Chương III Thông tư 06/2012/TT-BTC: Khấu trừ, hoàn thuế

Chapter III

TAX DEDUCTION, TAX REFUND

Section 1. TAX DEDUCTION

Article 14. Principles of input VAT deduction

1. Input VAT of goods, services serving production, business of VAT taxable goods, services are completely deducted, including the uncompensated input VAT of the damaged VAT taxable goods.

Goods suffering natural loss due to its physical and chemical properties during the transportation and pumping process such as gasoline, oil… the input VAT of the actual goods suffering the natural loss not exceeding the prescribed loss extent shall be deducted. The input VAT of the goods suffering loss exceeding the limitation shall not be deducted or refunded.

2. Input VAT of goods, services serving both the production, business of VAT taxable and non-taxable goods and services, only the input VAT of goods, services serving the production, business of VAT taxable goods, services shall be deducted. Business establishments must separately account the deductible input VAT and non-deductible input VAT; if the business establishments may not separately account them, the input VAT shall be deducted under the ratio of the VAT taxable revenue on the total revenue from sold goods, services. Establishments conducting business of both VAT taxable and non-taxable goods and services shall monthly apportion the deductible VAT of purchased goods, services in the month. At the end of the year, business establishments shall calculate and apportion the deductible input VAT of the year to declare and adjust the apportioned deductible input VAT of the months.

3. The input VAT of fixed assets serving both the production, business of VAT taxable and non-taxable goods, services are completely deducted.

Input VAT of the following kinds of fixed assets shall not be deducted and shall be counted in the whole prices of fixed assets: fixed assets serving the production of weapons, military equipment serving National defense and security; fixed assets, machinery, equipment of credit institutions, enterprises conducting business of reinsurance, life insurance, securities, hospitals, schools; civil airplanes, yacht not serving passengers, goods transportation business, tourism, hotels.

Input VAT of goods, services composing enterprises’ fixed assets such as canteen, recreation site, free accommodations, locker rooms, parking lot, bathrooms, pools serving workers within the production, business areas, accommodations, medical stations for workers in industrial zones are completely deducted.

Fixed assets being 9-seat cars or under (except for cars in transportation business, tourism, hotels) are worth over 1.6 billion VND (excluding VAT), the input VAT corresponding to the value more than 1.6 billion VND shall not be deducted. 

4. Establishments producing agricultural, forest, aquatic/maritime products with closed production, accounting the results of concentrated business using products from the agricultural, forestial production or maritime/aquatic rearing and catching stages to proceed producing products subject to VAT (including unprocessed agricultural, forestial, aquatic products for export or processed products subject to VAT) are eligible for the declaration and deduction of input VAT on expenses serving the production and business at all stages of fundamental construction, production, processing. Establishments having projects to continue invest in production, processing or having written commitment to continue producing products subject to VAT are eligible for VAT deduction right in the stage of the investment in fundamental construction. For input VAT at the stage of investment in Fundamental Construction that is declared, deducted, refunded but then turns out to be not eligible for deduction or refund, enterprises must declare, adjust and repay the deducted or refunded VAT. If such enterprises fail to adjust and then detected by inspection, tax agencies shall collect/refund the tax arrears and sanction as prescribed. Enterprises shall be totally responsible before law for the reported contents, commitment with tax agencies relating to tax deduction and tax refund.

For establishments selling goods as unprocessed or preliminarily processed agricultural, foreatial, aquatic products not subject to VAT, the VAT on purchased goods, services shall be deducted at the ratio of the revenue of VAT taxable goods, services on the revenue from sold goods, services.

Example 42: Enterprise A investing in rubber plantation with input VAT on goods, services generated at the stage of investment in fundamental construction. The enterprise has no material to proceed the production of products subject to VAT (including unprocessed products for export or processed products subject to VAT) but has the project of investment in building a rubber latex processing factory (subject to VAT) and commits to process the products from cultivation into VAT taxable products, the enterprise’s input VAT shall be completely deducted.

Enterprises selling rubber latex not subject to VAT are not eligible for tax deduction.

For enterprises using part of the exploited rubber latex for production of products subject to VAT and the rest for sale, the input VAT shall be deducted as follow:

- Input VAT of fixed assets (rubber plantations, processing factories…): enterprises are eligible for complete tax deduction (including VAT generated in the stage of investment in fundamental construction).

- Input VAT of goods, services: deducted at the ratio (%) of the revenue from VAT taxable goods, services on the total revenue from sold goods, services.

5. Input VAT of goods (including purchased goods or produced by the enterprises themselves) used as gifts, presents, promotions, advertisements under any form serving the production and business of VAT taxable goods, services are deducted.

