Decree No. 100/2016/ND-CP dated July 01, 2016 of the Government on elaboration and guidelines for some articles of the law on amendment of the law on value-added tax, the law on special excise duty and the law on tax administration

DECREE

Detailing and guiding the implementation of a number of articles of the Law Amending and Supplementing a Number of Articles of the Value-Added Tax Law, the Excise Tax Law and the Tax Administration Law[1]

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to the April 6, 2016 Law Amending and Supplementing a Number of Articles of the Value-Added Tax Law, the Excise Tax Law and the Tax Administration Law;

At the proposal of the Minister of Finance,

The Government promulgates the Decree detailing and guiding the implementation of a number of articles of the Law Amending and Supplementing a Number of Articles of the Value-Added Tax Law, the Excise Tax Law and the Tax Administration Law.

Article 1. To amend and supplement 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 Value-Added Tax Law, which was amended and supplemented under the Government’s Decree No. 12/2015/ND-CP of February 12, 2015, as follows:

1. To amend and supplement the first paragraph and Clause 1 of Article 3 as follows:

“Article 3. Non-taxable objects

Objects not subject to value-added tax must comply with Article 5 of the Law on Value-Added Tax, Clause 1, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax, and Clause 1, Article 1 of the Law Amending and Supplementing a Number of Articles of the Value-Added Tax Law, the Excise Tax Law and the Tax Administration Law.

1. Preliminarily processed products prescribed in Clause 1, Article 5 of the Law on Value-Added Tax, which was amended and supplemented under Clause 1, Article 1 of the Law Amending and Supplementing a Number of Articles of the Value-Added Tax Law, the Excise Tax Law and the Tax Administration Law, are products which have only been cleaned, sun-dried, heat-dried, peeled, pitted, cut, salted or cool-preserved or otherwise preserved in ordinary forms.”

2. To amend and supplement Clause 3 of Article 3 as follows:

“3. Medical examination and treatment services prescribed in Clause 1, Article 1 of the Law Amending and Supplementing a Number of Articles of the Value-Added Tax Law, the Excise Tax Law and the Tax Administration Law include also transportation, testing, screening, radiography, and blood and blood preparations used for patients.

Care services for elderly persons and persons with disabilities prescribed in Clause 1, Article 1 of the Law Amending and Supplementing a Number of Articles of the Value-Added Tax Law, the Excise Tax Law and the Tax Administration Law include also health and nutrition care and organization of cultural, sports and recreational activities, physical therapy and functional rehabilitation for elderly persons and persons with disabilities.”

3. To amend and supplement Clause 6 of Article 3 as follows:

“6. Mass transit prescribed in Clause 16, Article 5 of the Law on Value-Added Tax covers mass transit by bus and trolley bus (including tramcar) along routes within provinces, urban centers and adjacent areas as prescribed by the transport law.”

4. To amend and supplement Clause 11 of Article 3 as follows:

“11. Exported natural resources or minerals which have not yet been processed into other products or which have been processed into other products but the total value of natural resources or minerals plus the energy cost makes up 51% or more of  the production cost of the products processed from natural resources or minerals; and exports which are goods processed from natural resources or minerals with the total value of natural resources or minerals plus the energy cost making up 51% or more of the production cost of the products.

Natural resources and minerals prescribed in this Clause are those of domestic origin, including metallic minerals; non-metallic minerals; crude oil; natural gas; and coal gas.

The value of natural resources or minerals is the cost price of processed natural resources or minerals; for natural resources or minerals directly exploited by processing establishments, it is the direct and indirect costs for exploitation of the natural resources or minerals; for natural resources or minerals purchased for processing, it is the actual buying price plus the cost for processing the natural resources or minerals.

The energy cost includes the cost of fuel, electrical energy and thermal energy.

The determination of the value of natural resources or minerals and the energy cost shall be based on the final accounts of the previous year; for new enterprises which do not have statements of final accounts of the previous year, such determination shall be based on the investment plan.

 The Ministry of Finance shall detail this Clause.”

5. To amend Point dd, Clause 1 of Article 6 as follows:

“dd/ Cases in which the value-added tax rate of 0% is not applicable include:

- Offshore transfer of technologies or intellectual property rights;

- Offshore reinsurance service;

- Offshore credit provision service;

- Offshore capital transfer;

- Offshore securities investment;

- Derivative financial service;

- Post and telecommunications services;

- Exported products prescribed in Clause 11, Article 3 of this Decree;

- Goods and services provided for individuals without business registration in non-tariff areas;

- Imported cigarette, liquor and beer for export.”

6. To amend and supplement Article 10 as follows:

“Article 10. Value-added tax refund

1. Business establishments which pay value-added tax according to the tax credit method and have the input value-added tax amount not yet fully credited in a month (in case of monthly declaration) or in a quarter (in case of quarterly declaration) may credit such amount in the subsequent period.

