Circular No. 26/2015/TT-BTC dated February 27, 2015 of the Ministry of Finance guiding the value-added tax and tax administration in Decree No. 12/2015/ND-CP on guidelines for the Law on amendments to Laws, Decrees on taxations, and amendments to Circular No. 39/2014/TT-BTC on invoices for goods sale and service provision

CIRCULAR

Providing guidance on value-added tax and tax administration in 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 Tax Laws and amending and supplementing a number of articles of tax decrees, and amending and supplementing a number of articles of the Ministry of Finance’s Circular No. 39/2014/TT-BTC of March 31, 2014, on goods sale and service provision invoices[1]

Pursuant to Law No. 78/2006/QH11 on Tax Administration and Law No. 21/2012/QH13 Amending and Supplementing a Number of Articles of the Law on Tax Administration;

Pursuant to Law No. 13/2008/QH12 on Value-Added Tax and Law No. 31/2013/QH13 Amending and Supplementing a Number of Articles of the Law on Value-Added Tax;

Pursuant to Law No. 71/2014/QH13 Amending and Supplementing a Number of Articles of Tax Laws;

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, on goods sale and service provision invoices;

Pursuant to the Government’s Decree No. 83/2013/ND-CP of July 22, 2013, detailing a number of articles of the Law on Tax Administration and the Law Amending and Supplementing a Number of Articles of the Law on Tax Administration;

Pursuant to the Government’s Decree No. 209/2013/ND-CP of December 18, 2013, detailing and guiding the implementation of a number of articles of the Law on Value-Added Tax;

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

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 provides guidance on value-added tax (VAT), tax administration, and goods sale and service provision invoices as follows:

Article 1. To amend and supplement a number of articles of the Ministry of Finance’s Circular No. 219/2013/TT-BTC of December 31, 2013, guiding the implementation of the Law on Value-Added Tax and the Government’s Decree No. 209/2013/ND-CP of December 18, 2013, detailing and guiding the implementation of a number of articles of the Law on Value-Added Tax (amended and supplemented under the Ministry of Finance’s Circular No. 119/2014/TT-BTC of August 25, 2014, and Circular No. 151/2014/TT-BTC of October 10, 2014) as follows:

1. To amend Clause 1, Article 4 as follows:

“1. Products from cultivation (including products from planted forests) and husbandry, reared and fished aquatic and marine products which have not yet been processed into other products or have only been preliminarily processed by ordinary methods then sold by producers or fishermen themselves, and at the stage of importation.

Products preliminarily processed by ordinary methods are those which have only been cleaned, sun-dried, heat-dried, peeled, ground, husked, pitted, stemmed, cut, salted, cold-preserved (frozen or chilled), preserved with sulfur dioxide, impregnated with preservative chemicals, soaked in sulfur solution or another preservative solution, or otherwise ordinarily preserved.

Example 2: Company A signs a contract on pig farming with company B, under which company B provides piglets, feed and veterinary drugs to company A and company A sells pork products to company B. The renumeration for pig farming paid by company B and pork products sold to company B are not subject to VAT.

With regard to pork products received by company B from company A: Whole pigs or fresh meat sold by company B are not subject to VAT; if company B further processes pork into products such as sausage, bacon, pork paste, or other products, these products for sale are subject to VAT under regulations.”

2. To add the following Clause 3a to Article 4:

“3a. Fertilizers are organic and inorganic fertilizers such as phosphate fertilizer, nitrogenous fertilizer (urea), NPK fertilizer, mixed urea, potash; microbial fertilizer and other fertilizers;

Feeds for cattle, poultry, aquatic animals, and other animals, including processed or unprocessed products, such as rice bran, dregs, oil cakes, fish meal, bone meal, shrimp meal, and other types of animal feeds, animal feed additives (such as premix, active ingredients, and carriers) prescribed in Clause 1, Article 3 of the Government’s Decree No. 08/2010/ND-CP of February 5, 2010. on management of animal feeds, and Clauses 2 and 3, Article 1 of the Ministry of Agriculture and Rural Development’s Circular No. 50/2014/TT-BNNPTNT of December 24, 2014;

Offshore fishing ships are ships with a main engine capacity of 90 HP or more and engaged in fishing or logistics services serving fishing; machinery, and specialized machinery and equipment serving fishing and preservation of products on fishing ships with a total main engine capacity of 90 HP or more engaged in fishing or logistics services for fishing;

Agricultural machinery and equipment include tractor; harrowing machine; milling machine; sowing machine; root dozer; field leveling device; seeding machine; transplanter; sugarcane planting machine; rice-sowing machine; tiller,  cultipacker, fertilizer spreader; pesticide sprayer; machine for harvesting rice, corn, sugarcane, coffee and cotton; machine for harvesting tubers, fruits and roots; tea-cutting machine, tea leaf-picking machine; rice threshing machine; corn peeling machine; soybean crusher; peanut huller; coffee huller; machine and equipment for preparing coffee, wet rice; dryer for agricultural products (rice, corn, coffee, pepper, cashew nut...) and aquaculture products; machine for collecting and loading sugarcane and rice straw on the field; machine for poultry egg incubation and hatching; forage harvester; straw and grass baler; milking machine, and other specialized machines.”

3. To amend and supplement Point a, Clause 8 of Article 4 (amended and supplemented in Article 8 of the Ministry of Finance’s Circular No. 151/2014/TT-BTC of October 10, 2014) as follows:

“a/ Credit extension services include:

- Lending;

- Discount and rediscount of negotiable instruments and other valuable papers;

- Bank guarantee;

- Finance leasing;

- Issuance of credit cards.

In case a credit institution collects charges related to the issuance of credit cards, the charges collected from clients that are part of the credit extension process (card issuance charge) according to the credit institution’s regulations on grant of loans such as charge for early repayment, fines for late repayment, charge for debt rescheduling, charge for loan management, and other charges that are part of the credit extension process, are not subject to VAT.

The charges for common card transactions that are not part of the credit extension process such as charge for re-issuance of PINs for credit cards, charge for provision of invoice copies, charge for claiming refund in card use, charge for notification of credit card theft or loss, charge for credit card destruction, charge for credit card conversion, and other charges, are subject to VAT.

- Domestic factoring; international factoring for banks licensed to make international payments;

- Sale of loan collateral by a credit institution or judgment enforcement agency or the borrowers themselves as authorized by the lender to repay secured loans, specifically:

+ Collateral that may be sold is assets of a secured transaction already registered with a competent agency in accordance with the law on registration of secured transactions.

+ Collateral shall be handled in accordance with the law on secured transactions.

If the owner of the collateral defaults on the debt and has to hand over the collateral to the credit institution for handling in accordance with law, parties shall follow the prescribed procedures for handover of collateral and are not required to issue value-added invoices.

If the credit institution takes the collateral to clear debt, it shall account an increase in the value of assets used for production and business under regulations. When the credit institution sells the assets, it shall declare and pay VAT if these assets are subject to VAT.

Example 3: In March 2015, enterprise A, which pays VAT by the credit method, mortgages its machinery and equipment line to take a loan at bank B, which is due in one year (the payment deadline is March 31, 2016). On March 31, 2016, enterprise A defaults on the loan and has to hand over the collateral to bank B. When handing the collateral over to bank B, enterprise A is not required to issue invoices. When bank B sells the collateral to recover the debt, the sold collateral is not subject to VAT.

Example 3a: In December 2014, enterprise B, which pays VAT by the credit method, mortgages its workshop on land and land use rights to take a loan at commercial bank C, which is due in one year (the payment deadline is December 15, 2016). Bank C and enterprise B have registered the secured transaction (mortgage of workshop and land use rights) with a competent agency. On December 15, 2016, enterprise B defaults on the debt and bank C agrees in writing to release the collateral so that enterprise B can sell the workshop to repay the debt. When enterprise B sells the workshop in January 2017 to repay the debt, the sold workshop is not subject to VAT.

- Credit information provision service provided by the units and organizations of the State Bank for credit institutions to use for credit extension in accordance with the Law on the State Bank.

Example 4: X is a unit of the State Bank and is allowed by the State Bank to provide the credit information provision service. In 2014, X signs contracts to provide credit information for some commercial banks to serve their credit extension and other activities. The turnover from the provision of credit information serving credit extension is not subject to VAT; the turnover from the provision of credit information serving other activities of commercial banks not prescribed by the Law on the State Bank is subject to VAT at the rate of 10%.

- Other forms of credit extension prescribed by law.”

4. To add the following Points a.8 and a.9 to Clause 10 of Article 7:

“a.8/ When a business establishment receives land use rights as capital contribution from an organization or individual, the deductible land price when calculating VAT is that written on the capital contribution contract. If the price for transfer of land use rights is lower than the price of contributed land, the deductible land price is the price for transfer of land use rights;

a.9/ When a real estate business establishment signs a contract with a household or individual who has agricultural land to convert it into residential land and such conversion is conformable with the land law, the price for VAT calculation must be the transfer price minus (-) the deductible land price under regulations. The transfer price is the price for compensation for the area of agricultural land that is recovered under a plan approved by a functional agency.”