6. Input VAT of goods, services serving the production, business of goods, services not subject to VAT prescribed in Article 4 of this circular are counted in the original prices of fixed assets, materials or business expenses, except for the following cases:

a) VAT of goods, services purchased by business establishments serving the production, business of goods, services provided for foreign organizations, individuals, international organizations for humanitarian aids and non-refundable aids prescribed in clause 19 Article 4 of this Circular shall be completely deducted;

b) Input VAT of goods, services serving the petroleum exploration, exploitation and development is completely deducted until the first day of exploitation or production.

7. Input VAT generated in a certain month shall be declared and deducted while determining the tax amount payable of that month, regardless of those being used or stored.

a) Invoices not being declared and deducted when making declaration and deduction of the input VAT shall be declared and deducted in addition; time limits for additional declaration and deduction is not more than 06 (six) months as from the month of detecting the omitted invoices, except for the case guided in point b of this clause.

Example 43: Business establishment A has 01 VAT invoice dated March 10, 2012. In the tax declaration period in March 2012, the accountant of this business establishment omitted to declare this invoice. Business establishment A is allowed to make additional declaration and deduction no later than the declaration period in August 2012.

b) For business establishments inadequately declare the VAT amount paid at the importation stage (including the VAT amount paid at the importation stage with receipts of tax payment before March 01, 2012), the input VAT at the investment stage and not yet operated shall be declared and deducted in addition as prescribed by law provisions on tax administration.

Example 44: Business establishment B has paid VAT at the importation stage according to the tax payment receipt dated March 01, 2012. By mistakes, the accountant omitted to declare this document in the VAT declaration of the following months. Business establishment B is allowed to make additional declaration and deduction of the VAT amount paid at the importation stage (under the tax payment receipt) as prescribed by law provisions on tax administration.

Example 45: Business establishment Y has paid VAT at the importation stage according to the tax payment receipt before March 01, 2012. By mistakes, the accountant omitted to declare this receipt. On March 01, 2012, this mistake is discovered by the establishment’s accountant . Business establishment B is allowed make additional declaration and deduction of the VAT amount paid at the importation stage (under the tax payment receipt) as prescribed by law provision on tax administration.

c) For business establishments discovering inaccuracies of VAT after VAT invoices of goods, services were issued, the establishments must issue adjustment, supplement invoices, the time limits for declaring, deducting and supplementing VAT of business establishments purchasing goods, services is counted from the time of issuing the adjustment, supplement invoices.

8. For non-deductible input VAT amounts, business establishments are allowed to account into expenses for calculating enterprise income tax or into original prices of fixed assets as prescribed by law.

9. Head offices of corporations, groups not directly conducting business and other affiliated non-business, administrative units such as hospitals, infirmaries, sanitariums, institutions, schools… not being VAT payers are not eligible for deductions and refunds of the input VAT for purchased goods, services serving the operation of these units.

If these units conduct business of VAT taxable goods, services, such units must register, declare and pay VAT separately for these activities.

Example 46: The head office of corporation A not directly conducting production, business and operating by budget contributed by affiliated establishments. However, the head office leases out the unused part of the building, so that this leasing activity must be declared, paid seperately. The input VAT of goods, services serving the operation of the head office shall not be deducted or refunded.

10. Input VAT of goods, services serving the provision of goods, services not required to be declared and paid VAT prescribed in Article 5 of this Circular shall be completely deducted.

Example 47: Joint-stock construction company X is contracted to construct in Laos. Apart from the materials exported to Laos for building, company X has to incur a number of expenses arisen in Vietnam to serve the construction in Laos such as management expense. These expenses have VAT invoices (regarding VAT invoices worth 20 million VND or above and paid through banks). Company X is eligible for deductions of all the input VAT of the expenses stated above.

11. Business establishments are eligible for the declaration and deduction of the VAT on goods, services purchased by authorized organizations, individuals that the names thereof are written on the invoices including the following cases:

a) Insurers authorizing the insured to repair properties; the expenses on property repairs together with materials, spare parts with VAT invoices subscribed by the insured. When the insurers pay to the insured the insurance amounts under the contracts, the insurers are eligible for the declaration and deduction of the corresponding VAT on the paid insurance amounts under the VAT invoices subscribed by the insured; insurance indemnities payable to insured worth 20 million VND or above by the insurers must be paid through banks.

b) Before establishing an enterprise, if the founders have authorized in writing organizations, individuals to pay a number of expenses relating to the enterprises establishment, purchasing of goods, materials, the enterprise is eligible for the declaration and deduction of the input VAT under the VAT invoices subscribed by the authorized organizations, individuals and must pay to the authorized organizations, individuals through banks regarding invoices worth twenty million VND or above.

12. For non-business organizations, individuals contributing by assets as capital to limited liability companies, joint-stock companies, the documents of contributed assets are written contribution certificates and written records on delivery and receipt of assets. If the contributed assets are brand-new and unused, accompanied by legitimate invoices accepted by the council of contribution delivery and receipt, the value of contributions are determined under the value written on the invoices included VAT. The contributed party are eligible for the declaration and deduction of the VAT written on the invoices of assets purchase from the contributing party.

13. For business households paying VAT under the method of direct calculation on added value being converted to pay under the tax deduction method are eligible for the deduction of the VAT on goods, services purchased in the month of applying the tax deduction method; goods, services purchased before the month of applying the tax deduction method shall not be deducted input VAT.

14. Business establishments are not eligible for the deduction of VAT in the following cases:

- Use of VAT invoices not in compliance with law provisions such as:  VAT invoice not specified VAT (except for special cases that use VAT invoices with VAT-inclusive prices);

- Invoices not being specified or incorrectly being specified one of the indicators such as name, address, tax code of the seller so that it is unable to identify the seller;

- Invoices not being specified or incorrectly being specified one of the indicators such as name, address, tax code of the buyer so that it is unable to identify the buyer (except for the case guided in clause 11 of this Article);

-Fake invoices, VAT receipts, erased invoices, fraudulent invoices (not accompanied by goods, services);

- Invoices being specified the incorrect actual value of goods, services being purchased, sold or exchanged.

Article 15. Conditions for input VAT deduction

1. Having legitimate VAT invoices of goods, services being purchased or VAT receipts at the importation stage or VAT receipts on foreign parties’ behalf under the Ministry of Finance’s guidance applicable to foreign organizations without legal entities in Vietnam and foreign individuals conducting business or earning in Vietnam.

2. Having receipts of payment through banks for purchased goods, services (including imported goods) worth twenty million VND or above, except for the total value of the goods, services purchased each time under the invoice lower than twenty million VND including VAT.

a) Receipts of payment through banks are considered as documents proving the transfer from the buyer’s account to the seller’s account opened at organizations providing legitimate payment services in accordance with current law provisions  such as cheque, bank orders, banking cards, sim card (electronic wallet) and other methods of payment as prescribed (including cases when the buyer transfers from their account to the seller’s account bearing the name of the owner of a private enterprise, or when the buyer transfers from their account bearing the name of the owner of a private enterprise to the seller’s account if these accounts have registered the transaction at tax agencies).

Receipts of payment in cash to the seller’s account or receipts of payment under the forms contrary to current law provisions are not eligible for VAT deduction, refund regarding purchased goods, services worth twenty million VND or above.

b) Goods, services purchased each time under the invoices worth twenty million VND included VAT having no receipts of payment through banks shall not be deducted. Business establishments shall declare these invoices in the list of non-deductible invoices and documents of goods, services.

c) For goods, services purchased in instalments or deferred payment worth twenty million VND or above, business establishments shall base on the service, goods sale contracts, VAT invoices and receipts of payment through banks of goods, services purchased by instalments or deferred payment to make the declaration and deduction of input VAT, clearly specifying the term of payment in the “note” section on the list of invoices and documents of purchased goods, services. If the receipts of payment through banks are not available because the contractual payment is not due, business establishments are still eligible for the declaration and deduction of input VAT.

When the contractual payment is due, the input VAT shall not be deducted without receipts of payment through banks. Business establishments must declare and reduce the deducted input VAT on the goods without receipts of payment through banks. If business establishments have documents proving the payment through banks after reducing the deducted input VAT on the corresponding value of goods, services without receipts of payment through banks, they shall be eligible for the additional declaration.

In case the contractual payment is overdue and business establishments fail to reduce as prescribed but they are able to present adequate documents proving the payment through banks before the tax agencies publicize the inspection’s decisions at site, and if the undone reduction does not lead to the lack of tax amounts payable or the increase of tax amounts deductible, such business establishments shall be administratively sanctioned for violations of tax procedures; if the undone reduction leads to the lack of tax amounts payable or the increase of tax amounts deductible, tax agencies shall perform tax arrears collection or refund and sanction over the business establishments as prescribed by the Law on Tax administration.

Example 48: In March 2012, company A purchases a shipment from company B to serve the production, business with the total value of the contract being 330 million VND (the tax-exclusive price is 300 million VND, the VAT amount at 10% VAT rate is 30 million VND), company A shall pay company B in July 2012 as agreed in the contract.

In this case, company A is allowed to declare the input VAT being 30 million VND in the declaration period of March 2012. When the payment is due in July 2012, company A must provide receipts of payment through banks that is worth 330 million VND, if company A fails to provide such receipts, it must declare and reduce the deducted VAT amount (30 million VND).

If company A is able to provide the receipts of payment through banks when the payment is due in July 2012, but the amount written on these receipts is 275 million VND (in correspondence with the tax-exclusive price being 250 million VND, the VAT amount at 10% VAT rate being 25 million VND), company A is only eligible for the deduction of 25 million VND of VAT (in correspondence with the amount paid through banks being 275 million VND) and company A must reduce the declared deductible VAT amount (5 million VND = 30 million VND – 25 million VND) in the declaration period in March 2012.

In November 2012, company A provides the receipts of bank payment for the amount payable being 55 million VND (in correspondence with the VAT-exclusive price being 50 million VND, the VAT amount being 5 million VND). Company A is allowed to declare in addition the deductible VAT amount being 5 million VND in correspondence with the paid amount through banks being 50 million VND.

