Circular 20: Amendments and Supplements to Subjects Liable to Special Consumption Tax (SCT)

In fact, Circular 195/2015/TT-BTC dated November 24, 2015, has been amended and supplemented according to Circular 130/2016/TT-BTC dated August 12, 2016. However, to address emerging practical requirements, the Ministry of Finance continues to make adjustments and amendments to ensure harmony and reasonableness.

In Circular 20/2017/TT-BTC, the Ministry of Finance stipulates that taxpayers of Special Consumption Tax (SCT) on imported goods subject to SCT can deduct the SCT amount paid at the importation stage when determining the SCT amount payable upon domestic sales.

The deductible SCT amount corresponds to the SCT amount of the imported SCT goods sold and is only deductible up to the amount of SCT calculated at the domestic sale stage. For the SCT amount not deductible, the taxpayer can account it as an expense for calculating corporate income tax.

Additionally, the Circular clearly outlines the conditions for SCT deduction as follows:

First, in the case of importing SCT-liable materials for the production of SCT-liable goods and in the case of importing SCT-liable goods, the document used as the basis for SCT deduction is the SCT payment document at the import stage;

Second, for the case of purchasing materials directly from domestic manufacturers, the following conditions must be met:

A sales contract (the contract must show that the goods are directly produced by the selling establishment), a copy of the business registration certificate of the selling establishment (with signature and seal of the selling establishment); proof of payment through the bank; the document used as the basis for SCT deduction is the VAT invoice upon purchase.

The SCT amount paid by the purchasing unit when buying materials is determined as follows:SCT amount = Taxable price x SCT rate, where:

Taxable price = Purchase price excluding SCT (as shown on the VAT invoice) - Environmental protection tax (if any): 1 + SCT rate

The SCT deduction is performed when declaring SCT, and the SCT payable is determined by the following formula:

SCT payable = SCT on SCT-liable goods sold in the period - SCT paid for imported goods or materials or the SCT paid at the material purchase stage corresponding to the goods sold in the period.

If the exact SCT paid (or payable) for the materials corresponding to the consumed products in the period cannot be accurately determined, the figures from the previous period can be used to calculate the deductible SCT and will be accurately determined at the end of the quarter or year.

Additionally, the Circular also stipulates that under any circumstances, the maximum allowable deductible SCT cannot exceed the SCT calculated for the materials in accordance with the standard economic-technical norm of the product. The manufacturing establishment must register the economic-technical norm of the product with the tax authority directly managing the establishment.

For enterprises permitted to produce E5, E10 gasoline, the SCT declaration and deduction are performed at the local tax authority where the enterprise's headquarters is located. The unsatisfied SCT deduction in the period for E5, E10 gasoline can be offset against the SCT payable for other goods and services.

SCT taxpayers shall submit the SCT Declaration Form as per Form No. 01/SCT and the SCT Deduction Determination Table (if any) for purchased materials, imported goods (Form No. 01-1/SCT) issued with this Circular.

Source: Finance Magazine

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