In Vietnam, in case the implementation term of a contract concluded in 2022 is extended to 2023, shall the VAT rate of 10% or 8% be applied?
- In case the implementation term of a contract for the sale and purchase of goods concluded in 2022 is extended to 2023, shall the VAT rate of 8% or 10% in Vietnam be applied?
- In case the implementation term of a contract for service provision concluded in 2022 is extended to 2023, shall the VAT rate of 8% or 10% in Vietnam be applied?
- Shall the VAT rate of 8% be applied in case contracts for importing goods concluded in 2022 are implemented in 2023 in Vietnam?
In case the implementation term of a contract for the sale and purchase of goods concluded in 2022 is extended to 2023, shall the VAT rate of 8% or 10% in Vietnam be applied?
On the basis of complying with Resolution 43/2022/QH15 and Decree 15/2022/ND-CP, the reduction of the VAT rate from 10% to 8% only applies in 2022 (until the end of December 31, 2022).
For the case where the implementation term of a contract concluded in 2022 is extended to 2023, according to the provisions of Article 8 of Circular 219/2013 / TT-BTC on time for calculating VAT in Vietnam as follows:
Time for calculating VAT
1. For goods sale, VAT shall be calculated when the ownership or the right to use goods is transferred to the buyer, whether the payment is made or not.
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Accordingly, the time for calculating VAT corresponding to a contract for the sale and purchase of goods is as follows:
- In case the contract concluded in 2022 is a contract for sale and purchase of goods, the goods in the contract must be eligible for VAT reduction as prescribed in Clause 1 Article 1 of Decree 15/2022/ND-CP.
According to the provisions of Clause 1, Article 8 of Circular 219/2013 / TT-BTC, for contracts for sale and purchase of goods, the time for calculating VAT is the time for transfer ownership or right to use goods to buyer, whether the payment is made or not.
Thus, in case the contract for sale and purchase of goods is concluded before December 31, 2022, but the buyer and seller have not transferred ownership or right to use the goods, whether the payment is made or not, the VAT rate of 8% cannot be applied. When the parties transfer the goods in 2023, the goods are subject to VAT rate of 10% at this time.
In case both buyer and seller have transferred ownership or right to use the goods before December 31, 2022, the VAT rate of 8% shall be applied.
In case the implementation term of a contract for service provision concluded in 2022 is extended to 2023, shall the VAT rate of 8% or 10% in Vietnam be applied?
First of all, the service in the concluded contract must be subject to the VAT rate of 10% and VAT reduction according to Decree 15/2022/ND-CP.
Pursuant to Clause 2, Article 8 of Circular 219/2013 / TT-BTC on the time of calculating VAT of contracts for service provision as follows:
Time for calculating VAT
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2. For service provision, VAT shall be calculated when service provision is completed or when the invoice for service provision is made, whether the payment is made or not.
For telecommunications services, VAT shall be calculated when comparing the data about telecommunications charges according to the contracts between telecommunications service providers, but not later than 2 months from the month in which the charge is incurred.
Accordingly, for service provision, VAT shall be calculated when the service provision is completed or when the invoice for service provision is made, whether the payment is made or not.
Thus, it can be determined as follows:
- In case the contract for service provision is concluded in 2022 and the service provision is completed in 2023, at the time of completion is the time for calculating VAT with a tax rate of 10%.
- In case the implementation term of a contract for service provision concluded in 2022 is extended to 2023, but the payment is made during the implementation process, the time for calculating VAT is the time for issuing invoices (but the time for issuing invoices is also the time for payment as prescribed in Clause 2, Article 9 of Decree 123/2020/ND-CP):
Invoicing time
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2. Invoices for provision of services shall be issued upon completion of the provision of services, whether the payment of the invoiced amount is made or not. In case a service is provided with payments collected in advanced or during the provision of that service, an invoice shall be issued when each payment is collected (excluding payments of deposited amounts or advance payments which are made to ensure the execution of contracts for provision of accounting, audit, financial consulting or taxation services; valuation services; technical survey and design services; supervision consulting services; investment construction project formulation services).
3. In case where multiple deliveries are required, or each goods item or service phase is accepted, it shall be mandatory to issue an invoice showing quantity, value of goods or service for each respective delivery or acceptance.
Accordingly, the service provision on which the payment is made during the implementation process in 2022 will be applied the VAT rate of 8%.
In addition, according to the provisions of Clause 3 Article 9 of Decree 123/2020/ND-CP, in case where multiple deliveries are required, or each goods item or service phase is accepted, it shall be mandatory to issue an invoice showing quantity, the value of goods or service for each respective delivery or acceptance.
For example: Enterprises issue invoices to execute contracts for services provision from June 1, 2022 to May 31, 2023, from June 1, 2022 to December 31, 2022, invoices are made with a VAT rate of 8% and from January 1, 2023 to May 31, 2023 with a VAT rate of 10%.
Shall the VAT rate of 8% be applied in case contracts for importing goods concluded in 2022 are implemented in 2023 in Vietnam?
According to the provisions of Clause 6 Article 8 of Circular 219/2013 / TT-BTC on the time for calculating VAT for imported goods as follows:
Time for calculating VAT
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6. For imported goods, VAT shall be calculated when the customs declaration is registered.
At the same time, Article 25 of the 2014 Customs Law stipulates the time limit for the submission of customs documents as follows:
Time limit for submission of customs documents
1. The customs declarations shall be submitted:
a/ After goods are transported to places notified by customs declarants and at least 4 hours before the exit of vehicle regarding to exported goods; , at least 2 hours before the exit of vehicle regarding exported goods delivered by express delivery services;
b/ Before goods arrive at border checkpoints or within 30 days after goods arrive at border checkpoints regarding to imported goods;
c/ As prescribed in Clause 2, Article 69 of this Law.
2. Customs declarations are valid for customs formalities within 15 days from the day on which they are registered.
3. The time limit for submission of relevant documents in customs documents:
a/ Regarding to e-customs declaration, when customs authorities conduct examination of customs documents and physical inspection of goods, customs declarants shall submit paper documents in customs documents, except documents which are already available in the national single- window communication system;
b/ Regarding to paper customs declarations, customs declarants shall submit relevant documents when registering their customs declarations.
Thus, according to the above provisions, imported goods in contracts for importing goods concluded in 2022 are determined as follows:
- If the contract for importing goods is concluded in 2022, but the time of submitting customs declarations is before December 31, 2022, and the tax rate of 8% is applied.
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