Official Dispatch 13289/CTTPHCM-TTHT 2023 of the Ho Chi Minh issue invoices for internal consumption

To: Kohnan Vietnam Company Limited

Address: Room 20-02, Floor 20F, Bao Gia Building, 182 Le Dai Hanh, Ward 15,

District 11, Ho Chi Minh City - Tax identification number: 0313666077

In response to the Company’s document No. HCM2407/2023 dated July 31, 2023, regarding the issuance of invoices for internal consumption, the Ho Chi Minh City Tax Department has the following opinions:

In Clause 1 Article 4 of the Government’s Decree No. 123/2020/ND-CP dated October 19, 2020, on principles of creation, management and use of invoices and documents as follows:

“Article 4. Principles of creation, management and use of invoices and documents

1. When selling goods or providing services, the seller must create an invoice to the buyer (including goods or services for promotion or advertising or used as samples; goods and services donated, granted, presented as gifts, exchanged or given as salary for employees and for internal consumption (except goods internally circulated for further production); and goods loaned, lent or returned); and must fill in all contents as required in Article 10 of this Decree; in case of using e-invoices, the seller must use the standardized data format provided by the tax agency as prescribed in Article 12 of this Decree.”.

In Clause 2 Article 3 of Circular No. 119/2014/TT-BTC dated August 25, 2014, which is amended and supplemented under Clause 4 Article 7 of the Minister of Finance’s Circular No. 219/2013/TT-BTC dated December 31, 2013, guiding the implementation of the Law on Value-Added Tax and the Government’s Decree No. 209/2013/ND-CP of December 18, 2013, detailing and guiding a number of articles of the Law on Value-Added Tax (VAT) as follows:

“4. Taxed prices of products, goods and services for internal consumption.

For goods which are transferred within a production and business establishment such as goods transferred within the establishment’s warehousing system or ex-warehoused as supplies or semi-finished products for further manufacture or goods, services which are ex-warehoused or supplied by business establishments for use in business activities, VAT calculation and payment are not required.

…

In the case of ex-warehoused machinery, equipment, supplies and goods in the form of loan, borrowing or refund, if there is a contract and appropriate document related to the transaction, the business establishment is not required to issue invoices, calculate and pay VAT.

…

Example 27: Company Y, a bottled drinking water producer, sells a
water bottle at the VAT-exclusive market price of VND 4,000. When
Company Y delivers 300 water bottles for company meetings, it is not required to declare and calculate VAT.

…”

Pursuant to the General Department of Taxation’s Official Dispatch No. 4510/TCT-CS dated October 11, 2023, responding to the Ho Chi Minh City Tax Department regarding invoices.

Pursuant to the regulations and guiding documents mentioned above, in case of problems of the Company, the Ho Chi Minh City Tax Department responds according to the following principles:

- For goods which are internally transferred for further manufacture, the Company is not required to issue invoices and calculate, pay VAT.

- For goods for internal consumption at the sales department or at the Company's office serving production and business activities, the Company shall issue invoices but is not required to calculate and pay VAT according to Circular No. 119/2014/ TT-BTC.

The Ho Chi Minh City Tax Department hereby informs the Company for implementation./.