Expanding Conditions for VAT Deductible

 

According to Circular 26/2015/TT-BTC, enterprises must satisfy the three following conditions to have input VAT deducted:

First, they must have legal VAT invoices of purchased goods and services or import VAT payment vouchers or proof of VAT payment on behalf of foreign parties as guided by the Ministry of Finance, applicable to foreign organisations without legal status of Vietnam and foreign individuals doing business or having incomes earned in Vietnam.

 

Second, they must have evidence of non-cash payment for purchased goods and services (including imports) with the value from VND20 million onwards, except for the value of goods and services imported in separate time having the value of below VND20 million based on VAT-included price.

 

Third, they must have the evidence of payment via banks to prove the money transfer from the account of the buyer to the account of the seller (the accounts must be registered with or notified to tax offices. The buyer does not necessarily register or notify its credit loans for the settlement of payment for the supplier to tax offices) opened at payment service providers with appropriate payment methods according with the law like cheques, payment authorisation, payment order, collection authorisation, bank card, credit card, phone simcard (electronics wallet) and other forms of payment in accordance with the law.

 

Besides, other non-cash payment cases for input VAT deduction like: Goods and services purchased using clearing payment method between the value of goods and services purchased with the value of goods and services sold and borrowed and such method of payment is specified in the contract, they must have data reference documents and confirmation to clearing payment for goods and services purchased with goods and services sold and borrowed from both sides. In case of clearing liabilities to a third party, they must have written records of three parties to serve as the basis for tax deduction. Where goods and services purchased in the form of debt clearing like lending and borrowing, the clearing of liabilities to the third party that specifies in the contract must be in written form created before that and included the proof of money transfer from the account of the lending party to the account of the borrowing party.

 

Under the new regulations, from 2015, more cases of VAT refund will be subjected to examination, including tax refund in accordance with international treaties to which is a signatory. Taxpayers submit a request for tax refund in the first time, except for the case where the request is concerning the return of corporate income tax. Taxpayers who request the tax refund for the first time and are imposed examination before the refund are the persons who have tax refund applications sent to tax authorities for the first time and are classified to the group of tax refund objects. Taxpayers shall request tax refund within two years from the time of being handled for tax evasion and tax fraud. Where taxpayers are found to commit tax evasion, tax fraudulence or declare wrong values, their tax refund documents will be subject to examination in accordance with the aforementioned two-year term.

 

The Ministry of Finance also clearly stipulates that tax refund post-examination imposed to documents that are classified to be granted tax refund before document examination must be done within one year dating from the date of tax refund decision, applicable to the following cases: Business units suffer two straight years of loss preceding to the year of tax refund decision or have the loss value in excess of owner’s equity in the preceding year of tax refund decision. The loss value is determined based on corporate income tax document or the conclusion document of relevant State agencies.

 

Business units have tax refunded from real estate business and trade and service business. In the case where they have business lines that tax is impossible separated from real estate business, trade and service business that accounts for more than 50 percent of gross revenue of such business units will have examination done within one year dating from the date of tax refund decision. Business establishments change their registered head offices two or more times within 12 months from the date of tax refund decision; business establishments have extraordinary changes in taxable revenue within 12 months from the date of tax refund decision. Foreign carriers request tax refund in accordance with Double-tax Avoidance Treaty. For other cases, the tax refund post-examination will be based on risk management principle, which is within 10 years from the date of tax refund decision.