Shall VAT on the service provision in Vietnam be calculated in case payment has not been made?
Shall VAT on the service provision in Vietnam be calculated in case payment has not been made?
Under the provisions of Clause 1, Article 8 of Circular 219/2013/TT-BTC on time for calculating VAT:
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.
6. For imported goods, VAT shall be calculated when the customs declaration is registered.
According to the above provisions, 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.
Thus, VAT on the service provision in Vietnam will still be calculated if payment has not been made.
How many VAT deduction methods are there in Vietnam?
Under Article 10 of the Law on Value Added Tax 2008 amended by Clause 4, Article 1 of the Law on Amendments to Law on Value Added Tax 2013, the VAT deduction method in Vietnam is specified as follows:
- VAT shall be deducted as follows:
+ The amount of VAT payable by deduction method is equal to the amount of output VAT minus the deductible input VAT;
+ The amount of output VAT is equal to the total VAT on sold goods and services, which is written on the VAT invoice.
VAT on sold goods and services written on the VAT invoice is equal to the taxable prices of goods and services multiplied by the rate of VAT on such goods and services.
If the paid price written on the invoice is inclusive of VAT, the output VAT shall equal the paid price minus VAT defined in Point k Clause 1 Article 7 of the Law on Value Added Tax 2008;
+ The amount of deductible input VAT is equal to the total amount of VAT written on the VAT invoice, and the VAT bill of imported goods, and must satisfy the conditions in Article 12 of the Law on Value Added Tax 2008 amended by Clause 6, Article 1 of the Law on Amendments to Law on Value Added Tax 2013.
- The deduction method is applicable to the business establishments that comply with the regime for accounting and invoicing according to the laws on accounting and invoicing, including:
+ Business establishments that earn annual revenue of at least 1 billion VND from goods sale, except for business households and individuals;
+ Business establishments that voluntarily employ the deduction method, except for business households and individuals.
May individuals engaged in gold and silver trading and paying taxes calculated by the direct method in Vietnam apply the VAT deduction method?
According to the provisions of Clause 1, Article 12 of Circular 219/2013/TT-BTC, the tax deduction method is applied by the taxpayers who adhere to the accounting and invoicing practice according to accounting and invoicing laws, including:
Deduction method
1. The deduction method is applied by taxpayers who adhere to the accounting and invoicing practice according to accounting and invoicing laws, including:
a) Any taxpayer that earns at least 1 billion VND in annual revenue from selling goods and services Credit-invoice, provided the taxpayer adheres to the accounting and invoicing practice according to accounting and invoicing laws, except for business households and businesspeople mentioned in Article 13 of this Circular;
b) Any taxpayer that voluntarily applies the deduction method, except for the business households and individuals that pay tax using direct method mentioned in Article 13 of this Circular;
c) Any foreign entity that provides goods and services serving petroleum exploration and extraction and authorizes a Vietnamese party to deduct tax.
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Thus, individuals engaged in gold and silver trading and paying taxes calculated by the direct method in Vietnam are not allowed to apply the VAT deduction method.
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