5. To amend the first bullet point of Clause 3 of Article 9 as follows:

“3. Cases ineligible for the 0% tax rate include:

- Offshore reinsurance; offshore transfer of technologies or intellectual property rights; offshore capital transfer, credit extension or securities investment; derivative financial services; outbound post and telecommunications services (including post and telecommunications services provided to organizations and individuals in non-tariff zones; and provision of prepaid mobile phone cards with codes and par value overseas or in non-tariff zones); exported products being unprocessed natural resources or minerals; cigarettes, alcohol and beer that are imported then exported; and goods and services provided to individuals without business registration in non-tariff zones, except other cases provided by the Prime Minister.

Cigarettes, alcohol and beer that are imported then exported are not subject to output VAT upon export, but they are not entitled to input VAT credit.”

6. To amend Clause 2 of Article 10 as follows:

“2. Ores for fertilizer production; pesticides and plant and animal growth stimulants, including:

a/ Ores for fertilizer production which are those used as materials for fertilizer production such as apatite for phosphorus fertilizer production, humus for microbial fertilizer production;

b/ Pesticides which include plant protection drugs on the list of plant protection drugs promulgated by the Ministry of Agriculture and Rural Development, and other pesticides;

c/ Animal and plant growth stimulants.”

7. To annul Clauses 3 and 10 of Article 10.

8. To amend and supplement Clause 11 of Article 10 as follows:

“11. Medical equipment and instruments, including special-use machinery and instruments for medical use, such as scanners and radiography machines of all kinds for medical examination and treatment; devices and instruments used exclusively in surgery and wound treatment; ambulances; blood-pressure, cardiac and vascular meters, blood transfusion instruments; syringes and needles; contraceptive devices and other special-use medical equipment as certified by the Ministry of Health;

Medical cotton wool, bandages, gauze pads and medical hygienic bandages; preventive and curative medicines, including finished medicines, materials for medicine manufacture, except functional foods; vaccines, medical bio-products, distilled water for preparation of injections and transfusion fluids; surgical caps, clothes, facemasks, cloths, gloves and boots, shoe covers, tissues and gloves for medical use, breast implants and dermal fillers (excluding cosmetics); chemical supplies for testing and disinfection for medical use as certified by the Ministry of Health.”

9. To amend and supplement Article 14 as follows:

a/ To amend Clause 2 of Article 14 as follows:

“2. For goods or services (including also fixed assets) used for the production of and trading in goods or provision of services both liable and not liable to VAT, only the input VAT amount on goods or services used for the production of and trading in VAT-liable goods or provision of services is creditable. Business establishments shall separately account creditable and non-creditable VAT amounts. If it is impossible to do so, input VAT shall be credited based on the percentage (%) of VAT-liable turnover to total turnover of sold goods or provided services, including turnover that is not subject to tax declaration, calculation and payment and cannot be separately accounted.

Business establishments that trade in both goods or provide both services liable and not liable to VAT shall temporarily allocate creditable VAT amounts on purchased goods, services or fixed assets in every month/quarter. At the year end, they shall calculate the creditable input VAT amount for the whole year for declaration to adjust input VAT amounts which have been temporarily credited in every month/quarter.”

b/ To add following Clause 14a to Article 14:

“14a. Input VAT on goods, services and fixed assets serving manufacture of: fertilizers, special-use machinery and equipment for agricultural production, offshore fishing ships, feeds for cattle, poultry, aquatic animals, and other animals that are sold domestically shall not be declared and credited but shall be included in deductible expenses when determining income subject to enterprise income tax, except VAT on purchased goods, services and fixed assets that arises before January 1, 2015, is written on value-added invoices or receipts of VAT payment at the stage of importation, satisfy the conditions for tax credit and refund, and are eligible for tax refund as prescribed in Article 18 of Circular No. 219/2013/TT-BTC of December 31, 2013, and this Circular.”

10. To amend and supplement Article 15 (amended and supplemented under the Ministry of Finance’s Circular No. 119/2014/TT-BTC of August 25, 2014, and Circular No. 151/2014/TT-BTC of October 10, 2014) as follows:

“Article 15. Conditions for input VAT credit

1. Having lawful value-added invoices for purchased goods or services or documents on VAT payment at the stage of importation, or documents on VAT payment on behalf of foreign parties under the guidance of the Ministry of Finance applicable to foreign organizations that do not have the Vietnamese legal person status and to foreigners that do business or earn income in Vietnam.

2. Having documents on non-cash payments for purchased goods or services (including imported goods) valued at VND 20 million or more, except imported goods or services valued at below VND 20 million upon each importation; purchased goods or services valued at below VND 20 million according to VAT-inclusive prices written on their invoices upon each purchase; and imports being gifts from overseas organizations and individuals.

Documents on non-cash payments include documents on via-bank payments and other documents on non-cash payments guided in Clauses 3 and 4 of this Article.

3. Via-bank payment document is construed as a document proving the transfer of money from the buyer’s account to the seller’s account (both accounts have been registered with or notified to the tax agency, and the buyer is not required to register with or notify the tax agency of its loan accounts at credit institutions used for paying to suppliers) opened at providers of payment services in lawful forms of payment such as checks, payment orders, collection orders, bank cards, credit cards, SIM cards (digital wallets), and other forms of payment as prescribed (including the case in which the buyer transfers money from the buyer’s account to the seller’s account in the name of a private enterprise’s owner or from the buyer’s account in the name of a private enterprise’s owner to the seller’s account if such accounts have been registered with the tax agency).

a/ Documents on the buyer’s payment of cash into the seller’s account or payment documents in forms that are not conformable with current regulations are not eligible for VAT credit and refund for purchased goods or services valued at VND 20 million or more;

b/ VAT credit is not allowed for goods or services valued at VND 20 million or more according to VAT-inclusive prices written on their invoices upon each purchase if there is no via-bank payment document;

c/ For goods or services purchased under a deferred payment plan or installment payment plan that are valued at VND 20 million or more, business establishments shall declare and credit input VAT according to the written purchase contracts, value-added invoices and via-bank payment documents. If the via-bank payment document is not available because the payment deadline stated in the contract is not due, a business establishment may still declare and credit input VAT.

If a business establishment has no via-bank payment document when making payment, it shall declare a reduction of the credited input VAT amount on the value of goods or services without via-bank payment document in the tax period during which the cash payment is made (even in the case the tax agency and functional agencies have decided to conduct inspection or examination with regard to the tax period during which input VAT is declared and credited).

4. Other cases of non-cash payment eligible for input VAT credit include:

a/ If goods or services are purchased by offsetting their value against the value of sold goods or services, or by borrowing goods and this method of payment is specified in contracts, there must be a written record of data comparison and certification of the offsetting or borrowing of goods by both parties. If the payment is offset against a third party’s debt, there must be a written record of the debt offsetting made by all three parties for use as a basis for VAT credit;

b/ If goods or services are purchased by debt offsetting such as borrowing loans or by debt offsetting via a third party and this method of payment is specified in the contracts, there must be a written loan contract and a document on the transfer of money from the creditor’s account to the debtor’s account, even in the case of offsetting the value of purchased goods or services against the sum of money paid by the seller as a support for buyer, or paid by the buyer on behalf of another party;

c/ If via-bank authorized payment is made for purchased goods or services via a third party (including the case in which the seller requests the buyer to make via-bank payment to a third party designated by the seller), this authorized payment or payment to a third party designated by the seller shall be specified in the written contract, and the third party must be a lawfully operating legal person or natural person.

After the payment is made in the above-said forms, if the remaining value paid in cash is VND 20 million or more, tax shall only be credited if there is a document on via-bank payment;

d/ If the payment for purchased goods or services is made via a bank to a third party’s account at the State Treasury, which is opened to enforce the collection of money and assets currently held by other organizations and individuals (under a competent state agency’s decision), input VAT may be also credited.

Example 68:

Company A buys goods of company B and still owes money to company B for the goods. However, company B still owes tax to the state budget. According to the Law on Tax Administration, when the tax agency collects company B’s money and assets that is held by company A to enforce the tax administrative decision, the transfer of money by company A to the budget revenue account is also considered via-bank payment, and the input VAT corresponding to the turnover from the purchased goods may be declared and credited.

Example 69:

Company C signs an economic contract on goods supply with company D, and company D still owes money to company C for the goods.

A competent state agency decides to collect all the money owed to company C by company D and transfer it to the state agency’s account at the State Treasury to resolve disputes over goods purchase and sale contracts between company C and its partners.

When company D transfers money to the competent state agency’s account at the State Treasury (this transfer is not stated in the contract between company C and company D), the transfer is also considered via-bank payment and the input VAT corresponding to the turnover from the purchased goods may be declared and credited.

5. When the value of goods or services purchased from a single supplier or provider is below VND 20 million but the value of multiple purchases made in the same day is VND 20 million or more, tax may only be credited if via-bank payment documents are available. The supplier or provider is the taxpayer that has a tax identification number and shall directly declare and pay VAT.

In case the taxpayer is a business establishment with dependent stores that use the same tax identification number and invoice form of the business establishment, if the invoice has the item “Cua hang so:” (“Store No.”) to differentiate the business establishment’s stores, and bears the seal of each store, then each store shall be considered a supplier.”

