Circular No. 08/2003/TT-BTC guiding the implementation of value-added tax refunds for diplomatic missions, consular offices, and representative offices of international organizations in Vietnam.

CIRCULAR

Guidelines for Value Added Tax (VAT) Refunds for

Diplomatic Missions, Consular Offices, and International Organization Representative Offices in Vietnam

representative of an international organization in Vietnam

_______________________

Pursuant to the Law on VAT No. 02/1997/QH9 dated May 10, 1997;

Pursuant to Decree No. 76/2002/NĐ-CP dated September 13, 2002 of the Government amending and supplementing certain articles of Decree No. 79/2000/NĐ-CP dated December 29, 2000 of the Government detailing the implementation of the Law on VAT;

Pursuant to Decree No. 73/CP dated July 30, 1994 of the Government detailing the implementation of the Ordinance on privileges and immunities granted to diplomatic missions, consular offices of foreign countries, and international organization representative offices in Vietnam;

The Ministry of Finance issues guidelines for granting tax exemptions and immunities regarding VAT for diplomatic missions, consular offices, and international organization representative offices in Vietnam as follows:

I. SUBJECTS AND SCOPE OF APPLICATION:

Subjects enjoying diplomatic immunity when purchasing goods and services subject to VAT in Vietnam, as specified below, shall be entitled to a refund of VAT paid as recorded on the VAT invoice.

1. Subjects eligible for diplomatic immunity:

- Diplomatic missions, consular offices of foreign countries, and representative offices of international organizations within the United Nations system located in Vietnam (hereinafter referred to as Representative Office) and their heads.

- Diplomatic officials, consular officials, officials of international organizations, and administrative and technical staff of Representative Offices.

- Representative offices of intergovernmental international organizations outside the United Nations system and members of such organizations that have been granted VAT exemption rights under agreements signed between the Government of Vietnam and those organizations.

2. Goods and services eligible for VAT refunds:

2.1. For Representative Offices and their heads:

- Rental services for office premises of the Representative Office or housing for the head of the Representative Office.

- Electricity and water for daily use at the office premises of the Representative Office and housing for the head of the Representative Office.

- Communication services: telephone (including mobile phones), fax, internet, and installation and connection services for these communication devices.

- Gasoline or diesel fuel for vehicles of the Representative Office bearing diplomatic (NG) or foreign (NN) license plates: not exceeding 1,200 liters per vehicle per quarter.

- Goods and services used for constructing, maintaining, repairing, and servicing buildings serving as office premises and housing for the head of the Representative Office.

- Office equipment and other equipment used for office premises and housing for the head of the Representative Office.

- Goods purchased according to the quantities prescribed in Circular No. 04/TTLB dated February 12, 1996 and Circular No. 04BS/TTLB dated October 20, 1996 issued jointly by the Ministry of Trade, Ministry of Foreign Affairs, Ministry of Finance, and General Department of Customs.

2.2. For diplomatic officials, consular officials, officials of international organizations, and administrative and technical staff of Representative Offices:

- Goods purchased according to the quantities prescribed in Circular No. 04/TTLB dated February 12, 1996 and Circular No. 04BS/TTLB dated October 20, 1996 issued jointly by the Ministry of Trade, Ministry of Foreign Affairs, Ministry of Finance, and General Department of Customs.

- Gasoline or diesel fuel for vehicles bearing diplomatic (NG) license plates: not exceeding 900 liters per vehicle per quarter.

3. Cases where property transfers involving housing, motor vehicles, and motorcycles between Representative Offices and members thereof, who are eligible for diplomatic immunity, are exempt from VAT.

In cases where such property is transferred to other entities, VAT shall be levied in accordance with the provisions of the Law on VAT and current guiding documents.

II. IMPLEMENTATION:

1. Vietnamese or foreign organizations and individuals permitted to operate businesses in Vietnam and supply goods and services to subjects eligible for diplomatic immunity (hereinafter referred to as suppliers) must issue VAT invoices and calculate VAT on sales of goods and services in accordance with the provisions of the Law on VAT and current guiding documents.

2. VAT refunds shall be processed quarterly (based on the Gregorian calendar year). In cases where there is a change due to relocation to another province or city or the end of the term of service and return to the home country, the refund process will be determined up to the point of change.

If subjects eligible for diplomatic immunity have entered into contracts with suppliers based on prices excluding VAT, they must adjust the contracts to include VAT. If timely adjustment is not possible or cannot be made, the supplier must submit a written notice to the local tax authority along with the contract and a Certificate of VAT Exemption issued by the Protocol Department of the Ministry of Foreign Affairs to continue applying the provisions of Circular No. 122/2000/TT-BTC dated December 29, 2000 of the Ministry of Finance. The maximum duration for applying the provisions of Circular 122/2000/TT-BTC is until March 31, 2003.

