Circular No. 09/2011/TT-BTC provides detailed guidance on VAT and Corporate Income Tax for the insurance business sector applicable to insurance companies, insurance brokers. It specifies the taxable objects, tax base, tax calculation methods, invoices and supporting documents, revenue determination time points, and certain deductible expenses.
적용 범위
Insurance companies, insurance brokerage companies, reinsurance companies, organizations acting as insurance agents, and other insurance organizations that meet the conditions stipulated under the Law on Insurance Business.
핵심 사항
- The VAT taxable scope includes non-life insurance services, claims adjusting agency services, claims settlement agency services, and third-party claim recovery agency services.
- The tax base for VAT is the original insurance premium excluding VAT plus additional charges and extra fees minus mandatory reserves.
- A zero percent VAT rate applies to insurance services provided to businesses within special economic zones and organizations or individuals abroad.
- The method of calculating VAT is the tax deduction method as prescribed by current regulations.
- Revenue for calculating taxable income includes amounts receivable from original insurance premiums, reinsurance acceptance premiums, reinsurance cession commissions, insurance policy management fees, and agency service fees.
- The revenue determination time point is when the insurance company incurs liability towards the insured party.
🌐 이 문서의 사회적 영향
- Positive impact: Ensuring fairness in the application of VAT and Corporate Income Tax for the insurance business sector.
- Negative impact: May increase tax administration costs for insurance companies, particularly in adhering to invoice and supporting document regulations.
❓ 자주 묻는 질문
How does an insurance company calculate VAT?
An insurance company calculates and pays VAT using the tax deduction method, specifically the VAT payable equals the VAT-exclusive sales value of taxable goods and services multiplied by the corresponding tax rate, less deductible input VAT.
In which cases are insurance companies exempt from VAT?
Insurance companies are exempt from VAT on life insurance services, health insurance, personal accident insurance included in life insurance packages; pet and crop insurance, and other agricultural insurance services; reinsurance; insurance agent training; oil and gas facility and equipment insurance, and foreign-flagged oil tankers hired by oil contractors or subcontractors operating in Vietnam's exclusive economic zone.
What does revenue for calculating Corporate Income Tax include?
Revenue for calculating Corporate Income Tax includes amounts receivable from original insurance premiums, reinsurance acceptance premiums, reinsurance cession commissions, insurance policy management fees, and agency service fees.
When is the revenue determination time point?
The revenue determination time point for insurance business activities is when the insurance company incurs liability towards the insured party according to the Law on Insurance Business.
What deductible expenses are included when calculating Corporate Income Tax?
Deductible expenses when calculating Corporate Income Tax include compensation payments, reinsurance cession fees, reserve provisions for business operations, insurance commission expenses, loss adjustment expenses, expenses for processing fully settled loss claims, insurance agent management expenses, and other expenses as prescribed by laws governing insurance business.
전문
CIRCULAR
Guidelines on Value Added Tax and Corporate Income Taxin the field of insurance business
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Pursuant to the Law on Value Added Tax No. 13/2008/QH12 dated June 3, 2008 and guiding documents;
Pursuant to the Law on Corporate Income Tax No. 14/2008/QH12 dated June 3, 2008 and guiding documents;
Pursuant to the Law on Tax Administration No. 78/2006/QH11 dated November 29, 2006 and guiding documents;
Pursuant to the Law on Insurance Business No. 24/2000/QH10 dated December 9, 2000 and guiding documents;
Pursuant to Decree No. 118/2008/NĐ-CP dated November 27, 2008, of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;
The Ministry of Finance issues guidelines on value added tax (VAT) and corporate income tax (CIT) for the insurance business sector as follows:
PART I. GENERAL PROVISIONS
Article 1. Scope of Regulation
These Circulars provide guidelines on VAT and CIT for the insurance business sector.
Article 2. Applicability
1. Insurance companies, insurance brokerage companies, reinsurance companies operating under the Law on Insurance Business; organizations acting as insurance agents and other insurance organizations satisfying the conditions stipulated by the Law on Insurance Business (hereinafter collectively referred to as insurance companies).
