Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government on detailing and guiding implementation of several articles of Law on Value-Added Tax

THE GOVERNMENT

Decree No. 209/2013/ND-CP of December 18, 2013 detailing and guiding a number of articles of the Law on Value-Added Tax[1]

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the June 3, 2008 Law on Value-Added Tax;

Pursuant to the June 19, 2013 Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax;

At the proposal of the Minister of Finance,

The Government promulgates the Decree detailing and guiding a number of articles of the Law on Value-Added Tax.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Decree details and guides a number of articles of the Law on Value-Added Tax and the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax regarding taxpayers, non-taxable objects, taxable prices, tax rates, tax calculation methods, tax credit, tax refund, and places for tax payment.

Article 2. Taxpayers

1. Value-added tax payers include organizations and individuals that produce and trade in goods and services subject to value-added tax (below referred to as business establishments) and organizations and individuals that import goods subject to value-added tax (below referred to as importers).

2. Vietnam-based production and business organizations and individuals that purchase services (even services associated with goods) from foreign organizations without permanent establishments in Vietnam or from overseas individuals being non-residents in Vietnam, shall pay value-added tax, except those not subject to value-added tax declaration, calculation and payment prescribed at Point b, Clause 3 of this Article.

Permanent establishments and overseas individuals being non-residents prescribed in this Clause are defined in the law on enterprise income tax and the law on personal income tax.

3. Cases not subject to value-added tax declaration, calculation and payment:

a/ Organizations and individuals that receive revenues from compensations, bonuses, financial support, or transfer of emission rights, and other financial revenues;

b/ Vietnam-based production and business organizations and individuals that purchase services from foreign organizations without permanent establishments in Vietnam or from overseas individuals being non-residents in Vietnam in the following cases: repair of vehicles, machinery and equipment (including also supplies and spare parts); advertising and marketing; investment and trade promotion; brokerage of goods sale and service provision; training; sharing of charges for international post and telecommunications services provided outside Vietnam between Vietnam and foreign partners;

c/ Organizations and individuals that do not conduct business and are not liable to pay value-added tax, when selling assets;

d/ Organizations and individuals that transfer investment projects for producing and trading goods and services subject to value-added tax to enterprises or cooperatives;

dd/ Cultivation, husbandry and aquaculture products which have not yet been processed into other products or have just been preliminarily processed, when being sold to enterprises or cooperatives, except the case specified in Clause 1, Article 5 of the Law on Value-Added Tax.

The Ministry of Finance shall detail Clauses 2 and 3 of this Article.

Article 3. Non-taxable objects

Objects not subject to value-added tax are prescribed in Article 5 of the Law on Value-Added Tax and Clause 1, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax.

1. Preliminarily processed products prescribed in Clause 1, Article 5 of the Law on Value-Added Tax are products which have just been cleaned, sun-dried, heat-dried, peeled, pitted, cut, salted or cool-preserved or otherwise preserved in ordinary forms.

2. A number of services prescribed in Clause 8, Article 5 of the Law on Value-Added Tax and Clause 1, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax are specified as follows:

a/ Credit provision services include:

- Loan provision;

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

- Guarantee;

- Financial leasing;

- Issuance of credit cards;

- Domestic factoring; international factoring;

- Sale of loan collateral assets;

- Provision of credit information under the Law on the State Bank of Vietnam;

- Other forms of credit provision as prescribed by law.

b/ Loan provision services provided by taxpayers other than credit institutions;

c/ Securities trading activities include securities brokerage, security dealing, securities issuance underwriting, securities investment consultancy, security depository, securities investment fund management, securities investment company management, securities portfolio management, market organization services of stock exchanges or securities trading centers, services related to securities registered and deposited at the Vietnam Security Depository, provision of loans to clients for conducting deposit transactions, advance payment of proceeds from securities sale, and other securities trading activities as prescribed in the securities law;

d/ Capital transfer includes transfer of part or the whole of the invested capital amount, even sale of an enterprise to another for conducting production and business activities, transfer of securities, transfer of the capital contribution right, and other forms of capital transfer as prescribed by law;

dd/ Sale of debts;

e/ Foreign currency trading;

g/ Sale of collateral assets of loans of organizations with wholly state-owned charter capital established by the Government in order to handle non-performing loans of Vietnamese credit institutions.