2. Business establishments are entitled to tax refund for investment projects as follows:

a/ For new business establishments established under investment projects which have made business registration and register to pay value-added tax by the tax credit method, or under oil and gas prospecting, exploration and development projects still at the investment stage and not yet put into operation, if their investment period is 1 year or longer, they are entitled to value-added tax refund for goods and services used for investment in each year, except the case prescribed at Point c of this Clause. If the accumulative value-added tax amount of goods and services purchased for use in investment is VND 300 million or more, they are entitled to value-added tax refund.

For business establishments’ investment projects which have been inspected, examined or audited by competent state agencies, tax agencies may use the inspection, examination or audit results to decide on the value-added tax refund and shall take responsibility for their decision.

b/ For operating business establishments which pay value-added tax by the tax credit method, have new investment projects (other than commercial housing building investment projects) at the investment stage and not yet put into operation in a province or centrally run city other than the province or city where they are headquartered and have neither registered business nor registered tax, their input value-added tax amount may be offset against the payable value-added tax amount for business activities at their headquarters; after such offsetting, if the remaining amount of value-added tax for goods and services purchased for investment is VND 300 milion or more, they are entitled to value-added tax refund for their investment projects, except in the case prescribed at Point c of this Clause. Business establishments shall make declarations and tax refund dossiers separately for their investment projects.

c/ Business establishments are not entitled to value-added tax refund but may carry forward the investment projects’ tax amount not yet credited as prescribed by the investment law to the subsequent period in the following cases:

- Investment projects of establishments engaged in conditional production and business lines while failing to fully satisfy business conditions as prescribed by the Investment Law, prescribed at Point a, Clause 1, Article 13 of the Value-Added Tax Law, which was amended and supplemented under the Law Amending and Supplementing a Number of Articles of the Value-Added Tax Law, the Excise Tax Law and the Tax Administration Law, are investment projects of establishments engaged in conditional production and business lines, which have not been granted a license, or certificate of eligibility, for such conditional production and business lines; have not been permitted in writing by a competent state agency to run such conditional production and business lines; or have not yet satisfied conditions for conditional production business investment without having to obtain written certification or approval as prescribed by the investment law.

Investment projects of establishments engaged in conditional production and business lines while failing to fully maintain business conditions throughout their operation prescribed at Point a, Clause 1, Article 13 of the Value-Added Tax Law, which was amended and supplemented under the Law Amending and Supplementing a Number of Articles of the Value-Added Tax Law, the Excise Tax Law and the Tax Administration Law, are investment projects of establishments engaged in conditional production and business lines which, in the course of operation, have their license or certificate of eligibility for conditional production and business or a competent state agency’s document on investment in conditional production and business lines revoked; or in the course of operation, the establishments fail to satisfy the conditions for conducting conditional production and business lines as prescribed by the investment law, the time the establishments are not entitled to value-added tax refund shall be counted from the time they have one of the above papers revoked or from the time a competent state agency conducts inspection and detects that the establishments fail to satisfy the conditions on conditional production and business investment.

- Natural resources or mineral exploitation investment projects licensed from July 1, 2016, or goods production investment projects with the total value of natural resources or minerals plus the energy cost making up 51% or more of the cost price of the products under investment projects.

The determination of natural resources and minerals and their value and the time of determining the value of natural r inspection esources and minerals and the energy cost must comply with Clause 11, Article 3 of this Decree.

3. Business establishments which export goods and services and have a non-credited input value-added tax amount of VND 300 million or more in a month (in case of monthly declaration) or in a quarter (in case of quarterly declaration) are entitled to value-added tax refund on a monthly or quarterly basis, respectively; the value-added tax amount not yet credited in a month or quarter which is under VND 300 million may be credited in the subsequent month or quarter; for establishments having both exported goods and services and domestically sold goods and services, after offsetting the non-credited input value-added tax amount against the payable tax amount, if the establishments have a remaining non-credited amount of VND 300 million or more, the establishments are entitled to tax refund. Business establishments shall separately account the input value-added tax amount used for production and trading of exported goods and services; in case this amount cannot be accounted separately, the input value-added tax amount shall be determined based on the ratio of revenues from exported goods and services to the total revenues from goods and services of value-added tax declaration periods counting from the tax declaration period following the preceding tax refund period to the present period of tax refund request.

Business establishments are not entitled to tax refund in case imported goods are used for export or exported goods are not exported in areas of customs operation as prescribed by the Customs Law and its guiding documents.

Tax agencies shall conduct tax refund first and inspection later for goods-exporting taxpayers that have not been handled for smuggling, illegal cross-border transportation of goods, tax evasion, tax fraud or trade fraud for two consecutive years; and taxpayers other than those at high risk as prescribed by the Tax Administration Law and its guiding documents.