Example 49: In November 2012, the tax agency issues the decisions on VAT inspection at LLC Z, the inspected period is the year 2011 and 5 months in 2012. During the inspection, company Z fails to present the receipts of payment through banks for a number of deferred payment contracts due in 2011 and in the 5 months in 2012. Consequently, the tax agency disapproves company Z’s the declaration and deduction of the VAT on invoices without receipts of payment through bank. However, in November and December 2012, company Z presents the receipts of payment through banks of invoices disapproved by the tax agency, Company Z is allowed to make additional declaration and deduction of the VAT amounts of these invoices on the VAT declaration of November and December 2012.

d) The following cases considered as payment through banks as the basis for input VAT deduction include:

d.1) For goods, services purchased by means of offsetting the value of purchased goods, services against the value of sold goods, services or goods loans that prescribed in the contract, it is necessary to have written figure comparison and agreement between the parties on offsetting the value of purchased goods, services against the value of sold goods, services or goods loans. In cases of debt offsetting payment through a third party, it is necessary to have written records on debt offsetting of three (3) parties as the basis for tax deduction.

d.2) For goods, services purchased by means of debt offsetting such as loans, debt offsetting through the third party prescribed in the contract, it is necessary to have the written loan contract made priviously and receipts of account transfer from the lending party’s account to the borrowing party’s account regarding monetary loans, including offsetting of the value of purchased goods, services against the amounts supported for the buyer by the seller, or paid on the seller’s behalf.

d.3) For purchased goods, services paid through banks by the authorized third party (including the case when the seller requests the buyer to pay through banks to the third party appointed by the seller), the authorized payment or the payment through the third party appointed by the seller must be prescribed in the written contract, and the third party must be a legal entity or a natural person operating under the law.

In case after the above-mentioned methods of payment are carried out and the remaining monetary payment is worth 20 million VND or above, the VAT shall only be deducted when the receipts of payment through banks are presented. When declaring input VAT, business establishments must specify the contractual method of payment in the “note” section in the list of invoices, receipts of purchased goods, services.

đ) In case purchasing goods, services worth below twenty million VND many times in the same day with the total value being twenty million VND or above, the input VAT shall only be deducted if the receipts of payment through banks are presented. The suppliers being tax payers with tax codes shall directly declare and pay VAT.

Article 16. Conditions for input VAT deduction and refund of exported goods, services

Goods, services being exported (except for the case guided in Article 17 of this Circular) must meet the conditions and complete the procedures prescribed in clause 2 Article 9 and clause 1 Article 15 of this Circular to be eligible for input VAT deduction or refund.

1. Contracts of goods sale,  processing (for goods processing), services provisions for foreign organizations, individuals. For entrustment of export being the export entrusting contract and written records on liquidation of the export entrusting contract (when the contract expires) or periodic debt comparison records between the the export entrusting party and the export entrustment taking party in which specify: product quantity, category, value of the exported entrusted goods; number, date of the export contract signed by the export entrustment taking party and the foreign party; number, date, the amounts on receipts of payment through banks with the foreign party of the the export entrustment taking party; number, date, the amount on receipts of payment by the the export entrustment taking party paid to the export entrusting party; number, date of the customs declaration of goods being exported of the export entrustment taking party.

2. Customs declarations of exported goods that were completed the customs procedures as prescribed by the Ministry of Finance’s guidance on customs procedures; customs inspection and supervision; export tax, import tax and tax administration of exported, imported goods.

Business establishments exporting software products in forms of boxed documents, dossiers, database must implement procedures of customs declaration similarly to that of ordinary goods.

The following cases are not required customs declaration:

- Business establishments exporting services, software through electronic media. Such business establishments must implement in full the provisions on procedures for verifying that the buyer has received the services, software through electronic media as prescribed by law on electronic commerce.

- Construction and installation of works for processing and exporting enterprises.

- Business establishments supplying electricity, fresh water, stationery and goods serving daily life of processing and exporting enterprises including: food, consumer goods (including work protection: pants, shirts, hats, shoes, boots, gloves).

3. Exported goods, services required to be paid through banks

a) Payment through banks means money transfer from the importer’s account to the exporter’s account opened in banks under the methods of payment compatible with the contractual agreement and the banks’ provisions. The money remittance receipts are the Credit notices issued by the bank of the exporter on the amount of money received from the account of the importer. For deferred payment, there must be written contractual agreement. When the payment is due, business establishments must present the receipts of payment through bank. For export entrustment, there must be receipts of payment through banks by the foreign party to the entrustment taking party and the entrustment taking party must pay to the entrusting party.

b) The following cases are also considered as payment through banks:

b.1) For exported goods, services paid by offsetting against the foreign debts, business establishments must meet the full conditions and complete the procedures and dossiers as follows:

- Loan contracts (for financial loan terms under 01 year); or loan registration certificates issued by the State bank of Vietnam (for loan terms over 01 year).

