What are methods for distribution of VAT in Vietnam?

What are methods for distribution of VAT in Vietnam?

Pursuant to Clause 2, Article 13 of the Circular 80/2021/TT-BTC stipulating methods for distribution of VAT in Vietnam as follows: 

2. Distribution methods:

a) Distribution of VAT on computerized lottery business:

VAT payable in each province where computerized lottery business takes place equals (=) VAT payable on computerized lottery business multiplied by (x) the ratio (%) of revenue on selling lottery tickets in each province to total revenue from selling lottery tickets of the taxpayer.

Revenue from selling computerized lottery tickets shall be determined as follows:

In case lottery tickets are distributed by means of terminal devices: Revenue from computerized lottery generated by registered terminal devices in each province shall be determined according to the lottery agent contracts with the computerized lottery company or ticket booths established by the taxpayer in the province.

In case lottery tickets are distributed by phone and internet: The revenue shall be determined in each province where the buyers register their lottery account in accordance with regulations of law on computerized lottery business.

b) Distribution of VAT on real estate transfer:

VAT payable in each province on real estate transfer equals (=) VAT-exclusive revenue from real estate transfer in the province multiplied by (x) 1%.

c) Distribution of VAT on construction activities:

VAT payable in each province on construction activities equals (=) VAT-exclusive revenue from construction activities in the province multiplied by (x) 1%.

VAT-exclusive revenue shall be determined according to the construction contract. In case the construction work or item is relevant to multiple provinces and the revenue generated in each province cannot be determined, after determining the 1% revenue, the taxpayer shall determine the VAT payable in each province according to the ratio (%) of investment in the construction work in each province to total investment.

d) Distribution of VAT in provinces where dependent units and business locations that are factories are located:

d.1) VAT payable in the province equals (=) VAT-exclusive revenue multiplied by 2% (for goods subject to 10% VAT) or 1% (for goods subject to 5% VAT), provided the total VAT payable in the provinces where the factories are located does not exceed the VAT payable in the province where the taxpayer is headquartered. In case the factory delivers or sells the products to other units of the same taxpayer, the revenue from the products shall be determined according to their production costs.

d.2) In case VAT payable in the provinces where the factories are located calculated according to Point d.1 is greater than VAT payable in the province where the taxpayer is headquartered, the taxpayer shall distribute VAT as follows: VAT payable in each province where the factory is located equals (=) VAT payable in the province where the taxpayer is headquartered multiplied by (x) ratio (%) of VAT-exclusive revenue from products manufactured in each province to total VAT-exclusive revenue from all products manufactured by the taxpayer.

d.3) Revenue as the basis for determination of distribution ratio mentioned in Point d.1 and Point d.2 of this Clause is the actual revenue generated in the tax period. In case of supplementary declaration that increases the revenue, the taxpayer shall re-distribute tax payable in each erroneous tax period in order to determine the difference in VAT distributed in each province.

dd) Distribution of VAT payable in each province where a hydroelectric plant is partially located:

VAT payable in each province where a hydroelectric plant is partially located equals (=) VAT payable on the hydroelectric plant multiplied by (x) the ratio (%) of investment in the part of the hydroelectric plant that is located in the province to the total investment in the hydroelectric plant.

How to declare and pay VAT in Vietnam?

Pursuant to Clause 3, Article 13 of the Circular 80/2021/TT-BTC stipulating declaring and paying VAT in Vietnam as follows: 

3. Declaring and paying tax:

a) Computerized lottery business:

The taxpayer shall declare VAT on computerized lottery business nationwide and submit tax declaration dossiers according to Form No. 01/GTGT and the VAT distribution sheet according to Form No. 01-3/GTGT in Appendix II hereof to the supervisory tax authority; pay tax in the provinces where computerized lottery takes place in accordance with Clause 4 Article 12 of this Circular.

b) Real estate transfer:

b.1) The taxpayer shall declare VAT and submit the VAT declaration dossier according to Form No. 05/GTGT in Appendix II hereof; pay the declared tax in the province where the transferred real estate is located.

b.2) The taxpayer shall include the VAT-exclusive revenue from real estate transfer in the tax declaration dossier prepared at the headquarters in order to determine the VAT payable on the entire business operation at the headquarters. The VAT paid in the province where the transferred real estate is located shall be offset against the VAT payable in the headquarters' province.

c) Construction activities:

c.1) In case the taxpayer is a construction contractor that directly signs the contract with the investor for construction of the work in a province other than the province in which the taxpayer is headquartered, including construction works and items that are relevant to multiple provinces, the taxpayer shall declare VAT on these construction works and items at the tax authority of the area where the construction work is located according to Form No. 05/GTGT in Appendix II hereof; submit the declared tax in the province where the construction work is located. In case the State Treasury has carried out deduction as prescribed in Clause 5 of this Article, the taxpayer is not required to pay the amount deducted by State Treasury to state budget.

c.2) The taxpayer shall include the VAT-exclusive revenue from construction activities in the tax declaration dossier prepared at the headquarters in order to determine the VAT payable on the entire business operation at the headquarters. The VAT paid in the province where construction work is located shall be offset against the VAT payable in the headquarters' province.

d) In case of dependent units and business locations that are factories:

The taxpayer shall declare VAT on business operation of the dependent units and business locations that are factories and submit tax declaration dossiers according to Form No. 01/GTGT and the VAT distribution sheet according to Form No. 01-6/GTGT in Appendix II hereof to the supervisory tax authority; pay tax in the provinces where the factories are located in accordance with Clause 4 Article 12 of this Circular.

dd) In case of a hydroelectric plant that is located in multiple provinces:

The taxpayer shall declare VAT incurred by the hydroelectric plant and submit tax declaration dossiers according to Form No. 01/GTGT and the VAT distribution sheet according to Form No. 01-2/GTGT in Appendix II hereof to the tax authority of the area where the hydroelectric plant's operating office is located; pay tax in the provinces where the hydroelectric plant is located in accordance with Clause 4 Article 12 of this Circular.

Best regards!