4. Business establishments which pay value-added tax by the tax credit method are entitled to value-added tax refund if they have an overpaid value-added tax amount or have the input value-added tax amount not yet fully credited upon ownership transformation, enterprise transformation, merger, consolidation, separation, splitting, dissolution, bankruptcy or operation termination.

Business establishment still at the investment stage and not yet put into operation which are dissolved or bankrupt or terminate operation without having an output value-added tax amount for principal business lines under investment projects are not required to adjust the declared, credited or refunded value-added tax amount. The declaration and calculation for tax payment in case of transfer of investment projects, sale of assets of investment projects or change of production and business purposes of investment projects must comply with the Ministry of Finance’s guidance.

5. Value-added tax refund for programs and projects funded with non-refundable official development assistance (ODA), non-refundable aid or humanitarian aid is prescribed as follows:

a/ Owners or principal contractors of, or organizations designated by foreign donors to manage, programs or projects funded with non-refundable ODA, are entitled to refund of the value-added tax amount already paid for goods and services purchased in Vietnam to serve these programs or projects;

b/ Vietnam-based organizations using non-refundable aid or humanitarian aid of foreign organizations or individuals to purchase goods and services for non-refundable aid or humanitarian aid programs or projects in Vietnam are entitled to refund of the value-added tax amount already paid for these goods and services.

6. Entities entitled to diplomatic privileges and immunities as prescribed by the law on diplomatic privileges and immunities that purchase goods and services in Vietnam for use are entitled to refund of the paid value-added tax amount written on the added-value invoices or documents indicating the payment price inclusive of value-added tax.

7. Foreigners and overseas Vietnamese holding passports or entry papers granted by competent foreign agencies are entitled to refund of tax on goods purchased in Vietnam and carried upon exit.

8. Business establishments having value-added tax refund decisions issued by competent agencies as prescribed by law, and cases eligible for value-added tax refund under treaties to which the Socialist Republic of Vietnam is a contracting party.”

Article 2. To amend and supplement the Government’s Decree No. 108/2015/ND-CP of October 28, 2015, detailing and guiding the implementation of a number of articles of the Excise Tax Law and the Law Amending and Supplementing a Number of Articles of the Excise Tax Law, as follows:

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

“1. For domestically produced goods or imported goods, it is the selling price of the producer or importer. In case the selling price of the producer or importer does not match the ordinary market price, the tax agency shall assess tax in accordance with the Tax Administration Law. The price for excise tax calculation shall be determined as follows:

In which, the selling price exclusive of value-added tax shall be determined in accordance with the law on value-added tax.

a/ In case the producer or importer of excise tax-liable goods sells goods via its dependent cost-accounting establishments, the price serving as a basis for excise tax calculation is the selling price set by such establishments. In case the producer or importer sells goods via its agents that sell goods at prices set by the producer or importer for commissions only, the selling price serving as a basis for determining the price for excise tax calculation is the commission-inclusive price set by that producer or importer;

b/ In case excise tax-liable goods are sold to trading establishments which have the parent company-subsidiary relation with, or are subsidiary companies of same parent company of, the producer or importer, or to trading establishments being those having partnership relation, the selling price serving as a basis for determining the price for excise tax calculation must not be 7% lower than the average selling price set by trading establishments directly purchasing goods from the producer or importer. In case the producer or importer establishes various intermediary trading establishments having the parent company-subsidiary relation with, or being subsidiaries of the same parent company or having partnership relation, the selling price serving as a basis for determining the price for excise tax calculation must not be 7% lower than  the average selling price of these trading establishments applicable to trading establishments having no parent company-subsidiary relation or no relation of subsidiary companies of the same parent company of, or having the partnership relation with, the producer or importer. Particularly for autos, the average selling price of trading establishments for comparison is the auto selling price exclusive of options for equipment and parts additionally installed by trading establishments at the request of customers.

The producer or importer and a trading establishment are regarded to have the partnership relation when one directly or indirectly holds at least 20% of the investment capital of the other’s owner.

In case the selling price serving as a basis for determining the price for excise tax calculation of the producer or importer of excise tax-liable goods is 7% lower than the average selling price of trading establishments, the price for excise tax calculation shall be assessed by the tax agency in accordance with the law on tax administration.”

2. To amend and supplement Clauses 4 and 5 of Article 4 as follows:

“4. For excise tax-liable processed goods, the taxed price is the selling price set by the processing-ordering establishment or the selling price of products of the same or similar kind at the time of goods sale.

