Shall invoices be issued for fixed assets self-manufactured by the enterprise in Vietnam?

What are regulations on classification of enterprise’s fixed assets used for business purposes in Vietnam?

According to the provisions in Clause 1, Article 6 of Circular 45/2013/TT-BTC (amended by Clause 2, Article 1 of Circular 147/2016/TT-BTC), enterprise’s fixed assets used for business purposes are classified as follows:

(1) For tangible fixed assets:

Enterprises classify tangible fixed assets into the following groups:

Type 1: Buildings and architectural structures, including fixed assets formed after construction such as office buildings, warehouses, fences, water towers, yards, bridges, roads, piers, docks, airport runways, and decorative works for buildings.

Type 2: Machinery and equipment, which includes all types of machinery and equipment used in business activities such as specialized machinery, work equipment, technological lines, standalone machines, drilling rigs, and cranes.

Type 3: Transportation means, transmission equipment: Includes all types of transport vehicles such as railway, waterway, roadway, airway, pipeline transport means, and transmission equipment like information systems, electrical systems, water pipes, conveyors, gas pipelines.

Type 4: Management equipment and tools: Includes equipment and tools used in the management of enterprise business activities, such as computers for management use, electronic devices, measuring instruments, quality inspection tools, dehumidifiers, vacuum cleaners, termite control devices.

Type 5: Perennial crops, working and/or productive animals: Includes perennial crops such as coffee gardens, tea gardens, rubber plantations, fruit orchards, grass carpets, green carpets; working and/or productive animals like elephants, horses, buffaloes, cows.

Type 6: Fixed assets that are infrastructure, with significant value invested by the government from the state budget, allocated to economic organizations for management, exploitation, and use:

- Fixed assets including machinery, equipment, production lines, assets constructed with concrete and earth for projects directly serving irrigation or drainage (such as lakes, dams, canals); Water pumps with a capacity of 8,000 cubic meters/hour or more along with architectural structures required for the operation of structures assigned to single-member limited liability companies owned 100% by the State capital to manage and exploit irrigation works to organize business production and provide public utility services.

- Fixed assets that are infrastructure works of industrial zones invested by the State for common use in industrial zones such as: Internal roads, grass carpets, green trees, lighting systems, drainage, and wastewater treatment systems.

- Fixed assets comprising rail and urban rail infrastructure (tunnels, overhead structures, rail tracks).

Type 7: Other types of fixed assets: Includes all other unlisted fixed assets not classified into the above six categories.

(2) For intangible fixed assets, including rights and intangible assets such as:

- Land use rights.

- Rights of issuance, patents, inventions.

- Literary, artistic, and scientific works.

- Audio, video recordings, broadcast programs.

- Industrial designs, trade secrets, trademarks, geographical indications,...

Shall invoices be issued for fixed assets self-manufactured by the enterprise in Vietnam? (Image from the Internet)

Shall invoices be issued for fixed assets self-manufactured by the enterprise in Vietnam?

Based on Clause 4, Article 7 of Circular 219/2013/TT-BTC (amended by Clause 2, Article 3 of Circular 119/2014/TT-BTC) which stipulates as follows:

Tax calculation price

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4. Tax calculation price for internally consumed products, goods, services.

Internally circulating goods such as goods exported for internal warehousing, materials, semi-finished products to continue the production process within a manufacturing facility, business, or goods, services exported or provided by the business establishment for business activities are not required to calculate and pay VAT.

In cases where a business establishment self-produces or constructs fixed assets (self-manufactured fixed assets) for goods production and business activities subject to VAT, upon completion, acceptance, handover, the business establishment is not required to issue invoices. The input VAT that forms the self-manufactured fixed assets is declared and deducted according to regulations.

In cases of exporting machinery, equipment, materials, goods under lending, borrowing, or repayment, if there is a contract and related transaction documents, the business establishment is not required to issue invoices, calculate, or pay VAT.

Accordingly, enterprises that self-produce or construct fixed assets (self-manufactured fixed assets) for the production and business of goods and services subject to VAT, upon completion, acceptance, and handover, are not required to issue invoices.

The input VAT that forms the self-manufactured fixed assets is declared and deducted following regulations.

What are the cases where input VAT on fixed assets is non-deductible?

According to the provisions of Article 14 of Circular 219/2013/TT-BTC (amended and supplemented by Article 9 of Circular 151/2014/TT-BTC and points a, b clause 9, Article 1 of Circular 26/2015/TT-BTC), the cases where input VAT on fixed assets is non-deductible are specified as follows:

- Fixed assets used simultaneously for the production and business of goods, services subject to VAT and not subject to VAT, are only deductible for the input VAT of goods, services used for the production and business of goods, services subject to VAT.

The business establishment must separately account for deductible and non-deductible input VAT; if not separately accounted, input VAT deductible is calculated according to the proportion (%) of VAT taxable revenue, non-declaration, and VAT payment revenue relative to the total revenue of goods and services sold, including non-declaration and non-VAT payment revenue.

- Input VAT of fixed assets, machinery, equipment, including input VAT of leasing these assets, machinery, equipment, and other input VAT related to assets, machinery, equipment such as warranty, repair in the following cases is non-deductible but added to the original value of the fixed asset or deductible expenses per the Corporate Income Tax Law and guiding documents:

+ Fixed assets dedicated to producing weapons, munitions for national defense, security.

+ Fixed assets, machinery, equipment of credit institutions, reinsurance enterprises, life insurance businesses, securities businesses, medical treatment facilities, educational institutions.

+ Civil aircraft, yachts not used for business purposes of transporting goods, passengers, tourism, hotels.

Fixed assets are passenger cars seating up to 9 people (except cars used for transporting goods, passengers, tourism, hotels; cars used as samples and test drives for car business) valued over 1.6 billion VND (price excluding VAT), the input VAT corresponding to the value exceeding 1.6 billion VND is non-deductible.

- The input VAT of goods, services, fixed assets serving production:

Fertilizers, specialized machinery, and equipment serving agricultural production, offshore fishing vessels, livestock, poultry, aquatic animal feed, and other animal feed consumed domestically are not declared, deducted.

Instead, they are counted into deductible expenses when determining taxable income per the Corporate Income Tax Law, except for input VAT of purchased goods, services, and fixed assets on VAT invoices, import VAT payment documents incurred before January 1, 2015, meeting deduction, refund conditions and eligible for refund as prescribed.