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THE MINISTRY OF FINANCE
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THE SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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No. 25/2018/TT-BTC
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Hanoi, March 16, 2018
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CIRCULAR
Guiding the implementation of the Government’s Decree No. 146/2017/ND-CP of December 15, 2017, and amending and supplementing a number of articles of the Ministry of Finance’ Circular No. 78/2014/TT-BTC of June 18, 2014, and Circular No. 111/2013/TT-BTC of August 15, 2013[1]
Pursuant to June 29, 2006 Law No. 70/2006/QH11 on Securities and November 24, 2010 Law No. 62/2010/QH12 Amending and Supplementing a Number of Articles of the Law on Securities;
Pursuant to November 21, 2007 Law No. 04/2007/QH12 on Personal Income Tax and November 22, 2012 Law No. 26/2012/QH13 Amending and Supplementing a Number of Articles of the Law on Personal Income Tax;
Pursuant to November 26, 2014 Law No. 68/2014/QH13 on Enterprises;
Pursuant to November 26, 2014 Law No. 71/2014/QH13 Amending and Supplementing a Number of Articles of the Laws on Taxes;
Pursuant to April 6, 2016 Law No. 106/2016/QH13 Amending and Supplementing a Number of Articles of the Law on Value-Added Tax, Law on Excise Tax and Law on Tax Administration;
Pursuant to the Government’s Decree No. 65/2013/ND-CP of June 27, 2013, detailing a number of articles of the Law on Personal Income Tax and Law Amending and Supplementing a Number of Articles of the Law on Personal Income Tax;
Pursuant to the Government’s Decree No. 12/2015/ND-CP of February 12, 2015, detailing 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. 100/2016/ND-CP of July 1, 2016, detailing the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax, Law on Excise Tax and Law on Tax Administration;
Pursuant to the Government’s Decree No. 146/2017/ND-CP of December 15, 2017, amending and supplementing a number of articles of the Government’s Decree No. 100/2016/ND-CP of July 1, 2016, and Decree No. 12/2015ND-CP of February 12, 2015;
Pursuant to the Government’s Decree No. 87/2017/ND-CP of July 26, 2017, 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 the implementation of the Government’s Decree No. 146/2017/ND-CP of December 15, 2017, and amending and supplementing a number of articles of the Ministry of Finance’ Circular No. 78/2014/TT-BTC of June 18, 2014, and Circular No. 111/2013/TT-BTC of August 15, 2013, as follows:
Article 1. To amend and supplement Clause 23, Article 4 of the Ministry of Finance’s Circular No. 219/2013/TT-BTC of December 31, 2013 (which was amended and supplemented under the Ministry of Finance’s Circular No. 130/2016/TT-BTC of August 12, 2016), as follows:
“23. Exported products being exploited natural resources and minerals not yet processed into other products.
Exported products being goods processed directly from main materials being natural resources and minerals with a total value of natural resources and minerals plus energy cost accounting for at least 51% of the production cost of the products, except the cases prescribed in Clause 1, Article 1 of Decree No. 146/2017/ND-CP.
a/ Natural resources and minerals are those of domestic origin, including metal minerals, non-metal minerals, crude oil, natural gas, and coal gas.
b/ The ratio of the value of natural resources and minerals and energy cost to the production cost shall be determined according to the following formula:
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Ratio of the value of natural resources and minerals and energy cost to the production cost
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=
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Value of natural resources and minerals
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+ Energy cost
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x
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100%
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Total production cost
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Of which:
The value of natural resources and minerals put into processing shall be determined as follows: For exploited natural resources and minerals, their value consists of direct and indirect costs for exploitation of such natural resources and minerals, exclusive of the cost of their transportation from the place of exploitation to the place of processing; for natural resources and minerals purchased for further processing, their value is the actual purchasing price, exclusive of the cost of their transportation from the place of purchase to the place of processing.
The energy cost consists of the costs of fuel, electricity and thermal energy.
The value of natural resources and minerals and energy cost shall be determined based on their book value conformable with the table of production costs.