In case the processing-ordering establishment sells goods to trading establishments which have the parent company-subsidiary relation with, or are subsidiaries of the same parent company of, the producer or importer, or are establishments with partnership relation, the taxed price shall be determined in accordance with Point b, Clause 1 of this Article.

5. For goods produced in the form of business cooperation between the producer and a user or an owner of goods trademarks (brands) or production technologies, the price for excise tax calculation is the selling price set by that user or owner. In case an establishment produces goods under a franchise license and transfers goods to Vietnam-based branches or representatives of foreign companies for sale, the price for excise tax calculation is the selling price set by those branches or representatives.

In case these establishments sell goods to trading establishments which have the parent company-subsidiary relation with, or are subsidiaries of the same parent company of, the producer or importer, or are establishments with the partnership relation, the taxed price shall be determined in accordance with Point b, Clause 1 of this Article.”

Article 3. To amend and supplement the Government’s Decree No. 83/2013/ND-CP of July 22, 2013, detailing the implementation of a number of articles of the Tax Administration Law and the Law Amending and Supplementing a Number of Articles of the Tax Administration Law, which was amended and supplemented under the Government’s Decree No. 91/2014/ND-CP of October 1, 2014, and Decree No. 12/2015/ND-CP of February 12, 2015, on tax administration, as follows:

1. To amend Clause 1 of Article 28a as follows:

“1. Taxpayers that pay tax beyond the prescribed time limit, extended time limit, or time limit stated in notices or handling decisions of tax administration agencies shall fully pay tax amounts and late-payment interests at the rate of 0.03% per day of the late paid amounts.

Tax arrears amounts arising before July 1, 2016, which taxpayers have not paid to the state budget, including amounts detected through inspection or examination by competent agencies may apply the interest rate for late payment prescribed in this Clause from July 1, 2016.

Taxpayers that provide goods or services to be paid by the state budget but have not yet received payments and therefore fail to pay taxes within the prescribed time limit, thus having tax arrears, are not subject to tax-related coercive measures and payment of late-payment interests on the tax arrears which must not exceed the payments not yet made by the state budget.”

2. To annul Article 38.

3. To amend and supplement Point a, Clause 2 of Article 39 as follows:

“a/ Taxpayers shall pay late-payment interests at the rate of 0.03% per day of the late paid amounts during the period of tax arrears installment payment. Taxpayers shall fully pay the committed tax amounts and late-payment interest amounts.”

4. To amend and supplement Point a, Clause 2 of Article 42 as follows:

“a/ Exemption from or reduction of excise tax, royalty and personal income tax for taxpayers that suffer natural disasters, fire or sudden accidents and are unable to pay tax in accordance with law; exemption from non-agricultural land use tax, agricultural land use tax, land rental, water surface rental and registration fee for taxpayers as prescribed by law; tax exemption for households and individuals having a payable annual non-agricultural land use tax amount of VND 50,000 or less. The Ministry of Finance shall specify the tax exemption and reduction prescribed at this Point;

For cases of land use levy exemption or reduction, tax agencies shall base on cadastral dossiers and papers proving taxpayers’ eligibility for land use levy exemption or reduction and relevant documents to determine the exemptible or reducible land use levy amount and payable land use levy amount. Tax agencies may not issue tax exemption or reduction decisions, but shall state the exemptible or reducible land use levy amount in their notices of land use levy payment.”

Article 4. To amend Clause 3, Article 13 of the Government’s Decree No. 129/2013/ND-CP of October 16, 2013, on sanctioning of tax-related administrative violations and coercive enforcement of tax-related administrative decisions, as follows:

“3. The party guaranteeing the fulfillment of tax obligations shall pay taxes, interests on late paid tax amounts, fines and interests on late paid fine amounsts (if any) for a taxpayer as committed under the written guarantee in case the taxpayer fails to pay tax to the state budget.

The guaranteeing party shall pay the tax arrears amounts, interests on late paid tax amounts, fines, and interests inon late paid fine amounts (if any) for the taxpayer under the written guarantee. Past the time limit set by the tax agency, if the taxpayer fails to pay or fully pay the tax arrears amounts, interests on late paid tax amounts, fines, and interests on late paid fine amounts and the guaranteeing party fails to fulfill the guarantee obligation, the guaranteeing party shall pay the late-payment interests at the rate of 0.03% per day of the tax amount and fine for late payment and is subject to the coercion prescribed in Clause 3, Article 18, and Article 19, of this Decree. The order and procedures for taking coercive measures are the same as those for taxpayers subject to coercion.”

Article 5. Effect and implementation responsibility

1. This Decree takes effect on July 1, 2016, except for Clause 2 of this Article.

2. Clause 2, Article 3 of this Decree takes effect on September 1, 2016.

3. The Ministry of Finance shall guide the implementation of this Decree.

4. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees and related organizations and persons shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN XUAN PHUC