Decree No. 100/2016/ND-CP detailing and guiding the implementation of certain provisions of the Law amending and supplementing some articles of the Law on Value Added Tax, the Special Consumption Tax Law, and the Tax Administration Law.

DECREE

Detailed regulations and guidance on implementation of certain provisions

of the Law amending and supplementing certain articles of the Value Added Tax Law,

the Special Consumption Tax Law, and the Tax Administration Law

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

Pursuant to the Law amending and supplementing certain articles of the Value Added Tax Law, the Special Consumption Tax Law, and the Tax Administration Law dated April 6, 2016;

At the proposal of the Minister of Finance;

The Government promulgates this Decree providing detailed regulations and guidance on the implementation of certain articles of the Law amending and supplementing certain articles of the Value Added Tax Law, the Special Consumption Tax Law, and the Tax Administration Law,

1. The beginning of Article 3 and Clause 1 of Article 3 shall be amended and supplemented as follows:

"Article 3. Non-taxable objects

Non-taxable objects for value added tax shall be implemented according to the provisions of Article 5 of the Value Added Tax Law, Clause 1 of Article 1 of the Law amending and supplementing certain articles of the Value Added Tax Law, and Clause 1 of Article 1 of the Law amending and supplementing certain articles of the Value Added Tax Law, the Special Consumption Tax Law, and the Tax Administration Law.

1. For products specified in Clause 1 of Article 5 of the Value Added Tax Law which have been amended and supplemented at Clause 1 of Article 1 of the Law amending and supplementing certain articles of the Value Added Tax Law, the Special Consumption Tax Law, and the Tax Administration Law through simple processing are new products that have been cleaned, dried, peeled, shelled, cut, salted, frozen, and other common preservation methods."

2. Clause 3 Article 3 shall be amended and supplemented as follows:

"3. Medical services specified in Clause 1 of Article 1 of the Law amending and supplementing certain articles of the Value Added Tax Law, the Special Consumption Tax Law, and the Tax Administration Law include transportation, testing, imaging, blood and blood products used for patients.

Elder care and disability care services specified in Clause 1 of Article 1 of the Law amending and supplementing certain articles of the Value Added Tax Law, the Special Consumption Tax Law, and the Tax Administration Law include medical care, nutrition, and organizing cultural, sports, entertainment activities, physiotherapy, and rehabilitation for the elderly and people with disabilities."

3. Clause 6 of Article 3 shall be amended and supplemented as follows:

"6. Public passenger transport specified in Clause 16 of Article 5 of the Value Added Tax Law includes public passenger transport by bus, electric vehicle (including tram) along routes within provinces, cities, and nearby provincial routes as prescribed by laws on traffic."

4. Clause 11 of Article 3 shall be amended and supplemented as follows:

"11. Export products are natural resources, minerals extracted without further processing or processed into other products but the total value of natural resources, minerals plus energy costs account for 51% or more of the production cost of the product made from natural resources, minerals; export products are goods processed from natural resources, minerals where the total value of natural resources, minerals plus energy costs account for 51% or more of the production cost of the product.

Natural resources, minerals referred to herein are domestic-sourced natural resources, minerals including: Metal minerals; non-metal minerals; crude oil; natural gas; coal gas.

The value of natural resources, minerals is the capital value of natural resources, minerals put into processing; for directly extracted natural resources, minerals it is the direct and indirect extraction costs; for purchased natural resources, minerals it is the actual purchase price plus the cost of putting natural resources, minerals into processing.

Energy costs include: fuel, electricity, thermal energy.

The determination of the value of natural resources, minerals and energy costs is based on the annual settlement report; in cases where a newly established business does not have a previous annual settlement report, it is based on the investment plan.

The Ministry of Finance shall provide detailed regulations on this matter."

5. Point đ Clause 1 of Article 6 shall be amended as follows:

"đ) Cases not applying the 0% VAT rate include:

- Technology transfer, intellectual property rights transfer abroad;

- Reinsurance services provided abroad;

- Credit services provided abroad;

- Capital transfer abroad;

- Foreign securities investment;

- Derivative financial services;

- Postal and telecommunications services;

- Export products specified in Clause 11 of Article 3 of this Decree;

- Goods and services supplied to individuals not registered for business in duty-free zones;

- Imported tobacco, alcohol, beer re-exported."

6. Article 10 is amended and supplemented as follows:

"Article 10. Refund of VAT

1. Businesses subject to VAT under the deduction method if they have unclaimed input VAT in the month (for monthly reporting) or quarter (for quarterly reporting), may deduct it in the following period.

