Official Dispatch No. 943/TCT-CS dated March 25, 20013 of the General Department of Taxation on tax policies for non-returnable ODA project

THE MINISTRY OF FINANCE

THE GENERAL DEPARTMENT OF TAXATION

Official Dispatch No. 943/TCT-CS dated March 25, 20013 of the General Department of Taxation on tax policies for non-returnable ODA project

Respectfully to: United Nations Industrial Development Organization (UNIDO)

(72 Ly Thuong Kiet, Hoan Kiem district, Hanoi)

On answering the official dispatch on December 03, 3012 of the United Nations Industrial Development Organization (UNIDO) guiding the trading duty free goods and services to non-returnable ODA project managed by UNIDO, the General Department of Taxation has opinions as follows:

At point 2, section II of the Circular No. 123/2007/TT-BTC dated October 23, 2007 of the Ministry of Finance guiding the implementation of tax policy and tax incentives for programs and projects funded with Official Development Assistance (ODA) promulgating tax policies and tax priorities applicable to non-returnable ODA projects as follows:

“2.1. Non-refundable ODA project owners shall be refunded VAT amounts they have paid for goods and services bought in Vietnam if their approved contracts signed with principal contractors cover VAT and the project owners are not provided with state funds for paying VAT. The VAT refund is effected under the guidance at Point 4, Section V of this Circular.

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2.2. If the donor has a representative office in Vietnam and directly purchases goods and services for the execution of a non-refundable ODA project or assigns it to the non-refundable ODA project owner, the donor will be refunded the paid VAT amount. The VAT refund is effected under the guidance at Point 4, Section V of this Circular.

2.3. If the non-refundable ODA project owner has been allocated state budget funds for paying VAT in the course of project execution, it is not entitled to VAT refund.”

At point 3, section II of the Circular 123/2007/TT-BTC on principal contractors and subcontractors executing nonrefundable ODA projects as follows:

“3.4. If a principal contractor (regardless of paying VAT by the deduction or direct method) signs a contract with a VAT-exclusive price with the ODA project owner or donor for executing a non-refundable ODA project, the principal contractor is entitled to the input VAT amount paid for goods or services purchased for the performance of the signed contract. The VAT refund is effected under the guidance at Point 4, Section V of this Circular.”

At point 6.1, part C of the Circular No. 129/2008/TT-BTC dated December 26, 2008 and clause 6.a, Article 18 of the Circular No. 06/2012/TT-BTC dated January 11, 2012 of the Ministry of Finance guiding the implementation of some articles of the Law on Value Added Tax  and tax refund as follows:

“6.1. For projects funded with non-refundable ODA: Program or project owners or principal contractors or organizations designated by foreign parties to manage programs or projects will be entitled to refund of VAT amounts paid for goods and services purchased in Vietnam for use for these programs and projects.”

Due to principal, the case that non-refundable OAD is not allocated reciprocal capital by the state budget to pay VAT tax, the project shall be refunded input VAT for goods and services serving the projects in accordance with above guidance.

The procedure for VAT refund shall be implemented in accordance with the Circular No. 28/2011/TT-BTC dated February 28, 2011 of the Ministry of Finance guiding the implementation of some articles of the Law on Tax Administration.

At the official dispatch dated December 03, 2012, UNIDO did not list its role as the sponsor, investor or ODA project office in the project, so UNIDO is suggested to supply full of relevant dossier, document to local tax offices for detailed guidance.

The General Department of Taxation answers UNIDO for acknowledgement./.

For the General Directorate

Deputy General Directorate

Cao Anh Tuan