THE MINISTRY OF FINANCE
Circular No. 65/2013/TT-BTC of May 17, 2013, amending and supplementing the Ministry of Finance’s Circular No. 06/2012/TT-BTC of January 11, 2012, guiding the implementation of a number of articles of the Law on Value-Added Tax and the Government’s Decrees No. 123/2008/ND-CP of December 8, 2008, and No. 121/2011/ND-CP of December 27, 2011
Pursuant to June 3, 2008 Law No. 13/2008/QH12 on Value-Added Tax;
Pursuant to November 29, 2006 Law No. 78/2006/QH11 on Tax Administration;
Pursuant to the Government’s Decree No. 123/2008/ND-CP of December 8, 2008, detailing and guiding a number of articles of the Law on Value-Added Tax;
Pursuant to the Government’s Decree No. 121/2011/ND-CP of December 27, 2011, amending and supplementing a number of articles of the Government’s Decree No. 123/2008/ND-CP of December 8, 2008, detailing and guiding a number of articles of the Law on Value-Added Tax;
Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;
At the proposal of the General Director of Taxation;
The Minister of Finance promulgates the Circular amending and supplementing a number of provisions of the Ministry of Finance’s Circular No. 06/2012/TT-BTC of January 11, 2012, guiding value-added tax, as follows:
Article 1. To amend and supplement a number of provisions of Circular No. 06/2012/TT-BTC
1. To amend and supplement Point a, Clause 8, Article 4, Chapter I, as follows:
“a/ Credit extension services include the following forms:
- Loan provision;
- Discount and rediscount of negotiable instruments and other valuable papers;
- Bank guarantee;
- Financial leasing;
- Issuance of credit cards;
- Domestic factoring; international factoring, for banks licensed to provide international payment;
- Other forms of credit extension under law.
Assets which are used to secure loans of VAT payers or assets the ownership of which has been transferred to lenders, when sold, are subject to VAT, except those not liable to VAT specified in Article 4 of this Circular.
Example 2: Limited Liability Company A mortgages its machinery and equipment chain to borrow a loan from Bank B. When the loan matures under the credit contract, as Company A is unable to repay the loan, Bank B sells the loan security asset (regardless of whether or not its ownership has been transferred to Bank B) to recover the loan. In this case, such asset is liable to VAT.”
2. To amend and supplement Point a, Clause 11, Article 4 of Circular No. 06/2012/TT-BTC as follows:
“a/ Public services on sanitation and water drainage in streets and residential quarters provided to organizations and individuals (regardless of whether they are inside or outside industrial parks) include garbage and waste collection, transportation and treatment; wastewater drainage and treatment; suction, transportation and treatment of sludge and septic tank residues; unblocking of toilets and wastewater drainage systems; cleaning of public toilets; maintenance of hygiene for mobile toilets; and collection, transportation and treatment of other wastes.
Office and house cleaning services provided by service establishments are liable to VAT.
Example 3: Limited Liability Company B provides the office cleaning service to unit C and the lobby and stairway cleaning service to apartment building H, these services are liable to VAT.”
3. To amend and supplement Clause 2, Article 5, Chapter I as follows:
“2. Revenues from compensation, bonus, support, transfer of emission rights and other financial revenues.
When receiving revenues from compensation, bonus, support, transfer of emission rights and other financial revenues, business establishments shall make receipts according to regulations. Paying business establishments shall make payment documents based on the spending purposes.
An establishment that pays compensation in goods or services shall make invoices as for sale of goods or services. The establishment receiving compensation shall declare and credit VAT according to regulations.
Example 10: Joint-Stock Company VC signs a contract to provide enterprise T a 6 month-term loan and receives an interest thereon. The interest receivable by Company VC is not liable to VAT.
Example 11: Limited Liability Company P&C receives interests on purchased bonds and dividends on purchased shares of other enterprises. It does not have to declare and pay VAT on such interests and dividends.
Example 12: Enterprise A receives from enterprise B an amount of VND 50 million as compensation for contract cancellation. Enterprise A shall make a receipt and does not have to declare and pay VAT on that amount.
Example 13: Enterprise X purchases goods from enterprise Y. It also advances a sum of money to enterprise Y and receives from enterprise Y an interest thereon. Enterprise X does not have to declare and pay VAT on the received interest.
Example 14: Enterprise X sells goods to enterprise Z at a total price of VND 440 million. Under the contract, enterprise Z may make deferred payment within 3 months with the monthly interest rate of 1% of the total contractual price. After 3 months, enterprise X receives from enterprise Z VND 440 million as the total contractual payment price, and VND 13.2 million as the deferred payment interest (VND 440 million x 1% x 3 months). Enterprise X does not have to declare and pay VAT on the amount of VND 13.2 million.”
