Shall the input VAT of promotional goods be deducted in Vietnam?

Shall the input VAT of promotional goods be deducted in Vietnam?

Based on Clause 5, Article 14 of Circular 219/2013/TT-BTC, it is stipulated as follows:

Principles of Input Value Added Tax Deduction

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5. The input VAT of goods (including goods purchased externally or goods produced by the enterprise itself) that an enterprise uses to give, donate, present, promote, or advertise in various forms, serving the production and business activities of goods and services subject to VAT shall be deducted.

6. The VAT amount already paid according to the tax determination decision of the customs authority shall be fully deducted, except in cases where the customs authority imposes fines for fraud or tax evasion.

7. The input VAT of goods and services used for the production, business of goods and services not subject to VAT as guided in Article 4 of this Circular shall not be deducted, except for the following cases:

a) The VAT of goods and services that the business establishment purchases for the production, business of goods, and services supplied to foreign organizations, individuals, and international organizations for humanitarian aid, non-refundable aid guided in Clause 19, Article 4 of this Circular shall be fully deducted;

b) The input VAT of goods and services used in activities of searching, exploring, developing the oil and gas fields until the first day of exploitation or the first day of production shall be fully deducted.

8. The input VAT arising in any period shall be declared, deducted when determining the tax payable of that period, irrespective of whether it has been used or is still in storage.

In cases where the business establishment discovers a mistake in declaring, deducting input VAT, it shall be declared, supplemented, deducted before the tax authority or competent authority announces the decision on tax inspection at the taxpayer’s premises.

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As such, the input VAT of promotional goods in various forms serving the production and business activities of goods and services subject to VAT shall be deducted.

Shall the input VAT of promotional goods be deducted in Vietnam? (Image from the Internet)

Which business establishments are subject to the VAT deduction method in Vietnam?

According to Clause 1, Article 12 of Circular 219/2013/TT-BTC, the VAT deduction method applies to business establishments that fully comply with accounting, invoicing, and documentation policies in accordance with the legal provisions on accounting, invoicing, and documentation, including:

- Business establishments currently operating with annual revenue from the sale of goods and provision of services of one billion dong or more, and fully comply with accounting, invoicing, and documentation policies according to legal regulations, except for households and individuals paying tax by the direct calculation method guided in Article 13 of Circular 219/2013/TT-BTC

- Business establishments voluntarily registering to apply the VAT deduction method, except for households and individuals paying tax by the direct calculation method guided in Article 13 of Circular 219/2013/TT-BTC

- Foreign organizations and individuals supplying goods and services to conduct activities of searching, exploring, developing, and exploiting oil and gas shall submit tax by the deduction method declared and deducted by the Vietnamese side.

Where to submit VAT returns when there is a dependent branch in a different province from the headquarters in Vietnam?

Based on Clause 2, Article 11 of Decree 126/2020/ND-CP, the VAT return declaration is stipulated as follows:

Place to Submit Tax Declarations

Taxpayers shall implement the regulations on the place to submit tax declarations according to Clauses 1, 2, and 3, Article 45 of the Law on Tax Administration and the following regulations:

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2. The place to submit tax declarations for taxpayers having activities, business in multiple provincial areas different from where the taxpayer's main office is located as prescribed at Point b, Clause 4, Article 45 of the Law on Tax Administration shall conduct centralized accounting at the main office (except for cases prescribed in Clauses 1, 3, 4, 5, and 6 of this Article) at the tax authority managing the main office. Concurrently, the taxpayer must submit a Tax Allocation Table (if applicable) for each provincial area receiving state budget revenue (including dependent units and business locations) to the tax authority managing the main office, except for the following specific cases that do not require submitting the Tax Allocation Table:

a) VAT for the transport business activities of the taxpayer where transportation routes pass through provinces different from where the taxpayer's main office is located.

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Thus, in cases where taxpayers have dependent branches in a different province from the headquarters, they shall conduct centralized accounting at the headquarters and file taxes at the tax authority managing the headquarters, except for some specific cases stipulated in Clauses 1, 3, 4, 5, and 6, Article 11 of Decree 126/2020/ND-CP.