Decree No. 100/2016/ND-CP dated July 01, 2016, elaboration and guidelines for some Articles of the Law on amendment of the Law on Value-added tax, the Law on special excise duty and the Law on Tax administration

DECREE

ELABORATION AND GUIDELINES FOR SOME ARTICLES OF THE LAW ON AMENDMENT OF THE LAW ON VALUE-ADDED TAX, THE LAW ON SPECIAL EXCISE DUTY AND THE LAW ON TAX ADMINISTRATION

Pursuant to the Law on Government organization dated June 19, 2015 dated June 19, 2015;

Pursuant to the Law on amendment of the Law on Value-added tax, the Law on special excise duty and the Law on Tax administration dated April 06, 2016;

At the request of the Minister of Finance;

The Government promulgates a Decree on elaboration and guidelines for some Articles of the Law on amendment of the Law on Value-added tax, the Law on special excise duty and the Law on Tax administration,

Article 1. Amendments to the Government's Decree No. 209/2013/ND-CP dated December 18, 2013 elaborating and providing guidelines for some Articles of the Law on Value-added tax, amended by the Government's Decree No. 12/2015/ND-CP dated February 12, 2015:

1. The first paragraph and Clause 1 Article 3 is amended as follows:

“Article 3. Products not subject to VAT

Products not subject to VAT are specified in Article 5 of the Law on Value-added tax, Clause 1 Article 1 of the Law on amendments to some Articles of the Law on Value-added tax and Clause 1 Article 1 of the Law on amendment of the Law on Value-added tax, the Law on special excise duty and the Law on Tax administration.

1. Products that have undergone insufficient working or processing specified in Clause 1 Article 5 of the Law on Value-added tax amended in Clause 1 Article 1 of the Law on amendment of the Law on Value-added tax, the Law on special excise duty and the Law on Tax administration are products that have only been cleaned, dried, shelled, deseeded, cut, salted, cooled or otherwise preserved with common methods.”

2. Clause 3 Article 3 is amended as follows:

“3. Medical services specified in Clause 1 Article 1 of the Law on amendment of the Law on Value-added tax, the Law on special excise duty and the Law on Tax administration includes transport, testing, imaging, blood and blood products used for patients.

Care services for elderly people and disabled people specified in Clause 1 Article 1 of the Law on amendment of the Law on Value-added tax, the Law on special excise duty and the Law on Tax administration include medical and nutritional care, organization of cultural, sport and entertainment activities, physical therapy and rehabilitation for elderly people and disabled people."

3. Clause 6 Article 3 is amended as follows:

“6. Public transportation specified in Clause 16 Article 5 of the Law on Value-added tax includes intra-provincial, urban and extra-provincial suburban public transportation by bus and tram (including metro) according to traffic laws.”

4. Clause 11 Article 3 is amended as follows:

“11. Exports that are processed or unprocessed natural resources and/or minerals whose total value inclusive of energy cost makes up at least 51% of the products derived from such natural resources and/or minerals, exports that are products derived from natural resources and/or minerals whose total value inclusive of energy cost makes up at least 51% of the manufacturing cost.

Natural resources and minerals mentioned in this Clause are domestically obtained natural resources and minerals comprised of metallic minerals, non-metallic minerals, crude oil, natural gas and coal gas.

Value of a natural resource or mineral means the cost of the natural resource or mineral being processed, which is the direct or indirect cost of extraction of such natural resource or mineral if it is extracted, or buying price plus processing price if it is bought.

Energy cost is comprised of fuel, electricity and heat.

Value of a natural resource or mineral and energy cost shall be determined according to the previous year’s statement. For a new enterprise that does not have such statement, they shall be determined according to the investment plan.

The Ministry of Finance shall elaborate this Clause.”

5. Point d Clause 1 of Article 6 is amended as follows:

“dd) 0% VAT does not apply to:

- Transfer of technology, transfer of intellectual property rights to abroad;

- Selling reinsurance to abroad;

- Extension of credit to abroad;

- Transfer of capital to abroad;

- Investment of securities to abroad;

- Derivative financial services;

- Post and telecommunications services;

- Exports specified in Clause 11 Article 3 of this Decree;

- Goods/services provided for an individual who does not do business in a free trade zone;

- Tobacco, alcohol and beer imported and then exported.”