3. Medical examination and treatment services prescribed in Clause 9, Article 5 of the Law on Value-Added Tax include also transportation, testing, screening, radiography, and blood and blood preparations used for patients.

4. Zoo, flower garden, park and street greenery maintenance and public lighting services; and funeral services.

The Ministry of Finance shall detail non-taxable services prescribed in this Clause.

5. For the maintenance, repair or construction of works prescribed in Clause 12, Article 5 of the Law on Value-Added Tax which also uses funding sources other than people’s contributions (including also contributions and financial aid of organizations and individuals) or humanitarian aid, accounting for not more than 50% of the total funding amount used for the works, the whole value of the works is not subject to tax.

Social policy beneficiaries include people with meritorious service as prescribed by the law on people with meritorious service; social protection beneficiaries enjoying allowances from the state budget; members of poor households or households living just above the poverty line; and other cases as prescribed by law.

6. Mass transit prescribed in Clause 16, Article 5 of the Law on Value-Added Tax covers mass transit by bus or tramcar along routes within provinces, urban centers and adjacent areas as prescribed by competent state agencies.

7. Aircraft prescribed in Clause 17, Article 5 of the Law on Value-Added Tax and Clause 1, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax includes also aircraft engines.

The Ministry of Planning and Investment shall assume the prime responsibility for, and coordinate with related agencies in, promulgating a list of domestically available machinery, equipment, accessories and supplies as a basis for identifying those which cannot be manufactured at home yet and need to be imported for scientific research and technological development; a list of domestically available machinery, equipment, spare parts, special-use means of transport and supplies as a basis for identifying those which cannot be manufactured at home yet and need to be imported for prospecting, exploration and development of oil and gas fields; and a list of domestically available aircraft, oil rigs and ships as a basis for identifying those which cannot be manufactured at home yet and need to be imported for the formation of fixed assets of enterprises or hired from foreign partners for production, business, lease or sublease.

8. Special-use weapons and military equipment used for security and defense purposes prescribed in Clause 18, Article 5 of the Law on Value-Added Tax shall be specified by the Ministry of National Defense and the Ministry of Public Security after consulting with the Ministry of Finance.

9. Imported goods prescribed in Clause 19, Article 5 of the Law on Value-Added Tax are specified as follows:

a/ Goods imported as humanitarian aid or non-refundable aid must be approved by competent state agencies;

b/ Gifts for state agencies, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations or people’s armed units must comply with regulations on donations and gifts;

c/ Quotas of goods imported as donations or gifts for Vietnam-based individuals must comply with regulations on donations and gifts;

d/ Belongings of foreign organizations and individuals within diplomatic immunity quotas; and personal effects within duty-free luggage quotas;

dd/ Goods and services sold to foreign organizations or individuals or international organizations for use as humanitarian aid or non-refundable aid to Vietnam.

10. For transfer of technologies or transfer of intellectual property rights prescribed in Clause 21, Article 5 of the Law on Value-Added Tax which is accompanied with transfer of machinery and equipment, the value of the transferred technologies or intellectual property rights is not subject to value-added tax; if such value cannot be separated, value-added tax will be calculated on the total value of transferred technologies or intellectual property rights and accompanying machinery and equipment.

11. Exported natural resources or minerals which have not yet been processed into other products.

The Ministry of Finance shall assume the prime responsibility for, and coordinate with related agencies in, detailing the identification of exploited natural resources or minerals which have not yet been processed into other products prescribed in this Clause.

12. Goods and services of business households and individuals that earn an annual turnover of VND one hundred million or less.

The Ministry of Finance shall provide guidance on business households and individuals that earn an annual turnover of VND one hundred million or less prescribed in this Clause.

Chapter II

TAX BASES AND CALCULATION METHODS

Article 4. Taxable prices

Taxable prices comply with Article 7 of the Law on Value-Added Tax and Clause 2, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax.

1. For goods and services sold by production and business establishments, the taxable price is the selling price exclusive of value-added tax; for goods and services subject to excise tax, the taxable price is the selling price inclusive of excise tax but exclusive of value-added tax; for goods subject to environmental protection tax, the taxable price is the selling price inclusive of environmental protection tax but exclusive of value-added tax; for goods subject to excise tax and environmental protection tax, the taxable price is the selling price inclusive of excise tax and environmental protection tax but exclusive of value-added tax.

