Shall input value-added tax (VAT) on goods sold to organizations that use humanitarian be credited in Vietnam?

Shall input value-added tax (VAT) on goods sold to organizations that use humanitarian be credited in Vietnam?

Pursuant to Point b, Clause 1, Article 12 of the Law on Value-Added Tax 2008, there are specific regulations on crediting input VAT as follows:

Credit of Input Value-Added Tax

1. Business entities paying VAT under the credit method are eligible for input VAT credit as follows:

a) Input VAT on goods and services used for the production and business of goods and services subject to VAT can be fully credited;

b) Input VAT on goods and services used concurrently for the production and business of taxable and non-taxable goods and services can only be credited for the input VAT of goods and services used for the production and business of taxable goods and services. If input VAT is on fixed assets used concurrently for the production and business of goods and services subject to and not subject to VAT, it can be fully credited;

c) Input VAT on goods and services sold to organizations or individuals using funds from humanitarian aid or non-refundable aid can be fully credited;

d) Input VAT arising in any month is declared and credited when determining the payable tax amount for that month. If a business entity discovers errors in input VAT during declaration and credit, it can declare and credit them additionally; the time for declaration and additional credit is a maximum of 6 months from the time the error is discovered.

Therefore, through the above regulation, input VAT on goods sold to organizations that use humanitarian can be fully credited.

Shall input value-added tax (VAT) on goods sold to organizations that use humanitarian be credited in Vietnam? (Image from the Internet)

What are regulations on VAT payment for business establishments in Vietnam according to the credit method?

Based on Clause 1, Article 12 of the Law on Value-Added Tax 2008 as amended by Clause 6, Article 1 of the Amended Law on Value-Added Tax 2013, the regulation on how business establishments paying VAT under the credit method can credit input VAT is as follows:

- Input VAT on goods and services used for producing and trading taxable goods and services can be fully credited, including input VAT on uninsured taxable goods and services that incur losses;

- Input VAT on goods and services used concurrently for producing and trading both taxable and non-taxable goods and services can only be credited for the input VAT on goods and services used for producing and trading taxable goods and services. Business entities must account separately for creditible and non-creditible input VAT; if separate accounting is not possible, the creditible input vat is calculated based on the percentage ratio of the revenue from taxable goods and services to the total revenue from goods and services sold;

- Input VAT on goods and services sold to organizations or individuals using humanitarian aid or non-refundable aid funds can be fully credited;

- Input VAT on goods and services used for activities involving the exploration, survey, and development of oil and gas fields can be fully credited;

- Input VAT arising in a month is declared and credited when determining the payable tax amount for that month. If a business entity discovers errors in input VAT during declaration and credit, it can declare and credit them additionally; the time for declaration and additional credit is a maximum of 6 months from the time the error is discovered.

What are the conditions for input VAT credit in Vietnam?

According to Clause 2, Article 12 of the Law on Value-Added Tax 2008, as amended by Clause 6, Article 1 of the Amended Law on Value-Added Tax 2013, the conditions for input VAT credit are stipulated as follows:

- Have VAT invoices for purchasing goods and services or tax payment documents at the import stage;

- Have non-cash payment documents for purchased goods and services, excluding goods and services purchased each time with a value of less than twenty million VND;

- For exported goods and services, in addition to the conditions specified at points a and b, Clause 2, Article 12 of the Law on Value-Added Tax 2008, they must also have: a contract signed with foreign parties for the sale, processing of goods, and supply of services; sales invoices; non-cash payment documents; customs declarations for exported goods.

Payments for exported goods and services in the form of offsetting payments between exported goods and services with imported goods and services, or debt repayment on behalf of the State, are considered non-cash payments.