Pursuant to Clause 1, Article 5 of Circular 219/2013/TT-BTC cases of exemption declaring and paying VAT are as follows:
“Article 5. Cases of exemption declaring and paying VAT
1. An organization or individual receives a monetary compensation (including compensation for land and property on land that is withdrawn by a competent authority), bonus, allowance, or payment for transfer of emission permit, or other revenues.
Any taxpayer that receives a monetary compensation, bonus, allowance, payment for transfer of emission permits, or other revenues must make a receipt for such revenues. The taxpayer shall make receipts for spending according to the spending purposes.
If compensation is provided in the form of goods/services, the provider of compensation must issue an invoice, declare and pay VAT as if such goods/services are sold; the recipient of compensation shall declare and deduct tax as prescribed.
Any taxpayer that receives money from another entity to provide a service such as repair, warranty, sales promotion, or advertising must declare and pay tax as prescribed..."
From that, Circular 219 does not specify whether sales bonuses are invoiced or not but only regulates receipts of compensation, bonuses, support money received, money for transfer of emission rights and other financial revenues. Receipts of receipts shall be made according to regulations. For business establishments that spend money, based on the purpose of spending to make money payment vouchers.
As a result, it can be divided into cases that are not required to declare and pay VAT as follows:
- In the case of receiving compensation, bonus, support money, and other financial revenues from the business (receivables are not attached with conditions) , there is no need to issue invoices, just make receipts and payments.
- In the case of receiving compensation, bonus, support money, and other financial revenues from the enterprise to perform services for the enterprise, such as repair, warranty, promotion, and advertising (the money received conditions), the invoices must be issued and declared and paid tax according to regulations.
- If compensation is provided in the form of goods/services, the provider of compensation must issue an invoice for the goods.
You can refer to Official Dispatch No. 59565/CT-TTHT of the Hanoi Tax Department responding to questions from Megram Joint Stock Company on tax policy for sales bonus as follows:
"In case the company has paid bonuses to people who achieve sales, when receiving this bonus, they shall make receipts of collection according to regulations and are not required to declare and pay VAT as guided in Clause 1 of this Article 5 Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance. The company shall make payment vouchers based on the purpose of the money.
-In case the company has sales activities with trade discounts, selling at listed prices to customers buying goods in large quantities, the company shall make sales invoices according to the instructions in Clause 2.5 of Appendix 4 of the Circular No. issued together with Circular No. 39/2014/TT-BTC. Whereby:
In the event that the company sells goods and applies the form of trade discount to customers based on the sales of sold goods, the amount of trade discount shall be adjusted on the sales invoice of the last purchase or adjustment on the invoice in the next period.
In the event the discount amount is made at the end of the sales discount program (period), the company may issue an adjusted invoice with a list of invoice numbers to be adjusted, the adjusted amount, and tax amount. Based on the adjusted invoice, the seller and the buyer declare the adjustment of sales, output, and input tax.
In addition, Official Disptach 488/TCT-CS concerning value-added tax and enterprise income tax on discounts sent by the Hanoi General Department of Taxation to Panasonic Co., Ltd., has the following content:
"In case Panasonic Vietnam Co., Ltd. implements a number of discounts and discount programs for customers, then:
- PVN may deduct the trade discounts (discounts on the sales that reach a certain level) that are given directly when issuing invoices from the revenue when calculating VAT, and provide adequate invoices and documentation proving the reduction in revenue and the missing of cash due to such discounts.
- PVN must not deduct payment discounts (including fast payment discounts and immediate payment discounts) from its revenue when calculating VAT.
- Point 2.21 Section III Part B of the Circular no. 134/2007/TT-BTC dated November 23rd 2007 of the Ministry of Finance, and Point 2.19 Section IV Part C of the Circular No. 130/2008/TT-BTC dated December 26th 2008 of the Ministry of Finance, guiding the enterprise income tax, specify that in non-deductible expenditures when calculating incomes subject to enterprise income tax, the trade discounts (on the sales of goods) are already deducted from revenues when calculating VAT and enterprise income tax, and therefore, these expenditures must not be included in deductible expenses when calculating income subject to enterprise income tax. If the expenditures on supporting costs and expenditure on payment discounts have adequate invoices and documentation, they shall be included in deductible expenses when calculating income subject to enterprise income tax, and the maximum rate shall apply."
>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE