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TAX ALERT

March 2015

TAX AND CORPORATE SERVICES

Circular 26 – New Guidance on Value Added Tax,


Tax Administration, and Invoices
Further to Decree 12/2015/ND-CP dated 12 February 2015 of the Government, the Ministry of Finance
issued Circular 26/2015/TT-BTC (“Circular 26”) dated 27 February 2015 providing guidance on Value Added
Tax (“VAT”), tax administration, and invoices. Circular 26 took effect on 1 January 2015.
A summary of notable points of Circular 26 is presented below:

1. VAT • In the case where goods are imported as gifts from


overseas organizations or individuals, the corresponding
• Circular 26 provides additional details on cattle, poultry, input VAT at the import stage is deductible without
and other livestock food, types of fertilizers, and requiring non-cash payment documentation.
equipment used exclusively in agricultural production that
are not subject to VAT. • A single formula is applied to determine the refundable
input VAT for exported goods of both manufacturing
• In the case where a borrower cannot pay off a enterprises and trading enterprises.
collateralized loan upon the due date of the loan
agreement and the creditor acquires the collateral, the • For enterprises undergoing dissolution, bankruptcy, or
borrower is not required to issue a VAT invoice. termination during the investment stage where no output
VAT was generated from the main business activities,
• In the case where a land-use right is used as a capital the enterprise is not required to adjust the credited/
contribution, the land price used to calculate the VAT for refunded input VAT during the process of the dissolution,
the real estate property transfer is the lower of the price bankruptcy, or termination. Upon business termination,
of the capital contribution agreement and the price of the the enterprise is required to repay the State Budget
land-use right transferred. on the deducted/refunded input VAT, except for the
• Cigarettes, spirits, and beer that are imported corresponding input VAT of the liquidated assets subject
and subsequently exported are VAT exempt. The to VAT upon termination. Enterprises are not allowed to
corresponding input VAT is not creditable. apply for VAT refund for the remaining input VAT that has
not been refunded.
• Revenue that is not subject to VAT calculation and declaration
is added up to the total revenue to allocate the deductible VAT.

© 2015 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.

TAX ALERT / Tax and Corporate Services / March 2015


TAX ALERT
March 2015

TAX AND CORPORATE SERVICES

2. Tax administration • Circular 26 provide detailed guidance on calculating


interest on late payments:
• Only construction and installation projects having revenue
in excess of VND1 billion (inclusive of VAT) are required to -- For tax liabilities incurred on or after 1 January 2015, a
declare and pay extra provincial VAT on the direct method. single interest rate of 0.05% per day is applied.
Previously, there was no revenue threshold for extra -- For tax liabilities incurred prior to 1 January 2015 and
provincial VAT declaration and payment. still outstanding on 1 January 2015:
• Circular 26 provides guidance on the applicable foreign * For the period prior up to 1 January 2015: 0.05%
exchange rate (“FX”) to determine revenue, expenses, for the first 90 days and 0.07% for the 91th day
taxable prices, and payables to the State Budget: onwards
-- In the case where a taxpayer is required to pay tax in * For the period on and after 1 January 2015: 0.05%
a foreign currency but then allowed to pay in Vietnam per day
dong, the buying FX rate announced by the commercial
bank or credit institute where the taxpayer has its bank -- For under-declared tax liabilities relating to tax period
account at the time of remitting the tax payment to the prior to 1 January 2015 detected by the tax authorities
State Budget is used to convert to the Vietnam dong or by the taxpayers from 1 January 2015, the interest
equivalent. rate of 0.05% per day will be applied.

-- In the case where a taxpayer generate revenue or incur • Foreign carriers are required to calculate and settle
expense in foreign currencies, the FX rate announced provisional quarterly tax payments and declare an annual
by the commercial bank where the taxpayer has its tax finalization.
bank accounts is used to convert to the Vietnam dong • The tax payment voucher is no longer required in the tax
equivalent. The buying FX rate shall be used to convert refund dossier submitted under a Double Tax Avoidance
the generated revenue while the selling FX rate shall Agreement (“DTA”).
be used to convert the incurred expenses.
• Amend the dossier form to make the tax refund available
-- Other than the above, the provisions in Circular under a DTA for foreign carriers.
200/2014/TT-BTC dated 22 December 2014 on
Vietnamese Accounting Standards should be followed.

© 2015 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.

TAX ALERT / Tax and Corporate Services / March 2015


TAX ALERT
March 2015

TAX AND CORPORATE SERVICES

Contact us
KPMG Limited
Warrick Cleine
Chairman & CEO
Vietnam and Cambodia
Tax Managing Partner

Hanoi
Do Thi Thu Ha, Senior Partner
Hoang Thuy Duong, Partner
Le Thi Kieu Nga, Partner
Nguyen Thu Huong, Director
Nguyen Ngoc Thai, Director
Nguyen Hai Ha, Director
Phan Thi Quynh Ngoc, Director
Ho Dang Thanh Huyen, Director
Taninaka Yasuhisa, Japanese Desk
46th Floor, Keangnam Hanoi
Landmark Tower 72 Building,
Slot E6, Pham Hung Street, Me Tri
Ward, South Tu Liem District, Hanoi
T: +84 4 3946 1600
3. Invoices F: +84 4 3946 1601
E: kpmghanoi@kpmg.com.vn
• Abolish the requirement to register when changing the decimal point or when
using words without accent marks on invoices. Ho Chi Minh City

• After 5 working days from the date of filing the application for invoice usage, Nguyen Cong Ai, Partner
if the tax authorities do not issue an official written opinion the taxpayer is Ninh Van Hien, Partner
allowed to use the self-printing/order-printed invoices. Ta Hong Thai, Partner
Ho Thi Bich Hanh, Partner
• Abolish the provision whereby the tax authorities determine the number of
Jeff Sea, Partner
invoices to be used within 3 to 6 months under the notification of invoice
Hoang Anh Tuan, Director
issuance.
Nguyen Thanh Hoa, Director
• Goods sold internally within the same company do not require a VAT invoice. Nhan Huynh, Director
Tran Dong Binh, Director
• In case an invoice is issued with wrong information such as the buyer’s name
Thach Tuan Anh, Director
or address but with the correct tax code information, the parties are allowed
Nguyen Thanh Tam, Director
to enter into an agreement to amend the incorrect information. No invoice
Terresa Yiu, Director
adjustment is required.
Watari Takashi, Japanese Desk
10th Floor, Sun Wah Tower,
No.115, Nguyen Hue Street,
Ben Nghe Ward, District 1,
Ho Chi Minh City, Vietnam
T: +84 8 3821 9266
F: +84 8 3821 9267
E: kpmghcmc@kpmg.com.vn
kpmg.com.vn

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely
information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
© 2015 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.

TAX ALERT / Tax and Corporate Services / March 2015

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