Monthly Newsletter December, 2018
Monthly Newsletter December, 2018
1/8/2019
Monthly Newsletter December, 2018

1. Claiming credits for VAT assessed by Customs

On the 21st of September 2018, Bac Ninh Tax Department issued Official Letter no. 3037/CT-TTHT as guidance on declaration and claiming credits for VAT assessed by Customs as per post-clearance audit. Treatment of assessed VAT depends on when customs declaration was made:

  1. If assessed VAT arises from customs declaration made before 01/01/2014 (effective date of Circular no. 219/2013/TT-BTC), such VAT is not creditable (6 months overdue as instructed at point a, Clause 7, Article 14 Circular no. 06/2012/TT-BTC dated 11/01/2012); and it is not creditable against VAT on import. Such VAT is allowed as tax deduction for CIT purpose.
  2. If assessed VAT arises from customs declaration made on or after 01/01/2014:

2.1 In case of VAT assessment due to incorrect declaration of HS code, tax rate and import value of goods, such VAT is creditable on payment.

2.2 In case of VAT assessment due to variance between declared quantities of goods imported to produce exported goods with actual quantities used to produce exported goods:

  • If actual stock level of imported goods is lower than Customs’ data because standard rate of material consumption is lower than actual one, then such VAT is creditable
  • If actual stock level of imported goods is lower than Customs’ data, however, standard rate of material consumption is reasonable in comparison with actual one, then the Company can claim credits for VAT assessed by Customs. Materials variance not caused by force majeure events (as per Clause 1, Article 14, Circular no. 219/2013/TT-BTC) shall be treated as being consumed. VAT on output shall be calculated accordingly, and so does taxable income for CIT purpose.

 

2. Foreign contractor tax imposed on brokerage activities

On the 31st of October 2018, Binh Duong Tax Department issued official letter no. 19406/CT-TT&HT as guidance on FCT imposed on brokerage activities:

If a foreign contractor carries out brokerage activities so that a Vietnam company can sell goods to a Korean company, and such goods are supplied to a project in Vietnam, income that the foreign contractor receives for such brokerage activities is subject to foreign contractor tax.

 

3. Capitalisation of interest expense on purchase of machinery & equipment

On the 21st of November 2018, Minister of Finance issued Official Letter no. 14494/BTC-QLKT as response to Crowe Vietnam Ltd.’s enquiry (operating in accountancy and audit) about Capitalisation of interest expense on purchase of machinery & equipment:

Interest expense incurred on the borrowings used to finance the purchase of new machinery, equipment which is ready to use shall not be capitalised as part of the cost base. This guidance is in compliance with below regulations:

- According to paragraph 07,08 of Vietnam Accounting Standard no. 16 – Borrowing costs (VAS 16), interest expense shall be capitalised if it is directly related to Construction Investment or Construction-In-Progress assets. Construction-In-Progress asset is defined as asset under construction period and asset under long production period (over 12 months) before being put to use of being sold.

It is emphasized that: Circular 200/2014/TT-BTC dated 22/12/2014 is used as guidance for bookkeeping, preparation and presentation of Financial statements, it is not applicable for corporate income tax assessment.

 

4. Use of printed invoices until 31/10/2020

On the 5th of November 2018, General Department of Taxation issued official letter no. 4311/TCT-CS on implementation of e-invoice in accordance with Decree 119/2018/NĐ-CP. Kindly note that:

From 01/11/2018 to 31/10/2020, Decree no. 51/2010/NĐ-CP dated 14/5/2010 and Decree no. 04/2014/NĐ-CP dated 17/01/2014 issued by the Government on invoicing are both in enforcement.

Therefore, from 01/11/2018 to 31/10/2020, if the company uses up all printed invoices of which notice of issuance was made, and still need to use invoices for business activities, then the company can continue using printed invoices in accordance with Decree no. 51/2010/NĐ-CP dated 14/5/2010 and Decree no. 04/2014/NĐ-CP dated 17/01/2014 issued by the Government; and those printed invoices shall be in use until transition date for e-invoice as stipulated in Decree 119/2018/NĐ-CP dated 12/09/2018.