4. To amend and supplement Point a.3, Clause 9, Article 7, Section 1, Chapter II, as follows:
“a.3/ In case of renting land to build infrastructure or houses for sale or lease, the land price subtracted when calculating VAT is the land rent payable to the state budget (exclusive of the exempted or reduced land rent amount) plus the expense for compensation and ground clearance according to law.
For example: Joint-Stock Company VN-KR has the business line of investing and dealing in industrial production and service infrastructure facilities. It has been leased land by the State and has paid a lump-sum land rent for a lease term of 50 years for building industrial park infrastructure for project implementation. The rented land area is 300,000 m2 and the lump-sum land rent rate for the whole lease term is VND 82,000/m2. The total payable land rent is VND 24.6 billion. The Company is not entitled to land rent exemption or reduction. After building infrastructure, the Company signs with an investor a contract on sub-lease of 16.500 m2 of land with a lease term of 49 years and a VAT-inclusive rent rate of VND 450,000/m2 at the time of contract signing for the whole lease term.
The VAT-inclusive infrastructure rent for the whole lease term (49 years) applied by Joint-Stock Company VN-KR to the investor is determined as follows:
16,500 m2 x (450,000 - 82,000) = VND 6.072 billion.
The VAT-exclusive rent is determined as follows: VND 6.072 billion: (1+0.1) = VND 5.52 billion.
Payable VAT amount: VND 5.52 billion x 10% = VND 0.552 billion.”
5. To add Item a.6 to Point a, Clause 9, Article 7, Section 1, Chapter II, as follows:
“a.6/ In case real estate businesses receive rights to use agricultural land transferred from people under transfer contracts and later are permitted by a competent state agency to convert such agricultural land into residential land for building condominiums or houses for sale, the land price that is subtracted when calculating VAT is the price of agricultural land transferred from people plus other expenses, including land use levy paid to the state budget for conversion of agricultural land into residential use and personal income tax paid for people who transfer the land (if the parties agree that real estate businesses pay such tax).”
6. To add the following paragraph to the end of Point b, Clause 9, Article 7:
“In case of construction and commercial operation of infrastructure facilities, construction of houses for sale or transfer for which money is collected according to the project implementation progress or money collection schedule indicated in the contract, the land price to be subtracted is calculated by the ratio (%) of the money amount collected according to the project implementation progress to the total money amount to be collected under the contract or according to the money collection schedule indicated in the contract with the land price to be subtracted under regulations.”
7. To amend Clause 3, Article 9, Section 1, Chapter II, as follows:
“3. Cases ineligible for the 0% tax rate:
- Offshore re-insurance; 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 also post and telecommunications services provided to organizations and individuals in non-tariff zones and provision of mobile phone cards with codes and par value overseas or in non-tariff zones); exported products being unprocessed natural resources or minerals; goods and services provided to individuals without business registration in non-tariff zones, except other cases provided by the Prime Minister;
- Petrol and oil sold domestically to automobiles of businesses in non-tariff zones;
- Automobiles sold to organizations and individuals in non-tariff zones;
- Services provided by businesses to organizations and individuals in non-tariff zones, including lease of houses, meeting halls, offices, hotels and warehouses and storage yards; transportation of employees; catering services (except the provision of industrial meals and catering services in non-tariff zones);
- The post-provision services provided in Vietnam to overseas organizations and individuals are ineligible for the 0% tax rate, including:
+ Sports competitions, art and cultural performances, recreation, conferences, hotels, training, advertising and travel;
+ Online payment service.
The cases ineligible for the 0% tax rate provided in this Clause are subject to the corresponding tax rates applicable to goods and services sold or provided domestically.”
8. To amend Clause 4, Article 14, Section 1, Chapter III, as follows:
“4. Establishments engaged in agricultural or forestry production, rearing and fishing aquatic or marine products, organizing closed production processes, accounting their production and business results in a centralized manner, and using products at the stage of agricultural or forestry production; or rearing and fishing aquatic or marine products as raw materials for further production and processing into VAT-liable products (including unprocessed agricultural, forest and aquatic products for export or processed products liable to VAT) may declare and credit input VAT on goods and services purchased for production and business at all stages of capital construction investment, production and processing. Businesses that have investment projects for further production and processing and make a written commitment to further produce VAT-liable products may declare and credit VAT right from the stage of capital construction. For input VAT arising in the capital construction investment stage, which has been declared, credited and refunded, but is later determined to be ineligible for credit and refund, shall declare, adjust and return the credited and refunded VAT amounts. If enterprises fail to make tax adjustments and are detected through tax inspection and examination, tax offices shall retrospectively collect payable tax and refunded tax amounts and impose fines under regulations. Businesses shall take full responsibility before law for tax credit and refund-related contents they have reported, committed and explained to tax offices.
