Following my recent topics about corporate income tax and value added tax in Vietnam, today I am continuing with general issues about value added tax in Vietnam (Part 2)
Rules for deducting input VAT
Input VAT on goods and services serving the manufacture or sale of goods/ services subject to VAT shall be deducted in full, including non-refundable input VAT on damaged goods.
VAT shall be declared and deducted in the period during which it is incurred, whether the productsare used or still in storage.
If the taxpayer finds that the input VAT is incorrectly declared, an adjustment may be made before the tax authority announces the decision on tax inspection at the taxpayer’s premises.
Input VAT that is not deductible shall be aggregated with costs to calculate corporate income tax, or aggregated with costs of fixed assets, except for the VAT on any purchase that costs 20 million VND or more without receipts for non-cash payments.
Compulsory documents for input VAT deduction
Legitimate VAT invoices for purchases or receipts for payment of VAT on imported goods
Receipts for non-cash payments for the purchases (including imported goods) that cost 20 million VND or more inclusive of VAT.
Conditions for deducting and refunding input VATon exported goods and services
VAT on exported goods and services shall only be deducted and refunded when the documents mentioned in Clause 2 Article 9 and Clause 1 Article 15 of Circular 219/2013/TT-BTCare presented. In particular:
- The contract to sell, process goods, or provide services for a foreign entity.
- The customs declaration.
The customs declaration is not needed in the following cases:
The software and export exported via electronic means.
The construction or installation executed overseas or in free trade zones.
Supply of electricity, water, stationery, and goods serving every day life of export processing company.
- Payment for exported goods and services must be made by bank transfer.
If input VAT is not completely deducted after 12 months or 4 quarters from the first month or quarter input VAT is incurred, the taxpayer shall receive a refund.
In the month (if tax is declared monthly) or in the quarter (if tax is declared quarterly), if input VAT on exported goods and services that remains after deduction is 300 million VND or above, VAT shall be refunded; if the input VAT is below 300 million VND, it shall be aggregated with that in the next month or quarter.
Value added tax (VAT) in Vietnam (Part 2)
Thi-Ha Nguyen, ACCA
|DMS Law firm in Vietnam|
Lawyer Do Minh Son
DMS Lawyers in Vietnam advise on value added tax (VAT) for foreign companies in Vietnam
Law office in Vietnam advises about value added tax (VAT) for foreign companies in Vietnam