What are amendments to regulations on the time of determining VAT in Vietnam?

What are amendments to regulations on the time of determining VAT in Vietnam?

The Ministry of Finance is currently seeking public opinions on the draft amended Law on Value Added Tax (VAT). Specifically, the determination time for VAT as proposed by the Ministry of Finance in the Draft Law on Value Added Tax (amended) is stipulated in Article 8 as follows:

- The time to determine VAT for goods is the time when the ownership or right to use the goods is transferred to the buyer, regardless of whether payment has been received or not.

- The time to determine VAT for services is the time of completion of the service provision or the time of issuing the service provision invoice, regardless of whether payment has been received or not.

- The Minister of Finance shall stipulate specific times for determining VAT for certain specific cases: Telecommunications services, electricity supply activities, clean water supply, real estate business activities; construction and installation activities, and other specific cases.

Download the Draft of the amended Law on Value Added Tax... download

Currently, the regulation on the time for determining VAT is stipulated in Article 5 of Decree 209/2013/ND-CP (detailed guidance is provided in Article 8 of Circular 219/2013/TT-BTC). Specifically:

- For the sale of goods, it is the time when ownership or the right to use the goods is transferred to the buyer, regardless of whether payment has been received or not.

- For providing services, it is the time of completing the service provision or the time of issuing the service provision invoice, regardless of whether payment has been received or not.

For telecommunications services, it is the time of completing the reconciliation of data on telecommunication connection service charges as per the economic contract between telecommunications service providers, but not exceeding 2 months from the month in which the telecommunication connection service charges arise.

- For electricity and clean water supply activities, it is the date the electricity or water consumption indicators are recorded on the meter for invoicing.

- For real estate business activities, infrastructure construction, house construction for sale, transfer, or lease, it is the time of collecting money according to the project implementation progress or the payment schedule specified in the contract. Based on the collected amount, businesses declare the output VAT arising during the period.

- For construction and installation, including shipbuilding, it is the time of acceptance and handover of the works, work items, or completed volume of construction, installation without differentiating whether payment has been received or not.

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

What are amendments to regulations on the time of determining VAT in Vietnam? (Image from the Internet)

Which entities are VAT payers in Vietnam?

Pursuant to Article 4 of the Value Added Tax Law 2008 which stipulates the entities liable for VAT:

Entities liable for value added tax are organizations or individuals producing or trading goods and services subject to VAT (hereinafter referred to as businesses) and foreign organizations or individuals importing goods subject to VAT (hereinafter referred to as importers).

What are the regulations for the VAT deduction method in Vietnam?

According to Article 10 of the Value Added Tax Law 2008 (as amended and supplemented by Clause 4, Article 1 of the amended Value Added Tax Law 2013), the VAT deduction method is stipulated as follows:

- The VAT payable according to the deduction method is the output VAT minus the deductible input VAT;

- The output VAT is the total VAT on goods and services sold recorded on the VAT invoice.

The VAT on goods and services sold recorded on the VAT invoice is calculated by the taxable price of goods and services sold multiplied by the VAT rate of those goods and services.

In case payment documents include VAT, the output VAT is determined by the payment price minus the taxable price determined as per point k, clause 1, Article 7 of this Law;

- The deductible input VAT is the total VAT recorded on the VAT invoice for purchased goods and services, VAT payment documents for imported goods, meeting the conditions stipulated in Article 12 of this Law.

In addition, the deduction method applies to businesses that fully comply with legal regulations on accounting, invoices, and records, as follows:

- Businesses with annual revenue from sales of goods and provision of services from one billion dong or more, except households and individuals in business;

- Businesses voluntarily registered for the deduction method, except households and individuals in business.