For establishments selling unprocessed or preliminarily processed agricultural, forest, aquatic or marine products not liable to VAT, the VAT amount on purchased goods and services may be credited according to the ratio (%) of sales of VAT-liable goods or services to total sales of sold goods or services.
Example 42: Enterprise A has an investment project on rubber plantation and has an input VAT amount on goods and services at the stage of capital construction. While still having no products for use as materials for further production and processing of VAT-liable products (including also unprocessed products for export or processed products liable to VAT), it has a project to build a rubber latex factory (liable to VAT) and commits that their cultivated products will be further processed into VAT-liable products, then it may credit all input VAT amounts.
If the enterprise sells rubber latex, not liable to VAT, it may not credit tax.
If the enterprise uses part of its exploited rubber latex for the production of VAT-liable products and sells the rest, it may credit input VAT as follows:
- It may credit all input VAT amounts on fixed assets (rubber plantation, processing factory, etc.) (including also VAT amounts arising at the stage of capital construction investment).
- It may credit input VAT amounts on goods and services according to the ratio (%) of sales of VAT-liable goods and services to total sales of sold goods and services.”
9. To amend Point c, Clause 2, Article 15, Section 1, Chapter III, as follows:
“c/ For goods or services valued at VND 20 million or more purchased on deferred or installment payment, businesses shall declare and credit input VAT based on goods or service purchase contracts, value-added invoices and via-bank payment vouchers of these goods or services, and at the same time write the payment deadlines in the note section of the list of invoices and vouchers of purchased goods and services. If via-bank payment vouchers are not available yet as the payment under contracts is not due, businesses may still declare and credit input VAT.
If via-bank payment vouchers are unavailable when the payment under contracts is due, businesses may not credit input VAT and shall declare and reduce input VAT amounts already credited for the value of goods without via-bank payment vouchers. In case businesses reduce the input VAT amount already credited for the value of goods or services purchased without via-bank payment vouchers and concurrently account expenses corresponding to the reduced uncreditable input VAT amount as an increase in expenses for calculation of enterprise income tax, they may, after obtaining via-bank payment vouchers, make additional VAT declaration and reduce expenses for calculation of enterprise income tax correspondingly. In case businesses do not account expenses corresponding to the reduced uncreditable input VAT amount as an increase in expenses for calculation of enterprise income tax, they are not required to readjust expenses for calculation of enterprise income tax.
In case the deferred payment under contracts is overdue and businesses fail to make reductions under regulations but they have sufficient via-bank payment vouchers before tax offices announce decisions on examination at their offices, businesses will be sanctioned for violation of tax procedures if their failure to make reductions does not result in a decrease in payable tax amounts or an increase in refundable tax amounts. If their failure to make reductions results in a decrease in payable tax amounts or an increase in refundable tax amounts, businesses will have to pay decreased- or over-refunded tax amounts and be sanctioned under the Tax Administration Law.
In case tax offices have announced decisions on examination or inspection at head offices of businesses and issued handling decisions not to permit tax credit with regard to value-added invoices without via-bank payment vouchers, and businesses obtain via-bank payment vouchers after these handling decisions are issued:
- For value-added invoices already reduced by businesses before examination or inspection by tax offices, businesses may make additional VAT declaration.
- For value-added invoices not reduced by businesses before examination or inspection by tax offices, businesses may make additional declaration if having via-bank payment vouchers within 6 months after the month of issuance of handling decisions by tax offices.
Example 49: In November 2012, the tax office issued a decision on VAT inspection at Limited Liability Company Z. The period to be inspected is the year 2011 and 5 months of 2012. At the time of inspection, Company Z cannot produce via-bank payment vouchers for some contracts involving deferred payment which is due in 2011 and 5 months of 2012. The tax office does not approve Company Z’s declaration for VAT credit for invoices without via-bank payment vouchers. However, in November and December 2012, Company Z can produce via-bank payment vouchers for invoices disapproved by the tax office for tax credit. The company may still make an additional declaration for VAT credit for these invoices in the VAT declarations of November and December 2012.
