What are value-added tax distribution methods in Vietnam?

What are cases eligible for value-added tax distribution in Vietnam?

According to Clause 1, Article 13 of Circular 80/2021/TT-BTC, cases eligible for value-added tax distribution include:

- Business activities related to computerized lottery;

- Real estate transfer activities, except as stipulated in Point b, Clause 1, Article 11 of Decree 126/2020/ND-CP;

- Construction activities in accordance with regulations of the national economic sector system and specialized legal provisions;

- Dependent units, business locations being production facilities (including processing and assembly facilities), except as stipulated in Point c, Clause 1, Article 11 of Decree 126/2020/ND-CP.

What are cases eligible for value-added tax distribution in Vietnam? (Image from Internet)

What are value-added tax distribution methods in Vietnam?

According to Clause 2, Article 13 of Circular 80/2021/TT-BTC, the methods for value-added tax distribution are as follows:

- Distribution of payable value-added tax for computerized lottery business activities

The value-added tax payable for each province where computerized lottery business activities take place equals (=) the total value-added tax payable from computerized lottery business activities multiplied (x) by the percentage (%) of actual ticket sales revenue from computerized lottery business activities in each province over the total actual ticket sales revenue of the taxpayer.

Actual ticket sales revenue from computerized lottery business activities is determined as follows:

If the distribution method of computerized lottery tickets is through terminal devices: Revenue from computerized lottery business activities arises from terminal devices registered to sell computerized lottery tickets within the administrative boundaries of each province as per the lottery agency agreements signed with the computerized lottery company or retail outlets and sales points established by the taxpayer in the area.

If the distribution method of computerized lottery tickets is through phone and internet: Revenue is determined by the province where customers register to participate in the lottery by opening a lottery account in accordance with legal provisions on computerized lottery business.

- Distribution of payable value-added tax for real estate transfer activities:

The value-added tax payable for each province from real estate transfer activities equals (=) the revenue excluding value-added tax from real estate transfer activities in each province multiplied (x) by 1%.

- Distribution of payable value-added tax for construction activities:

The value-added tax payable for each province from construction activities equals (=) the revenue excluding value-added tax from construction activities in each province multiplied (x) by 1%.

Revenue excluding value-added tax is determined based on the contract for construction works and construction work items.

If the construction works or construction work items relate to multiple provinces and revenue for each province cannot be determined, after determining the 1% ratio on the revenue from the construction works or construction work items, the taxpayer uses the percentage (%) of the investment value of the works in each province over the total investment value to determine the value-added tax payable to each province.

- Distribution of payable value-added tax to the province where the dependent unit or business location is a production facility:

+ The value-added tax payable to the province where the production facility is located equals (=) the revenue excluding value-added tax multiplied (x) by 2% (for goods subject to 10% value-added tax rate) or 1% (for goods subject to 5% value-added tax rate), provided that the total value-added tax payable to the provinces where the production facilities are located does not exceed the value-added tax payable by the taxpayer at the head office.

If the production facility transfers finished products or semi-finished products to another internal unit for sale, the revenue of the produced products is determined based on the production cost of the products.

+ If the taxpayer calculates to declare and pay according to the percentage % stipulated at Point d.1, Clause 2, Article 13 of Circular 80/2021/TT-BTC and the total value-added tax payable to the provinces where production facilities are located exceeds the total value-added tax payable by the taxpayer at the head office, the taxpayer distributes the tax payable to the provinces where production facilities are located according to the formula:

Value-added tax payable to each province where the production facility is located equals (=) the value-added tax payable by the taxpayer at the head office multiplied (x) by the percentage (%) of revenue excluding value-added tax of the produced products at each province over the total revenue excluding value-added tax of the produced products of the taxpayer.

+ The revenue used to determine the distribution ratio according to Point d.1 and d.2, Clause 2, Article 13 of Circular 80/2021/TT-BTC is the actual revenue arising from the tax period.

If additional declarations change the actual revenue arising, the taxpayer must determine and redistribute the tax payable for each erroneous tax period that has been additionally declared to determine the value-added tax difference that has not been distributed or that has been overdistributed to each locality.

- Distribution of payable value-added tax to each province where the hydropower plant is located in multiple provinces:

The value-added tax payable at each province where the hydropower plant is located in the administrative boundaries equals (=) the value-added tax payable by the hydropower plant multiplied (x) by the percentage (%) of the investment value of the part of the hydropower plant located in the administrative boundaries of each province over the total investment value of the hydropower plant.

What are responsibilities of tax authorities receiving value-added tax distribution in Vietnam?

According to Clause 2, Article 5 of Circular 80/2021/TT-BTC, tax authorities receiving value-added tax distribution have the following responsibilities:

- Monitor and supervise taxpayers in declaring the distributed tax payable amounts and paying tax into the state budget at the location receiving the distribution; require taxpayers to provide information and related documents about the distributed revenue; notify the direct tax administration authority when taxpayers do not comply or improperly comply with the tax distribution obligations.

- Implement some measures to expedite tax debts, enforce tax debts for the tax amounts payable at the location distributed and notify the direct tax administration authority (except the tax administration authority receiving the distribution as stipulated in Point a, Clause 6, Article 3 of Circular 80/2021/TT-BTC).

- Coordinate to resolve applications for tax payment extensions, installment tax payments, tax debt deferral, and tax debt write-off at the province benefiting from the distributed revenue as requested by the direct tax administration authority (except the tax administration authority receiving the distribution as stipulated in Point a, Clause 6, Article 3 of Circular 80/2021/TT-BTC).

- Preside over or cooperate with the direct tax administration authority to handle tax distribution overpayment offsets of taxpayers according to the provisions of Articles 25 and 26 of Circular 80/2021/TT-BTC (except the tax administration authority receiving the distribution as stipulated in Point a, Clause 6, Article 3 of Circular 80/2021/TT-BTC).

- Coordinate in resolving tax distribution overpayment refunds for taxpayers as requested by the direct tax administration authority according to the provisions of Section 2, Chapter 5 of Circular 80/2021/TT-BTC (except the tax administration authority receiving the distribution as stipulated in Point a, Clause 6, Article 3 of Circular 80/2021/TT-BTC).

- Coordinate in inspecting and auditing taxpayers as requested by the direct tax administration authority.