How to Declare and Pay Tax When an Invoice with 8% VAT is Issued for Services Completed in 2023?
How is the value-added tax amount to be paid determined according to the deduction method?
Based on the provisions in Clause 5, Article 12 Circular 219/2013/TT-BTC as follows:
The VAT amount payable = Output VAT - Deductible input VAT
In which:
- Output VAT is the total amount of VAT for goods and services sold as recorded on the VAT invoice.
VAT recorded on the VAT invoice is equal to the taxable price of taxable goods and services sold multiplied by (x) the VAT rate applicable to those goods and services.
In the case of using receipts where the payment price is inclusive of VAT, the output VAT is determined by subtracting the payment price from the taxable price stipulated in Clause 12, Article 7 Circular 219/2013/TT-BTC.
Business entities subject to tax calculation by the deduction method, when selling goods and services, must calculate and pay VAT on the goods and services sold.
When issuing invoices for the sale of goods and services, the business entity must clearly record the selling price excluding tax, VAT, and the total amount the buyer has to pay. If the invoice only records the payment price (excluding special circumstances where specific documentation is allowed), without recording the price excluding tax and VAT, the VAT on the goods and services sold must be calculated based on the payment price recorded on the invoice.
The business entity must comply with the accounting policies, books, invoices, and documents as stipulated by law regarding accounting, invoices, and documentation. If an invoice records the wrong VAT rate and the business entity has not self-corrected, the tax authority checks and discovers the error, it will be handled as follows:
For business entities selling goods and services: If the VAT rate recorded on the invoice is higher than the rate stipulated in the tax regulations, the entity must declare and pay VAT according to the rate recorded on the invoice; If the VAT rate recorded on the invoice is lower than the rate stipulated in the tax regulations, the entity must declare and pay VAT according to the rate stipulated in the tax regulations.
- Input VAT is equal to the total VAT recorded on the VAT invoices for purchasing goods and services (including fixed assets) used for producing and trading taxable goods and services, the VAT recorded on tax payment documents for imported goods, or the VAT payment receipts made on behalf of foreign parties as guided by the Ministry of Finance applicable to foreign organizations without Vietnamese legal personality and foreign individuals doing business or earning income in Vietnam.
In cases where the purchased goods and services are of the kind that allows using specific documents where the payment price is inclusive of VAT, the entity is allowed to base on the price inclusive of tax and the calculation method guided in Clause 12, Article 7 of this Circular to determine the price excluding tax and input VAT.
The deductible input VAT is determined based on the principles and conditions for VAT deduction stipulated in Articles 14, 15, 16, and 17 Circular 219/2013/TT-BTC.
Having recorded an 8% VAT invoice for services completed in 2023, how should it be declared and paid?
How to declare taxes for a bidding project to provide services with an 8% VAT invoice for services completed in 2023?
According to Clause 1, Article 1 Decree 15/2022/ND-CP and Article 3 Decree 15/2022/ND-CP, the VAT rate applies to the following goods and services categories:
VAT reduction
1. VAT reduction for groups of goods and services currently subject to a 10% VAT rate, except for the following groups of goods and services:
a) Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and manufactured metal products, mineral products (excluding coal mining), coke, refined petroleum, and chemical products. Details are in Appendix I attached to this Decree.
b) Products and services subject to excise tax. Details are in Appendix II attached to this Decree.
c) Information technology as stipulated by the law on information technology. Details are in Appendix III attached to this Decree.
d) The reduction of VAT for each type of goods and services stipulated in Clause 1 of this Article applies uniformly at all stages of importation, production, processing, and commercial trading. For coal products mined and sold (including coal processed and then sold) subject to VAT reduction in Appendix I attached to this Decree, VAT reduction does not apply beyond the stage of mining sale.
In cases where the goods and services in Appendices I, II, and III attached to this Decree are not subject to VAT or are subject to a 5% VAT rate according to the Law on VAT, it follows the provisions of the Law on VAT and is not subject to VAT reduction.
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2. VAT reduction rate
a) Business entities calculating VAT by the deduction method are subject to an 8% VAT rate on the goods and services stipulated in Clause 1 of this Article.
Thus, in the case that the bidding project falls under the above provisions, the applicable VAT rate is 8%. However, Article 3 Decree 15/2022/ND-CP confirms that the 8% VAT rate only applies until December 31, 2022. From 2023 onwards, the 10% VAT rate applies as per the previous regulation.
According to Clause 2, Article 8 Circular 219/2013/TT-BTC, the time to determine VAT for service provision is the time of completion of service provision or the time of invoice issuance for provided services, regardless of whether payment has been received.
Therefore, if the service provision project is completed in 2023, the VAT rate of 10% will be applied.
For the issue of a bidding project to provide services that have an 8% VAT invoice for services completed in 2023, it is resolved according to point a, clause 5, Article 12 Circular 219/2013/TT-BTC as follows:
Tax deduction method
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For business entities selling goods and services: If the VAT rate recorded on the invoice is higher than the stipulated VAT rate in the tax regulations, they must declare and pay VAT according to the rate recorded on the invoice; If the VAT rate recorded on the invoice is lower than the stipulated VAT rate in the tax regulations, they must declare and pay VAT according to the VAT rate stipulated in the tax regulations.
Thus, business entities implementing a service provision bidding project completed in 2023 must record a VAT rate of 10% and declare and pay VAT at 10%.
How is the VAT calculation base regulated?
The VAT calculation base is regulated in Article 6 Circular 219/2013/TT-BTC as follows:
Calculation base
The VAT calculation base is the taxable price and the tax rate.
In which, the VAT rates for 2023 include three levels: 0%, 5%, and 10%, specifically stipulated in Articles 9, 10, and 11 Circular 219/2013/TT-BTC.
The taxable price of VAT is determined in Article 7 Circular 219/2013/TT-BTC.
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