- Receipts of money transfer through banks from abroad to Vietnam.

Payments of exported goods, services by means of offsetting against foreign debts must be prescribed in the export contract.

- Written verification by the foreign party on debt offsetting.

- In case of differences after offsetting the value of exported goods, services against the foreign debts, the differences must be paid through banks. Receipts of payment through banks are made as guided in this point.

b.2) For exporting establishments using money from exported goods, services to contribute as capital to overseas importers, such establishments must meet the full conditions and complete the procedures and dossiers as follows:

- The Contribution contract

- The use of money paid from exported goods, services as capital contribution to overseas importer must be prescribed in the export contract.

In case the contribution is smaller than the revenue from the exported goods, the difference must be paid through banks as guided in this point.

b.3) In case the foreign party authorizes the third party being overseas organizations, individuals to make payment, the authorized payment must be prescribed in the export contract (in contract annex or written contract adjustment – if any).

b.4) In case the foreign party requests the third party being organizations in Vietnam to make offsetting payment against debts with the foreign party by making payment through banks for the amount payable by the foreign party to the exporting establishment, and the request of making offsetting payment against debts as mentioned-above is prescribed in the export contract (in contract annex or written contract adjustment – if any). The exporter must have receipts being the Credit notices of the bank of the exported on the amount received from the third party’s account and present the written debt comparison verified by the foreign party and the third party.

b.5) In case the foreign party (the importer) authorizes the third party being overseas organizations, individuals to make payment; and the third party request an organization in Vietnam (the forth party) to make offsetting payment against debts with the third party by making payment through banks for the amount payable by the importer to the Vietnamese exporter, the exporter must meet the full conditions and complete the dossiers as follows:

- The export contract (including the contract annex or written contract adjustment – if any) prescribing the payment authorization and debt offsetting among the parties.

- The receipts of payment being Credit notices of banks on the amount received by the Vietnamese exporter from the forth party’s account.

- The written debt comparison verified by the relevant parties (between the exporter and the importer, between overseas third party and the forth party being an organization in Vietnam).

b.6) In case the foreign party authorizes an Representative office in Vietnam to make the payment to the account of the exporter and the authorization is prescribed in the export contract (in contract annex or written contract adjustment – if any).

b.7) In case the foreign party extracts from the their deposit account opened at credit institutions in Vietnam, this payment must be prescribed in the export contract (in contract annex or written contract adjustment – if any). The receipts of payment are Credit notices of banks of the exporter on the amounts received from the foreign party’s current account.

In case of exporting to foreign buyers being private enterprises and the payment through current accounts of these enterprises opened at credit institutions in Vietnam and prescribed in the export contract (in contract annex or written contract adjustment – if any), this case is considered as payment through banks.

Tax agencies, upon inspecting the tax deduction and tax refund of exported goods being paid through current accounts, shall coordinate with credit institutions where the foreign buyers opened their accounts to ensure that the payment and the transfer are made under right purposes and in accordance with law.

b.8) In case the foreign party makes payment through banks but the amount on the receipt does not match with the payable amount stated in contract or its annex:

- If the paid amount written on the receipt of payment through banks is lower than the payable amount stated in contract or its annex, business establishment must present explanations, such as: bank transfer fees, reduction of price due to defective or diminished products (this case required the written discount agreement between the seller and the buyer)…;

If the paid amount written on the receipt of payment through banks is higher than the payable amount stated in contract or its annex, business establishment must present explanations, such as: lump-sum payment for many contracts, goods advance…

Business establishments must commit to be responsible before law for the explanations and the written adjustment (if any).

b.9) In case the foreign party make payment through banks but the name of the bank on the receipts of payment through banks does not match the contractual bank, if the receipt contents show clearly the name of the payer, the beneficiary, the number of export contract, the value of payment that match the signed export contract, these receipts are considered legitimate.

b.10) For business establishments exporting goods, services to the foreign party (second party), and concurrently importing goods, services from another foreign party or purchasing goods, services from organizations, individuals in Vietnam (third party); if the business establishment has a deal with the second and third party that the second party shall make payment through banks to the third party for the amount payable by the business establishment to the third party, the payment offsetting among the parties must be prescribed in the export contract, import contract or sale contract (in contract annex or written contract adjustment – if any) and the business establishment must present the written debt comparison verified by the relevant parties (between the business establishment and the second party, between the business establishment and the third party).

b.11) In case the foreign party refuse to receive the shipment due to objective reasons and the business establishment finds another customer in the same country to sell that shipment, the tax refund dossier shall include all the export dossiers relating to the export contract signed with the first customer (contract, customs declaration for goods being exported, invoices), written explanation by the business establishment for the change of the buyer’s name (in which the business establishment committing to be responsible for the information accuracy), all the export dossiers relating to the export contract signed with the new customer (contract, sale invoices, receipts of payment through banks as prescribed and other documents – if any).

