKETS, BORDER-GATE MARKETS OR MARKETS IN BORDER-GATE ECONOMIC ZONES

Article 3. Tax policies for business organizations and individuals

1. A trader that purchases, sells or exchanges goods in border markets, border-gate markets or markets in border-gate economic zones shall pay value-added tax, enterprise income tax, personal income tax and other taxes, charges and fees in accordance with the current tax laws.

2. A trader that purchases, sells or exchanges goods in border markets, border-gate markets or markets in border-gate economic zones must have sufficient documents proving the origin of his/her/its goods before selling them, ensuring that taxes have been fully paid for such imported goods at the stage of importation under regulations, specifically:

- For goods re-purchased from border inhabitants, the trader must have sufficient documents prescribed in the Prime Minister’s Decision No. 52/2015/QD-TTg of October 20, 2015, and the Ministry of Finance’s guidance to prove that such goods have gone through customs procedures with taxes and other obligations fully paid and fulfilled according to regulations.

- For goods directly imported by the trader, documents prescribed in the customs law and the Ministry of Finance’s guidance are required.

- For goods purchased from other business organizations or individuals, invoices issued by goods sellers under regulations on invoices are required.

3. Goods exported in the form of cross-border purchase and sale of goods by a trader being an enterprise shall be eligible for value-added tax refund if satisfying conditions prescribed in the current value-added tax law.

Article 4. Use of invoices

1. A trader that purchases, sells or exchanges goods in border markets, border-gate markets or markets in border-gate economic zones shall use invoices under regulations. When selling goods of a value of VND 200,000 or more each time, the trader shall issue an invoice to the buyer and take responsibility for goods origin. In case the buyer refuses to receive the invoice or provide his/her name, address and tax identification number (in any), the trader shall still make out the invoice and write “the buyer refuses to receive the invoice” or “the buyer fails to provide his/her name, address and tax identification number”.

The date of making out a sale invoice is the time of transferring the right to own or use the goods to the buyer, regardless of whether payment has been made or not.

2. For traders being business households or individuals

A household or an individual doing business in border markets, border-gate markets or markets in border-gate economic zones shall fully keep documents proving the origin of its/his/her goods according to Clause 2, Article 3 of this Circular.

Every month, the business household or individual shall declare its/his/her invoice-based turnover in the report on use of invoices made according to form No. 01/BC-SDHD-CNKD promulgated together with the Ministry of Finance’s Circular No. 92/2015/TT-BTC of June 15, 2015, and pay value-add tax and personal income tax arising according to these invoices on a monthly basis (once a month). The deadline for submission of a report on use of invoices and tax payment is the 20^th of the following month.

3. For a trader being an enterprise

- The enterprise may use invoices printed on order, invoices purchased from tax agencies under current regulation or e-invoices according to the roadmap set by tax agencies and shall comply with the accounting book regime applicable to enterprises under regulations.

- When selling goods, the enterprise shall make out and hand over invoices to buyers according to regulations, take responsibility for goods origin and fully keep documents proving goods origin according to Clause 2, Article 3 of this Circular.

- Every month, the enterprise shall submit a report on use of invoices made according to form No. 3.9 provided in Appendix 3 to the Ministry of Finance’s Circular No. 39/2014/TT-BTC of March 31, 2014, not later than the 20^th of the following month.

Article 5. Tax declaration and payment

1. A trader being an enterprise governed by this Circular shall declare and pay value-added tax on a monthly basis; pay temporarily calculated enterprise income tax on a quarterly basis; and make year-end enterprise income tax finalization in accordance with the Law on Tax Administration and the Ministry of Finance’s guiding documents.

Turnover from goods sale shall be determined according to monthly value-added tax declarations.

2. Tax declaration and payment by the presumption method of business households and individuals must comply with the Ministry of Finance’s Circular No. 92/2015/TT-BTC of June 15, 2015, and guiding documents.

An individual’s presumptive turnover in a tax year shall be assessed on the basis of the previous year’s presumptive turnover; turnover declared by the individual; tax agencies’ databases; customs offices’ databases; forecasts of economic growth and price indexes; and opinions of tax advisory councils of communes, wards or townships.

Article 6. Tax administration

Tax agencies shall conduct tax administration of traders that purchase, sell and exchange goods in border markets, border-gate markets and markets in border-gate economic zones through monthly inspections, focusing on:

- Examining and comparing reports on use of invoices (made according to form No. 01/BC-SDHD-CNKD promulgated together with the Ministry of Finance’s Circular No. 92/2015/TT-BTC of June 15, 2015) with the situation of use of invoices at business households. If detecting acts of selling goods without making out invoices, tax agencies shall retrospectively collect taxes and sanction acts of tax evasion in accordance with the law on tax administration.

- Examining the value of sold goods stated in invoices. If, after referring to customs offices’ databases on reference prices and regulations of the Law on Tax Administration, tax agencies have sufficient documents to determine that the value of sold goods stated in an invoice is unconformable with the market price, they shall assess a price for use as a basis for determining value-added tax, personal income tax and enterprise income tax amounts payable according to invoices.

- If detecting that turnover from sale of imported goods or goods categories is/are unconformable with goods origin and value stated in customs declarations, or re-purchased goods have not yet gone through customs procedures or taxes have not yet been paid, tax agencies shall provide information to customs offices for the latter to retrospectively collect taxes at the stage of importation according to regulations.

Article 7. Principles of coordination between tax agencies and customs offices

Tax agencies shall, in the course of tax administration, exploit customs offices’ databases for comparison with traders’ turnovers from goods sale. If detecting any unreasonable signs in the value of imported goods and sold goods (value of imported goods is higher than turnover from goods sale  or turnover from goods sale is large while the value of imported goods is low), tax agencies shall coordinate with other functional agencies in inspecting traders’ warehouses in order to determine inventories, adjust presumptive turnover of business households and individuals under regulations on taxes and handle the case according to relevant regulations.

Part III

ORGANIZATION OF IMPLEMENTATION

Article 8. Effect

1. This Circular takes effect 45 days from the date of its signing.

2. Other contents on invoice management and tax collection management for traders that purchase, sell or exchange goods in border markets, border-gate markets or markets in border-gate economic zones not guided in this Circular shall still comply with currently effective legal documents.

Article 9. Implementation responsibility

1. Provincial-level People’s Committees shall direct functional agencies to comply with the Prime Minister’s Decision No. 52/2015/QD-TTg and the Ministry of Finance’s guidance.

2. Tax agencies at all levels shall disseminate and guide organizations and individuals to comply with this Circular.

3. Organizations and individuals governed by this Circular shall comply with the guidance in this Circular.

Any problems arising in the course of implementation should be promptly reported to the Ministry of Finance for settlement.-

For the Minister of Finance
Deputy Minister
DO HOANG ANH TUAN