6. Article 10 is amended as follows:

“Article 10. VAT refund

1. A business establishment that pays VAT according to credit-invoice method may offset input VAT that remains after deduction in a month/quarter against that in the next month/quarter.

2. Refund of VAT on an investment project:

a) A business establishment derived from an investment project which has been registered and pays VAT under credit-invoice method, a petroleum exploration and development project which has been invested for at least 01 year and has not been put into operation shall have VAT on goods/services purchased during investment stage refunded in each year, except for the case specified in Point c of this Clause. If accumulated VAT on goods/services during investment stage is VND 300 million or over, it shall be refunded.

If the project has been inspected or audited by a competent authority, the tax authority may decide the VAT refund according to the inspection or audit result and take responsibility for such decision.

b) In the cases where a business establishment which pays VAT under credit-invoice method has a new investment project (other than commercial housing project) in different a province from that where its headquarters is located and it has not been put into operation, registered, and applied for tax registration, VAT on the investment project shall be refunded if VAT on goods/services purchased during investment stage that remains after being offset against VAT payable on the headquarters’ business operation is at least VND 300 million, except for the case specified in Point c of this Clause. Tax on the investment project shall be separately declared and refund thereof shall be claimed separately.

c) VAT shall not be refunded and shall be offset against that of the next period in the following cases:

- The project of investment in a conditional area has not satisfied all conditions as prescribed in the Law on Investment and specified in Point a Clause 1 Article 13 of the Law on Value-added tax and the Law amendments to the Law on Value-added tax, the Law on special excise duty and the Law on Tax administration, which means the business establishment has not obtained a license for conditional business or has not obtained a certificate of eligibility for conditional business, or a competent authority has not issued a permission for conditional business, or any of the conditions for conditional business have not been satisfied if a written permission is not required by law.

The project of investment in a conditional area fails to maintain fulfillment of all conditions during its operation as specified in Point a Clause 1 Article 13 of the Law on Value-added tax and the Law amendments to the Law on Value-added tax, the Law on special excise duty and the Law on Tax administration, which means the business establishment has its license for conditional business or certificate of eligibility for conditional business or permission for conditional business issued by a competent authority revoked, or it fails to maintain fulfillment of conditions for the conditional business during its business operation. In this case, VAT incurred from the time of revocation of any of the said document or from the time of discovery of the failure to maintain fulfillment of conditions shall not be refunded.

- A natural resource or mineral extraction project licensed from July 01, 2016 or manufacturing project where total value of natural resources and/or minerals inclusive of energy cost makes up at least 51% of the product price.

Clause 11 Article 3 of this Decree shall apply to determination of values of natural resources and minerals and time for determination of values of natural resources and minerals and energy cost.

3. In a month or quarter, if input VAT on goods/services for export of a business establishment that remains after deduction is VND 300 million or over, it shall be refunded by month or quarter. If such input VAT is smaller than VND 300 million, it shall be offset against that of the next month/quarter. In case a business establishment has both goods/services for export and goods/services for domestic sale and input VAT on goods/services for export that remains after being offset against tax payable is VND 300 million or over, it shall be refunded. Input VAT on purchases used for manufacturing of goods/services for export shall be separately recorded. Otherwise, input VAT shall be determined according to the ratio of revenue from goods/services for export to total revenue from goods/services of tax periods from the period succeeding the period in which tax is funded to the current period in which tax refund is claimed.

Tax shall not be refunded in case goods are imported and then exported outside a customs controlled area according to the Law on Customs and its instructional documents.

Tax authority shall grant a refund before inspection if the taxpayer who is a manufacturer of exports has not incurred any penalty for smuggling, illegal traffic of goods across the border, tax evasion, tax fraud, trade fraud for two consecutive years or the taxpayer does not pose a high risk according to the Law on Tax administration and its instructional documents.