c) For other payment of exported goods, services as prescribed by the Government:

c.1) For labor export that such businessline establishments directly collect money from workers, receipts of payment in cash made by the workers are required.

c.2) For business establishments exporting goods to be sold in foreign fairs or exhibitions then collecting money and transferring back to Vietnam in foreign currency, the customs declaration on the foreign currency collected from goods sale being transferred to Vietnam and receipts of the money remittance to banks in Vietnam are required.

c.3) For goods, services being exported to pay debt for the Government, it is necessary to have written verification by foreign trade banks on the exported consignment accepted by the foreign party as debt payment or on the dossier being sent to the foreign party for debt deduction, the receipts of payment shall be made as prescribed by the Ministry of Finance.

c.4) Payment of exported goods, services by goods means the case of exporting goods, services (including goods processing for export) to foreign organizations, individuals (hereinafter referred to as the foreign party) but the payment between Vietnamese enterprises and foreign party is made by offsetting the value of exported goods, services, the remuneration of goods processing against the value of goods, services purchased from the foreign party.

Exported goods, services paid in goods must include the following dossiers:

- The method of payment for exported goods in goods must be prescribed in the export contract 

- The sale contract of goods, services purchased from the foreign party;

- The customs declaration on the imported goods offset against the exported goods, services.

- The written verification by the foreign party on the amount of the exported goods, services being offset against the goods, services purchased from the foreign party.

- In case of having difference after offsetting the value of exported goods, services against the value of imported goods, services, the difference must be paid through banks. The receipts of payment through banks shall comply with guidance in this clause.

c.5) The goods export to the countries of the same border prescribed by the Prime Minister on the management of border trade with countries of the same border shall comply with guidance by the Ministry of Finance and the State bank.

c.6) A number of other methods of payment of exported goods, services as prescribed by relevant law provisions.

d) Cases of tax deduction, tax refund regarding export without receipts of payment through banks

d.1) If the foreign party is insolvent, the exporter must present written explanation stating clearly the reason and can substitute the receipts of payment through banks with one of the following documents:

- The custom declaration of goods imported from Vietnam registered at the customs agency in the importing country (1 copy); or

- The lawsuit petition to court or competent agency in the country where the buyer resides, together with notice or verifying documents of such agency on the assuming of the case (01 copy); or

- The final judgment in favor of the business establishment by the foreign court (01 copy); or

- Documents by foreign competent organizations verifying (or notifying) the foreign buyer being bankrupt or insolvent (01 copy).

d.2) For exported goods not meeting the standard and compelled to be destructed, the exporter must present written explanation explanation stating clearly the reason and the records on goods destruction (or documents verifying the destruction) overseas made by the agency performing the destruction, together with receipts of payment through banks for the destruction expense on account of the exporter or documents proving the destruction expense on account of the buyer or the third party (01 copy).

In case the importer must implement the procedures for destruction overseas, the record on destruction (or documents verifying the destruction) shall bear the name of the importer.

d.3) In case the exported goods is damaged, the exporter must present written explanations stating clearly the reason and may substitute the receipts of payment through banks with one of the following documents:

- The document verifying the damage occurred outside Vietnam by relevant competent agency (01 copy); or

- The record verifying the damage occurred during the transportation outside Vietnam and specifying the reasons for such damage (1 copy);

If the exporter has received the compensations for the exported goods damaged outside Vietnam, such exporter must enclose the receipts of payment through banks of the received amount (01 copy).

The copies of documents guided in point d.1, d.2, d.3 in this clause must be authenticated as truly copied from the original by the exporter. If the language in the third party’s verifying documents used to substitute for the receipts of payment through banks is not English, 01 notarized English translation is required to be enclosed. If the relevant parties issue, use and save documents in form of electronic data, printed copies of those documents are required.

The exporters are totally responsible for the accuracy of documents used to substitute for the receipts of payment through banks in the stated-above cases.

4. VAT invoices of goods, services sale or export invoices or invoices of the processing charges regarding processed goods.

Article 17. Conditions for deducting, refunding input VAT on goods regarded as being exported

1. Transitionally processed goods as prescribed by commercial law on international goods trading and agent services of trading and processing goods with foreign parties.

a) Export processing contracts and annexes thereof (if any) signed with the foreign party in which specify the goods receiving establishment in Vietnam.

b)VAT invoices specifying the processing price and the quantity of goods being processed required to be returned to the foreign party (at the price specified in the contract signed with the foreign party) and the name of goods receiving establishment under the foreign party’s appointment.

c) The Slip of transitionally processed goods transfer (hereinafter referred to as Transitional Slip) verified by the delivering party, the receiving party and the Customs agency managing that processing contract.

d) The payment of goods processed for foreign parties must be made through banks as guided in Article 16 of this Circular.

The procedure for delivering and receiving the transitionally processed products and the Transitional Slip shall comply with the guidance of the General Department of Customs.