11. To amend and supplement Point b.7, Clause 3 of Article 16 as follows:

“b.7/ If the foreign party (except foreign individual) makes payment from its current deposit account opened at a credit institution in Vietnam, this payment is required to be stated in the export contract (or a contract annex or contract modification document, if any). The payment document is the credit note of the exporter’s bank of the amount received from the current account of the foreign purchaser that has signed the contract.

Also regarded as via-bank payment is the case in which goods are exported to a foreign purchaser being a private enterprise, the payment is made through the private enterprise owner’s current account opened at a Vietnam-based credit institution and such payment is stated in the export contract (or a contract annex or contract modification document, if any).

When checking the credit and refund of tax on exported goods that are paid via the current account, the tax agency shall coordinate with the credit institution at which the foreign purchaser opens its account to ensure that the payment and transfer are made properly and lawfully. Any person on entry who brings money across the border shall declare that such money is for making payment for each particular purchase and sale contract and export declaration, and present the contracts and export declarations to customs officers for checking and comparison. In case the person on entry is not a representative of the foreign enterprise that directly signs the purchase and sale contract with the Vietnamese enterprise, he/she is required to have a power of attorney (translated into Vietnamese or English together with the original in the language of a bordering  country) made by the foreign organization or individual that has signed such contract. This power of attorney is only valid for a single time of bringing money into Vietnam and must specify the amount of money brought into Vietnam under the purchase and sale contract.”

12. To amend and supplement Article 18 as follows:

a/ To amend and supplement Clause 3 as follows:

“3. VAT refund for investment projects

a/ Operating business establishments paying VAT by the credit method that have investment projects still at the investment stage (except commercial housing investment projects) in the same province or city shall make separate declarations for those projects and carry forward input VAT amounts of these projects for clearing against declared VAT amounts for their ongoing production and business activities. The VAT amount carried forward from investment projects must not exceed the business establishment’s VAT amount payable for production and business activities in the period.

After clearing, if an investment project’s input VAT amount not fully credited is VND 300 million or more, the project is entitled to VAT refund.

After clearing, if an investment project’s input VAT amount not fully credited is under VND 300 million, this amount may be carried forward to the investment project’s input VAT amount of the subsequent declaration period.

In a declaration period, a business establishment that has an input VAT amount for production and business activities not fully credited and an input VAT amount for its investment project is entitled to VAT refund under the guidance in Clauses 1 and 3 of this Article.

Example 74: Company A is headquartered in Hanoi. In March 2014, it has an investment project in Hanoi, which is at the investment stage. Company A makes separate declaration of input VAT amounts for this project. In April 2014, the project’s input VAT amount is VND 500 million; the payable VAT amount for the company’s ongoing production and business activities is VND 900 million. Company A shall clear its investment project’s input VAT amount of VND 500 million against the payable tax amount for its ongoing production and business activities (VND 900 million), so the company’s payable VAT amount in the tax period of April 2014 is VND 400 million.

Example 75: Company B is headquartered in Hai Phong. In March 2014, it has an investment project in Hai Phong, which is at the investment stage. Company B makes separate declaration of input VAT amounts for this project. In April 2014, the investment project’s input VAT amount is VND 500 million; the payable VAT amount for the company’s ongoing production and business activities is VND 200 million. Company B shall clear VND 200 million from its investment project’s input VAT amount against the payable tax amount for its ongoing production and business activities (VND 200 million), so in the tax period of April 2014, the company’s input VAT amount for its new investment project not fully credited is VND 300 million and the company may be considered for VAT refund for its investment project.

Example 76: Company C is headquartered in Ho Chi Minh City. In March 2014, it has an investment project in Ho Chi Minh City, which is at the investment stage. Company C makes separate declaration of input VAT amounts for this project. In April 2014, the investment project’s input VAT amount is VND 500 million; the payable VAT amount for the company’s ongoing production and business activities is VND 300 million. Company C shall clear VND 300 million from its investment project’s input VAT amount against the payable amount for its ongoing production and business activities (VND 300 million), so in the tax period of April 2014, the company’s input VAT amount for its investment project not fully credited is VND 200 million. Company C is not entitled to VAT refund for its investment project and may carry forward VND 200 million to the investment project’s input VAT amount in the declaration period of May 2014.

Example 77: Company D is headquartered in Da Nang city. In March 2014, it has an investment project in Da Nang city, which is at the investment stage. Company D makes separate declaration of input VAT amounts for this project. In April 2014, the investment project’s input VAT amount is VND 500 million; the VAT amount for the company’s ongoing production and business activities not fully credited is VND 100 million. So, in the tax period of April 2014, the input VAT amount for the investment project (VND 500 million) is entitled to VAT refund; the VAT amount for the company’s ongoing production and business activities not fully credited (VND 100 million) may be considered for VAT refund under Clause 1 of this Article;

b/ In case operating business establishments paying VAT by the credit method have new investment projects (except commercial housing investment projects) in provinces or centrally run cities other than those in which they are headquartered and these projects are still at the investment stage and have neither commenced operation nor made business and tax registration, such establishments shall make separate tax declaration dossiers for their investment projects and clear input VAT amounts for those investment projects against declared VAT amounts for their ongoing production and business activities. The cleared VAT amount of investment projects must not exceed the payable VAT amount for the business’s production and business activities in the period.

After clearing, if a new investment project’s input VAT amount not fully credited is VND 300 million or more, the investment project is entitled to VAT refund.

After clearing, if a new investment project’s input VAT amount not fully credited is under VND 300 million, this amount may be carried forward to the investment project’s input VAT amount of the subsequent declaration period.

During a declaration period, a business establishment that has an input VAT amount for production and business activities not fully credited and an input VAT amount for its new investment project is entitled to VAT refund under the guidance in Clauses 1 and 3 of this Article.

Particularly, national important projects whose investment policy and criteria are decided by the National Assembly must not have tax amounts carried forward and must comply with the Ministry of Finance’s specific guidance.

For business establishments that establish project management units or branches in provinces or centrally run cities other than those in which they are headquartered in order to manage, on behalf of taxpayers, one or more than one investment project in different localities and these project management units or branches have their lawful seals, keep books and documents in accordance with the accounting law, have bank accounts and have made tax registration and obtained tax identification numbers, the project management units or branches shall make separate tax declaration and refund dossiers at local tax agencies with which they have made tax registration. When an investment project to establish a new business is completed and has completed procedures for business registration and tax payment registration, the business establishment being the project owner shall summarize the project’s arising VAT amounts, refunded VAT amounts and VAT amounts not yet refunded for transfer to the new business which shall declare and pay, or request refund of, VAT to the directly managing tax agency under regulations.

An investment project entitled to VAT refund under Clause 2 or 3 of this Article is the one approved by a competent agency in accordance with the investment law. If the investment project is not subject to approval in accordance with the investment law, it must have an investment plan approved by a person with investment-deciding competence.

Example 78: Company A is headquartered in Hanoi. In March 2014, it has a new investment project in Hung Yen, which is at the investment stage and has neither commenced operation nor made business and tax registration. Company A separately declares input VAT amounts for this project in Hanoi in the VAT declaration form for investment projects. In April 2014, the investment project’s input VAT amount is VND 500 million; the payable VAT amount for the company’s ongoing production and business activities is VND 900 million. Company A shall clear the investment project’s input VAT amount of VND 500 million against the payable VAT amount for ongoing production and business activities (VND 900 million). So, its payable tax amount in the tax period of April 2014 is VND 400 million.

Example 79: Company B is headquartered in Hai Phong. In March 2014, it has a new investment project in Thai Binh, which is at the investment stage and has neither commenced operation nor made business and tax registration. Company B separately declares input VAT amounts for this project in Hai Phong in the VAT declaration form for investment projects. In April 2014, the investment project’s input VAT amount is VND 500 million; the payable VAT amount for the company’s ongoing production and business activities is VND 200 million. Company B shall clear VND 200 million from the investment project’s input VAT amount against the payable VAT amount for ongoing production and business activities (VND 200 million). So, in the tax period of April 2014, the company’s input VAT amount for the new investment project not fully credited is VND 300 million. Company B may be considered for VAT refund for the investment project.

Example 80: Company C is headquartered in Ho Chi Minh City. In March 2014, it has a new investment project in Dong Nai, which is at the investment stage and has neither commenced operation nor made business and tax registration. Company C separately declares input VAT amounts for this project in Ho Chi Minh City in the VAT declaration form for investment projects. In April 2014, the investment project’s input VAT amount is VND 500 million; the payable VAT amount for the company’s ongoing production and business activities is VND 300 million. Company B shall clear VND 300 million from the investment project’s input VAT amount against the payable VAT amount for ongoing production and business activities (VND 300 million). So, in the tax period of April 2014, the company’s input VAT amount for the new investment project not fully credited is VND 200 million. Company C is not entitled to VAT refund for the investment project and shall carry forward VND 200 million to the investment project’s input VAT amount of the declaration period of May 2014.

