The General Department of Taxation has recently issued Official Dispatch 1582/TCT-DNL providing guidance on the implementation of declaration, calculation, and payment of value-added tax (VAT) for Vietnam Electricity Group (abbreviated as EVN) under Article 2 of Decree 10/2017/ND-CP.
Article table of contents
According to the provisions of Article 2 Decree No. 10/2017/ND-CP, EVN and its member units shall declare and pay taxes in accordance with the laws on taxation.
The electricity production companies under the accounting of EVN and the accounting of power generation corporations under EVN shall declare and pay VAT as follows:
- Electricity production companies under the accounting of EVN and the accounting of power generation corporations shall declare and pay VAT by the deduction method for electricity production activities at the locality where the company’s head office is located.- The payable VAT of electricity production activities shall be determined as follows:
| Payable VAT for electricity production activities |
= | Output VAT |
- | Deductible input VAT |
- The output VAT shall be determined as follows:
| Output VAT | = | Electricity quantity | x | Tax assessment price | x | VAT rate (10%) |
To ensure the uniform implementation of the above regulations, the General Department of Taxation requires the Tax Departments of provinces and cities, EVN, and Power Generation Corporations 1, 2, 3 to note the following issues:
On VAT declaration:
Electricity production companies under the accounting of EVN and the accounting of power generation corporations shall declare and pay VAT by the deduction method, declaring VAT according to the VAT Declaration Form No. 01/GTGT attached to Circular No. 156/2013/TT-BTC.
On VAT assessment price:
- For hydropower companies under the accounting of EVN and the accounting of power generation corporations:- The VAT assessment price for the electricity of hydropower companies is the selling price of electricity to customers as recorded on the invoice according to the electricity sale contract.- If the hydropower company does not directly sell electricity, the VAT assessment price is the selling price to the parent company announced by EVN before March 31 each year for uniform application but not lower than the average production cost of electricity from the preceding year (excluding loan interest and exchange rate difference) of the hydropower plants under the accounting of EVN and power generation corporations.- For thermal power companies under the accounting of EVN and the accounting of power generation corporations:- The VAT assessment price is the selling price of electricity to customers as recorded on the invoice according to the electricity sale contract.- If the thermal power company does not directly sell electricity to customers, the VAT assessment price is the selling price to the parent company announced by EVN before March 31 each year for uniform application but not lower than the average purchase price of electricity from the preceding year of EVN.
EVN must issue a document announcing the electricity selling price to determine the VAT assessment price before March 31 each year.
The VAT declaration of electricity production companies under the accounting of EVN and the accounting of power generation corporations under EVN shall be applied from the tax calculation period of April 2017 (tax declaration no later than May 20, 2017).
For detailed guidance, refer to Official Dispatch No. 1582/TCT-DNL issued by the General Department of Taxation on April 29, 2017.