Example 49a:
In Limited Liability Company Super, the situation is as follows:
In February and March 2012, Limited Liability Company Super had value-added invoices for goods purchase under contracts involving deferred payment due on October 31, 2012. Based on value-added invoices provided by the seller, the Company has made declaration for VAT credit in its VAT returns of February and March 2012. By the payment deadline (October 31, 2012), the Company, due to its financial difficulties, is unable to pay. The Company has made declaration for reduction in its VAT return of October 2012, and its accountant has declared expenses corresponding to the reduced uncreditable input VAT as an increase in expenses for enterprise income tax calculation.
In April 2013, the tax office issues a decision on VAT inspection at the Company. For value-added invoices for goods purchase in February and March 2012 under contracts involving deferred payment due on October 31, 2012, because the Company has reduced the tax amount declared for credit in its VAT return of October 2012, the inspection team will record the reduced figure.
In May 2013, the tax office issues a decision on VAT settlement for the Company (having no content on VAT settlement for value-added invoices for goods purchase in February and March 2012 under contracts involving deferred payment due on October 31, 2012, because the inspection team has recorded the reduced accounting figure).
In December 2013, the Company obtains via-bank payment vouchers for value-added invoices for goods purchase in February and March 2012 under contracts involving deferred payment (due on October 31, 2012). Then it may make additional VAT declaration and concurrently reduce corresponding expenses for enterprise income tax calculation.
Example 49b:
In Limited Liability Company YKK, the situation is as follows:
In March and April 2012, Limited Liability Company YKK has value-added invoices for goods purchase under contracts involving deferred payment due in September 2012. Based on value-added invoices provided by the seller, the Company’s accountant has made declaration for VAT credit in its VAT returns of March and April 2012. By the payment deadline in September 2012, the Company is unable to pay. However, the Company has made no declaration for reduction.
In April 2013, the tax office issues a decision on VAT inspection at the Company. The period to be inspected is the year 2012. At the time of inspection, the Company cannot produce via-bank payment vouchers for value-added invoices for goods purchase under contracts involving deferred payment due in September 2012. The inspection team will disapprove the Company’s declaration for VAT credit for invoices without via-bank payment vouchers.
In May 2013, the tax office issues a decision on retrospective collection of VAT from the Company.
In October 2013, the Company obtains via-bank payment vouchers for value-added invoices for goods purchase in March 2012 under contracts involving deferred payment (the payment deadline is in September 2012). Then it may make additional VAT declaration because it has via-bank payment vouchers within 6 months after the tax office issues the decision on retrospective collection of tax.
In December 2013, the Company has via-bank payment vouchers for value-added invoices for goods purchase of April 2012 under contracts involving deferred payment (the payment deadline is in September 2012). In this case, it may not make additional VAT declaration because it has via-bank payment vouchers more than 6 months after the tax office issues the decision on retrospective collection of tax.
Example 49c:
In September 2012, the Tax Department of province B issued a decision on tax settlement and administrative sanctioning of Joint-Stock Company PNG for its violation detected through an inspection of tax law compliance. The decision has a content on recovery of the refunded VAT amount of VND 460,000,000 which is a VAT amount credited for the purchased goods value of over VND 20 million without via-bank payment vouchers at the time of inspection and overdue under the contract as prescribed in the dossier set for which the tax was refunded for the period from January to March 2012. The Company has paid to the state budget the full tax amount subject to retrospective collection.
In October 2012, the Company had via-bank payment vouchers for invoices for goods purchase under the contract which were overdue corresponding to the VAT amount of VND 460,000,000 which had been recovered by the tax office. It may make an additional declaration in the VAT return of October 2012.”
10. To amend Clauses 3 and 4, Article 18, Section 2, Chapter III, as follows:
“3. An operating business paying VAT by the tax credit method that has a new investment project in the same province or city and still at the investment stage shall make declaration for clearing VAT amounts on goods and services purchased for the new investment project against VAT amounts on its ongoing production and business activities.
After clearing, any uncredited VAT amount on goods and services purchased for investment which is VND 200 million or more may be refunded for the investment project. If the input VAT amount on production and business activities and the investment project is less than VND 200 million and has not been fully credited for 3 months, the business may enjoy VAT refund under Clause 1 of this Article.
