Is the invoicing time for construction also the time for calculating VAT in Vietnam?
- What is the VAT rate for construction? Is it possible to apply the tax reduction policy under Decree 15/2022/ND-CP?
- Is the invoicing time for construction also the time for calculating VAT in Vietnam?
- Guidance of the General Department of Taxation on VAT invoices in 2023 for services completed in 2022?
What is the VAT rate for construction? Is it possible to apply the tax reduction policy under Decree 15/2022/ND-CP?
Pursuant to Article 11 of Circular 219/2013/TT-BTC, construction is subject to the value added tax rate of 10%.
Regarding the application of VAT reduction in Vietnam as prescribed in Article 1 of Decree 15/2022/ND-CP, then:
VAT reduction in Vietnam
1. VAT on goods and services currently subject to 10% VAT shall be reduced, except the following goods and services:
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2. VAT reduction rates
a) Business establishments that pay VAT using the credit-invoice method shall pay 8% VAT on the goods and services specified in Clause 1 of this Article.
Thus, construction is subject to value added tax reduction.
However, the reduced VAT rate under Decree 15/2022/ND-CP is only applied in 2022. From January 1, 2023, the regulation on value-added tax reduction expires in accordance with regulations of Article 3 of this Circular.
Is the invoicing time for construction also the time for calculating VAT in Vietnam?
Is the invoicing time for construction also the time for calculating VAT in Vietnam?
Pursuant to the provisions at point c, clause 4, Article 9 of Decree 123/2020/ND-CP on the invoicing time as follows:
Invoicing time
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4. Invoicing time in some specific cases:
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c) Invoices for construction and installation shall be issued at the time of commissioning and acceptance of the finished work, work item or construction/installation amounts, whether the payment of the invoiced amount is made or not.
Thus, invoices for construction and installation shall be issued at the time of commissioning and acceptance of the finished work, work item or construction/installation amounts, whether the payment of the invoiced amount is made or not.
Regarding the time for calculating VAT, it is based on Clause 5, Article 8 of Circular 219/2013/TT-BTC 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.
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 charge according to the contracts between telecommunications service providers, but not later than 2 months from the month in which the charge is incurred.
3. For electricity and water supply, VAT shall be calculated when the electricity or water consumption is recorded.
4. For real estate trading, construction of infrastructural works, houses for sale or for lease, VAT shall be calculated when money is collected according to the project schedule or the contract. The taxpayer shall declare output VAT incurred in the tax period according to collected amount.
5. For construction and installation, including shipbuilding, VAT shall be calculated when the construction or a work is completed and put into use, whether the payment is made or not.
Thus, for construction and installation, VAT shall be calculated when the construction or a work is completed and put into use, whether the payment is made or not.
Thus, through the above regulations, it can be understood that for construction and installation, VAT shall be calculated (also the invoicing time) when the construction or a work is completed and put into use, whether the payment is made or not.
Guidance of the General Department of Taxation on VAT invoices in 2023 for services completed in 2022?
Pursuant to the guidance at Point c, Clause 4, Article 9 of Decree 123/2020/ND-CP, Clause 5, Article 8 of Circular 219/2013/TT-BTC and Official Dispatch 2619/CTHN-TTHT in 2023 as follows:
In case the company has completed services and construction and installation contracts in 2022, at the time of acceptance and handover of works, work items, completed construction and installation volume is the time of formulation. Invoice is also the time to determine VAT for construction.
However, the company makes a VAT invoice in 2023, the VAT invoice is not eligible for the tax reduction policy as prescribed in Decree 15/2022/ND-CP.
In addition, companies that make invoices at the wrong time may be administratively sanctioned according to the provisions of Article 24 of Decree 125/2020/ND-CP as follows:
Penalties for violations against regulations on issuance of invoices upon sale of goods or provision of services
1. Cautions shall be given as a form of penalty imposed for the following violations:
a) Issuing invoices at the wrong time, but not to the extent of causing any deferred fulfillment of tax obligations, under any mitigating circumstance;
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3. Fines ranging from VND 3,000,000 to VND 5,000,000 shall be imposed for any act of issuing invoices at the wrong time, but not to the extent of causing any deferred payment of tax obligations, except as prescribed in point a of clause 1 of this Article.
4. Fines ranging from VND 4,000,000 to VND 8,000,000 shall be imposed for one of the following violations:
a) Issuing invoices at the wrong time in breach of laws on invoices for sale of goods or provision of services, except as provided in point a of clause 1 and 3 of this Article;
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