4. A business establishment paying VAT under credit-invoice method may claim refund of overpaid VAT or input VAT that remains after deduction upon its ownership transfer, conversion, merger, amalgamation, division, dissolution, bankruptcy or shutdown.

A business establishment that is dissolved or bankrupt or shut down before it is put into operation and thus has not incurred output VAT is not required to adjust the amount of VAT that was declared, deducted or refunded. In case of transfer of an investment project or sale of assets of an investment project or repurposing of an investment project, tax shall be declared in accordance with instructions of the Ministry of Finance.

5. Refund of VAT on programs and projects funded by grant ODA, grant aid or humanitarian aid:

a) Owner of the program/project or main contractor or an organization appointed by the foreign sponsor to manage the program/project funded by ODA shall have VAT on goods/services purchased in Vietnam to serve the program/project refunded.

b) A Vietnamese organization that uses grant aid or humanitarian aid provided by a foreign entity to purchase goods/services serving an aid program/project shall have VAT paid on such goods/services refunded.

6. An entity granted diplomatic immunity in accordance with regulations of law on diplomatic immunity shall have VAT on goods/services purchased in Vietnam for personal use refunded according to the VAT invoice or payment note on which the prices are inclusive of VAT.

7. A foreigner or Vietnamese national residing overseas who carries a passport or immigration document issued by a foreign competent authority shall have VAT on goods purchased in Vietnam refunded when they are carried in his/her luggage upon exit from Vietnam.

8. VAT shall be refunded when a business establishment has a decision on VAT refund issued by a competent authority and in cases in which VAT is refunded under international treaties to which Vietnam is a signatory.”

Article 2. Amendments to the Government's Decree No. 108/2015/ND-CP dated October 28, 2015 elaborating and providing guidelines for some Articles of the Law on special excise duty and the Law on amendments to the Law on special excise duty:

1. Clause 1 of Article 4 is amended as follows:

“1. The taxable prices for domestically manufactured goods and imported goods are the selling pricesfixed by the manufacturer or importer. If the selling price imposed by the manufacturer or importer is significantly different from market price, a tax authority shall impose tax in accordance with the Law on Tax administration. Taxable price is determined as follows:

VAT-exclusive selling price is determined in accordance with VAT laws.

a) In the cases where a manufacturer or importer of goods subject to excise tax sells the goods through its financially dependent affiliates, taxable prices are the selling prices imposed by such affiliates. In the cases where a manufacturer or importer sells goods via an agent that sells goods at prices imposed by the manufacturer or importer to earn commissions, taxable prices are prices imposed by the manufacturer or importer inclusive of commissions.

b) In the cases where goods subject to excise tax are sold to a trading establishment that is in the same parent company-subsidiary company relationship with or is a subsidiary of the same parent company as the manufacturer or importer or is related to the manufacturer or importer, the taxable price must not be smaller by more than 7% of the average price  paid by the trading establishments to the manufacturer or importer. In the cases where a manufacturer or importer establishes multiple trading establishments that are in a parent company-subsidiary company relationship or are subsidiaries of the same parent company or  are related to the manufacturer or importer, the taxable price must not be smaller by more than 7% of the average price paid by such trading establishments to other trading establishments that are not in the parent company-subsidiary company relationship or not subsidiaries of the same parent company or  are not related to the manufacturer or importer. For motor vehicles, the average price is the selling price without optional parts ordered by customers.

It is considered that a manufacturer or importer and a trading establishment  are related when one enterprise directly or indirectly holds at least 20% of paid-in capital of the other.

In the cases where the taxable price imposed by the manufacturer or importer is smaller by more than 7% of the average selling price imposed by the trading establishments, the tax authority shall decide the taxable price in accordance with tax administration laws.”

2. Clause 4 and Clause 5 of Article 4 is amended as follows:

“4. The taxable price for processed goods subject to excise tax is the selling price imposed by the processor or selling price for products of the same or similar kind at selling time.

If the hirer that sells goods to the trading establishment has a parent company-subsidiary company relationship with or are subsidiaries of the same parent company as the manufacturer or importer, or the trading establishment  is related to the hirer, the taxable price shall be determined in accordance with Point b Clause 1 of this Article.

5. For goods manufactured in cooperation between the manufacturer and the user or the owner of the trademark or manufacturing technology, the taxable price is the selling price imposed by the user or owner of the trademark or manufacturing technology. In the cases where goods are manufactured under franchise and sold by a branch or representative office in Vietnam, the taxable price is the selling price imposed by such branch or representative office.

If the branch or representative office sells goods to a trading establishment which has a parent company-subsidiary company relationship with or are subsidiaries of the same parent company as the manufacturer or importer, or the trading establishment has  is related to the branch or representative office, the taxable price shall be determined in accordance with Point b Clause 1 of this Article.”

Article 3. Amendments to the Government's Decree No. 83/2013/ND-CP dated July 22, 2013 elaborating some Articles of the Law on Tax administration and the Law on amendments to the Law on Tax administration, amended by the Government's Decree No. 91/2014/ND-CP dated October 01, 2014 and the Government's Decree No. 12/2015/ND-CP dated February 12, 2015:

1. Clause 1 Article 28a is amended as follows:

 "1. A taxpayer who fails to pay tax by the deadline or extended deadline or deadline written in the notice or tax decision issued by the tax authority shall fully pay tax and late payment interest at 0.03% per day on the outstanding amount.

Regarding outstanding tax incurred before July 01, 2016, including tax arrears discovered after inspections by competent authorities, the late payment interest rate specified in this Clause shall be charged from July 01, 2016.

If the taxpayer fails to pay tax because payment for goods/services covered by state budget has not been made on schedule, tax payment shall not be enforced and late payment interest shall not be charged on the outstanding tax, provided it does not exceed the payment covered by state budget.”

2. Article 38 is abrogated.

3. Point a Clause 2 Article 39 is amended as follows:

“a) While paying the tax arrears in installments, the taxpayer still have to pay late payment interest at 0.03% of the tax arrears per day. The taxpayer shall fully pay tax and late payment interest.”

4. Point a Clause 2 Article 42 is amended as follows:

“a) Exemption and reduction of excise tax, resource royalty, personal income tax granted to a taxpayer who suffers from a natural disaster, fire or unexpected accident and consequently is not able to pay tax in accordance with law; exemption of tax on non-agricultural land, tax on agricultural land, land rent, water surface rent, registration fee granted to taxpayers; tax exemption granted to a household or individual that pays less than VND 50,000 in annual non-agricultural land tax. The Ministry of Finance shall elaborate this Point;

The exemption or reduction of land levy depends on cadastral documents and documents proving the eligibility for exemption or reduction of land levy and other relevant documents. Tax authorities shall not issue decisions on tax exemption or reduction, but only specify the amount of land levy exempted or land levy reduction on the land levy notice.”

Article 4. Clause 3 Article 13 of the Government's Decree No. 129/2013/ND-CP dated October 16, 2013 on administrative penalties for tax offences and enforcement of tax decisions:

“3. The guarantor shall pay tax, late payment interest, fines and interest on late payment of fines (if any) on the taxpayer behalf’s in accordance with the guarantee agreement if the taxpayer fails to pay them.

If the guarantor fails to pay outstanding tax, late payment interest, fines and interest on late payment of fines (if any) on the taxpayer behalf’s in accordance with the guarantee agreement when the taxpayer fails to pay or fully pay them by the deadline imposed by the tax authority, the guarantor shall pay an interest at 0.03% per day on the unpaid amounts and the payment of such amounts shall be enforced in accordance with Clause 3 Article 18 and Article 19 of this Decree. Enforcement procedures applied to the guarantor are the same as those applied to taxpayers.”

Article 5. Effect and responsibility for implementation

1. This Decree comes into force from July 01, 2016, except for Clause 2 of this Article.

2. Clause 2 Article 3 of this Decree comes into force from September 01, 2016.

3. The Ministry of Finance shall provide guidelines for the implementation of this Decree.

4. Ministers, Heads of ministerial agencies, Heads of Governmental agencies, Presidents of the People’s Committees of central-affiliated cities and provinces, relevant organizations and individuals are responsible for the implementation of this Decree./.