Example 81: Company D is headquartered in Da Nang city. In March 2014, it has a new investment project in Quang Nam, which is at the investment stage and has neither commenced operation nor made business and tax registration. Company D makes separate declaration of input VAT amounts for this project in Da Nang on the VAT declaration form for investment project. In April 2014, the investment project’s input VAT amount is VND 500 million; the VAT amount for the company’s ongoing production and business activities not fully credited is VND 100 million. So, in the tax period of April 2014, the input VAT amount for the new investment project (VND 500 million) is entitled to VAT refund, and the VAT amount for the company’s ongoing production and business activities not fully credited (VND 100 million) may be considered for VAT refund under Clause 1 of this Article.”

b/ To amend and supplement Clause 4 of Article 18 as follows:

“4. If in a month (for monthly declaration) or quarter (for quarterly declaration), a business establishment exports goods or services and the input VAT amount for exported goods or services not yet credited is VND 300 million or more, the business establishment is entitled to VAT refund on a monthly or quarterly basis. If the input VAT amount for exported goods or services in the month or quarter is under VND 300 million, this input VAT amount may be credited in the subsequent month or quarter.

If in a month or quarter, a business establishment both exports and domestically sells goods or services, it is entitled to VAT refund for the exported goods or services if the input VAT amount for the exported goods or services not fully credited is VND 300 million or more.

The refundable input VAT amount for exported goods or services shall be determined as follows:

If the input VAT amount for exported goods or services calculated as above and not yet credited is under VND 300 million, a business establishment may not be considered for VAT refund on a monthly/quarterly basis but shall carry forward it to the subsequent tax period; if this amount is VND 300 million or more, the business establishment is entitled to VAT refund on a monthly/quarterly basis.

Example 82:

In March 2014, the VAT declaration form of enterprise X has the following figures:

- VAT amount carried forward from the previous period: VND 0.15 billion.

- Input VAT amount for export and taxable domestic business activities arising in the month: VND 4.8 billion.

- Total turnover is VND 21.6 billion, including VND 13.2 billion in export turnover and VND 8.4 billion in taxable domestic sale turnover.

Percentage of export turnover/total turnover = 13.2/21.6 x 100% = 61%

- Output VAT amount for domestically sold goods and services is VND 0.84 billion.

The monthly refundable VAT amount for exported goods shall be determined as follows:

So, the VAT amount not fully credited of the month is VND 4.11 billion.

- Determination of the input VAT amount for exported goods

The input VAT amount for exported goods (after being cleared and distributed) not fully credited is VND 2.507 billion, which is larger than (>) VND 300 million, so the business establishment is entitled to a VAT refund of VND 2.507 billion for the month/quarter. The input VAT amount for domestically sold goods and services, which is not entitled to refund on a monthly basis, is VND 1.603 billion (VND 1.603 billion = VND 4.11 billion - VND 2.507 billion) and may be carried forward to the subsequent period for credit.

The following business establishments are entitled to tax refund in some cases of export: For export entrustment, establishments having goods exported under entrustment; for transit processing, establishments signing export processing contracts with foreign parties; for goods exported for the construction of works overseas, enterprises having exported goods and supplies for such construction; for goods exported on the spot, enterprises having such goods.”

c/ To amend and supplement Clause 5 of Article 18 as follows:

“5. Business establishments paying VAT by the credit method are entitled to VAT refund upon their ownership transformation, enterprise transformation, merger, consolidation, division, split, dissolution, bankruptcy or operation termination, if they have overpaid VAT amounts or input VAT amounts not fully credited.

A business establishment still at the investment stage without having commenced any production and business activities that is dissolved, goes bankrupt, or terminates operation without any arising output VAT amounts for its main business line under the investment project is not required to immediately adjust the VAT amount that was declared, credited, or refunded. The business establishment shall notify the managing tax agency of its dissolution, bankruptcy, or operation termination under regulations.

After a business establishment fully completes legal procedures for dissolution or bankruptcy, its refunded VAT shall be settled in accordance with the laws on dissolution, bankruptcy and tax administration; its VAT not yet refunded shall not be refunded.

When a business establishment terminates operation and does not incur output VAT on its main business line, it shall return the refunded VAT to the state budget. If assets subject to VAT are sold, it is not required to adjust the input VAT on the sold assets.

Example 83: In 2015, enterprise A which is still at the investment stage without having commenced any production and business activities has an input VAT incurred during the investment stage refunded by the tax agency in August 2015, which is VND 700 million. Because of difficulties, in February 2016, enterprise A decides to dissolve and send a written notice of its dissolution to the tax agency. The tax agency shall not retrieve the refunded VAT before enterprise A completes the legal procedures for dissolution. Twenty days before its official dissolution in October 2016, the enterprise sells one (1) of its invested assets. In this case, enterprise A is not required to adjust input VAT on the sold asset (which was refunded by the tax agency). With regard to unsold assets, enterprise A shall make adjustment declaration to return the refunded VAT.”

Article 2. To amend and supplement the Ministry of Finance’s Circular No. 156/2013/TT-BTC of November 6, 2013, guiding the implementation of a number of articles of the Law on Tax Administration, the Law Amending and Supplementing a Number of Articles of the Law on Tax Administration, and the Government’s Decree No. 83/2013/ND-CP of July 22, 2013 (amended and supplemented under the Ministry of Finance’s Circular No. 119/2014/TT-BTC of August 25, 2014, and Circular No. 151/2014/TT-BTC of October 10, 2014), as follows:

1. To amend and supplement Article 11 (amended and supplemented under the Ministry of Finance’s Circular No. 119/2014/TT-BTC of August 25, 2014) as follows:

a/ To amend Point dd, Clause 1 of Article 11 as follows:

“dd/ In case a taxpayer engages in an extraprovincial construction, installation, or sale with a value of VND 1 billion or higher inclusive of VAT, or extraprovincial real estate transfer other than the case specified at Point c, Clause 1 of this Article, without establishing an attached unit in the provincial-level locality other than the locality where the taxpayer is headquartered (below referred to as extraprovincial business), the taxpayer shall submit a tax declaration dossier to the tax agency of the locality where the extraprovincial business takes place.

Based on the practical situation in their localities, directors of provincial-level Tax Departments shall decide on places of tax declaration for extraprovincial business.

Example 16: Company A, which is headquartered in Hai Phong, signs a contract to sell cement to company B, which is headquartered in Hanoi. According to the contract, company A shall deliver goods to company B’s construction site in Hanoi. This sale is not regarded as extraprovincial. Company A shall declare VAT in Hai Phong and is not required to declare VAT on the turnover from the sale contract with company B in Hanoi.

Example 17: Company B is headquartered in Ho Chi Minh City. Its warehouses in Hai Phong and Nghe An have no trading function. When company B sells goods from the warehouse in Hai Phong to company C in Hung Yen, company B is not required to declare VAT in the localities where the warehouses are located.

Example 18:

- Company A, which is headquartered in Hanoi, signs a contract with company B only for consultancy, survey and design of a construction work in Son La province of which company B is the project owner. This activity is not regarded as extraprovincial. Company A shall declare VAT on this contract in Hanoi where it is headquartered, not in Son La.

- Company A, which is headquartered in Hanoi, signs a contract with company C to execute a construction work in Son La (including the survey and design) of which company C is the project owner. The construction value is over VND 1 billion inclusive of VAT. Company A shall declare VAT on extraprovincial construction under this contract in Son La.

- Company A, which is headquartered in Hanoi, signs a contract with company Y to execute a construction work in Yen Bai (including the survey and design) of which company C is the project owner. The construction value is VND 770 million inclusive of VAT. Company A is not required to declare VAT on extraprovincial construction under this contract in Son La.

Example 19: Company B, which is headquartered in Hanoi, sells air conditioners to their customers in Hoa Binh (including installation). Company B is not required to declare VAT in Hoa Binh.

Example 20: Company A, which is headquartered in Hanoi, buys 10 houses from a housing project of company B in Ho Chi Minh City, then sells these houses and issues invoices to customer C. In this case, company A shall declare and pay tax on (in a percentage of) the turnover from extraprovincial real estate transfer to the tax agency in Ho Chi Minh City.”

b/ To amend Point e of Clause 1 as follows:

“In case the taxpayer has an extraprovincial construction and installation project that is related to multiple localities such as construction of roads, power line, water, oil, gas pipeline, etc., and thus is unable to determine the turnover earned from each provincial-level locality, the taxpayer shall declare VAT on turnover from the extraprovincial construction and installation in the VAT declaration at its headquarter and pay VAT for the provinces where the construction project goes through. VAT payable for the provinces shall be determined in a percentage (%) of the investment value of the project in each province, which is calculated by the taxpayer, multiplied by (x) 2% of the VAT-exclusive turnover from the construction of the project.

Paid VAT (according to the tax receipt) for the interprovincial construction shall be deducted from the payable tax amount stated in the VAT declaration (form No. 01/GTGT) of the taxpayer at its headquarters.