For lease contracts for office space, housing, and transportation services signed before October 1, 2002, if the Representative Office has prepaid rent in accordance with the contract terms and the supplier has issued invoices based on prices excluding VAT before this Circular takes effect, then the contract and payment invoices need not be adjusted until the prepayment period ends.

3. Provisions on procedures and documentation for VAT refunds:

a. Procedure for registering tax identification number:

Representative Offices eligible for VAT refunds must complete the Tax Registration Form No. 06-ĐK-TCT attached hereto, accompanied by a Confirmation of Eligibility for VAT Refunds issued by the Protocol Department of the Ministry of Foreign Affairs. These Representative Offices should submit the completed Tax Registration Form to the provincial or centrally-administered municipal tax office where the Representative Office is located.

The tax office is responsible for issuing the tax identification number and confirming it to the Representative Office within 15 days from the date of receipt of the fully and accurately completed Tax Registration Form.

For other subjects under the Representative Office such as the head of the Representative Office, diplomatic officials, consular officials... who are eligible for VAT refund according to Clause I of this Circular, shall be listed when registering for the tax code of the Representative Office. In necessary cases and for convenience in managing and tracking VAT refunds, the Representative Office may request the tax authority to consider issuing additional tax codes for these subjects.

b. Documents for VAT Refund:

The Representative Office prepares the application for VAT refund quarterly and sends it to the Protocol Department (Ministry of Foreign Affairs). The documents include:

- A diplomatic note requesting VAT refund from the Representative Office.

- The VAT refund declaration form according to Form No. 01a/MTNG and 01b/MTNG issued together with this Circular, confirmed by the Protocol Department (Ministry of Foreign Affairs).

- Original invoices (accompanied by two copies stamped by the Representative Office). The tax authority will return the original invoices to the Representative Office after completing the VAT refund.

Valid VAT invoices are those issued by the Ministry of Finance or self-printed invoices of enterprises in special sectors (electricity, water, postal services, aviation, oil, gas...) and other enterprises approved by the Ministry of Finance (General Tax Department). All contents and items specified must be fully and accurately reflected on the invoice.

Within the first ten days of the month following each quarter, the Representative Offices prepare the application for VAT refund of the previous quarter and submit the documents to the Protocol Department - Ministry of Foreign Affairs for confirmation of the VAT refund application (for example, the deadline for submitting the VAT refund application for the first quarter of 2003 is before April 11, 2003).

When preparing the application for VAT refund, the diplomatic representative office must declare actual and accurate figures, forms, and is responsible for the declared data.

4.Authority and Responsibilities of Authorities Processing Refund Applications:

a. Protocol Department - Ministry of Foreign Affairs:

Within fifteen working days from receiving complete documents, the Protocol Department is responsible for reviewing the application and confirming the subject, list, and quantity of goods and services eligible for VAT refund. After the Protocol Department confirms the VAT refund application (according to Form No. 01a/MTNG or 01b/MTNG), the Protocol Department transfers the application to the Provincial Tax Departments for processing.

In cases where the applicant does not qualify for VAT refund or the application is incomplete, the Protocol Department returns the application to the Representative Office.

b. Provincial Tax Departments:

The Provincial Tax Departments are responsible for reviewing the application and processing VAT refunds for applicants within thirty days from receipt of complete documents. If during the verification process for VAT refund, the Tax Department needs to verify invoices and the time exceeds thirty days, the Tax Department must notify the Representative Office in writing about the extended processing period, but the maximum duration cannot exceed sixty days.

After reviewing the refund application, the Tax Department determines the amount of VAT refund and issues a Decision on VAT Refund according to Form No. 02/MTNG issued together with this Circular.

c. State Treasury:

The State Treasury of provinces and centrally-administered cities implements the payment of VAT refunds to Representative Offices within a maximum of three working days from the date of receipt of the Tax Authority's decision on VAT refund.

The refunded VAT funds are sourced from the VAT refund fund.

III. EFFECTIVE DATE OF IMPLEMENTATION:

- This Circular takes effect from the date of issuance and applies to the processing of VAT refunds for subjects enjoying diplomatic privileges and immunities from October 1, 2002.

- The provisions of this Circular apply to subjects enjoying diplomatic privileges and immunities on the principle of reciprocity. In cases where international treaties signed or joined by Vietnam have different provisions regarding VAT than those stipulated in this Circular, the provisions of the international treaty shall prevail.

- Previous regulations of the Ministry of Finance concerning the implementation of VAT exemptions applicable to subjects enjoying diplomatic privileges and immunities, which differ from the provisions of this Circular, are no longer in effect./.