Production costs include the cost of direct materials, cost of direct labor and overhead cost. Indirect expenses like sale expense, management expense, financial expense and other expenses shall not be included in the production costs.
The ratio of the value of natural resources and minerals and energy cost to the production costs shall be determined based on the previous year’s final accounts and maintained in the year the products are exported. In the first year of export this ratio shall be determined according to the investment plan and maintained in the year the products are exported. If no investment plan is available, this ratio shall be determined based on the actual value of exported products;
c/ In case enterprises do not export but sell the products to other enterprises for export, the latter shall declare value-added tax as for products of the same type exported by the former;
d/ Within the ambit of their functions and tasks, provincial-level Tax Departments shall coordinate with specialized state management agencies in localities in guiding enterprises that produce and export products from natural resources and minerals to base themselves on the characteristics and production process of the products to determine whether exported products are natural resources and minerals already processed or not yet processed into other products in order to make declaration under regulations.
In case enterprises declare products processed into other products while the production process is not reliable enough for determining whether these products are other products, provincial-level Tax Departments shall report such to the General Department of Taxation for the latter to coordinate with related ministries and specialized state management agencies to base themselves on the enterprises’ production process to determine whether exported products being natural resources and minerals have been or have not yet been processed into other products in accordance with law.”
Article 2. To amend and supplement Clause 4, Article 18 of the Ministry of Finance’s Circular No. 219/2013/TT-BTC of December 31, 2013 (which was amended and supplemented under the Ministry of Finance’s Circular No. 130/2016/TT-BTC of August 12, 2016), as follows:
“4. Tax refund for exports and services
a/ In a month (in case of monthly declaration) or a quarter (in case of quarterly declaration), a business establishment that has an input value-added tax amount of VND 300 million or over not credited for exports or services, including goods which are imported and then exported to non-tariff areas and goods which are imported and then exported abroad, is entitled to claim value-added tax refund on a monthly or quarterly basis. If the input value-added tax amount not yet credited in a month or quarter is lower than VND 300 million, the remainder shall be credited in the subsequent month or quarter.
In a month or quarter, if a business establishment both exports and domestically sells goods or services, it shall separately account the input value-added tax amount used for the production and trading of exports or services. If it is impossible to make separate accounting, the input value-added tax amount for exports or services shall be determined based on the ratio of the turnover from exports or services to the total turnover from goods or services of the value-added tax declaration periods counting from the tax declaration period following the preceding period of tax refund to the current period of request for tax refund.
If, after clearing the input value-added tax amount for exports or services (including the input value-added tax amount separately accounted and the input value-added tax amount distributed based on the above ratio) against the payable value-added tax amount for domestically sold goods or services, the remainder is VND 300 million or over, the business establishment is entitled to claim tax refund for the exports or services. The refundable value-added tax amount must not exceed the turnover from exports or services multiplied by (x) 10%.
Entities entitled to claim tax refund in some cases are prescribed as follows: In case of export entrustment, these entities are establishments that have goods exported under entrustment; in case of intermediary processing, these entities are establishments that sign export processing contracts with foreign partners; for goods exported for construction of overseas works, these entities are enterprises that have goods and supplies exported for construction of overseas works; or for goods exported on the spot, these entities are business establishments that have goods exported on the spot.
b/ Business establishments are not entitled to claim value-added tax refund for goods imported and then exported not in customs operation areas as prescribed by the customs law; or goods exported not in customs operation areas as prescribed by the customs law;
c/ Tax offices shall refund tax before conducting inspection to exports-producing taxpayers that have not been handled for acts of cross-border goods smuggling or illegal transportation, tax evasion, tax fraud or trade fraud for two consecutive years; and taxpayers that are not classified as prone to high risks under the Law on Tax Administration and guiding documents.”