The taxpayer shall make a table of payable VAT distribution among the provinces where the construction and installation project goes through (form No. 01-7/GTGT issued together with this Circular) and submit its copy together with the VAT declaration to the provincial-level Tax Department of the locality entitled to this tax revenue.”

c/ To amend Point b, Clause 3 of Article 11 as follows:

“b/ A monthly or quarterly dossier of VAT declaration applying the credit method must comprise:

- The VAT declaration made according to form No. 01/GTGT issued together with this Circular (in replacement of VAT declaration form No. 01/GTGT issued together with the Ministry of Finance’s Circular No. 119/2014/TT-BTC of August 25, 2014).

If the taxpayer engages in an extraprovincial business and real estate transfer or has a manufacturing facility based in a locality other than that in which it is headquartered, the taxpayer shall submit the following documents together with the VAT declaration form:

- The table of VAT amounts paid on turnover from the extraprovincial business and real estate transfer (if any), made according to form No. 01-5/GTGT issued together with the Ministry of Finance’s Circular No. 156/2013/TT-BTC of November 6, 2013.

- The table of VAT distribution between the locality where the taxpayer is headquartered and the localities where are located its manufacturing facilities that do not practice accounting (if any), made according to form No. 01-6/GTGT issued together with Circular No. 156/2013/TT-BTC.

- The table of payable VAT distribution among the localities where the extraprovincial project is located (if any), made according to form No. 01-7/GTGT issued together with this Circular.”

d/ To amend Point b, Clause 5 of Article 11 as follows:

“b/ The dossier of monthly/quarterly declaration of VAT on turnover using the direct method is form No. 04/GTGT issued together with the Ministry of Finance’s Circular No. 156/2013/TT-BTC.”

e/ To amend Clause 6, Article 11 as follows:

“6. VAT declaration for extraprovincial business and real estate transfer that does not fall into the case mentioned at Point c, Clause 1 of this Article

a/ The taxpayer conducting extraprovincial business and real estate transfer shall declare VAT temporarily calculated at 2% on goods that are subject to 10% VAT, or at 1% on goods that are subject to 5% VAT on turnover exclusive of VAT to the tax agency in the locality where the business or transfer takes place.

b/ The dossier of declaration of VAT on extraprovincial business and real estate transfer is form No. 05/GTGT issued together with Circular No. 156/2013/TT-BTC.

c/ The dossier of declaration of VAT on extraprovincial business and real estate transfer shall be submitted whenever turnover arises. If many tax declaration dossiers are submitted in a month, the taxpayer may register with the tax agency to permit monthly submission of tax declaration dossiers.

d/ When declaring tax to the managing tax agency, the taxpayer shall sum up the turnovers that arise and the paid VAT amounts on the extraprovincial business and real estate transfer in the tax declaration dossier at its headquarters. The paid tax (according to the tax receipts) on the extraprovincial business and real estate transfer shall be deducted from the VAT payable according to the VAT declaration of the taxpayer at its headquarters.”

2. To amend Clause 3 of Article 13 as follows:

“3. Excise tax declaration dossier

- An excise tax declaration, made according to form No. 01/TTDB issued together with Circular No. 156/2013/TT-BTC.”

3. To amend Article 20 as follows:

a/ To amend Point d, Clause 3 of Article 20 as follows:

“d/ Tax declaration by foreign shipping companies:

The shipping agents or forwarding agents of foreign shipping companies (below collectively referred to as agents of shipping companies) shall deduct and pay tax on behalf of the foreign shipping companies.

Tax declaration dossiers for foreign shipping companies shall be submitted to the tax agency directly managing their agents.

Tax for foreign shipping companies shall be temporarily paid every quarter and finalized every year.”

b/ To amend Point d2, Clause 3 of Article 20 as follows:

“d.2/ Dossier of notice of eligibility for tax exemption or reduction under agreement:

For foreign shipping companies eligible for tax exemption or reduction under a double taxation avoidance agreement between Vietnam and another country or territory, the following procedures shall be additionally carried out:

Together with the tax declaration form for foreign shipping companies, the foreign shipping company or its agent shall send to the tax agency a dossier of notice of eligibility for tax exemption or reduction under agreement, which must comprise:

- The notice of eligibility for tax exemption or reduction under agreement, made according to form No. 01/HTQT issued together with this Circular;

- The consularly legalized original (or certified true copy of the) certificate of residence issued by the tax agency of the country or territory where the foreign shipping company is situated in the year preceding the year of the notice of eligibility for tax exemption or reduction under agreement.

The agent or representative office in Vietnam of the foreign shipping company shall keep dossiers and documents in accordance with the Law on Accounting and its guiding decrees and the Maritime Code, and shall present them to the tax agency upon request.

If the foreign shipping company or its agent authorizes a legal representative to carry out procedures to apply the agreement, the original letter of attorney shall be additionally submitted.

At the end of a year, the foreign shipping company or its agent shall send to the tax agency a consularly legalized certificate of residence of the shipping company for that year.

If a notice of eligibility for tax exemption or reduction under agreement was submitted in the previous year, in the subsequent years the foreign shipping company or its agent is only required to notify any change in the information provided in the submitted notice (form No. 01/HTQT) and provide documents relevant to the change.

If a foreign shipping company has multiple agents in different localities in Vietnam, or its agent has multiple branches or representative offices (below collectively referred to as branches) in different localities in Vietnam, the foreign shipping company or its agent shall submit the consularly legalized original (or certified true copy of the) certificate of residence to the provincial-level Tax Department of the locality where the agent of the foreign shipping company is headquartered and consularly legalized photocopies of the certificate of residence to the provincial-level Tax Departments of the localities where the branches are based, specifying the place where the original (or certified true copy of the) certificate is submitted in the notice of eligibility for tax exemption or reduction under agreement.”

4. To amend and supplement Article 27 as follows:

“Article 27. Tax payment currency and determination of turnover, expenditures, taxable prices, and amounts payable to the state budget

1. Taxpayers shall pay taxes and other amounts payable to the state budget in Vietnam dong, except cases in which they are permitted by law to pay tax in foreign currencies.

2. If a taxpayer is obliged to pay tax in foreign currency but a competent agency allows payment in Vietnam dong, the taxpayer and tax administration agency shall convert the amount paid in Vietnam dong specified on the document on payment to the state budget at the exchange rate prescribed in this Clause into an amount in foreign currency to pay tax in foreign currency, particularly:

If money is paid at a commercial bank, credit institution or State Treasury, the buying rate announced by the commercial bank or credit institution where the taxpayer’s account is opened at the time of payment shall apply.

Example: Company X has to pay tax in foreign currency and is permitted by a competent agency to pay tax in Vietnam dong. Company X opens accounts at 3 banks which are bank A, bank B, and bank C. On March 21, 2015, the buying rate is 21,300 VND/USD at bank A, 21,310 VND/USD at bank B, and 21,305 VND/USD at bank C. On March 21, 2015, Company X pays tax in Vietnam dong at credit institution D or State Treasury in district E. In this case, company X may apply the buying rate of one of these three banks. If company X pays tax in Vietnam dong at bank A, the rate of 21,300 VND/USD shall apply.

3. If there arise turnover, expenditures and taxable prices in foreign currencies, they shall be converted into Vietnam dong at the practical exchange rate according to the guidance of the Ministry of Finance in Circular No. 200/2014/TT-BTC of December 22, 2014, on corporate accounting practice, as follows:

- The practical exchange rate for turnover accounting is the buying rate announced by the commercial bank where the taxpayer’s account is opened.

- The practical exchange rate for expenditure accounting is the selling rate announced by the commercial bank where the taxpayer’s account is opened at the time the payment is made.

- The guidance of the Ministry of Finance in Circular No. 200/2014/TT-BTC shall apply to other particular cases.”

5. To amend and supplement Points a and d, Clause 1 of Article 31 (amended and supplemented in Clause 1, Article 21 of Circular No. 151/2014/TT-BTC) as follows:

“1. To amend Points a and d, Clause 1 of Article 31 as follows:

“a/ Material damage caused by natural disasters, fires or accidents that directly affect production and business activities.

Material damage means the damage to the taxpayer’s property that can be measured by money, such as machinery, equipment, vehicles, supplies, goods, workshops, working offices, cash, and valuable papers.

Accident means an unexpected incident due to external causes that affects the taxpayer’s production and business activities, not due to violations of law. The following events are regarded as accidents: traffic accidents, occupational accidents; contraction of fatal diseases; outbreak of infectious epidemics during the times and in the areas announced to be affected by infectious epidemics by a competent agency; and other force majeure events.

The list of fatal diseases is specified in relevant legal documents.”

“d/ The taxpayer fails to pay tax on time due to other special difficulties.”

6. To annul Point c, Clause 1; Point c, Clause 2; and Point c, Clause 3, of Article 31 of Circular No. 156/2013/TT-BTC, and Clause 2 of Article 21 of Circular No. 151/2014/TT-BTC of the Ministry of Finance

For cases of tax payment extension prescribed at Point c, Clause 1, Article 31 of the Ministry of Finance’s Circular No. 156/2013/TT-BTC of November 6, 2013, decisions on tax payment extension issued before January 1, 2015, remain effective until they cease to be effective.

