This March 2023 publication of our Tax and Accounting Updates looks at amendments to a number of regulations on VAT refund for investment projects/enterprises, 6 steps of electronic tax payment for imported and exported goods and our regular review of recent Official Letters released by the Tax Authorities.
Amendment to a number of regulations on VAT refunds for investment projects/enterprises
Key elements in Circular 13/2023/TT-BTC dated 28 February 2023 include guidance on the implementation of Decree 49/2022/ND-CP and amendment of Circular 80/2021/TT-BTC related to VAT. Accordingly, VAT refund for investment projects of conditional business lines will comply with the new provisions in Clause 3, Article 1 of Decree 49/2022/ND-CP and be applied retroactively from the time Decree 100/2016/ND-CP takes effect (i.e., 1 July 2016).
In terms of VAT refund dossiers for investment projects of conditional lines of business, according to the amendment to point a.4 clause 2 Article 28 of Circular 80/2021/TT-BTC, enterprises will submit a copy of one of the forms of a license/certificate or a written confirmation on approval on the conditional business line, for tax refund consideration.
Circular 13/2023/TT-BTC takes effect from 14 April 2023.
6 steps of electronic tax payment for imported and exported goods
With the aim of diversifying electronic tax payment methods following the project of developing non-cash payments in Vietnam in the period of 2021 – 2025, reducing tax payment time and shortening the time to complete customs procedures for export and import goods, on 18 January 2023, the General Department of Customs issued Decision 101/QD-TCHQ approving the project “Pilot of electronic tax payment for exported and imported goods through intermediary payment service providers”.
According to Decision 101/QD-TCHQ, the scope and subjects of the project are specified as follows:
- Scope of application: Taxes and other revenues from the state budget are managed by the customs authority.
- An intermediary payment service provider participating in the pilot
- Commercial banks have coordinated collection with the General Department of Customs
- Taxpayers make payments to the state budget through an intermediary payment service provider
- The customs authority has state budget revenues paid through intermediary payment service providers
Pursuant to Appendix I of Decision 101, the electronic tax payment process for imported and exported goods consists of 6 steps as follows:
- Step 1: Taxpayers make a receipt for payment to the state budget on the system or application of the intermediary payment service provider
- Step 2: The intermediary payment service provider sends and responds to information about state budget payments to the customs system.
- Step 3: The intermediary payment service provider transfers payment information to the guarantor bank – intermediary payment.
- Step 4: The guarantor bank – intermediary payment responds to information to the customs electronic payment gateway, the State Treasury, and the payment intermediary service provider.
- Step 5: Debt deduction, customs clearance/release of goods
- Step 6: Taxpayers receive a credit report from the State Treasury to account for state budget revenue
Decision 101/QD-TCHQ took effect from the date of issuance, and the project implementation period is from January to December 2023.
Official Letters released
Official Letters are releases showing the Tax and other Authorities’ interpretation and application of Vietnam’s Taxation Laws, providing guidance to taxpayers in Vietnam.
CIT incentives for software production projects English attachment
On 1 March 2023, Hanoi Department of Tax released 2 Official Letters 8442/CTHN-TTHT and 8441/CTHN-TTHT on VAT and CIT incentives for software production activities and VAT incentives for software services.
Software production activities and software service providers are not subject to VAT as prescribed in Clause 21, Article 4 of Circular 219/2013/TT-BTC.
However, for CIT, only software production activities are eligible for CIT incentives (i.e., income from software services is not eligible for CIT incentives).
In particular, where the company performs a project meeting the requirements of new projects as regulated and does business in the sector of software manufacturing according to the law, CIT incentives will be determined as below:
- Incentives on tax rates: tax rate at 10% in a period of 15 years. The period of application of the preferential tax rate is calculated continuously from the first year the enterprise has revenue from the new investment project entitled to tax incentives.
- Incentives on tax exemption and reduction: CIT exemption for 4 years and 50% reduction of payable tax for the next 9 years.
The tax exemption and reduction period is calculated continuously from the first year the enterprise earns taxable income from an investment project entitled to tax incentives. In case the company has no taxable income in the first 3 years from the first year of revenue generated from the new investment project, the tax exemption and reduction period is calculated from the 4th year that the new investment project generates revenue.
Invoice when returning goods
On 28 February 2023, Hanoi Department of Taxation released Official Letter 8202/CTHN-TTHT guiding on requirements of issuing invoices when a company returns goods to the provider.
According to the provisions of Article 4 of Decree 123/2020/ND-CP, when a company returns purchased goods to the providers, the enterprise must also issue an invoice. The VAT rate on the return invoice is recorded according to the tax rate of the goods stated on the purchase invoice.
Where the company has a commercial discount on the quantity and sales, the discount amount of the sold goods will be adjusted on the invoice of the last purchase or the next period. Where the discount amount is made at the end of the sales discount program (period), an adjustment invoice will be issued according to the provisions of Article 19 of Decree 123/2020/ND-CP.
Where the enterprise receives an amount to provide support services for product display, it must declare and pay VAT according to the provisions of Article 15 of Circular 219/2013/TT-BTC. The time to issue invoices and determine VAT is the time to complete the service provision. Where the enterprise issues invoices after 31 December 2022, they are no longer eligible to apply the VAT reduction policy according to Decree 15/2022/ND-CP.
For more information on tax updates and other compliance requirements for businesses operating in Vietnam, follow our monthly releases on the website and social media channels at vietnam.acclime.com.