For imported goods, the taxable price is the border-gate import price plus (+) import duty (if any), plus (+) excise tax (if any) and plus (+) environmental protection tax (if any). The border-gate import price shall be determined under regulations on taxable prices of imports.

For the purchase of services prescribed in Clause 2, Article 2 of this Decree, the taxable price is the payment price exclusive of value-added tax as written in the service purchase contract.

2. For goods and services used for barter, internal consumption or donation, or as gifts, the taxable price is the price for calculating value-added tax on goods and services of the same or similar kinds at the time of barter, consumption or donation, or as gifts. Particularly for donation of letters of invitation (free admission) to art performances, fashion shows, beauty or model contests or sports competitions as permitted by competent state agencies under law, the taxable price is zero (0).

For goods and services used for sales promotion under the commercial law, the taxable price is zero (0); goods and services used for sales promotion not under the commercial law are subject to tax declaration, calculation and payment like goods and services used for internal consumption or donation or as gifts.

Goods and services used for internal consumption prescribed in this Clause are those delivered or provided by business establishments for consumption, excluding those further used for their production and business activities.

3. For real estate transfer, the taxable price is the real estate transfer price minus (-) the land price permitted to be deducted for value-added tax calculation.

a/ The land price permitted to be deducted for value-added tax calculation is specified as follows:

- In case of land allocation by the State for investment in infrastructure to build houses for sale, the land price permitted to be deducted for value-added tax calculation is the land use levy payable into the state budget (exclusive of the exempted or reduced land use levy) plus expenses for compensation and ground clearance as prescribed by law;

- In case of auction of land use rights, the land price permitted to be deducted for value-added tax calculation is the auction-winning land price;

- In case of land lease for building infrastructure or building houses for sale, the land price permitted to be deducted for value-added tax calculation is the land rental payable into the state budget (exclusive of the exempted or reduced land rental) plus expenses for compensation and ground clearance as prescribed by law;

- In case of receiving the transfer of land use rights from organizations or individuals, the land price permitted to be deducted for value-added tax calculation is the land price at the time of transfer, inclusive of the value of infrastructure (if any). Business establishments may not declare and credit input value-added tax on infrastructure already included in the deducted value of land use rights not subject to value-added tax. If the deducted land price is exclusive of the value of infrastructure, business establishments may declare and credit input value-added tax on infrastructure not yet included in the deducted value of land use rights not subject to value-added tax.

In case the land price at the time of transfer cannot be determined, the land price permitted to be deducted for value-added tax calculation is the land price set by the provincial-level People’s Committee at the time of signing the transfer contract.

- For real estate trading establishments that build build-transfer (BT) works and make payment with the value of land use rights, the land price permitted to be deducted for value-added tax calculation is the price at the time of signing the BT contract under law; if at the time of contract signing, the price cannot be determined yet, the land price permitted to be deducted is the land price decided by the provincial-level People’s Committee for payment for the works;

b/ In case business establishments build and commercially operate infrastructure or build houses for sale, transfer or lease, the taxable price is the amount collected according to the project implementation schedule or payment schedule written in the contract minus (-) the land price permitted to be deducted in proportion to the percentage (%) of the collected amount to the total contractual value.

4. For electricity of dependent cost-accounting hydropower plants of Electricity of Vietnam group, including electricity of dependent cost-accounting hydropower plants of power generation corporations within the group, the taxable price for determining the value-added tax amount to be paid in the locality where the plant is located equals 60% of the previous year’s average commodity electricity selling price exclusive of value-added tax.

5. For casino, prize-winning electronic games and entertainment services with betting, the taxable price is the amount collected from such services, inclusive of excise tax, excluding the prizes paid to customers.

6. The taxable prices for goods and services prescribed in Clause 1, Article 7 of the Law on Value-Added Tax and Clause 2, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax include surcharges and additional  charges enjoyed by business establishments.

The Ministry of Finance shall detail taxable prices prescribed in this Article.

Article 5. Time for determining value-added tax

1. The time for determining value-added tax on goods is the time of transferring goods ownership or use rights to the buyer, regardless of whether money has been collected or not.

