When is the time for calculating value-added tax in Vietnam?

When is the time for calculating value-added tax in Vietnam?

According to Article 8 of Circular 219/2013/TT-BTC, the determination of value-added tax is as follows:

- For the sale of goods, it is the time of transferring ownership or the right to use the goods to the buyer, irrespective of whether the payment has been received.

- For the supply of services, it is the time of completing the service provision or the time of issuing the service provision invoice, irrespective of whether the payment has been received.

For telecommunications services, it is the time of completing the reconciliation of service charge data according to the economic contract between the telecommunications service businesses but not exceeding 2 months from the month of incurred telecommunications service charges.

- For electricity and clean water provision activities, it is the date of recording the consumption index on the meter to be recorded on the invoice.

- For real estate business activities, infrastructure construction, and construction of houses for sale, transfer, or lease, it is the time of collecting money according to the project's progress or the payment progress stated in the contract. Based on the collected amount, the business establishment declares the output VAT arising during the period.

- For construction and installation, including shipbuilding, it is the time of project acceptance, project item delivery, and completed construction and installation volume, irrespective of whether the payment has been received.

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

When is the time for calculating value-added tax in Vietnam? (Image from the Internet)

What are the methods of calculating value-added tax in Vietnam?

According to Article 9 of the Law on Value-Added Tax 2008, the methods of calculating value-added tax include the deduction method and the direct calculation method on the value added.

* Deduction Method

According to Article 10 of the Law on Value-Added Tax 2008, amended by clause 4, Article 1 of the Law on Amendments to the Law on Value-Added Tax 2013, the deduction method is regulated as follows:

- The VAT to be paid under the deduction method is the output VAT minus the deductible input VAT;

- The output VAT is the total VAT of goods and services sold as stated on the value-added invoice.

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

In case of using payment vouchers that include VAT, the output VAT is determined by the payment price minus the taxable price according to point k clause 1 Article 7 of the Law on Value-Added Tax 2008;

- The deductible input VAT is the total VAT stated on the value-added invoice for purchases of goods and services, import VAT payment vouchers, and meeting the conditions specified in Article 12 of the Law on Value-Added Tax 2008.

- The deduction method applies to business establishments that comply fully with accounting, invoice, and voucher regulations as prescribed by law on accounting, invoices, and vouchers, including:

+ Business establishments with annual revenue from selling goods and providing services of one billion dong or more, excluding households and individuals engaged in business;

+ Business establishments voluntarily registering to apply the deduction method, excluding households and individuals engaged in business.

* Direct Calculation Method on Value Added

According to Article 11 of the Law on Value-Added Tax 2008, amended by clause 5, Article 1 of the Law on Amendments to the Law on Value-Added Tax 2013, the direct calculation method on value added is regulated as follows:

- The VAT to be paid under the direct calculation method on value added is calculated by the value added multiplied by the VAT rate applicable to the trading, processing of gold, silver, and precious stones activities.

The value added of gold, silver, and precious stones is determined by the payment price of the sold gold, silver, and precious stones minus the payment price of the purchased gold, silver, and precious stones.

- The VAT to be paid under the direct calculation method on value added is determined by the percentage rate multiplied by the revenue applied as follows:

+ Applicable entities:

++ Enterprises, cooperatives with annual revenue below the threshold of one billion dong, except for voluntarily registering to apply the deduction method as stipulated in clause 2, Article 10 of the Law on Value-Added Tax 2008;

++ Households and individuals engaged in business;

++ Foreign organizations and individuals doing business without permanent establishments in Vietnam but have revenue arising in Vietnam and have not complied fully with accounting, invoice, and voucher regulations, except for foreign organizations and individuals supplying goods and services for oil and gas exploration and exploitation activities, paying tax under the deduction method by the Vietnamese side deducting payment;

++ Other economic organizations, except for those registering to pay tax under the deduction method as stipulated in clause 2, Article 10 of the Law on Value-Added Tax 2008;

+ The percentage rate for calculating VAT is stipulated as follows:

++ Distribution, supply of goods: 1%;

++ Services, construction without including raw materials: 5%;

++ Production, transport, services with attached goods, construction including raw materials: 3%;

++ Other business activities: 2%.

What are the conditions for input value-added tax credit in Vietnam?

According to clause 2, Article 12 of the Law on Value-Added Tax 2008, amended by clause 6, Article 1 of the Law on Amendments to the Law on Value-Added Tax 2013, the conditions for input value-added tax credit are regulated as follows:

- There is a value-added invoice for the purchase of goods and services or import VAT payment voucher;

- There is a non-cash payment voucher for the purchase of goods and services, except for goods and services purchased each time with a value of less than twenty million dong;

- For exported goods and services, in addition to the conditions stipulated in points a and b, clause 2, Article 12 of the Law on Value-Added Tax 2008, there must also be: a contract signed with the foreign party for selling, processing goods, providing services; an invoice for goods and services; non-cash payment voucher; customs declaration for exported goods.

Payment for exported goods and services in the form of offsetting between exported and imported goods and services, state debt payment is considered non-cash payment.