7. To amend and supplement Point d, Clause 3 of Article 31 as follows:

“d/ In the case mentioned at Point d, Clause 1, Article 31 of Circular No. 156/2013/TT-BTC:

- The taxpayer’s written request for tax payment extension, made according to form No. 01/GHAN issued together with Circular No. 156/2013/TT-BTC;

- Document sent by the managing tax agency to its superior tax agency certifying the special difficulty and its causes due to which the taxpayer cannot pay tax on time as requested and explained by the taxpayer in the written request for tax payment extension;

- Copies of the documents on the tax payment extension, debt write-off and tax exemption or reduction for the taxpayer, issued by the tax agency over the previous 2 (two) years (if any);

- Decisions (if any) of competent state agencies that affect the taxpayer’s production and business activities when they are implemented.”

8. To amend Point b.2, Clause 2 of Article 32 as follows:

“b.2/ To pay on behalf of the taxpayer an interest of 0.05% per day in case the taxpayer fails to pay tax by the deadline for paying tax in monthly installments.”

9. To amend and supplement Clause 2 of Article 34 as follows:

“2. Determination of late payment interest

a/ If the tax debt arises from January 1, 2015, the late payment interest must be 0.05% per day on the tax paid behind schedule;

b/ If the tax debt arises before January 1, 2015, but is not paid since that date, fine and late payment interest shall be charged in accordance with Law No. 78/2006/QH11 on Tax Administration and Law No. 21/2012/QH13 Amending and Supplementing a Number of Articles of the Law on Tax Administration for the period before January 1, 2015; and in accordance with Law No. 71/2014/QH13 Amending and Supplementing a Number of Articles of the Tax Laws for the period from January 1, 2015.

Example 44: Taxpayer B owes VND 100 million in VAT according to the VAT declaration of August 2014, which is due on September 22, 2014 (because September 20 and 21, 2014, are days off). Taxpayer B pays tax on January 20, 2015. The late payment period extends from September 23, 2014, to January 20, 2015. The late payment interest is VND 6.2 million, which is calculated as follows:

- Before January 1, 2015, the late payment interest is calculated as follows:

+ 90 days from January 23, 2014, to December 21, 2014: VND 100 million x 0.05% x 90 days = VND 4.5 million.

+ 10 days from December 22, 2014, to December 31, 2014: VND 100 million x 0.07% x 10 days = VND 0.7 million.

- 20 days from January 1, 2015, to January 20, 2015: VND 100 million x 0.05% x 20 days = VND 1 million.”

“e/ If the taxpayer’s insufficient tax declared before January 1, 2015, is discovered by the competent state agency after January 1, 2015, during inspection or by the taxpayer, late payment interest shall be charged at 0.05% per day on the payable tax deficit until the date it is fully paid to the state budget.”

10. To add the following Article 34a:

“Article 34a. Exemption from late payment interest

1. In case a taxpayer supplies goods or provides services covered by the state budget but has not received any payment from the state budget-using unit (below referred to as taxpayer) and thus fails to pay tax on time, such taxpayer is not required to pay late payment interest.

In case a taxpayer supplies goods or provides services that are covered partially by the state budget and partially by non-state budget sources but has not received any payment from the state budget-using unit and thus fails to pay tax on time, such taxpayer is not required to pay late payment interest on the tax corresponding to the amount to be covered by the state budget.

State budget-using units are units that open accounts at the State Treasury and are allocated state budget funds in accordance with the Law on the State Budget.

Example: Taxpayer A supplies goods for unit B (that uses the state budget) for VND 100 million, of which VND 40 million is covered by the state budget and VND 60 million is covered by non-state budget sources. Taxpayer A has not received the payment of VND 100 million from unit B.

If taxpayer A has a tax debt of VND 70 million, taxpayer A is not required to pay late payment interest on VND 40 million of tax.

2. The period of exemption and amount of tax exempted from late payment interest in case the taxpayer supplies goods or provides services covered by state budget but has not received payment from the state budget-using unit

a/ Late payment interest shall not be charged on the tax debt that must not exceed the amount that is not paid by the state budget.

If the taxpayer owes tax debts of multiple tax periods, the total tax debt must not exceed the amount that is not paid by the state budget.

b/ The period of exemption from late payment interest shall be counted from the deadline for tax payment to the date on which the state budget-using unit makes payment to the taxpayer, and must not exceed the duration of the delay in payment to the taxpayer.

3. Order and procedures for exemption from late payment interest

a/ The taxpayer exempted from late payment interest prescribed in Clause 1 of this Article shall provide the managing tax agency with the written certification made by the state budget-using unit that the taxpayer has not received any payment according to form No. 01/TCN issued together with this Circular.

b/ The tax agency shall issue a decision on inspection at the taxpayer’s head office. The inspection may last up to 3 working days. After inspection, the tax agency shall:

- Notify the taxpayer of exemption from late payment interest if the taxpayer is eligible for such exemption.

- Notify the taxpayer of the liability to pay late payment interest (tax debt, fine and late payment interest) if the taxpayer is not eligible for exemption from late payment interest, and enforce the tax administrative decisions in accordance with law.

Example:

On February 20, 2015, taxpayer A submits the VAT declaration, according which the tax payable is VND 30 million. At that time, the taxpayer has not received the payment of VND 100 million from the state budget. After inspection, the tax agency determines that taxpayer A is exempted from late payment interest on the VAT amount of VND 30 million until the taxpayer receives the payment from the state budget.

On March 31, 2015, taxpayer A submits the annual enterprise income tax finalization statement, according which the tax payable is VND 80 million. At that time, the taxpayer has still not received the payment of VND 100 million from the state budget. Therefore, taxpayer A is still exempted from late payment interest on the VAT amount of VND 70 million until the taxpayer receives the payment from the state budget. If taxpayer A does not pay the remaining tax amount of VND 10 million, late payment interest shall be charged thereon.

c/ After receiving the payment from the state budget, the taxpayer shall pay tax to the state budget and notify the tax agency according to form No. 02/TCN issued together with this Circular as the basis for the tax agency to recalculate the tax debt and late payment interest, and determine the exact period of exemption from late payment interest for the taxpayer.

4. Responsibility of taxpayers

Taxpayers shall pay tax to the state budget immediately after receiving payments from the state budget-using units.

5. Responsibility of state budget-using units

State budget-using units shall certify the situation of payment to taxpayers and take responsibility before law for such certification.

6. Responsibilities of the tax agency:

a/ The tax agency shall supervise the fulfillment of tax liability by taxpayers. If finding that a taxpayer has received a payment from the state budget-using unit but fails to promptly pay tax debt to the state budget, the tax agency shall issue a notice of tax debt, fine, and late payment interest, which is charged for the period starting from the date following the date of payment, and enforce the tax administrative decision an accordance with law;

b/ The tax agency may not enforce tax administrative decisions against taxpayers exempted from late payment interest prescribed in this Article.

7. Responsibility of the State Treasury

The State Treasury shall coordinate with the tax agency in providing information about the payment of state budget funds.”

11. To amend and supplement Article 35 as follows:

a/ To amend and supplement Clause 2 as follows:

“2. Determination of exempted late payment interest

a/ For taxpayers suffering a natural disaster, a fire, an accident, or an epidemic, late payment interest on the tax debt by the time such event occurs shall be exempted, which must not exceed the value of damaged assets or goods;

b/ For taxpayers suffering a fatal disease, late payment interest on the tax debt by the time of contracting the disease shall be exempted, which must not exceed the medical examination and treatment cost.”

c/ For taxpayers suffering another force majeure event, late payment interest on the tax debt by the time of such event shall be exempted, which must not exceed the value of damaged assets or goods.”

b/ To amend and supplement Points b.1 and b.2 of Clause 3 as follows:

“b.1/ The following documents shall be provided in case of suffering a natural disaster, a fire, an accident, or an epidemic:

- An asset damage assessment report issued by a competent agency such as valuation council formed by the provincial-level Finance Department or professional valuation company that provides valuation services under contracts, or valuation center of the provincial-level Finance Department;

- A written certification that the taxpayer suffers damage caused by a natural disaster, a fire, an accident, or an epidemic and the time of occurrence, made by the police office or People’s Committee of the ward or commune, the management board of the industrial park, export-processing zone, or economic zone where the natural disaster, fire, accident or epidemic occurs, or by a rescue or salvage organization;

- A dossier of claim for compensation (if any) approved by the insurer;

- Documents (if any) specifying the responsibilities of the entities responsible for paying compensation.

b.2/ For individuals suffering a fatal disease, it is required to have a certification of medical examination and treatment written on the medical book and the time of certification by a lawfully established health establishment, sufficient documents proving the costs of medical examination and treatment; and documents (if any) on payment for the costs of medical examination and treatment by the insurer.”

c/ To add the following Clause 5 to Article 35:

“5. Order of processing dossiers of request for exemption from late payment interest

a/ Within 60 (sixty) days from the date of occurrence of a natural disaster, a fire, an accident, an epidemic, a fatal disease, or another force majeure event, the taxpayer shall make a dossier of request for exemption from late payment interest and send it to the managing tax agency;

b/ If the dossier is incomplete, within 3 (three) working days after receiving it, the tax agency shall request in writing the taxpayer to give explanation or complete the dossier. The taxpayer shall give explanation or complete the dossier within 10 (ten) working days after receiving the request from the tax agency.