Article 3. To amend and supplement Item e, Point 2.2, Item b, Point 2.6, and Points 2.11 and 2.30, Clause 2, Article 6 of the Ministry of Finance’s Circular No. 78/2014/TT-BTC of June 18, 2014 (which was amended and supplemented under Article 4 of the Ministry of Finance’s Circular No. 96/2015/TT-BTC of June 22, 2015), as follows:
1. To supplement Item e, Point 2.2, Clause 2, Article 6 of Circular No. 78/2014/TT-BTC (which was amended and supplemented under Article 4 of the Ministry of Finance’s Circular No. 96/2015/TT-BTC of June 22, 2015), as follow:
“In case an enterprise transfers part of its capital or transfers the whole enterprise to another enterprise involving the transfer of assets under law, the transferee may only include the fixed asset depreciation expense in deductible expenses for the transferred assets eligible for depreciation based on their residual value stated in the account book of the transferor.”
2. To amend the first paragraph of Item b, Point 2.6, Clause 2, Article 6 of Circular No. 78/2014/TT-BTC (which was amended and supplemented under Article 4 of the Ministry of Finance’s Circular No. 96/2015/TT-BTC of June 22, 2015), as follow:
“b/ Salaries and bonuses for employees for which the payment conditions and levels are not specified in one of the following documents: labor contract; collective labor agreement; financial regulation of the company, corporation or group; or reward regulation issued by the chairperson of the Board of Directors, general director or director under the financial regulation of the company, corporation or group.”
3. To amend and supplement Point 2.11, Clause 2, Article 6 of Circular No. 78/2014/TT-BTC (which was amended and supplemented under Article 4 of the Ministry of Finance’s Circular No. 96/2015/TT-BTC of June 22, 2015), as follow:
“2.11. Deductions in excess of VND 3 million/month/person for setting up the voluntary pension fund and purchasing voluntary pension insurance or life insurance for employees; or deductions in excess of the levels prescribed by the laws on social insurance and health insurance for setting up social security funds (compulsory social insurance fund and additional pension insurance fund), health insurance fund and unemployment insurance fund for employees.
Deductions for setting up the voluntary pension fund and social security funds and purchasing voluntary pension insurance or life insurance for employees allowed to be included in deductible expenses must not exceed the levels specified at this Point and their payment conditions and levels shall also be specified in one of the following documents: labor contract; collective labor agreement; financial regulation of the company, corporation or group; or reward regulation issued by the chairperson of the Board of Directors, director general or director according to the financial regulation of the company, corporation or group.
Enterprises may not include the payments for the above voluntary programs in their expenses if they fail to fulfill all the obligations related to compulsory insurance for employees (including the case of owing compulsory insurance premiums).”
4. To amend the first paragraph of the fifth em rule of Point 2.30, Clause 2, Article 6 of Circular No. 78/2014/TT-BTC (which was amended and supplemented under Article 4 of Circular No. 96/2015/TT-BTC), as follow:
“- Welfare expenses paid directly to employees, such as expenses for funerals and weddings of employees and their relatives; expenses on summer holidays or medical treatment; expenses for refresher training courses; expenses for employees’ families affected by natural disasters, enemy sabotage, accidents or illnesses; expenses for rewarding employees’ children for their study achievements; expenses for employees’ travel during holidays; payment for accident insurance, health insurance, and other voluntary insurance for employees (except life insurance and voluntary pension insurance for employees mentioned at Point 2.11 of this Article), and other welfare expenses. The total welfare expenses must not exceed one month’s average wage actually paid in the tax year of the enterprise.”
Article 4. To amend and supplement Point b, Clause 4, Article 2 of the Ministry of Finance’s Circular No. 111/2013/TT-BTC of August 15, 2013, as follows:
“b/ Incomes from securities transfer, including income from transfer of stocks and the right to purchase stocks, bonds, treasury bills, fund certificates and securities of other types as prescribed in Clause 1, Article 6 of the Law on Securities. Incomes from transfer of stocks of individuals of joint-stock companies as prescribed in Clause 2, Article 6 of the Law on Securities and Article 120 of the Law on Enterprises.”
Article 5. Effect
1. This Circular takes effect on May 1, 2018.
2. Cases arising from February 1, 2018, and regulated by Decree No. 146/2017/ND-CP must comply with this Decree No. 146/2017/ND-CP and Articles 1 and 2, and Clauses 2, 3 and 4, Article 3, of this Circular.
3. Any problems arising in the course of implementation of this Circular 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
