Q&A Value-added Tax

1/5/2022

Question 1: Are enterprise operating in transportation services entitled to VAT reduction according to the Resolution 406? And at which level of reduction?

Answer:

According to Clause 3, Article 1, Resolution 406/UBTVQH15 of Standing committee of the National Assembly, the value-added tax reduction will be applied to the following goods and services from 01 November 2021 to 31 December 2021:

(i) Transport services (railway transport, water transport, aviation transport, other road transport); accommodation services; food and drink services; services of travel agencies, tour operators and support services, related to promotion and organization of tours.

(ii) Publishing products and services; cinematographic services, production of television program, sound recording and music publishing; works of art and services for composing, arts, and entertainment; services of libraries, archives, museums and other cultural activities; sports, recreation and entertainment services. The goods and services mentioned in category (ii) do not include publishing software, and goods and services provided in online form.

The determination of VAT reduction also depends on the tax calculation method. If enterprise operates in transportation services field and calculates VAT using credit method, it will be entitled to a reduction of 30% of the VAT rate. Accordingly, the tax rate after reduction applied for transportation services will be 7% applies from 01 November 2021 to 31 December 2021.

 

Question 2: When the company transports goods and materials to the export processing zone, which VAT rate should be applied in the service invoice?

Answer:

If the Company's customer is an export processing enterprise:

  • If the above services are consumed in a non-tariff zone and satisfy the conditions specified in Clause 2, Article 9 of Circular No. 219/2013/TT-BTC dated 31 December 2013 of the Ministry of Finance (i.e. have supplying contract of services to organizations or individuals in non-tariff zone, proof of payment for export services via banks and other documents as prescribed by law), they are subject to VAT of 0%.
  • If the above services are consumed outside the non-tariff area, they are subject to VAT of 10%.

The Company bases on the actual situation to comply with the provisions of the law (Article 9, 11 of Circular No. 219/2013/TT-BTC dated 31 December 2013 of the Ministry of Finance.)

 

Question 3: The company operating in transportation field, recently hired a 3rd party to test COVID - 19 for drivers (this fee is included in the price of transportation services for customer). All of these expenses have sufficient supporting document. Thus, when issuing VAT invoice for shipping services to customer, can the company include the COVID-19 test service fee in the invoice?

Answer:

According to current regulations, during the period from the issuance date of Decree No. 123/2020/ND-CP dated 19 October 2020 to June 30, 2022, Decree No. 51/2010/ND-CP dated 14 May 2010 and Decree No. 04/2014/ND-CP dated 17 January 2014 guiding invoices for selling goods and providing services are still valid.

Accordingly: If the transportation service company includes COVID-19 testing cost in the price of transportation services, when issuing invoice to the customer for transportation services, the company must include the total value of the transportation service fee received (including COVID-19 testing cost) according to the provisions of Clause 7 Article 3 of Circular No. 26/2015/TT-BTC dated 27 February 2015 of the Ministry of Finance.

 

Question 4: Real estate brokerage company, has a promotion program in which customers buying real estate will receive gold (already registered as promotion program with the Ministry of Industry and Trade). The gold purchased invoice is the sales invoice (as the gold seller declares VAT by the direct method). The company declares VAT by the credit method. Which output VAT rate should be stated in the invoice of gold given to customers?

Answer:

If the company using credit method for VAT calculation buys processed gold products from organizations engaged in buying, selling, and processing gold, silver and gems to give to customers, the company must issue VAT invoice, with 10% VAT rate, and fill in all the criteria of the invoice, calculate VAT as a invoice for selling goods and services to customers according to the provisions of Clause 9, Article 3, supplement Point 2.4, Appendix 4 of Circular No. 39/2014/TT-BTC dated 31 March 2014 of the Ministry of Finance.

 

Question 5: If the company is not a real estate business, when transferring the land use rights,  does it have to declare VAT?

Answer:

According to Clause 10. Article 7 of Circular 219/2013/TT-BTC dated 31 December 2013 of Ministry of Finance about implementing Law on VAT and Decree 209/2013/ND-CP dated 18 December 2013 of Government detailing and guiding the implementation of some articles of the Law on VAT, the company must declare VAT for real estate transfer activities regardless of whether it operates in real estate or not. The taxable price is the real estate transfer price minus (-) the deductible land price for VAT calculation.

 

Question 6: In sale and purchase activities, if the seller supports the buyer with transportation costs, does the buyer have to issue VAT invoice for this supporting expense? Can this amount be offset with the purchase payable? Is such offset considered as a form of non-cash payment?

Answer:

According to the provisions of Clause 1, Article 5, Circular 219/2013/TT-BTC dated 31 December 2013 of the Ministry of Finance, the buyer is not required to declare tax or calculate VAT for this supporting amount. The buyer only needs to make receipt voucher according to regulations.

According to the provisions of Point b, Clause 4, Article 15, Circular 219/2013/TT-BTC, the supporting amount received by the buyer could be offset with the debt between the two parties if specified in the contract. The offset, if clearly stated in the contract, is also considered as non-cash payment.

 

Question 7: The company operates in the education and training field, and is not subject to output VAT. Can the input VAT on goods and services purchased for the Company's activities be credited? Can the company do procedures for input VAT refund or not?

Answer:

If the enterprise produces or trades of goods and services that are not subject to output VAT, the input VAT of goods and services purchased for the production and trading of not-subject to VAT goods and services, will not be credited, but accounted into expenses to Corporate income tax calculation or included in the fixed asset’s historical cost. This excepts the case where the VAT amount of goods and services purchased each time with was from VND 20 million, and not supported by non-cash payment vouchers.

(Based on Clause 13, Article 4, Article 14 of Circular 219/2013/TT-BTC dated 31 December 2013 of the Ministry of Finance; Article 1 of Circular No. 26/2015/TT-BTC dated 27 February 2015 of the Ministry of Finance)

The company is not eligible for VAT refund according to regulations.

(Based on Clause 3, Article 1 of Circular No. 130/2016/TT-BTC dated 12 August 2016 by the Ministry of Finance; Article 2 of Circular 25/2018/TT-BTC dated 16 March 2018 by the Ministry of Finance)