If failing to comply with the tax agency’s request, the taxpayer shall not be exempted from late payment interest.

c/ If the dossier is complete, within 10 (ten) working days after receiving it, the managing tax agency shall send to the taxpayer:

c.1/ A written refusal to grant exemption from late payment interest if the taxpayer is not eligible for such exemption.

c.2/ A decision to grant exemption from late payment interest if the taxpayer is eligible for such exemption.”

12. To amend Article 40 as follows:

“Article 40. Fulfillment of tax liability upon exit from Vietnam

1. Vietnamese people that leave the country to reside overseas, overseas Vietnamese and foreigners shall fulfill their tax liability before exiting Vietnam.

2. The immigration agency shall stop a person from leaving Vietnam when receiving a written or electronic notification from a tax administration agency that this person has not fulfilled his/her tax liability.”

13. To amend Clause 2 of Article 54 as follows:

“2. A dossier of request for tax refund:

- A written request for tax refund according to the double taxation avoidance agreement made according to form No. 02/DNHT issued together with this Circular.

- The consularly legalized original (or certified true copy of the) certificate of residence issued by the tax agency of the home country (specifying the tax year).

- Copies of the economic contract, service provision contract, agency contract, entrustment contract, technology transfer contract, or labor contract signed with a Vietnamese organization or individual, certificate of deposits in Vietnam, and certificate of capital contribution to a company in Vietnam (depending on the income earned in each case) that are certified by the taxpayer.

- Certification of the period and situation of operation according to the contract by the Vietnamese organization or individual (except the case of tax refund to a foreign shipping company).

- A letter of attorney in case an organization or individual authorizes a legal representative to carry out the procedures to apply the agreement. If an organization or individual makes a letter of attorney to authorize a legal representative to claim tax refund to be transferred to the account of another entity, consular legalization (if the authorization is made overseas) or notarization (if the authorization is made in Vietnam) is required.

If an organization or individual cannot provide sufficient information or documents as required for a dossier of request for tax refund according to the agreement, specific explanation shall be provided in the written request for tax refund (form No. 02/DNHT) for the tax agency to consider and decide.”

14. To amend and supplement Article 58 as follows:

a/ To amend and supplement Clause 2 as follows:

“2. Cases of inspection before tax refund

- Tax refund under a treaty to which Vietnam is a contracting party. Particularly for dossiers of request for tax refund under the double taxation avoidance agreement submitted by foreign shipping companies, Point b, Clause 14, Article 2 of this Circular shall apply.

- Taxpayers claiming tax refund for the first time, except for personal income tax. If the taxpayer claims tax refund for the first time and is eligible for tax refund, inspection shall be conducted before tax refund. If the taxpayer claims tax refund for the first time but is not eligible for tax refund, the next request for tax refund shall still be regarded the first claim.

- Taxpayers claiming tax refund within 2 (two) years from the time of being handled for acts of tax evasion or fraud.

In case the taxpayer makes multiple claims for tax refund within 2 (two) years from the time of being handled for acts of tax evasion or fraud, if the tax agency does not find in the first claim any understatement of payable tax or overstatement of refundable tax according to Clause 33, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Tax Administration, or an act of tax evasion or fraud according to Article 108 of the Law on Tax Administration and Clause 34, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Tax Administration, the taxpayer shall be exempted from inspection before tax refund from the second claim. When making subsequent claims, if the taxpayer is found making incorrect declaration in the dossier of request for tax refund or committing an act of tax evasion or fraud according to Clause 33, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Tax Administration; Article 108 of the Law on Tax Administration; and Clause 34, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Tax Administration, their dossiers of request for tax refund shall be inspected before tax refund within 2 (two) years from the time of being handled for acts of tax evasion or fraud.

- The payment for goods and services mentioned in the dossier of request for tax refund is not made via a bank under regulations, including goods and services traded domestically, and imported and exported goods and services. This provision shall not be applied to dossiers of request for VAT refund. In particular: If payment for the goods and services mentioned in the dossier of request for VAT refund is not made via a bank as prescribed by the VAT law, the tax agency is not required to conduct inspection at the taxpayer’s headquarters before tax refund, and shall not refund the VAT on such goods and services.

- The enterprise is merged, consolidated, divided, split, dissolved, bankrupt, transformed, or terminates operation; the state-owned enterprise is assigned, sold, contracted or leased.

- After the deadline notified in writing by the tax agency, the taxpayer fails to provide explanation or complete the dossier of request for tax refund; or fails to prove the accuracy of the tax declared after providing explanation or completing the dossier for the second time. This provision is not applicable to the goods and services eligible for tax refund under regulations.”

b/ To amend and supplement Clause 4 as follows:

“4. Inspection after tax refund for dossiers eligible for tax refund before inspection

a/ Inspection after tax refund shall be conducted within 1 (one) year from the date on which the decision on tax refund is issued in the following cases:

- The business establishment declares a loss in 2 (two) consecutive years preceding the year in which the decision on tax refund is issued, or suffers a loss that exceeds the owner’s equity in the year preceding the year in which the decision on tax refund is issued. The loss shall be determined according to the dossier of finalization of enterprise income tax, or to the inspection or examination record made by a competent state agency, if any.

- The business establishment is refunded tax on real estate business, trade, and service provision. If the establishment fails to separate the refundable tax on real estate business, trade, and service provision, and the ratio of turnover from real estate business, trade, and service provision to the total turnover from all of its production and business activities in the period during which arises the refundable tax is 50% or more, inspection after tax refund shall be conducted within 1 (one) year from the date on which the decision on tax refund is issued.

- The business establishment changes its head office twice or more within 12 (twelve) months before the issuance of the decision on tax refund;

- The business establishment’s taxable turnover and refundable tax see abnormal changes within 12 (twelve) months before the issuance of the decision on tax refund.

- The foreign shipping company requests tax refund according to a double taxation avoidance agreement.

b/ In other cases not mentioned at Point a of this Clause, inspection after tax refund shall be conducted in accordance with risk management principles within 10 (ten) years from the date on which the decision on tax refund is issued.”

Article 3. To amend and supplement a number of articles of Circular No. 39/2014/TT-BTC of March 31, 2014, guiding the implementation of the Government’s Decree No. 51/2010/ND-CP of May 14, 2010, and Decree No. 04/2014/ND-CP of January 17, 2014, on goods sale and service provision invoices, as follows:

1. To amend Point k, Clause 1 of Article 4 as follows:

“k/ Invoices shall be written in Vietnamese. When foreign language words need to be added, those words shall be written in brackets ( ) to the right of the Vietnamese words or just below the Vietnamese words with a font size smaller than that of the Vietnamese words.

Figures written on an invoice are natural numerals: 0, 1, 2, 3, 4, 5, 6, 7, 8 and 9. The seller may select to put a dot (.) after digits representing thousands, millions, billions, trillions, million billions and billion billions and a comma (,) to separate the digit representing units, or use a comma (,) to separate natural numerals following digits representing thousands, millions, billions, trillions, million billions and billion billions and a dot (.) to separate the digit representing units on accounting invoices.

The total payable amount shall be written in words. Vietnamese words written without accent marks on an invoice must not cause misunderstanding of the invoice contents.

Invoices of a given form must be of the same size (except cases in which invoices are printed from cash registers using paper rolls; in these cases, the length of an invoice may vary according to the length of the list of goods sold).”

2. To amend the last bullet point of Point b, Clause 1 of Article 6 as follows:

“- Having a written request for use of self-printed invoices (Form No. 3.14 provided in Appendix 3 to this Circular) with the managing tax agency’s certification of the enterprise’s eligibility. Within 5 working days after receiving such request, the managing tax agency shall give its opinion on the enterprise’s eligibility or ineligibility to use self-printed invoices (Form No. 3.15 provided in Appendix 3 to this Circular).

After 5 working days, if the managing tax agency issues no written opinion, the enterprise may use self-printed invoices. The head of the tax agency shall take responsibility for the non-reply to enterprises.”

3. To add the following Clause 4 to Article 7:

“4. Taxpayers (both organizations and individuals) doing business involving high tax risks shall make electronic invoices and electronically send information on these invoices to the tax agency to receive authentication codes from the tax agency. The cases of using electronic invoices with authentication codes granted by the tax agency must comply with separate guidance of the Ministry of Finance.”

4. To amend the last paragraph of Point b, Clause 1 of Article 8 as follows:

“Within 5 working days after receiving requests from organizations or enterprises, managing tax agencies shall issue notices on the use of invoices printed on order (Form No. 3.15 provided in Appendix 3 to this Circular).

After 5 working days, if the managing tax agency issues no written opinion, the enterprise may use invoices printed on order. The head of the tax agency shall take responsibility for the non-reply to enterprises.”

