Hi DMS Lawyers in Vietnam! My company has a branch. The branch shall deliver goods to company’s head office in Da Nang, then the company’s head office shall sell goods to customers, and vice versa. Do we have to issue VAT invoices and declare VAT for these intra-company transactions ? Could you advise me about these issues ? Thank you!
Intra-company transactions mean transactions within a single company, for example, a head office is sending or receiving goods to its branch offices, or transactions between separate divisions of a company.
A branch shall be a dependent unit of an enterprise:
A branch shall be a dependent unit of an enterprise, having the task of performing all or a number of the functions of the enterprise, including the function of authorized representative (Clause 1 Article 45 Law on Enterprises No. 68/2014/QH13 dated 11/26/2014), each branch is an affiliate other than a juridical person (Clause 1 Article 84 The Civil Code No. 91/2015/QH13 dated 11/24/2015).
Where the taxpayer has an affiliate in another province than the taxpayer’s head office, the affiliate shall directly submit the VAT declaration to the supervisory tax authority. If the affiliate does not sell anything and thus does not earn any revenue, tax shall be declared at the taxpayer’s head office (Point c Clause 1 Article 11 Circular No. 14/VBHN-BTC dated 05/15/2017).
Where a taxpayer that declares and pays tax using credit-invoice method has a manufacturing division (processing, assembling facility) situated in another province than that of the head office that does not directly sell goods and thus does not earn any revenue, then: If the affiliated manufacturing division keeps accounting records, tax shall be registered and paid using credit-invoice method in the same locality, and VAT invoices shall be used when semi-finished products or finished products are transferred, including those transferred to the head office (Pont d Clause 1 Article 11 Circular No. 14/VBHN-BTC dated 05/15/2017).
Therefore, the branch shall issue VAT invoices and declare VAT to the branch’s supervisory tax authority for intra-company transactions, and vice versa.
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VAT for intra-company transactions between a company and a branch
Thi-Ha Nguyen, Lawyer’s assistant
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Lawyer Do Minh Son