2. The time for determining value-added tax on services is the time of completing the provision of services or the time of making a service provision receipt, regardless of whether money has been collected or not.

3. The Ministry of Finance shall detail the time for determining value-added tax in a number of specific cases.

Article 6. Tax rates

Value-added tax rates comply with Article 8 of the Law on Value-Added Tax and Clause 3, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax.

1. The tax rate of 0% applies to exported goods and services, international transportation, and goods and services not subject to value-added tax prescribed in Article 5 of the Law on Value-Added Tax and Clause 1, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax upon exportation, except goods and services prescribed at Point dd of this Clause.

Exported goods and services are goods and services sold or provided to overseas organizations and individuals and consumed outside Vietnam or within a non-tariff area; and goods or services provided for foreign customers in accordance with law.

a/ Exported goods include goods exported abroad or sold into a non-tariff area; works built or installed abroad or in a non-tariff area; sold goods which are delivered and received outside Vietnam; spare parts and supplies for repair or maintenance of vehicles, machinery or equipment for foreign partners which are consumed outside Vietnam; goods exported on the spot, and other cases regarded as export under law;

b/ Exported services include services provided directly to organizations or  individuals abroad or in a non-tariff area and consumed outside Vietnam or in a non-tariff area;

In case a service is provided both in and outside Vietnam but the service contract is signed between the two parties that pay tax in Vietnam or have permanent establishments in Vietnam, the tax rate of 0% applies only to the value of service provided outside Vietnam, except the provision of insurance service for imported goods for which the tax rate of 0% applies to the whole contractual value. In case it is impossible to separately determine in the contract the value of service provided in Vietnam, the taxable price will be determined based on the percentage (%) of expenses arising in Vietnam to the total expenses;

Overseas individuals are foreigners who do not reside in Vietnam and Vietnamese who reside overseas and stay outside Vietnam during the provision of services.

Organizations and individuals in a non-tariff area are those having business registration and in other cases as prescribed by the Prime Minister.

c/ International transportation prescribed in this Clause covers transportation of passengers, luggage and cargo along international routes from Vietnam abroad or from abroad to Vietnam, or involving both overseas departure and destination places. In case an international transportation contract also covers domestic transportation routes, international transportation will cover these domestic routes;

d/ To be eligible for the tax rate of 0%, exported goods and services prescribed at Points a and b of this Clause must fully satisfy the conditions specified at Point c, Clause 2, Article 9 of this Decree, and other goods and services that meet the conditions specified by the Ministry of Finance;

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 being natural resources and minerals not yet processed into other products as prescribed in Clause 11, Article 3 of this Decree;

- Goods and services provided for individuals without business registration in a non-tariff area.

e/ The Ministry of Finance shall detail a number of cases in which other goods and services provided for overseas organizations and individuals are eligible for the tax rate of 0%, and goods and services provided for overseas organizations and individuals but consumed in Vietnam are ineligible for the tax rate of 0%.

2. The tax rate of 5% applies to goods and services prescribed in Clause 2, Article 8 of the Law on Value-Added Tax and Clause 3, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax. A number of cases in which the tax rate of 5% is applicable are specified as follows:

a/ Clean water for production and daily life prescribed at Point a, Clause 2, Article 8 of the Law on Value-Added Tax does not include bottled water of all kinds and other beverages which are subject to the tax rate of 10%;

b/ Products prescribed at Point b, Clause 2, Article 8 of the Law on Value-Added Tax include:

- Fertilizers, which are organic fertilizers, inorganic fertilizers, microbial fertilizers and other fertilizers;

- Ores for fertilizer production, which are ores used as materials for fertilizer production;

- Insecticides, which are plant protection drugs and other insecticides;

- Animal and plant growth stimulants.

c/ Feeds for cattle and poultry and feeds for other raised animals prescribed at Point c, Clause 2, Article 8 of the Law on Value-Added Tax include processed or unprocessed products such as bran, offal, oil cake of all kinds, fish powder and bone meal;

d/ Product preliminary-processing and preservation services prescribed at Point d, Clause 2, Article 8 of the Law on Value-Added Tax include sun-drying, heat-drying, peeling, pitting, slicing, grinding, cool-preserving, salting and other ordinary forms of preservation;

dd/ Fresh and raw food prescribed at Point g, Clause 2, Article 8 of the Law on Value-Added Tax includes food not yet cooked or processed into other products.