An operating business paying VAT by the tax credit method that has a new investment project in a province or centrally run city other than that in which it is headquartered, which is still at the investment stage, has neither commenced operation nor made business and tax registration, and has a VAT amount of VND 200 million or more on goods and services purchased for investment, this VAT amount may be refunded for the investment project. For this case, the business shall make separate tax declaration and refund dossier. If the project has a management unit, this unit shall register, declare and make a separate tax refund dossier with the local tax office with which it has made tax registration (other than the project management unit in the same province or city in which the business is headquartered. In this case, the business shall make VAT refund dossiers). When it finishes the investment project to establish a new business and has completed procedures for business registration and tax payment registration, the business, as the project owner, shall sum up arising VAT amounts, refunded VAT amounts and to-be-refunded VAT amounts of the project for transfer to the new business which shall declare and pay, or request refund of, VAT to its managing tax office under regulations.
4. If in a month, a business exports goods or services and concurrently sells goods or services at home and has an uncredited input VAT amount of VND 200 million or more in that month (input VAT arising in the month includes input VAT for tax-liable export or domestic business activities and uncredited VAT amount carried forward from the previous month), it may not be considered for VAT refund on a monthly basis if its uncredited input VAT on exported goods or services is less than VND 200 million after being cleared against the output VAT on domestically sold goods or services and allocated according to the ratio (%) of the turnover of goods or services exported in the period to the total VAT-liable turnover of goods or services of the business in the period. If its uncredited input VAT amount is VND 200 million or more, it may have VAT refunded on a monthly basis for its exported goods or services.
Specifically:
Uncredited VAT amount of the month | = | Output VAT amount on domestically sold goods or services | - | Total creditable input VAT amount arising in the month (including input VAT for tax-liable export or domestic business activities and uncredited VAT amount carried forward from the previous month) |
Input VAT on exported goods | = | Uncredited VAT amount of the month | x | Ratio (%) of export turnover to total tax-liable turnover of goods or services |
For example:
In March 2012, the VAT return of enterprise X has the following figures:
- VAT amount carried forward from the previous period: VND 0.15 billion.
- Input VAT for tax-liable export or domestic business activities arising in the month: VND 4.8 billion.
- Total turnover is VND 21.6 billion, including export turnover of VND 13.2 billion and turnover of VND 8.4 billion from VAT-liable domestic sales.
Ratio (%) of export turnover to total turnover: 13.2/21.6 x 100% = 61%.
- Output VAT on domestically sold goods or services is VND 0.84 billion.
VAT amount to be refunded on a monthly basis for exported goods is determined as follows:
Uncredited VAT amount of the month = VND 0.84 billion - VND (0.15 + 4.8) billion = VND 4.11 billion.
So, the uncredited VAT amount of the month is VND 4.11 billion.
- Input VAT amount on exported goods is determined as follows:
Input VAT amount on exported goods = VND 4.11 billion x 61% = VND 2.507 billion.
The uncredited input VAT amount on exported goods (after being cleared and allocated) is VND 2.507 billion, larger than (>) VND 200 million. So, the business will have the VAT amount of 2.507 billion refunded on a monthly basis. The input VAT amount of VND 1.603 billion on domestically sold goods or services which is not refundable on a monthly basis (VND 1.603 billion = VND 4.11 billion - VND 2.507 billion) will be carried forward to the next period for further credit.”
Article 2. Organization of implementation
1. This Circular takes effect on July 1, 2013.
2. In case a workshop less or has issued invoices and calculated VAT since March 1, 2012, on the lease of workshops to an export processing enterprise, the parties shall issue value-added invoices to adjust the issued invoices in order to apply the VAT rate of 0%.
3. In case a business which is not a credit institution has issued invoices and calculated VAT since March 1, 2012, on interests on loans provided to other organizations or individuals, the parties shall make invoices to adjust the issued invoices and free these loan interests from VAT. In case the parties do not adjust the issued invoices and borrowers use the loans for VAT-liable business activities, borrowers may credit the input VAT under regulations based on value-added invoices of the lender.
4. In case a contract on provision of digitalized services to a foreign party signed before the effective date of this Circular has come into effect, VAT on such contract continues to apply under the guidance in relevant legal documents effective at the time of signing of the contract. For contracts on provision of digitalized services to foreign parties signed on or after March 1, 2012, which are liable to VAT and now subject to VAT rate of 0% under this Circular, this Circular is applied from March 1, 2012.
5. Contents not guided in this Circular and those not contrary to the guidance in this Circular still comply with the Ministry of Finance’s Circular No. 06/2012/TT-BTC of January 11, 2012, on value-added tax.
Any difficulties or problems arising in the course of implementation should be reported to the Ministry of Finance for timely guidance and settlement.-
For the Minister of Finance
Deputy Minister
DO HOANG ANH TUAN
Vietnamese
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