Regulations on value-added taxable prices for goods/services meant for internal use in Vietnam

Regulations on value-added taxable prices for goods/services meant for internal use in Vietnam (Internet image)

Regarding this issue, LawNet responded as follows:

1. Regulations on value-added taxable prices for goods/services meant for internal use in Vietnam

Regulations on value-added taxable prices for goods/services meant for internal use in Vietnam according to Clause 4, Article 7 of Circular 219/2013/TT-BTC (amended in Circular 119/2014/TT-BTC) are as follows:

- Goods internally circulated as supplies or semi-finished products serving the operation of a manufacturing or business establishment are exempt from VAT.

- When a business establishment creates its own fixed assets (self-created) to serve the manufacture or sale of goods subject to VAT, the business establishment is not required to issue invoices when such fixed assets are completed and approved. Input VAT on self-created fixed assets shall be declared and deducted as prescribed.

- When machinery, equipment, supplies, or goods are delivered as a loan, borrowing, or repayment, the business establishment is not required to issue invoices and pay VAT, provided contracts and relevant proof of payment are available.

Example 24: Unit A is a manufacturer of electric fans. Unit A installs 50 of these fans in its workshops to server its business operation. Unit A is not required to pay VAT on these 50 electric fans.

Example 25: Facility B has a weaving workshop and a tailoring workshop. Facility B delivers finished thread from the weaving workshop to the tailoring workshop to proceed the manufacture. Facility B is not required to calculate and pay VAT on the thread delivered to the tailoring workshop.

Example 26: Joint-stock company P builds a rest house for its workers. Company P does not have any specialized unit to execute the construction. When the house is finished, company P is not required to issue an invoice. Input VAT on self-created fixed assets shall be declared and deducted as prescribed.

Example 27: Company Y is a company that produces bottled water. The VAT-exclusive price for a bottle on the market is VND 4,000. When company Y uses 300 bottles during its meeting, VAT shall not be paid.

Example 28: Company Y is a company that produces bottled water. The VAT-exclusive price for a bottle on the market is VND 4,000. Company Y delivers 300 bottles for purposes other than business purposes, company Y must declare and calculate VAT on these 300 bottles. The taxable price is VND 4,000 x 300 = VND 1,200,000.

- When a business establishment using internal goods/services for business such as transport, aviation, rail transport, postal services and telecommunications, it is not required to calculated output VAT. The business establishment must issue written regulations on the types and quantity of goods/services used internally.

2. Time for calculating VAT in Vietnam 

Time for calculating VAT in Vietnam according to Article 8 of Circular 219/2013/TT-BTC is as follows:

- For goods sale, VAT shall be calculated when the ownership or the right to use goods is transferred to the buyer, whether the payment is made or not.

- For service provision, VAT shall be calculated when service provision is completed or when the invoice for service provision is made, whether the payment is made or not.

For telecommunications services, VAT shall be calculated when comparing the data about telecommunications charge according to the contracts between telecommunications service providers, but not later than 2 months from the month in which the charge is incurred.

- For electricity and water supply, VAT shall be calculated when the electricity or water consumption is recorded.

- For real estate trading, construction of infrastructural works, houses for sale or for lease, VAT shall be calculated when money is collected according to the project schedule or the contract. The taxpayer shall declare output VAT incurred in the tax period according to collected amount.

- For construction and installation, including shipbuilding, VAT shall be calculated when the construction or a work is completed and put into use, Whether the payment is made or not.

- For imported goods, VAT shall be calculated when the customs declaration is registered.

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