Unprocessed forest products prescribed at Point g, Clause 2, Article 8 of the Law on Value-Added Tax include exploited natural forest products such as rattan, bamboo, mushrooms; roots, leaves, flowers, medicinal plants, resin and other forest products;

e/ Pharmaco-chemistry products and pharmaceuticals used as raw materials for the production of curative and preventive medicines prescribed at Point l, Clause 2, Article 8 of the Law on Value-Added Tax;

g/ Social houses prescribed at Point q, Clause 2, Article 8 of the Law on Value-Added Tax and Clause 3, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax are houses built with investment by the State or organizations or individuals of different economic sectors and satisfying the criteria on house, selling price, rental, lease-purchase price, eligible purchaser and conditions for purchase, lease or lease-purchase under the housing law.

Article 7. Tax credit method

The tax credit method complies with Article 10 of the Law on Value-Added Tax and Clause 4, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax.

1. The payable value-added tax amount calculated by the tax credit method equals the output value-added tax amount minus (-) the creditable input value-added tax amount.

2. The output value-added tax amount equals the total value-added tax amount for goods or services sold as written on the added-value invoice.

The value-added tax amount written on the added-value invoice equals the taxable price of sold goods or services multiplied by (x) the value-added tax rate for such goods or service.

If documents are written with the payment price inclusive of value-added tax, the output value-added tax equals the payment price minus (-) the taxable price determined under Point k, Clause 1, Article 7 of the Law on Value-Added Tax.

3. The creditable input value-added tax amount shall be determined based on:

a/ The value-added tax amount written on the added-value invoice for goods or services purchased; the document on value-added tax payment for imported goods or the document on tax payment for purchased services under Clause 2, Article 2 of this Decree;

If documents are written with the payment price inclusive of value-added tax for the goods or services purchased, the creditable input value-added tax amount equals the payment price minus (-) the taxable price prescribed at Point k, Clause 1, Article 7 of the Law on Value-Added Tax.

b/ The conditions for credit of input value-added tax comply with Clause 2, Article 9 of this Decree.

4. The tax credit method applies to:

a/ Operating business establishments which earn an annual turnover of VND one billion or more from goods sale or service provision and fully observe regulations on accounting, invoices and documents as prescribed by the law on accounting, invoices and documents, except business households and individuals that pay tax by the method of calculation of tax based directly on added value as prescribed in Article 8 of this Decree;

The period of stable application of a certain tax calculation method is two consecutive years;

The Ministry of Finance shall guide the calculation of turnover as a basis for determination of business establishments which pay value-added tax by the tax credit method and the duration of stable application of a certain tax calculation method prescribed at this Point.

b/ Business establishments which voluntarily register to apply the tax credit method, including:

- Operating enterprises and cooperatives which earn an annual turnover less than VND one billion from goods sale or service provision and fully observe regulations on accounting, books, invoices and documents as prescribed by the law on accounting, invoices and documents;

- Newly established enterprises under investment projects of operating business establishments which pay value-added tax by the tax credit method;

- Newly established enterprises and cooperatives which implement investment projects and procure fixed assets, machinery and equipment, and foreign organizations and individuals doing business in Vietnam under contractor or subcontractor contracts under the Ministry of Finance’s guidance;

- Other economic organizations that can account input and output value-added tax.

c/ Foreign organizations and individuals that provide goods and services for conducting oil and gas prospecting, exploration, development and exploitation activities and register the tax credit method will have tax declared and paid by Vietnamese parties on their behalf.

Business establishments which conduct gold, silver and gem purchase, sale and fashioning activities shall separately account these activities for paying tax by the method of calculation of tax based directly on added value under Clause 1, Article 8 of this Decree.

5. The Ministry of Finance shall detail this Article.

Article 8. Method of calculation of tax based directly on added value

The method of calculation of tax based directly on added value complies with Article 11 of the Law on Value-Added Tax and Clause 5, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax.

1. The payable value-added tax amount by the method of calculation of tax based directly on added value equals the added value multiplied by the value-added tax rate of 10% applicable to gold, silver and gem purchase, sale and fashioning activities.

The added value of gold, silver or gems equals the payment price of gold, silver or gem sold minus (-) the payment price of gold, silver or gem purchased.