Example 50: company A is contracted to process 200,000 pairs of soles for export. The processing price is 800 million VND. The contract specifies the soles shall be delivers to company B in Vietnam to produce finished shoes.

In this case, company A shall be subject to processing of transitionally exported goods. When making documents of the transfer of soles to company B, company A must specify the quantity, category, specifications of the delivered products. All the revenue received from sole processing being 800 million VND shall be subject to 0% VAT.

2. Goods of on-spot export as prescribed by law:

a) Goods sale and purchase contract or processing contract specifying the appointment of goods delivery in Vietnam;

b) The customs declaration of on-spot exported - imported products that have completed customs procedures.

c) VAT invoices or export invoices specifying the name of foreign buyer, the receiving enterprise and the delivery location in Vietnam;

d) Goods being sold to foreign traders but received in Vietnam must be paid through banks in freely convertible currency. Receipts of payment through banks are made as guided in clause 3 Article 16 of this Circular. In case the on-spot importer is authorized by the foreign party to pay the on-spot exporter, the currency used in the payment must comply with law provision on foreign exchange.

đ) On-spot exported goods of foreign-owned enterprises must comply with the provisions of the investment certificate.

3. Goods, supplies exported by Vietnamese enterprises to execute constructions overseas, the necessary dossiers for Vietnamese enterprises to execute constructions overseas to be eligible for input VAT deduction or refund must meet the following conditions:

a) The customs declaration as prescribed in clause 2 Article 16 of this Circular.

b) The exported goods, supplies must comply with the List of exported goods to execute constructions overseas approved by the director of the Vietnamese enterprise executing the construction overseas.

c) The export entrusting contract (in case of entrusting export).

4. Goods, supplies sold by domestic business establishments to Vietnamese enterprises to execute constructions overseas and delivered abroad under the signed contract, the dossiers for the domestic seller to be eligible for the deduction and refund of input VAT on exported goods must meet the following conditions:

a) The custom declaration prescribed in clause 2 Article 16 of this Circular.

b) The exported goods, supplies must comply with the List of exported goods to execute constructions overseas approved by the director of the Vietnamese enterprise executing the construction.

c) The sale contract signed by the domestic business establishment and the Vietnamese enterprise to execute constructions overseas in which specify the conditions of delivery, quantity, category and value of goods.

d) The export entrusting contract (in case of entrusting export);

đ) Receipts of payment through bank;

e) VAT invoices of goods sale.

If the business establishments having exported goods or goods regarded as exported goods as guided in Article 16, Article 17 of this Circular that have been verified by customs agencies (regarding exported goods) but do not have adequate corresponding dossiers for each specific case, such establishments are not required to calculate output VAT but shall not be eligible for input VAT deduction. Particularly, for transitionally processed goods and on-spot exported goods, if one of the necessary procedures, dossiers is not done as prescribed, those goods are subject to VAT similar to domestically consumed goods. Business establishments with exported services that fail to make payment through banks or considered as payment through banks are not eligible for 0% VAT rate. Such establishments are not required to calculate output VAT but not eligible for input VAT deduction.

Section 2. TAX REFUND

Article 18. Subjects and cases of VAT refund

1. Business establishments paying tax under the tax deduction method are eligible for VAT refund if their input VAT are not completely deducted in 3 consecutive months or more.

The refunded amount is the input VAT amount that has not been completely deducted during the request for tax refund.

Example 51: Enterprises A declares VAT with the input and out put VAT as follows:

(unit: million VND)

According to the above example, the accumulative amount of enterprise A in 3 consecutive months has the input tax higher than the output tax. Enterprise A is eligible for VAT refund with the maximum tax amount being 150 million VND.

2. Business establishments newly-founded under investment projects applied for business registration and VAT paying registration under the deduction method or projects of petroleum exploration and development at the investment stage and not yet operated with investment term of 01 year or longer are eligible for the refund of VAT on goods, services serving the investment in each year. If the accumulative VAT amount of purchased goods, services serving the investment is 200 million VND or above, such amount is eligible for VAT refund.

3. When the business establishments subject to VAT payment under the deduction method have new investment project under the investment stage, such business establishments must declare and offset the VAT amount of purchased goods, services serving the new project together with the VAT declaration of the production and business being implemented.

After being offset, if the remaining VAT amount of purchased goods, services serving the investment is 200 million VND or above, this amount is eligible for VAT refund to the investment project. If the input VAT amount of the production, business and project is lower than 200 million VND and stay deductible after 3 months, business establishments are eligible for VAT refund as guided in clause 1 of this Article.