5. To amend Clause 2 of Article 9 as follows:

“2. An invoice issuance notice must contain the name, tax identification number, address and telephone of the invoice issuer, types of invoice to be issued (name and symbol of invoice, symbol of invoice number, starting date of use, quantity of invoices to be issued (from number... to number...)), name and tax identification number of the invoice-printing enterprise (for invoices printed on order), name and tax identification number (if any) of the invoice-printing software provider (for self-printed invoices), or name and tax identification number (if any) of the intermediary organization providing e-invoicing solutions (for e-invoices); date of making the notice, name and signature of the at-law representative and seal of the unit.

A bank or credit institution or its branch that uses self-printed transaction documents as service charge receipts shall send invoice issuance notices enclosed with specimen invoices to its managing tax agency and register the method of structuring invoice numbers without having to register in advance the quantity of to-be-issued invoices.  

For the unused quantity of invoices pre-printed with its name and address already notified to be issued, if the business establishment changes its name or address without changing its tax identification number and managing tax agency and wishes to continue to use such unused invoices with its old name and address, it shall append a mark showing its new name and address next to the preprinted name and address and send a notice of modification of information in the invoice issuance notice to the managing tax agency (form No. 3.13 provided in Appendix 3 to this Circular).

If a business establishment changes its business location, thus having a new managing tax agency, and wishes to continue to use the unused quantity of invoices issued, it shall submit a report on the use of invoices to the tax agency of the locality from which it moves and append a mark showing its new address on such invoices, and send a statement of the unused invoices (form No. 3.10 provided in Appendix 3 to this Circular) and a notice of modification of information in the invoice issuance notice to the tax agency of the locality to which it moves (indicating the quantity of unused invoices already issued and to be further used). If the business establishment does not need to use the unused invoices already issued, it shall destroy such invoices and notify destruction results to the tax agency of the locality from which it moves and send a new invoice issuance notice to the tax agency of the locality to which it moves. 

Upon occurrence of a change in the contents of the invoice issuance notice, a business establishment shall make a new invoice issuance notice under the guidance in this Clause.”

6. To add the following Clause 2 to Article 14:

“2. Taxpayers (both organizations and individuals) doing hotel, restaurant and supermarket business or trade in other goods and services using a cash register system or a sale software system to receive payments shall connect such system with the tax agency to send information to the tax agency according to its implementation roadmap.”

7. To amend and supplement Article 16 as follows:

a/ To amend and supplement Point b, Clause 1 of Article 16 (amended and supplemented in Clause 3, Article 5 of Circular No. 119/2014/TT-BTC) as follows:

“b/ A seller shall issue an invoice when selling goods or providing services, including goods or services for promotion or advertising or use as samples; goods and services donated, presented as gifts, exchanged or given as salary to employees (except goods internally circulated or consumed for further production).

An invoice must correctly reflect the invoiced economic operation. An invoice shall be neither erased nor modified. It shall be written in an unfadable ink of the same color other than red. Figures and words shall be written uninterruptedly on the invoice. Pre-printed words shall be neither overwritten nor overprinted. Any blank space shall be crossed out, except for self-printed invoices or invoices printed on order made out on a computer.”

b/ To amend and supplement Point d, Clause 2 of Article 16 as follows:

“b/ “Name, address and tax identification number of the seller”, “Name, address and tax identification number of the buyer”

The seller shall correctly write the “tax identification numbers” of the buyer and seller.

The name and address of the seller or buyer shall be fully written. If using an abbreviated name, it must ensure correct identification of the buyer or seller.

In case name and address of a buyer are too long, the seller may write the shorten forms of some common nouns, such as “P” for “Phuong” (ward),  “Q” for “Quan” (district), “TP” for “Thanh pho” (city), “VN” for “Vietnam”, or “CP” for “Co phan” (joint-stock), “TNHH” for “Trach nhiem huu han” (limited liability), “KCN” for “Khu cong nghiep” (industrial park), “SX” for “San xuat” (production), “CN” for “Chi nhanh” (branch), etc., and shall ensure full numbers or houses or names of streets, wards, communes, urban districts, rural districts and cities, and names and addresses of enterprises and suitability to their business registration and tax registration.

For an organization having an attached unit that has its own tax identification number and directly sells goods, write the name, address and tax identification number of that unit. If such unit has no tax identification number, write the tax identification number of the head office.

For goods or services sold at VND 200,000 or more each time, if the buyer does not need an invoice or provide his/her/its name, address and tax identification number (if any), an invoice shall still be made out specifying that “buyer does not need invoice” or “buyer does not provide name, address and tax identification number.”

Particularly for petrol and oil retailers, if buyers do not need invoices, at the end of each day, they shall issue one single invoice for the day’s total sales to these buyers.

If the buyer’s name or address on an issued invoice is incorrect but the buyer’s tax identification number is correct, only an adjustment note is required instead of an adjusted invoice. Other cases of invoice errors must comply with the guidance in Article 20 of the Ministry of Finance’s Circular No. 39/2014/TT-BTC.”

8. To issue together with this Circular the following forms:

a/ Notice of invoice issuance (form TB01/AC) for organizations and enterprises, which replaces form TB01/AC issued together with the Ministry of Finance’s Circular No. 39/2014/TT-BTC of March 31, 2014;

b/ Notice of invoice issuance (form TB02/AC) for provincial-level Tax Departments, which replaces form TB02/AC issued together with Circular No. 39/2014/TT-BTC;

c/ Report on invoice printing/provision of invoice printing software (form No. BC01/AC), which replaces form BC01/AC issued together with Circular No. 39/2014/TT-BTC.

9. To amend and supplement Point 2.4 of Appendix 4 as follows:

“2.4. Use of invoices and documents for goods and services on sale promotion, advertising, distribution as sample goods, donation or presentation as gifts by organizations declaring and paying VAT by the credit method:

a/ For products, goods and services used for sale promotion in accordance with commercial law, invoices shall be issued specifying the names and quantities of goods used for sale promotion, advertising or provision as free samples in accordance with the VAT law.

For goods and services used as donations or gifts, for exchange, or payment as salaries to employees, added-value invoices (or sale invoices) shall be issued, specifying all necessary information and VAT like sale invoices issued to customers.”

Article 4. Effect

1. This Circular takes effect on the effective date of Law No. 71/2014/QH13 Amending and Supplementing a Number of Articles of the Tax Laws and 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 Tax Laws, and amending and supplementing a number of articles of the decrees on taxes.

2. Clause 2, Article 1 of this Circular shall be applied to contracts on purchase of machinery and equipment for agricultural production (those mentioned in Clause 11, Article 10 of Circular No. 219/2013/TT-BTC which is amended and supplemented in Clause 2, Article 1 of this Circular) which were signed before the effective date of Law No. 71/2014/QH13,  over which the ownership or use rights are transferred after the effective date of Law No. 71/2014/QH13.

3. With regard to contracts on building of offshore fishing ships signed before January 1, 2015, at VAT-inclusive prices, if the ships are not built and delivered by January 1, 2015, the total value of such ships must comply with Clause 2, Article 1 of this Circular.

4. To annul all contents relating to the statement of invoices and documents of purchased and sold goods and services, and regulations on exchange rates applied when determining turnover and taxable prices in:

- 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.

- The Ministry of Finance’s Circular No. 219/2013/TT-BTC of December 31, 2013, guiding the implementation of the Law on Value-Added Tax and the Government’s Decree No. 209/2013/ND-CP of December 18, 2013, detailing and guiding the implementation of a number of articles of the Law on Value-Added Tax.

- The Ministry of Finance’s Circular No. 156/2013/TT-BTC of November 6, 2013, guiding the implementation of a number of articles of the Law on Tax Administration, the Law Amending and Supplementing a Number of Articles of the Law on Tax Administration, and the Government’s Decree No. 83/2013/ND-CP of July 22, 2013.

- The Ministry of Finance’s Circular No. 119/2014/TT-BTC of August 25, 2014, amending and supplementing a number of articles of the Ministry of Finance’s Circular No. 156/2013/TT-BTC of November 6, 2013; Circular No. 111/2013/TT-BTC of August 15, 2013; Circular No. 219/2013/TT-BTC of December 31, 2013; Circular No. 08/2013/TT-BTC of January 10, 2013; Circular No. 85/2011/TT-BTC of June 17, 2011; Circular No. 39/2014/TT-BTC of March 31, 2014; and Circular No. 78/2014/TT-BTC of June 18, 2014, to reform and simplify tax administrative procedures.

5. Dossiers of notices of tax exemption and reduction according to the agreements submitted to the tax agency before the effective date of this Circular shall be retained together with relevant documents in accordance with this Circular by Vietnam-based agents or representative offices of foreign shipping companies.

6. During the implementation of this Circular, if the documents mentioned in this Circular are amended and supplemented or replaced, the new documents shall apply.

Article 5. Implementation responsibility

1. Provincial-level People’s Committees shall direct their functional agencies to organize proper implementation of regulations of the Government and guidance of the Ministry of Finance.

2. Tax agencies at all levels shall disseminate and guide organizations and individuals to implement the provisions of this Circular.

3. Organizations and individuals regulated by this Circular shall comply with the guidance herein.

Any difficulties that arise in the course of implementation of this Circular should be promptly reported to the Ministry of Finance for consideration and settlement.-

For the Minister of Finance
Deputy Minister
DO HOANG ANH TUAN