The payment price of gold, silver or gem sold is the actual selling price written on the sale invoice, inclusive of the remuneration for fashioning (if any), value-added tax and surcharges enjoyed by the seller.

The payment price of gold, silver or gem purchased equals the value of gold, silver or gem purchased or imported, inclusive of value-added tax, which are used for purchase, sale or fashioning of gold, silver and gem sold.

In a tax period, a negative (-) added value of gold, silver or gem, if any, shall be cleared against the positive (+) added value of gold, silver or gem. If there is no positive (+) added value or the positive (+) added value is insufficient for clearing the negative (-) added value, such negative (-) added value shall be carried forward for clearing against the added value of the subsequent period in the year. At the end of a calendar year, the negative (-) added value may not be carried forward to the subsequent year.

2. The payable value-added tax amount by the method of calculation of tax based directly on added value equals the percentage (%) multiplied by turnover and applies as follows:

a/ Subjects of application:

- Operating enterprises and cooperatives which earn an annual turnover less than VND one billion, except those voluntarily registering to apply the tax credit method under Clause 4, Article 7 of this Decree;

- Newly established enterprises and cooperatives, except those voluntarily registering to apply the tax credit method under Clause 4, Article 7 of this Decree;

- Business households and individuals;

- Foreign organizations and individuals that do business in Vietnam not under the Investment Law and other organizations that fail to observe or fully observe regulations on accounting, invoices and documents, except foreign organizations and individuals that provide goods and services for conducting oil and gas prospecting, exploration, development and exploitation activities under Point c, Clause 4, Article 7 of this Decree;

- Other economic organizations, except those registering to pay tax by the tax credit method under Point b, Clause 4, Article 7 of this Decree.

Business establishments which conduct gold, silver and gem purchase, sale and fashioning activities shall separately account these activities for paying tax by the method of calculation of tax based directly on added value under Clause 1 of this Article;

b/ The percentage (%) used for calculating value-added tax on turnover is prescribed for each activity as follows:

- 1%, for goods distribution and provision;

- 5%, for services and construction not associated with supply of materials;

- 3%, for production, transportation, and services associated with supply of materials;

- 2%, for other business activities.

c/ Turnover used for value-added tax calculation is the total proceeds from the sale of goods or services as written on the sale invoice, inclusive of value-added tax and surcharges and additional charges enjoyed by business establishments.

3. Business households that fail to observe or fully observe regulations on accounting, invoices and documents in their business activities shall pay value-added tax by the presumption method prescribed in Article 38 of the Law on Tax Administration.

The Ministry of Finance shall detail the method of calculation of tax based directly on added value prescribed in this Article.

Chapter III

TAX CREDIT AND REFUND

Article 9. Credit of input value-added tax

Credit of input value-added tax complies with Article 12 of the Law on Value-Added Tax and Clause 6, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax.

1. Business establishments which pay value-added tax by the tax credit method are entitled to credit of input value-added tax as follows:

a/ Input value-added tax on goods and services used for production and trading of goods and services subject to value-added tax may be wholly credited, including non-compensated input value-added tax on lost goods and services subject to value-added tax, and input value-added tax on goods and services which form fixed assets being refectories, houses for mid-shift break, change rooms, garages, restrooms and water tanks for employees at production and business places, and houses and health stations for workers in industrial parks;

b/ Input value-added tax on goods and services (including fixed assets) used for production and trading of goods and services both subject and not subject to value-added tax may be credited only for goods and services used for production and trading of goods and services subject to value-added tax. Business establishments shall separately account creditable and non-creditable input value-added tax; if they cannot do so, the creditable input value-added tax amount shall be calculated based on the percentage (%) of turnover subject to value-added tax to the total turnover of goods and services sold;

For business establishments which organize closed production and centralized cost-accounting and use products not subject to value-added tax in different stages for production of goods subject to value-added tax, the input value-added tax amount in all stages may be wholly credited.

For business establishments, including newly established ones, which have investment projects implemented in different phases, have production and business plans, organize closed production and centralized cost-accounting, and use products not subject to value-added tax for production of goods subject to value-added tax but provide goods and services not subject to value-added tax in the phase of capital construction investment, the input value-added tax amount in the investment phase for formation of fixed assets may be wholly credited. The input value-added tax amount for goods and services not forming fixed assets shall be credited based on the percentage (%) of turnover subject to value-added tax to the total turnover of goods and services sold.

