Vietnam: Regulations on taxes applicable to a television station that partially self-covers its operational expenses

Vietnam: Regulations on taxes applicable to a television station that partially self-covers its operational expenses (Illustrative image)

Article 4 of Circular 55/2010/TT-BTC stipulates the declaration, deduction, and payment of VAT and CIT for television stations that partially self-cover operational expenses in Vietnam as follows:

1. Regarding VAT:

- Stations that partially self-cover operational expenses engaged in the production and business of goods and services subject to VAT, with proper invoices for goods and services sold in accordance with regulatory policies, or with sufficient conditions to accurately determine revenue from the sale of goods and provision of services (such as contracts and payment documents), and accurately determine input VAT deductible according to regulations shall declare, deduct, and pay VAT as guided for stations that self-cover whole operational expenses in Clause 1, Article 3 of this Circular.

Stations are not allowed to declare or deduct VAT for goods and services purchased with funds allocated by the State as stipulated in Clause 1, Article 14 of Decree No. 43/2006/ND-CP dated April 25, 2006 of the Government of Vietnam ON the autonomy and accountability in the performance of duties, organizational structure, staffing, and financial matters for public service providers.

- In case stations that partially self-cover operational expenses have proper invoices for goods and services sold as per regulatory policies or sufficient conditions to accurately determine revenue from the sale of goods and provision of services (such as contracts and payment documents) but do not have proper invoices for input goods and services or cannot accurately determine deductible input VAT according to regulations, they shall declare and pay VAT on a direct calculation basis on VAT.

Payable VAT is calculated as follows:

Revenue x VAT percentage on revenue (%) x VAT rate for goods and services sold.

The VAT percentage on revenue used to determine the VAT value is regulated as follows:

- Trade (distribution, supply of goods): 10%.

- Services, construction (excluding construction with material supply): 50%.

- Production, transportation, services associated with goods, construction with material supply: 30%.

- In case of switching between VAT calculation methods from the credit-invoice method to the direct calculation on VAT and vice versa, stations that partially self-cover operational expenses shall send a written request to the supervisory tax authority for approval of change in the VAT calculation method. Within 10 working days from the date of receiving the written request for change in the VAT calculation method from the station, the tax authority has the responsibility to review and respond in writing whether the request is approved or not.

2. Regarding CIT:

- In case stations that partially self-cover operational expenses and are engaged in the production and business of goods and services subject to CIT can account for the revenue and related expenses of production of goods and provision of services subject to CIT, they shall declare and pay CIT as guided for stations that self-cover whole operational expenses in Clause 2, Article 3 of this Circular.

- In case stations that partially self-cover operational expenses engage in business activities subject to CIT and account for revenue but cannot account for and determine the expenses and income of the business, they shall declare and pay CIT calculated as a percentage ratio on the revenue from goods and services sold. To be specific:

- For services: 5%;

- For business in goods: 1%;

- For other activities: 2%.

More details can be found in Circular 55/2010/TT-BTC effective from May 31, 2010.

Nguyen Phu

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