Latest instructions on value-added tax declaration for supporting industry in Vietnam

Latest instructions on value-added tax declaration for supporting industry in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Latest instructions on value-added tax declaration for supporting industry in Vietnam

Instructions for declaring value added tax for supporting industries according to Article 3 of Circular 21/2016/TT-BTC are as follows:

- Value-added tax declaration

= For institutional taxpayers:

A taxpayer shall declare value-added tax (VAT) on a quarterly basis for turnover from supporting industry products on the list of supporting industry products prioritized for development (regardless of whether such turnover is over or under VND 50 billion per year).

A taxpayer that has turnover both from supporting industry products on the list of supporting industry products prioritized for development and from other production and business activities shall declare VAT on a quarterly basis or may declare VAT on a monthly basis and notify such to the tax agency under the law on tax administration.

= An individual taxpayer that has turnover from supporting industry products on the list of supporting industry products prioritized for development shall declare VAT on an annual basis and pay VAT on a quarterly basis.

If paying VAT upon each time of arising of turnover from supporting industry products on the list of supporting industry products prioritized for development, the taxpayer shall declare and pay VAT upon each time of arising of turnover or may declare and pay VAT on a monthly basis.

- Tax declaration dossier

= A tax declaration dossier for an institutional taxpayer must comply with Circular 80/2021/TT-BTC and Circular 26/2015/TT-BTC

= A tax declaration dossier for an individual taxpayer must comply with Circular 92/2015/TT-BTC.

2. Instructions on Enterprise income tax incentives for supporting industry in Vietnam

Instructions on Enterprise income tax incentives for supporting industry in Vietnam according to Article 4 of Circular 21/2016/TT-BTC are as follows:

- Enterprise income tax incentives apply from January 1, 2015, to income of enterprises from projects to manufacture supporting industry products which satisfy the conditions provided in Law amending laws on taxes, and guiding documents, and for which a competent agency has granted an incentive certificate for manufacture of supporting industry products.

- The order and procedures for certification of incentives and inspection after incentives are granted for projects to manufacture supporting industry products on the list of supporting industry products prioritized for development must comply with Circular 55/2015/TT-BCT.

- An incentive certificate for manufacture of supporting industry products prioritized for development serves as a basis for application of enterprise income tax incentives. Incentive levels, time of starting the application of incentives, and transition of incentives must comply with the law on enterprise income tax.

Example 1:

In the 2015 tax period, enterprise A is granted an investment registration certificate for implementing a new investment project to manufacture supporting industry products. In the 2016 tax period, the project has turnover from the manufacture of supporting industry products.

In the 2017 tax period, the project gets an incentive certificate for manufacture of supporting industry products. In the 2018 tax period, the project has income from the manufacture of supporting industry products.

The times of starting the calculation of enterprise income tax incentives for this project are as follows: 2017 is the first year of application of preferential tax rates, and 2018 is the first year of tax exemption if the project actually satisfies the law-prescribed conditions for enjoyment of incentives.

Example 2:

In the 2016 tax period, enterprise B is granted an investment registration certificate for implementing a new investment project to manufacture supporting industry products. In the 2017 tax period, the project has turnover from the manufacture of supporting industry products.

In the 2018 tax period, the project has income from the manufacture of supporting industry products. In the 2019 tax period, the project gets an incentive certificate for manufacture of supporting industry products. The time of starting the calculation of enterprise income tax incentives for this project is as follows: 2019 is the first year of application of preferential tax rates and also the first year of tax exemption if the project actually satisfies the law-prescribed conditions for enjoyment of incentives.

- While enjoying enterprise income tax incentives, if an enterprise conducts different production and business activities, it shall separately determine income from the project to manufacture supporting industry products prioritized for development in order to enjoy enterprise income tax incentives under regulations.

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