For business establishments, including newly established ones, which have investment projects and invest in production and trading of goods and services both subject and not subject to value-added tax, the input value-added tax amount for fixed assets in the capital construction investment phase may be temporarily credited at the percentage (%) of turnover of goods and services subject to value-added tax to the total turnover of goods and services sold under production and business plans of these business establishments. The temporarily credited tax amount shall be adjusted based on the percentage (%) of turnover of goods and services subject to value-added tax to the total turnover of goods and services sold within three years from the first year in which turnover is generated.

The Ministry of Finance shall guide the determination of the percentage (%) of turnover of goods and services subject to value-added tax to the total turnover of goods and services sold, and the temporary credit and adjustment of the input value-added tax amount prescribed at this Point;

c/ Input value-added tax on fixed assets, machinery and equipment, including input value-added tax on lease of these assets, machinery and equipment, may not be credited in the following cases but shall be included in the historical costs of fixed assets or in deductible expenses under the Law on Enterprise Income Tax and guiding documents: fixed assets used exclusively for production of weapons and military equipment for national defense and security purposes; fixed assets, machinery and equipment of credit institutions, reinsurance businesses, life insurance businesses, securities businesses, health establishments and training institutions; civil aircrafts and yachts not used for cargo and passenger transportation, tourist or hotel business.

For fixed assets being passenger cars of 9 seats or less (except cars for cargo and passenger transportation, tourist or hotel business) which are valued at over VND 1.6 billion, the input value-added tax amount for the value exceeding VND 1.6 billion may not be credited;

d/ Input value-added tax on goods and services used for production and trading of goods and services not subject to value-added tax may not be credited, except the cases specified at Points dd and e of this Clause;

dd/ Value-added tax on goods and services purchased by business establishments for production and trading of goods and services to be provided for foreign organizations and individuals and international organizations as humanitarian aid or non-refundable aid prescribed in Clause 19, Article 5 of the Law on Value-Added Tax may be wholly credited;

e/ Input value-added tax on goods and services used for oil and gas prospecting, exploration and development activities may be wholly credited;

g/ Input value-added tax arising in a month shall be declared and credited when determining the payable tax amount of that month. If detecting errors in the declared and credited input value-added tax amount, business establishments may make additional declaration and credit before tax offices announce decisions on tax examination or inspection at taxpayers’ offices;

h/ Input value-added tax on goods and services used for production and trading of goods and services not subject to value-added tax prescribed at Points a, d and dd, Clause 3, Article 2 of this Article may be wholly credited;

i/ Business establishments may account the non-creditable input value-added tax amount in expenses for enterprise income tax calculation or in the historical costs of fixed assets, except the value-added tax amount for goods or services purchased each time with a value of VND twenty million or more and without non-cash payment documents;

k/ Business establishments which pay value-added tax by the method of calculation of tax based directly on added value and change to pay tax by the tax credit method are entitled to credit of value-added tax on goods and services purchased in the first period when they declare and pay tax by the tax credit method.

Business establishments which pay value-added tax by the tax credit method and change to pay tax by the method of calculation of tax based directly on added value may include the value-added tax amount not fully credited for goods and services purchased in the period of tax payment by the tax credit method in deductible expenses when determining incomes subject to enterprise income tax, except the refundable value-added tax amount for goods and services purchased in the period of tax payment by the tax credit method under Article 10 of this Decree and legal documents effective before this Decree takes effect;

l/ The Ministry of Finance shall detail a number of cases in which business establishments are entitled to declaration and credit of value-added tax on goods and services purchased through authorization to other organizations or individuals named on invoices.

2. Conditions for credit of input value-added tax:

a/ Having added-value invoices of goods and services purchased or documents on payment of value-added tax on goods imported or documents of payment of value-added tax on services purchased under Clause 2, Article 2 of this Decree;

b/ Having non-cash payment documents for goods and services purchased, except goods and services valued at less than VND 20 million upon each purchase.

