Is declaring and paying VAT required for the transfer of Internet domain usage rights in Vietnam?

Shall an invoice be issued for the transfer of Internet domain usage rights in Vietnam?

The principles for issuing, managing, and using invoices and vouchers are stipulated in Clause 1, Article 4 of Decree 123/2020/ND-CP as follows:

Principles for issuing, managing, and using invoices and vouchers

1. When selling goods or providing services, the seller must issue an invoice to deliver to the buyer (including cases where goods and services are used for promotion, advertising, samples; goods and services given as gifts, donations, exchange, or as salary payment for employees and for internal consumption (except for goods internally circulated to continue production processes); exporting goods under forms of loan, lending, or return) and must fully record content per the regulations in Article 10 of this Decree. If electronic invoices are used, they must be formatted to the standard data structure by the tax authority per the regulation in Article 12 of this Decree.

...

Based on the regulations that when selling goods, the seller must issue an invoice to deliver to the buyer and fully record the content as stipulated in Article 10 of Decree 123/2020/ND-CP, in cases of using electronic invoices, they must follow the standard data format by the tax authority as regulated in Article 12 of Decree 123/2020/ND-CP.

Thus, in cases where enterprises transfer the right to use Internet domain names in accordance with the law, they must issue an invoice.

Is declaring and paying VAT required for the transfer of Internet domain usage rights in Vietnam? (Image from the Internet)

Is it required to declare and pay VAT for the transfer of Internet domain usage rights in Vietnam?

According to the guidance in Official Dispatch 14845/CTHN-TTHT of 2023 regarding VAT policies for activities transferring the right to use Internet domain names as follows:

- According to Circular No. 219/2013/TT-BTC dated December 31, 2013, of the Ministry of Finance guiding the implementation of the Value Added Tax Law and Decree No. 209/2013/ND-CP dated December 18, 2013, of the Government of Vietnam stipulating detailed regulations and guidance on implementing some articles of the Value Added Tax Law:

+ Article 2 stipulates the subjects of VAT:

“Article 2. Subjects of VAT

The subjects of value-added tax (VAT) are goods and services used for production, business, and consumption in Vietnam (including goods and services purchased from organizations and individuals foreign), except for subjects not subject to VAT guided in Article 4 of this Circular.”

+ Article 11 stipulates a 10% tax rate:

“Article 11. 10% tax rate

The 10% tax rate applies to goods and services not specified in Article 4, Article 9, and Article 10 of this Circular.

…”

Based on the above regulations, in cases where the Economic & Urban Newspaper transfers the right to use Internet domain names in accordance with the law, it must issue invoices and declare and pay VAT with a VAT rate of 10% according to the regulations in Article 4 of Decree No. 123/2020/ND-CP of the Government of Vietnam, Article 11 of Circular No. 219/2013/TT-BTC of the Ministry of Finance.

Based on the above regulations, in cases where enterprises transfer the right to use Internet domain names, they must declare and pay VAT with a VAT rate of 10%.

When is the time to determine VAT for the transfer of Internet domain usage rights in Vietnam?

The time to determine VAT is determined according to Article 8 of Circular 219/2013/TT-BTC as follows:

Time to determine VAT

1. For goods sales, it is the time of transfer of ownership or right to use goods to the buyer, regardless of whether money has been collected.

2. For the provision of services, it is the time of completion of service provision or the time of issuing the service provision invoice, regardless of whether money has been collected.

For telecommunications services, it is the time of completing data reconciliation of connection service charges per the economic agreement between telecommunications service business entities, but not more than 2 months from the connection service charge's occurrence month.

3. For electricity and clean water supply, it is the date of recording electricity and water consumption indices on the meter to record on the billing invoice.

4. For real estate, infrastructure, house construction for sale, transfer, or lease activities, it is the time of receiving money according to the project implementation schedule or payment progress recorded in the contract. Based on the collected amount, the business entity declares output VAT arising in the period.

5. For construction and installation, including shipbuilding, it is the time of project acceptance and handover of the completed project items or work volume, regardless of whether money has been collected.

6. For imported goods, it is the time of customs declaration registration.

Thus, the time to determine VAT for the activity of transferring the right to use Internet domain names is the time of transferring the right to use to the buyer, regardless of whether money has been collected.