Article 3. Taxable Objects
Article 4. Exempted Objects
1. Life insurance, health insurance, personal accident insurance within life insurance packages; student insurance; seafarer and ship crew accident insurance; passenger accident insurance; tourist accident insurance; driver-passenger accident insurance; estate insurance; surgical hospitalization allowance insurance; individual life insurance; electricity user insurance; labor compensation insurance, health insurance, and other insurances related to individuals and health care;
2. Animal insurance, crop insurance, and other agricultural insurance services;
3. Reinsurance;
4. Insurance agent training;
5. Insurance of offshore oil installations, vessels carrying oil leased by foreign oil contractors or subcontractors for operations in Vietnam's exclusive economic zone and overlapping maritime areas agreed upon by Vietnam and neighboring coastal states under joint development arrangements.
Article 5. Tax Payers
VAT taxpayers are insurance companies, insurance brokerage companies, and other insurance organizations conducting business activities involving goods and services subject to VAT as specified in Article 3 of this Circular.
Article 6. Taxable Amount
1. For insurance services, the taxable amount for VAT is the original premium without VAT, plus all surcharges and additional fees outside the service price that the insurance company receives, excluding surcharges and mandatory contributions that the insurance company must pay into the state budget.
2. For loss adjustment agency services, claims examination agency services, third-party claim recovery agency services, and 100% indemnity processing services where the insurance company receives payment or commission, the taxable amount for VAT is the payment or commission received (without deducting any costs) by the insurance company, without VAT.
3. For insurance brokerage services, it is the gross commission received from insurance brokerage minus any reduction in brokerage commission (if applicable).
4. Other goods and services subject to VAT shall be implemented according to the provisions of the Law on VAT and current guiding documents.
Article 7. Tax Rate
1. A zero percent tax rate applies to insurance services provided to enterprises in free trade zones and to organizations and individuals abroad, including insurance services, insurance brokerage services, loss adjustment agency services, claims examination agency services, third-party claim recovery agency services, and 100% indemnity processing services.
2. A ten percent tax rate applies to insurance business activities not covered by Article 4 and paragraph 1 of Article 7 of this Circular.
3. For other business activities outside the aforementioned insurance business, the VAT rate shall be applied according to the specific provisions for each type of goods and services under the Law on VAT and current guiding documents.
Article 8. Method of Calculating Tax
1. Insurance companies implementing VAT deduction method according to current regulations, specifically:
a) VAT output tax equals the taxable amount of goods and services subject to VAT sold during the tax period multiplied by the corresponding tax rate.
b) Revenue from services and goods sold already taxed at the insurance premium stage does not need to be taxed again according to these Circulars, including:
c) Insurance companies can deduct input VAT on goods and services purchased for insurance business activities subject to VAT as shown on the VAT purchase invoice according to the Law on VAT and guiding documents. Specific cases are carried out as follows:
2. Adjustment of deductible input VAT: Insurance companies must adjust downward the deductible input VAT or repay the deducted input VAT for fixed assets, materials, and goods purchased for production and business activities subject to VAT that have been deducted input VAT but now used for other purposes. The adjustment amount is calculated based on the remaining value (excluding VAT) of the fixed asset; for materials and goods, the VAT to be adjusted or refunded is the full amount declared for deduction when purchased.
Article 9. Invoices and purchase-sale documents for goods and services
1. Insurance enterprises shall implement the invoice and document system in accordance with relevant laws.
2. The following cases shall be implemented as follows:
a) Types of services not subject to VAT as specified in point b, Clause 1, Article 8 of this Circular:
b) In the case of insurance contracts:
c) For the case of collecting on behalf of or paying on behalf of other insurance enterprises:
d) For the case of collecting on behalf of or paying on behalf of between affiliated enterprises or between dependent enterprises and the main office of the insurance enterprise;
đ) For the case of refunding insurance premiums and reducing brokerage commissions:
e) For the case of reducing insurance premiums:
g) For goods and services purchased by life insurance enterprises for promotional, advertising purposes, gifts, or donations serving the life insurance business, invoices for VAT must be issued, indicating the name and quantity of goods, clearly stating that they are promotional, advertising items, gifts, or donations without payment; the tax rate and VAT amount lines shall not be filled in, but crossed out. If insurance agents or customers do not request invoices, at the end of the day, the insurance enterprise shall issue a combined invoice for all promotional, advertising items, gifts, or donations generated on that day.
h) For goods and services purchased by non-life insurance enterprises for promotional, advertising purposes serving the non-life insurance business, invoices for VAT must be issued, indicating the name and quantity of goods, clearly stating that they are promotional, advertising items without payment; the tax rate and VAT amount lines shall not be filled in, but crossed out. If insurance agents or customers do not request invoices, at the end of the day, the insurance enterprise shall issue a combined invoice for all promotional, advertising items generated on that day.
i) For insurance service brokerage enterprises where insurance services are not subject to VAT, when insurance agents (as organizations) receive brokerage commissions, they must issue VAT invoices, clearly stating the brokerage fee amount and the commission received, the tax rate and VAT amount lines shall not be filled in, but crossed out.
k) For insurance enterprises and insurance agents receiving support funds from other businesses, the insurance enterprises and insurance agents must issue receipt documents and identify these as other income for declaration and payment of corporate income tax according to regulations. Insurance enterprises shall provide support to insurance agents in accordance with the law on insurance activities.
Article 10. Registration, Declaration, Payment of Tax
Insurance enterprises shall implement registration, declaration, payment of VAT, refund of VAT, and final settlement of VAT in accordance with the law on tax management. Specific cases shall be implemented as follows:
1. Insurance agents who receive commissions are exempt from declaring and paying VAT on the commission amounts they receive.
2. Insurance brokerage enterprises are exempt from declaring and paying VAT on brokerage commissions for reinsurance and insurance brokerage commissions where insurance services are not subject to VAT.
3. Life insurance enterprises are exempt from declaring and paying VAT on revenue from the liquidation of dedicated assets serving life insurance.
Except for services not subject to VAT as stipulated in Article 4 of this Circular, insurance services and other goods and services provided by entities specified in Article 2 of this Circular are subject to VAT, including:
- Non-life insurance, consulting, and non-life insurance brokerage services;
- Claims adjusting agencies, claims settlement agencies, third-party claim recovery agencies;
- Other goods and services subject to VAT under the provisions of the law on VAT arising during the operation of companies engaged in the insurance sector.
- In the case where insurance premiums already include VAT, the taxable VAT amount is determined as follows:
- For insurance contracts that agree to collect premiums periodically, the taxable VAT amount is the periodic premium payment; if agreed to be paid in advance, the taxable VAT amount is the total advance payment excluding VAT.
- For insurance contracts: The taxable amount is the original insurance premium excluding VAT allocated according to the proportion of each participating enterprise's share. In the case where enterprises agree to have one enterprise responsible for collecting premiums, the taxable amount for the authorized enterprise is the total contract value's original insurance premium excluding VAT.
An organization outside the country refers to a foreign organization without a permanent establishment in Vietnam and is not a VAT taxpayer in Vietnam.
Foreign individuals are foreigners who do not reside in Vietnam, Vietnamese citizens residing abroad, and those outside Vietnam during the period of service provision.
The provisions regarding permanent establishments and non-residents in this clause shall be implemented in accordance with the law on corporate income tax and the law on personal income tax.
VAT payable = Output VAT - Input VAT deductible
Where:
The time for determining VAT is the time when the insurance enterprise assumes liability towards the insured party according to the Insurance Business Law, regardless of whether payment has been received or not, or the time when the insurance enterprise issues sales invoices.
- Commissions from reinsurance cessions and other incomes from reinsurance cessions.
- Premiums for accepting reinsurance and other incomes from accepting reinsurance (including premiums for accepting reinsurance from insurance companies operating within Vietnam and outside Vietnam).
c) Insurance companies may deduct VAT input on goods and services purchased for VAT-liable insurance business operations as shown on the VAT purchase invoices according to the guidance in Point 1, Section III, Part B, Circular No. 120/2003/TT-BTC.
- Input VAT related to goods and services for compensation or other expenses associated with insurance contracts, where the VAT invoice bears the name, address, and tax code of a specific enterprise, that enterprise shall declare and deduct input VAT and record the expense according to regulations. Input VAT related to compensation expenses and other costs incurred jointly by the authorized enterprise (including VAT) which cannot be separately invoiced for each participating enterprise in a joint insurance contract, the authorized enterprise shall declare and deduct input VAT for these expenses.
- For goods and services purchased simultaneously for business activities subject to VAT and not subject to VAT, only the input VAT of goods and services used for business activities subject to VAT shall be deductible. In cases where it is not possible to separately account for deductible input VAT, the deductible input VAT shall be calculated based on the ratio (%) of the turnover from goods and services subject to VAT to the total turnover realized during the period; wherein:
+ Turnover subject to VAT: Is the revenue from income items subject to VAT, including commissions such as agency commission, brokerage commission, reinsurance commission, and other income items that are not required to be declared or paid VAT.
+ Total turnover realized during the period is the entire revenue generated by the enterprise during the period, excluding income reductions such as reinsurance indemnity receipts and third-party claim receipts.
- Input VAT on fixed assets used simultaneously for production and business activities subject to VAT and not subject to VAT shall be fully deductible, except for fixed assets which are office buildings and specialized equipment serving the operations of reinsurance and life insurance businesses.
- In cases where an insurance company authorizes policyholders to repair assets but the invoice is issued in the name of the policyholder, the insurance company may still declare and deduct input VAT on these invoices provided that:
+ There must be a power of attorney for the policyholder, clearly stating the name of the authorized person, identification number or business registration number, address of the authorized person, and the insurance contract number along with the invoice from the repair service provider.
+ The deductible input VAT shall correspond to the portion of the indemnification responsibility of the insurance company and shall not exceed the VAT amount stated on the invoice.
+ The policyholder shall not declare and deduct input VAT on invoices that have already been declared and deducted by the insurance company.
- Insurance companies shall not issue VAT invoices for each transaction.
- Reinsurance activities must comply with the payment receipt and transfer documentation system according to the accounting regulations applicable to current insurance enterprises. The General Director of the insurance company and the reinsurance company shall bear legal responsibility for the accuracy and honesty of these documents. These payment receipt and transfer documents serve as the basis for the buyer to record expenses.
- When collecting insurance premiums, each co-insurance company shall issue a VAT invoice to the customer based on the premium received and declare and pay VAT according to the regulations. In cases where one company collects premiums on behalf of others or only one company is named in the contract, it shall be handled as if collecting premiums on behalf of others as stipulated in Subpoint d, Clause 2, Article 9 of this Circular.
- When purchasing goods and services for indemnification or other related expenses under an insurance contract, the enterprise whose name, address, and tax code appear on the VAT invoice shall declare and deduct input VAT and record expenses according to general regulations. In cases where a co-insurance company authorizes the named company in the contract to make payments, it shall be handled as if making payments on behalf of others as stipulated in Subpoint d, Clause 2, Article 9 of this Circular.
For common indemnification expenses and other costs that cannot be separately allocated to each participating co-insurance company, the authorized company shall declare and deduct input VAT on these expenses. When allocating costs to each co-insurance company, the named company issuing the VAT invoice shall clearly state the indemnification and related expenses (contract number, date) incurred by the named company, and the VAT line shall not be filled out and shall be crossed out. This invoice serves as the basis for co-insurance companies to record expenses and for the named company to reduce receivables (without recording as revenue).
- When collecting insurance premiums on behalf of others, the enterprise or agent acting as the collector shall issue a VAT invoice to the customer, clearly stating the collection on behalf of the Insurance Company (name, address, tax code of the company) according to the Insurance Contract (number, date, year of the contract). The enterprise or agent collecting on behalf of others shall not record revenue but shall record the collection and declare and pay VAT on this collection. For the enterprise being collected on behalf of, upon receiving money from the collecting enterprise, it shall issue a VAT invoice to the Insurance Company collecting on behalf of others, clearly stating the receipt of insurance premiums collected by the Insurance Company or agent (name, address, tax code of the company) according to the insurance contract (number, date, year of the contract); the VAT amount on the invoice shall match the VAT amount collected from the customer by the collecting enterprise. This invoice serves as the basis for the collecting enterprise to deduct input VAT when calculating VAT payable, and also serves as the basis for the enterprise being collected on behalf of to record revenue, declare and pay VAT according to the regulations.
- When paying on behalf of others for the purchase of goods and services to indemnify customers, the enterprise or agent paying on behalf of others shall require the organization or individual providing goods and services to issue a sales invoice in the name, address, and tax code of the enterprise being paid on behalf of; this invoice shall be transferred to the enterprise being paid on behalf of for it to declare and deduct input VAT (if applicable) and record expenses according to the regulations.
- When collecting insurance premiums on behalf of others, the collecting enterprise shall issue a VAT invoice to the customer and declare and pay VAT on the portion collected, while notifying the enterprise being collected on behalf of about the collection. Based on the notification of collection, the enterprise being collected on behalf of shall record revenue (excluding VAT), without issuing an invoice and without declaring or paying tax on the revenue collected on behalf of others.
In the case where the entrusted enterprise does not request the collecting enterprise to issue a VAT invoice for the customer, when collecting on behalf, the collecting enterprise records the collection and does not declare or pay VAT on the collected revenue. Based on the notice of collection, the entrusting enterprise issues a VAT invoice for the customer and declares and pays tax on the collected revenue.
When making payments on behalf, the VAT invoice bears the name and taxpayer code of which enterprise, that enterprise shall declare and deduct input VAT. The insurance company making payments on behalf must notify the entrusting enterprise of the payment so that the entrusting enterprise can record the expense.
In the case where the insurance participant is a business entity, when refunding insurance premiums (in part or in full), the insurance company requires the participating business entity to issue a VAT invoice, indicating the amount of refunded insurance premium, VAT amount, and reason for the refund. This invoice serves as the basis for the insurance company to adjust sales volume, output VAT, and for the participating business entity to adjust insurance purchase costs and declared VAT.
In the case where the insurance participant cannot issue a VAT invoice, when refunding insurance premiums, the insurance company and the insurance participant must prepare a written record or agreement detailing the amount of refunded insurance premium (excluding VAT), the amount of VAT according to the insurance premium invoice issued by the insurance company (invoice number, date), and the reason for the refund. This record is kept together with the insurance premium invoice as the basis for adjusting revenue declaration and VAT of the insurance company. If the participant cannot provide the insurance premium invoice, the insurance company bases its refund on the invoice retained by the company and the written record or agreement.
The reduction of insurance brokerage commissions shall be carried out in accordance with the relevant legal documents.
In cases where the insurance company or insurance broker has collected insurance premiums and issued invoices to customers but due to objective reasons must reduce premiums for customers or according to agreements until the end of the insurance period if there is no loss or the loss is lower than the specified ratio in the insurance policy, the insurance buyer will receive a partial premium reduction, the insurance company shall implement the premium reduction adjustment. The insurance company and the insurance buyer must prepare a written record or agreement specifying the amount of reduced premium according to the sales invoice (invoice number, date), and the insurance company issues a VAT invoice for the reduced portion. The invoice clearly states the premium reduction adjustment (negative amounts (-) shall not be recorded), VAT for the insurance service at invoice number, code... Based on the adjusted invoice, both parties declare adjustments to revenue, expenses, and input/output VAT.
When disbursing support funds, based on the purpose of support stated in the support contract, vouchers for disbursement are prepared. The VAT amount of goods and services purchased with received support funds shall not be declared or deducted.
CHAPTER III. ENTERPRISE INCOME TAX
Enterprise Income Tax shall be applied in accordance with the Law on Enterprise Income Tax and guiding documents for its implementation, including revenue, the time of determining revenue, and certain deductible expenses as follows:
Article 11. Revenue
The revenue for calculating taxable income includes all amounts received from providing insurance services and other goods and services, including surcharges and additional fees that the insurance enterprise enjoys, excluding Value Added Tax (VAT), including:
1. Revenue from insurance business activities:
For insurance and reinsurance operations, it is the amount receivable from insurance premiums; reinsurance premium receipts; reinsurance commission receipts; insurance policy management fees; service fees including loss assessment, claim settlement, third-party compensation requests, and processing 100% replacement goods (excluding internal loss assessments between member enterprises within an independent insurance enterprise) after deducting expenses to reduce revenue such as: refunding insurance premiums; reducing insurance premiums; refunding reinsurance premium receipts; reducing reinsurance premium receipts; refunding reinsurance commission receipts; reducing reinsurance commission receipts.
In cases where insurance enterprises participate in co-insurance, the revenue for calculating taxable income of each party is the portion of the original insurance premium allocated according to the co-insurance ratio for each party, excluding VAT.
For insurance contracts that agree to pay in installments, the revenue for calculating taxable income is the amount receivable generated in each period.
In cases where there are collection activities among affiliated enterprises or between dependent enterprises and the main office of the insurance enterprise, the revenue for calculating taxable income does not include the portion of collected revenue.
2. Revenue from insurance brokerage activities: Commission revenues from insurance brokerage after deducting insurance brokerage commissions, reductions, and refunds of insurance brokerage commissions.
Article 12. Time of Determining Revenue
- The time of determining revenue for insurance business activities is the time when the insurance enterprise assumes liability towards the insured party according to the Insurance Business Law, regardless of whether payment has been received or not.
- The time of determining revenue for insurance brokerage activities is the time when the insurance contract assumes liability for insurance, regardless of whether payment has been received or not.
- The time of determining revenue for reinsurance activities, reinsurance commission, and other revenues arising from reinsurance transactions is the time when the reinsurance payment confirmation is made. The time of determining revenue for reinsurance is also the time of determining costs for the reinsurer.
Article 13. Certain Deductible Expenses
Certain deductible expenses for insurance enterprises are determined specifically as follows:
- Compensation expenses under the original insurance contract (compensation expenses for non-life insurance, payment expenses for life insurance), reinsurance contract after deducting receivables to reduce expenses such as reinsurance compensation receipts, third-party compensation receipts, processed goods receipts, 100% compensation.
The principle of original insurance compensation expenses for non-life insurance enterprises: In accordance with the scope and conditions of insurance stipulated in the insurance contract agreed upon by both parties and supported by evidence proving the occurrence of damage.
- Reinsurance commission fees;
- Provisions for business contingencies in accordance with laws on insurance business;
- Insurance commission fees, insurance brokerage commission fees in accordance with laws on insurance business;
- Loss assessment fees in accordance with laws;
- Fees for agency services including loss assessment, claim settlement, third-party compensation requests;
- Fees for processing damaged goods that have been fully compensated;
- Agency insurance management fees in accordance with laws on insurance activities;
- Prevention and limitation of loss expenses in accordance with regulations;
Prevention and limitation of loss expenses must comply with the purpose specified by law, ensuring full invoices, supporting documents, or evidence proving the expenses.
- Risk assessment expenses for insured objects including expenses for information gathering, investigation, and evaluation of insured objects;
- Mandatory provisions in accordance with laws on insurance business;
- Non-wage bonuses based on business activities for employees clearly recorded in labor contracts, collective labor agreements, decisions of the Board of Directors, or General Management;
- Other expenses and provisions in accordance with laws on insurance business.
CHAPTER IV. IMPLEMENTATION ORGANIZATION
Article 14. Effective Date
1. This Circular shall take effect 45 days from the date of signature.
2. ABOLISH Circular No. 111/2005/TT-BTC dated December 13, 2005 of the Ministry of Finance guiding value-added tax and corporate income tax for the insurance business sector, which contradicts the guidance provided in this Circular, and all previous circulars of the Ministry of Finance regarding value-added tax and corporate income tax for the insurance business sector that are inconsistent with this Circular.
In the course of implementation, if any difficulties arise, units are requested to report to the Ministry of Finance for consideration and resolution./.
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DEPUTY MINISTER
DEPUTY MINISTER
(Signed)
Do Hoang Anh Tuan
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