2. Businesses are eligible for VAT refund for investment projects as follows:

a) New businesses established from registered investment projects, registered for VAT deduction method, or oil and gas exploration and development projects still in the investment phase and not yet operational, if the investment period is one year or longer, may be refunded VAT on goods and services used for investment annually, except as provided in point c of this clause. In case the cumulative VAT of goods and services purchased for investment exceeds 300 million dong, VAT can be refunded.

If the investment project of a business has been audited, inspected, or reviewed by competent state authorities, the tax authority may use the results of such audits, inspections, or reviews to decide on VAT refunds and must bear responsibility for their decisions.

b) A business entity that is currently operating and subject to value-added tax under the deduction method has a new investment project (excluding construction projects for sale) located in a different province or centrally governed city from where its main office is situated, which is still in the investment phase and has not commenced operations, registered for business, or registered for tax purposes. The input VAT can be offset against the VAT payable for production and business activities at the main office. After the offset, if the remaining input VAT for goods and services purchased for the investment project exceeds VND 300 million, then VAT refund for the investment project will be granted, except in cases stipulated in point c of this clause. The business entity must declare and prepare separate refund documentation for the investment project.

c) Businesses are not entitled to a value-added tax refund but can carry forward the undeducted value-added tax of investment projects to the next period for the following cases:

- An investment project of a business entity in a trade or profession requiring conditions when it does not yet meet the business conditions as prescribed in point a, Clause 1, Article 13 of the Value-Added Tax Law, amended and supplemented by the Law Amending and Supplementing Certain Provisions of the Value-Added Tax Law, Special Consumption Tax Law, and Tax Administration Law, refers to an investment project in a trade or profession requiring conditions but the business entity has not been issued a business license for such trade or profession; has not been issued a certificate of compliance with business conditions for such trade or profession; has not received a written permit from a competent state agency to engage in such trade or profession; or has not met the conditions to conduct such trade or profession without needing confirmation or approval in writing as required by investment laws.

An investment project of a business entity in a trade or profession requiring conditions that fails to maintain sufficient business conditions during operation as prescribed in point a, Clause 1, Article 13 of the Value-Added Tax Law, amended and supplemented by the Law Amending and Supplementing Certain Provisions of the Value-Added Tax Law, Special Consumption Tax Law, and Tax Administration Law refers to an investment project in a trade or profession requiring conditions but during operation, the business entity has had its business license for such trade or profession revoked; has had its certificate of compliance with business conditions for such trade or profession revoked; has had its written permit from a competent state agency regarding such trade or profession revoked; or during operation, the business entity has failed to meet the conditions to conduct such trade or profession as required by investment laws. The time point for non-refund of VAT shall be calculated from the date the business entity was revoked one of the aforementioned documents or from the date a competent state agency discovered that the business entity did not meet the conditions for conducting such trade or profession.

- An investment project exploiting natural resources or minerals licensed from July 1, 2016, or an investment project producing goods where the total value of natural resources or minerals plus energy costs account for 51% or more of the product cost according to the investment project.

The determination of natural resources or minerals, their value, and the time point for determining their value and energy costs shall be carried out in accordance with Clause 11, Article 3 of this Decree.

3. A business entity, in a month (for monthly declaration) or quarter (for quarterly declaration), has exported goods or services with input VAT not yet deducted exceeding VND 300 million, shall be eligible for VAT refund on a monthly or quarterly basis; if the input VAT not yet deducted is less than VND 300 million in a month or quarter, it may be deducted in the following month or quarter; if the business entity simultaneously exports goods or services and sells domestically, and after offsetting with the VAT payable, the remaining input VAT for exported goods or services exceeds VND 300 million, the business entity shall be eligible for VAT refund. The business entity must separately account for the input VAT used for producing and trading exported goods or services; if separate accounting is not possible, the input VAT shall be determined based on the ratio of export revenue to total revenue of goods or services over the periods of VAT declaration from the period immediately following the last refund request to the current refund request period.

A business entity shall not be eligible for VAT refund for imported goods subsequently exported or exported goods not conducted at the customs area as prescribed by the Customs Law and related guiding documents.

The tax authority shall implement VAT refund before inspection for taxpayers engaged in the production of exported goods who have not been penalized for smuggling, illegal cross-border transportation of goods, tax evasion, tax fraud, or commercial fraud within two consecutive years; taxpayers who do not fall into the high-risk category as prescribed by the Tax Administration Law and related implementing regulations.

4. A business entity subject to VAT under the deduction method shall be eligible for VAT refund when transferring ownership, restructuring, merging, splitting, dissolving, liquidating, or ceasing operations, provided there is excess paid VAT or undeducted input VAT.

Business establishments during the investment phase that have not commenced production and business operations but must be dissolved, declared bankrupt, or cease operations without generating output VAT from the main business activities as per the investment project shall not yet need to adjust the previously declared, deducted, or refunded VAT. The declaration and payment of tax in cases of transferring the investment project, selling assets of the investment project, or changing the purpose of production and business operations of the investment project shall be carried out according to the guidelines of the Ministry of Finance.

5. The refund of VAT for programs and projects using official development assistance (ODA) funds that are non-reimbursable or non-reimbursable aid, humanitarian aid is regulated as follows:

a) The program or project manager, the main contractor, or the organization designated by the foreign sponsor to manage programs and projects using non-reimbursable ODA funds may be refunded the VAT paid on goods and services purchased in Vietnam for the purposes of the program or project.

b) Organizations in Vietnam using non-reimbursable aid or humanitarian aid funds from foreign organizations or individuals to purchase goods and services for non-reimbursable aid or humanitarian aid programs in Vietnam may be refunded the VAT paid on those goods and services.

6. Foreign individuals, Vietnamese individuals residing abroad holding passports or entry permits issued by competent authorities of foreign countries may be refunded VAT on goods purchased in Vietnam and carried with them upon departure.

7. Business establishments that have a decision to refund VAT from the competent authority as stipulated by law and in cases of VAT refunds under international treaties to which the Socialist Republic of Vietnam is a member.”

Article 2. Amend and supplement Decree No. 108/2015/ND-CP dated October 28, 2015 of the Government detailing and guiding the implementation of certain provisions of the Special Consumption Tax Law and the Law Amending and Supplementing Certain Provisions of the Special Consumption Tax Law as follows:

1. Clause 1 of Article 4 shall be amended as follows:

The selling price excluding VAT is determined according to the regulations of the Law on Value Added Tax.

a) In cases where the production establishment or import establishment subject to special consumption tax sells goods through subordinate establishments that are dependent accounting units, the price serving as the basis for calculating the special consumption tax is the selling price of the dependent accounting unit. If the production establishment or import establishment sells goods through agents at the prices set by the production establishment or import establishment and only receives commission, the selling price serving as the basis for determining the special consumption tax base price is the price set by the production establishment or import establishment before deducting the commission.

b) In cases where goods subject to special consumption tax are sold to commercial business establishments that are parent-child companies or companies within the same parent company as the production establishment or import establishment, or commercial business establishments that have a relationship of affiliation, the selling price serving as the basis for determining the special consumption tax base price shall not be lower than 7% of the average price of commercial business establishments purchasing directly from the production establishment or import establishment. In cases where the production establishment or import establishment establishes multiple intermediary commercial businesses that are parent-child companies or companies within the same parent company or have a relationship of affiliation, the selling price serving as the basis for determining the special consumption tax base price shall not be lower than 7% of the average price of these commercial businesses selling to commercial business establishments that do not have a parent-child relationship, or companies within the same parent company, or have a relationship of affiliation with the production establishment or import establishment. For automobiles, the average selling price of commercial business establishments for comparison purposes is the selling price of automobiles excluding additional equipment and parts installed according to customer requirements.

Production establishments, import establishments, and commercial business establishments with an affiliated relationship as stipulated herein when one enterprise directly or indirectly holds at least 20% of the capital investment of the other enterprise.

In cases where the selling price serving as the basis for determining the special consumption tax base price of the production establishment or import establishment selling goods subject to special consumption tax is lower than 7% of the average price of commercial business establishments selling such goods, the special consumption tax base price is the price determined by the tax authority according to the regulations of the Law on Tax Administration.”

2. Clause 4, Clause 5 Article 4 are amended as follows:

“4. For goods subject to special consumption tax that are processed, the price is the selling price of the goods processing establishment or the selling price of similar or equivalent products at the time of sale.

In cases where the goods processing establishment sells goods to commercial business establishments that are parent-child companies or companies within the same parent company as the production establishment or import establishment, or commercial business establishments that have a relationship of affiliation, the tax base price is determined according to the provisions of point b, clause 1 of this Article.

In the case where the manufacturing facility subcontracts sales to a trading business entity that has a parent-subsidiary relationship or an affiliated relationship among subsidiaries within the same parent company with the production facility, the importing facility, or the trading business entity that has an associated relationship, the taxable price shall be determined in accordance with point b, Clause 1 of this Article.

5. For goods produced under a business cooperation arrangement between the production entity and the entity using or owning the brand (trademark) of the goods, or the production technology, the price for calculating special consumption tax is the selling price of the entity using or owning the brand or production technology. In cases where the production entity produces according to a franchise license and transfers goods to branches or representatives of foreign companies in Vietnam for product sales, the price for calculating special consumption tax is the selling price of the branch or representative of the foreign company in Vietnam.

In cases where these entities sell goods to trading businesses that have parent-subsidiary relationships or subsidiaries within the same parent company with the production entity, import entity, or trading businesses that have associated relationships, the taxable price shall be determined in accordance with the provisions of point b, Clause 1 of this Article.

Article 3. Amend and supplement Decree No. 83/2013/ND-CP dated July 22, 2013, of the Government detailing certain provisions of the Law on Tax Administration and the Law Amending and Supplementing Certain Provisions of the Law on Tax Administration, which has been amended and supplemented by Decree No. 91/2014/ND-CP dated October 1, 2014, and Decree No. 12/2015/ND-CP dated February 12, 2015, of the Government on tax administration, as follows:

1. Amend Clause 1 of Article 28a as follows:

"1. A taxpayer who fails to pay taxes within the prescribed deadline, the extended payment deadline, the deadline stated in the notification of the tax management agency, or the deadline specified in the tax management agency's decision must pay the full amount of taxes and late payment interest at a rate of 0.03% per day based on the amount of unpaid taxes.

For tax debts arising before July 1, 2016, which the taxpayer has not paid into the state budget, including tax debts identified through inspection and audit results by competent authorities, the rate of late payment interest shall be applied as stipulated in this clause from July 1, 2016.

If a taxpayer provides goods or services for payment from state budget funds but has not yet received payment, leading to delayed tax payments, then enforcement measures for tax collection will not be implemented, and the taxpayer will not be required to pay late payment interest on the outstanding tax debt, provided that such interest does not exceed the amount of the state budget funds that remain unpaid during the period of non-payment."

2. Repeal Article 38.

3. Point a, Clause 2 of Article 39 is amended and supplemented as follows:

"a) During the period of gradually paying off the tax debt, the taxpayer must still pay late payment interest at a rate of 0.03% per day based on the amount of unpaid taxes. The taxpayer is responsible for paying the full amount of taxes and late payment interest as agreed."

4. Point a, Clause 2 of Article 42 is amended and supplemented as follows:

"a) Exempt or reduce special consumption tax, resource tax, personal income tax for taxpayers affected by natural disasters, fires, or unexpected accidents who are unable to pay taxes as prescribed by law; exempt land use tax, agricultural land use tax, land rental fees, water surface rental fees, and stamp duty for taxpayers as prescribed by law; exempt households and individuals from land use tax if their annual tax liability is 50,000 VND or less. The Ministry of Finance shall specify the details of the exemptions and reductions provided for in this point;

In cases of exemption or reduction of land use fees, the tax authority shall base its determination on the land registry documents attached with proof of eligibility for exemption or reduction of land use fees and related documents to determine the amount of land use fees to be exempted or reduced and the amount of land use fees to be paid. The tax authority shall not issue a decision on exemption or reduction of tax but shall clearly indicate the amount of land use fees to be exempted or reduced on the tax authority's notice of payment of land use fees."

Article 4. Amend Clause 3 of Article 13 of Decree No. 129/2013/NĐ-CP dated October 16, 2013 of the Government on administrative penalties for tax violations and enforcement of administrative decisions on taxes as follows:

“3. The guarantor must pay on behalf of the taxpayer the tax amount, late payment interest on tax, fines, and late payment interest on fines (if any) to the taxpayer according to the content of the guarantee document in case the taxpayer does not pay into the State budget.

If the taxpayer fails to pay or pays insufficiently the overdue tax, late payment interest on tax, fines, and late payment interest on fines (if any) within the time limit prescribed by the tax authority, and if the guarantor has not fulfilled their guarantee obligation, then the guarantor shall be liable to pay late payment interest at a rate of 0.03% per day on the amount of overdue tax and fines, and shall be subject to enforcement measures as stipulated in Clause 3, Article 18 and Article 19 of this Decree. The procedures and formalities for implementing enforcement measures shall be carried out in the same manner as for taxpayers who are subject to enforcement.”

Article 5. Effectiveness and Responsibility for Implementation

This Decree takes effect from July 1, 2016, except for the provision in Clause 2 of this Article.

Clause 2 of Article 3 of this Decree takes effect from September 1, 2016.

The Ministry of Finance shall provide guidance on the implementation of this Decree.

Ministers, heads of ministerial-level agencies, heads of agencies under the Government, Chairpersons of provincial People's Committees under the central city, and related organizations and individuals are responsible for implementing this Decree./.