What are cases where enterprises and household businesses are distributed for VAT calculation in Vietnam?

What are cases where enterprises and household businesses are distributed for VAT calculation in Vietnam?

Based on Clause 1, Article 13 of Circular 80/2021/TT-BTC, the cases where enterprises and household businesses (hereinafter referred to as taxpayers) are distributed for VAT calculation include:

- Digital lottery business activities.

- Real estate transfer activities, excluding real estate transfer activities of infrastructure investment projects, houses for transfer (including cases of receiving advance payments from customers according to progress) must declare VAT at the place where the real estate transfer activity occurs.

- Construction activities as prescribed by law on the national economic sector system and sector-specific regulations.

- Dependent units (branches, representative offices), business locations serving as production facilities (including processing and assembling facilities); excluding power plants located in different provinces or cities than the headquarters.

- Hydroelectric plants located across multiple provinces.

What are cases where enterprises and household businesses are distributed for VAT calculation in Vietnam? (Image from the Internet)

What are regulations on VAT distribution method in Vietnam?

Based on Clause 2, Article 13 of Circular 80/2021/TT-BTC, the VAT distribution method is regulated as follows:

(1) For digital lottery business activities

- The amount of VAT payable to each province with digital lottery business activity is equal to (=) the VAT payable for digital lottery business activity multiplied by (x) the percentage (%) of actual ticket sales revenue from digital lottery business activity in each province over the total actual ticket sales revenue of the taxpayer.

- Actual ticket sales revenue from digital lottery business activity is determined as follows:

+ In cases where digital lottery tickets are distributed via terminal devices: Revenue is generated from digital lottery terminals registered to sell tickets within the administrative boundaries of each province according to lottery agency contracts signed with digital lottery companies or stores, and points of sale established by taxpayers in the area.

+ In cases where digital lottery tickets are distributed via phone and internet: Revenue is determined in each province where customers register to participate in the prize draw when opening a prize account in accordance with the law on digital lottery business.

(2) For real estate transfer activities:

The VAT payable for each province for real estate transfer activity is equal to (=) revenue excluding VAT for real estate transfer activity in each province multiplied by (x) 1%.

(3) For construction activities:

- The VAT payable for each province for construction activities is equal to (=) revenue excluding VAT for construction activity in each province multiplied by (x) 1%.

- Revenue excluding VAT is determined according to contracts for construction works and items. In cases where construction works and items involve multiple provinces and it's not possible to determine the revenue of the works in each province, after determining the 1% ratio on the revenue of the construction works and items, taxpayers shall base it on the percentage (%) of the investment value of the works in each province on the total investment value to determine the VAT payable for each province.

(4) For provinces where dependent units or business locations serve as production facilities:

- The VAT payable to provinces with production facilities is equal to (=) revenue at pre-VAT prices multiplied by (x) 2% (for goods subject to a 10% VAT rate) or 1% (for goods subject to a 5% VAT rate) provided that the total VAT payable to provinces with production facilities shall not exceed the VAT payable by the taxpayer at its headquarters. In cases where production facilities transfer finished goods or semi-finished goods to other internal units for sale, the revenue of produced products is determined based on the production cost of the products.

- If the taxpayer applies the percentage % prescribed in point d.1 of this clause whereby the total VAT payable to provinces with production facilities exceeds the total VAT payable by the taxpayer at its headquarters, the taxpayer shall distribute the tax payable to each province with the production facility according to the following formula: The VAT payable to each province with the production facility equals (=) the VAT payable by the taxpayer at its headquarters multiplied by (x) the percentage (%) of revenue at pre-VAT prices of produced products in each province over the total revenue at pre-VAT prices of produced products of the taxpayer.

- Revenue used to determine the distribution ratio as prescribed in point d.1 and d.2 of this clause is the actual revenue incurred during the tax calculation period. If supplementary declarations are made changing the actual revenue incurred, the taxpayer must determine and redistribute the tax payable for each erroneous tax calculation period declared as supplementary in order to identify the VAT differential not yet distributed or excessively distributed for each locality.

(5) For provinces with a hydroelectric plant spanning multiple provinces:

The VAT payable in each province where the hydroelectric plant is located in the administrative boundaries is equal to (=) the VAT payable by the hydroelectric plant multiplied by (x) the percentage (%) of the investment value of the part of the hydroelectric plant located in the administrative boundaries of each province over the total investment value of the hydroelectric plant.

What are the responsibilities of the tax authority managing the distributed area for tax administration in Vietnam?

According to Clause 2, Article 5 of Circular 80/2021/TT-BTC, the responsibilities of the tax authority managing the distributed area for tax administration are defined as follows:

- Monitor and supervise taxpayers in implementing the declaration and distribution of tax payable and paying taxes into the state budget in the distributed area; require taxpayers to provide information, materials related to the distributed revenue; notify the direct managing tax authority when the taxpayer does not comply or does not conform to the distribution of tax obligations.

- Implement measures to urge tax debt, enforce tax debt for the amount of tax payable in the distributed area, and notify the direct managing tax authority (except for the tax authority managing the distributed area as prescribed in point a, Clause 6, Article 3 Circular 80/2021/TT-BTC).

- Coordinate in resolving tax payment extension requests, gradual tax payments, debt freezing, and tax debt write-offs in the province benefiting from distributed revenue at the request of the direct managing tax authority (except for the tax authority managing the distributed area as prescribed in point a, Clause 6, Article 3 Circular 80/2021/TT-BTC).

- Take the lead or cooperate with the direct managing tax authority in processing the set-off of overpaid distributed tax amounts of taxpayers as per the regulations of Article 25, Article 26 of Circular 80/2021/TT-BTC (except for the tax authority managing the distributed area as prescribed in point a, Clause 6, Article 3 Circular 80/2021/TT-BTC).

- Coordinate in handling tax refunds of overpaid distributed tax for taxpayers as per the request of the direct managing tax authority according to Section 2, Chapter 5 of Circular 80/2021/TT-BTC (except for the tax authority managing the distributed area as prescribed in point a, Clause 6, Article 3 Circular 80/2021/TT-BTC).

- Coordinate in conducting inspection and examination of taxpayers as requested by the direct managing tax authority.