For goods and services purchased on deferred payment or in installments with a value of VND 20 million or more, business establishments shall make declaration and credit of input value-added tax for these goods and services based on goods and service purchase contracts, added-value invoices and non-cash payment documents. If non-cash payment documents are not yet available because the contractual payment time is not due, business establishments may still make declaration and credit of input value-added tax. By the contractual payment time, or by December 31 every year in case the contractual payment time is earlier than December 31, business establishments that fail to produce non-cash payment documents are not entitled to credit of input value-added tax and shall declare and adjust the credited value-added tax amount.

Payment for goods and services purchased by clearing the value of goods and services purchased against the value of goods and services sold is also regarded as non-cash payment; after clearing, if the residual value subject to cash payment is VND 20 million or more, business establishments are entitled to tax credit only when they produce non-cash payment documents.

A business establishment which purchases goods or services valued at less than VND 20 million from the same supplier but makes many purchases in the same day with the total value of VND 20 million or more is entitled to tax credit only when it produces non-cash payment documents.

c/ In addition to the conditions specified at Points a and b of this Clause, exported goods and services must satisfy the following conditions to be eligible for the tax rate of 0%:

- Having a contract on sale or processing of exported goods or entrusted processing of exported goods or a service provision contracts with an organization or individual based overseas or in a non-tariff area;

- Having non-cash payment documents for exported goods and services and other law-prescribed documents; and customs declarations, for exported goods.

Payment for exported goods and services through clearing goods and services exported against goods and services imported or used for debt payment on behalf of the State is also regarded as non-cash payment.

Documents and certification papers of a third party required in substitution of non-cash payment documents in the following cases are also regarded as non-cash payment documents: Foreign buyers lose solvency as a result of bankruptcy; exported goods fail to satisfy quality requirements and are subject to destruction right at border gates of importing countries, and exported goods are lost due to objective causes during transportation outside Vietnam.

The Ministry of Finance shall guide conditions in specific cases of goods sale and service provision eligible for the tax rate of 0% and dossiers and documents in substitution of non-cash payment documents.

Article 10. Value-added tax refund

Value-added tax refund complies with Article 13 of the Law on Value-Added Tax and Clause 7, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax.

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) are entitled to credit of such amount in the subsequent period; if such input value-added tax amount is not yet fully credited within twelve months from the first month, or within four quarters from the first quarter in which the non-credited value-added tax amount arises, the business establishments are entitled to value-added tax refund.

2. Newly established business establishments under investment projects which have registered to do business and pay value-added tax by the tax credit method, or under ongoing oil and gas prospecting, exploration and development projects not yet put into operation are entitled to value-added tax refund for goods and services used for investment in each year if the investment period is one year or longer. If the accumulated value-added tax amount for purchased goods and services used for investment is valued at VND 300 million or more, business establishments are entitled to value-added tax refund.

3. Operating business establishments which pay value-added tax by the tax credit method and have ongoing investment projects not yet put into operation (except projects to build houses for sale) 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 are entitled to value-added tax refund if they have the value-added tax amount of VND 300 million or more for purchased goods and services used for investment. The business establishments shall make declaration and tax refund dossiers separately for this case.

4. 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.

5. 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.

6. 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 and 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 and 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 and projects in Vietnam are entitled to refund of the value-added tax amount already paid for these goods and services.

7. Entities entitled to diplomatic privileges and immunities under regulations 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 invoice or document indicating the payment price inclusive of value-added tax.

8. 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.

9. Business establishments possessing 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 11. Places for tax payment

1. Taxpayers shall declare and pay value-added tax in localities where they conduct production and business activities.

2. Taxpayers that declare and pay value-added tax according to the credit method and have dependent cost-accounting units based in a province or centrally run city other than the province or city where they are headquartered shall pay value-added tax in the locality where these units are based and the locality where the taxpayers are headquartered.

The Ministry of Finance shall detail this Article.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 12. Effect and implementation responsibility

1. This Decree takes effect on January 1, 2014, and replaces the Government’s Decree No. 123/2008/ND-CP of December 8, 2008, and Decree No. 121/2011/ND-CP of December 27, 2011, detailing and guiding a number of articles of the Law on Value-Added Tax.

To annul Clause 1, Article 4 of the Government’s Decree No. 92/2013/ND-CP of August 13, 2013, detailing a number of articles effective on July 1, 2013, of the Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax, on the effective date of this Decree.

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

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

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG