Abolishment of Circular 150/2010/TT-BTC on VAT and CIT policies for press agencies from May 18, 2023, correct?
Abolish Entire Circular 150/2010/TT-BTC on VAT and Corporate Income Tax Policy for Press Agencies from May 18, 2023?
The Minister of Finance promulgates Circular 19/2023/TT-BTC, which includes the following provisions:
Article 1 of Circular 19/2023/TT-BTC states the abolition of the entire Circular 150/2010/TT-BTC guiding Value Added Tax (VAT) and Corporate Income Tax (CIT) for press agencies.
Circular 19/2023/TT-BTC takes effect from May 18, 2023, meaning that Circular 150/2010/TT-BTC will cease to be valid from May 18, 2023.
Abolish Entire Circular 150/2010/TT-BTC on VAT and CIT Policy for Press Agencies from May 18, 2023, correct?
Regulations in Circular 150/2010/TT-BTC No Longer Align with Current VAT Regulations?
Previously, the Ministry of Finance has assessed VAT regulations applied to press agencies as follows:
Firstly, Points b and c, Clause 1, Article 2 of Circular 150/2010/TT-BTC guide:
Regarding VAT, CIT for Self-Financed Newspapers
1. Regarding VAT
...
b) Self-financed newspapers are entitled to deduct all input VAT of fixed assets formed from the Development Fund for Newspaper Activities and fixed assets used concurrently for the production and business of VAT-taxable goods and services and non-VAT-taxable goods and services.
In cases where fixed assets are partially formed from state budget capital, the corresponding input VAT to the state budget proportion over the total capital forming the fixed assets is not deductible but is accounted for as the original value of the fixed assets.
c) For fixed assets formed from state budget capital, the input VAT of the fixed assets is not deductible but is accounted for as the original value of the fixed assets.
Point b, Clause 1, Article 12 of the Law on Value Added Tax 2008, amended by Clause 6, Article 1 of the Amended Law on Value Added Tax 2013, stipulates:
Deducting Input VAT
1. Business establishments that pay VAT by the tax deduction method are entitled to deduct input VAT as follows:
...
b) Input VAT for goods and services used concurrently for the production and business of VAT-taxable goods and services and non-VAT-taxable goods and services is only deductible for the VAT input of goods and services used for the production and business of VAT-taxable goods and services.
Thus, only the input VAT of goods and services used for the production and business of VAT-taxable goods and services is deductible, regardless of the origins of the fixed assets.
Therefore, Points b and c, Clause 1, Article 2 of Circular 150/2010/TT-BTC are no longer consistent with current VAT regulations.
Secondly, Point b, Clause 1, Article 3 of Circular 150/2010/TT-BTC guides the declaration and payment of VAT by the direct calculation method on VAT as follows:
VAT Payable = Revenue x Percentage (%) of VAT on revenue x VAT rate of sold goods and services.
The percentage (%) of added value on revenue as a basis for determining VAT is regulated as follows:
- Commerce (distribution, supply of goods): 10%.
- Services, construction (excluding construction with material supply): 50%.
- Production, transportation, services with associated goods, construction with material supply: 30%.
However, Clause 2, Article 11 of the Law on Value Added Tax 2008 (amended by Clause 5, Article 1 of the Amended Law on Value Added Tax 2013) stipulates:
Direct Calculation Method on Added Value
...
2. VAT payable by the direct calculation method on added value = percentage % multiplied by revenue.
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b) The percentage % for VAT calculation is regulated as follows:
- Distribution, supply of goods: 1%;
- Services, construction without material supply: 5%;
- Production, transportation, services with associated goods, construction with material supply: 3%;
- Other business activities: 2%.
Thus, the guidelines in Point b, Clause 1, Article 3 of Circular 150/2010/TT-BTC are no longer consistent with current VAT regulations.
Thirdly, Point c, Clause 1, Article 3 of Circular 150/2010/TT-BTC guides as follows:
c) To switch between the VAT calculation methods from the deduction method to the direct calculation method on VAT and vice versa, the partially self-financed newspaper sends a written request to the directly managing tax authority for approval to switch the VAT calculation method.
Meanwhile, Clause 2, Article 10 of the Amended Law on Value Added Tax 2023 stipulates the conditions to switch from the direct calculation method on VAT to the deduction method must fully implement accounting policies, invoices, vouchers, have annual revenue from the sale of goods and provision of services from one billion dong or more, and register to voluntarily apply the deduction method.
Therefore, the guidelines in Point c, Clause 1, Article 3 of Circular 150/2010/TT-BTC are not consistent with current VAT regulations.
Regulations in Circular 150/2010/TT-BTC No Longer Align with Current CIT Regulations?
For CIT of press agencies, the Ministry of Finance points out inconsistencies with current CIT regulations as follows:
According to Point c, Clause 2, Article 2 of Circular 150/2010/TT-BTC guiding cost limitation on advertising, promotion as follows:
Regarding VAT, CIT for Self-Financed Newspapers
...
c) Some cost items for the newspaper are as follows:
- Salary costs accounted as reasonable expenses when determining taxable corporate income of the newspaper are the actual salary amounts the newspaper pays to employees with valid, lawful vouchers.
- Complimentary, gift newspapers of the press agency directly related to production and business activities are limited to reasonable expenses for determining taxable corporate income as regulated at Point n, Clause 2, Article 9 of the Corporate Income Tax Law (not exceeding 10% of total deductible expenses; for newly established newspapers, not exceeding 15% in the first three years from the establishment date), except for complimentary, gift newspapers given to persons with contributions to the revolution, war invalids, sick soldiers; officials, soldiers in island areas, remote regions, special difficult areas; state management agencies.
- The press agency does not account for expenses when determining taxable corporate income for expenditures funded by the state budget.
However, these regulations have been abolished by Clause 4, Article 1 of the Law Amending Tax Laws 2014. Therefore, the guidelines in Point c, Clause 2, Article 2 of Circular 150/2010/TT-BTC regarding cost limitation on advertising and promotion are not consistent with the current Corporate Income Tax Law.
Circular 19/2023/TT-BTC takes effect from May 18, 2023.
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