When operating business establishments subject to VAT payment under the deduction method have investment in new production establishments in the provinces, centrally-run cities different from places where their head offices are situated under the investment project not yet operated, applied for business and tax registration with the VAT amount of purchased goods, services serving the investment being 200 million VND or above, they are eligible for the refund of VAT to the investment project. Business establishments must declare and compile tax refund dossiers separately for this case. The project management unit (if any) shall register, declare and compile the separate tax refund dossier at local tax agencies (except for the case when the project management unit in the same locality with the head office of the business establishment compiling the VAT refund dossier themselves). When the investment in establishing new enterprise is done and complete all the procedures for business registration, tax registration, the business establishments being the project investors must synthesize the arisen, refunded and not refunded VAT of the project to hand over to the newly-founded enterprise so that the enterprise can declare, pay tax and request for VAT refund as prescribed by the tax agency directly managing them.

4. Business establishments exporting goods, services in the month of which the deductible input VAT arisen in the month being 200 million VND or above are eligible for VAT refund by months.

For business establishments having both goods, services for export and goods, services for domestic sale with the input VAT amount of goods, services for export arisen in the month not yet been wholly deducted being 200 million VND or above, if the input VAT amount of goods, services for export not yet been wholly deducted is lower than 200 million VND after being offset against the output VAT amount of goods, services for domestic sale on the declaration of the arisen month, the business establishments are not eligible for VAT refund; if the input VAT amount of goods, services for export not yet been wholly deducted is 200 million VND or higher after being offset against the output VAT amount of goods, services for domestic sale on the declaration of the month, the business establishments are eligible for VAT refund by the month of the exported goods, services.

If the input VAT amount of goods, services for export is not able to be separately accounted, the input VAT amount of goods, services for export shall be apportioned by the ratio (%) of the revenue from exported goods, services in the period on the total revenue of the establishment in the period.

Subjects eligible for VAT refund in some cases of export as follows: for export entrustment, it is the establishment with the export entrusted goods; for transitional processing, it is the establishment signing the export processing contract with the foreign party; for exported goods to execute overseas constructions, it is the establishment with exported goods, supplies serving the overseas constructions; for on-spot exported goods, it is the establishment with on-spot exported goods.

5. Business establishments settling up tax when dividing, splitting, dissolving, being bankrupt, ownership transferring; contracting, leasing to State enterprises, with input VAT amounts not yet been wholly deducted or overpaid VAT amounts.

For business establishments under the investment and not in operation of production, business dissolving without output VAT arisen during the primary business operation under the investment project are not eligible for VAT refund. In case the business establishments are refunded the tax of the investment project, this amount must be collect and remit to the State budget.

6. VAT refund regarding the programs and projects using the non-refundable official development aids (ODA), non-refundable aids and humanitarian aids:

a) For project using non-refundable ODA: the program/project owner or the primary contractor, program/project managing organizations appointed by the foreign sponsors are eligible for VAT refund regarding the paid VAT amount of goods, services purchased in Vietnam to serve the programs/projects.

b) Organizations in Vietnam using humanitarian aids from foreign organizations, individuals to purchase goods, services serving the programs/projects of non-refundable aids, humanitarian aids in Vietnam are eligible for VAT refund regarding the paid VAT amount of such goods, services.

Example 52: The Red Cross receives 200 million VND of humanitarian aids from international organizations to purchase humanitarian goods for people in provinces suffering natural disasters. The VAT-exclusive price is 200 million VND, the VAT amount is 20 million VND. The Red Cross shall be refunded 20 million VND of VAT as prescribed.

The refund of paid VAT amount regarding programs and projects using the non-refundable Official development aids (ODA) is implemented as guided by the Ministry of Finance.

7. Subjects under diplomatic immunity regulations under the Ordinance on diplomatic immunity purchasing goods, services in Vietnam for personal use shall be refunded the paid VAT amount on the VAT invoices or on the receipts with VAT-inclusive price.

8. Business establishments that receive decisions on handling of tax refund by competent agencies as prescribed by law.

Article 19. Conditions and procedures for VAT refund

1. Business establishments, organizations eligible for VAT refund as guided in point 1, 2, 3, 4, 5, 8 Article 18 of this Circular must be business establishments paying tax under the deduction method, being issued the enterprise registration certificates or investment certificates (practice certificate) or decisions on the establishment of competent agencies with seals as prescribed, making and keeping accounting book, documents in accordance with law provisions on accounting; having deposit account in banks under the tax codes of the business establishments.

2. For business establishments that have declared the tax refund request on the VAT declaration, the input VAT amount requested to be refunded must not be transferred to the deductible tax of the following months

3. Procedures for VAT refund are implemented as prescribed in the Law on tax administration and documents guiding the implementation of the Law on tax administration.

Article 20. Locations of tax payment.

1. Tax payers shall declare and pay VAT in the localities where they operate.

2. Tax payers declaring and paying VAT under the deduction method with dependent cost-accounting establishments situated in the provinces, centrally-run cities different from places where their head offices are situated must pay VAT separately in the localities where the production establishments are situated and localities where the head offices are situated.

3. The VAT declaration and payment are implement as prescribed in the Law on tax administration and documents guiding the implementation of the Law on tax administration.