Circular No. 118/2010/TT-BTC guiding financial regulations and taxes for liquefied petroleum gas (LPG) cylinder business establishments

CIRCULAR

Guidelines on financial regime and tax for liquefied petroleum gas cylinder business establishments
These guidelines apply to the financial regime and tax for liquefied petroleum gas cylinder business establishments

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Pursuant to the Law on Corporate Income Tax No. 14/2008/QH12 dated June 3, 2008 and its guiding documents;

Pursuant to the Law on Value Added Tax No. 13/2008/QH12 dated June 3, 2008 and its guiding documents;

Pursuant to the Law on Tax Administration and its guiding documents;

Pursuant to the Decree on Prices No. 40/2002/PL-UBTVQH dated May 10, 2002 and its guiding documents;

Pursuant to the Government's Decree No. 107/2009/NĐ-CP dated November 26, 2009 on liquefied petroleum gas business operations;

Pursuant to the Government's Decree No. 118/2008/NĐ-CP dated November 27, 2008 on the functions, tasks, powers, and organizational structure of the Ministry of Finance,

The Ministry of Finance hereby issues guidelines on the financial regime and tax applicable to liquefied petroleum gas cylinder business establishments as follows,

PART A - GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular stipulates the financial regime and tax applicable to various types of liquefied petroleum gas cylinders on the market (excluding single-use liquefied petroleum gas cylinders and autogas cylinders permanently installed on transportation vehicles).

Article 2. Applicability

This Circular applies to liquefied petroleum gas cylinder business establishments (LPG cylinder business establishments), LPG cylinder business establishments (excluding importers of liquefied petroleum gas as specified in Clause 2, Article 2 of the Government's Decree No. 107/2009/NĐ-CP dated November 26, 2009).

Article 3. Explanation of Terms

Some terms in this Circular are understood as follows:

1. Liquefied Petroleum Gas (LPG) as defined in Clause 1, Article 3 of the Government's Decree No. 107/2009/NĐ-CP dated November 26, 2009 shall be referred to as LPG hereinafter;

2. LPG Cylinder: is a container with a capacity under 1,000 liters that must meet the standards prescribed in Clauses 3 and 4, Article 3 of the Government's Decree No. 107/2009/NĐ-CP dated November 26, 2009;

3. LPG Cylinder Business Establishment: refers to enterprises, traders, general agents, agents, and stores engaged in LPG cylinder business operations;

4. LPG Cylinder Shell Business Establishment: refers to enterprises engaged in purchasing LPG cylinder shells or producing LPG cylinder shells for sale.

PART B - CLASSIFICATION OF LPG CYLINDERS AND TIME FOR COST ALLOCATION

Article 4. Classification of LPG Cylinders

LPG cylinder shells with a value under VND 10 million per shell are classified as tools, equipment, and packaging materials for production and business purposes. If an enterprise has recorded LPG cylinder shells as fixed assets, it must adjust them to tools and equipment.

LPG cylinder shells with a value of VND 10 million per shell or more are recorded as fixed assets. The period for depreciation is carried out according to Circular No. 203/2009/TT-BTC dated October 20, 2009 of the Ministry of Finance.

Article 5. Time for Cost Allocation of LPG Cylinder Shells Under VND 10 Million Per Shell

- LPG cylinder shells under VND 10 million per shell are special tools and equipment with a usage period exceeding one year, and the cost allocation period for such shells is as follows:

- When recording costs reasonably to determine corporate income taxable revenue, in addition to invoices and documents as required, the shells must still retain their original design, have been technically certified by authorized agencies, and not exceed the certification validity period.

- For LPG cylinder shells with a maximum capacity up to 300 ml per shell (reusable and refillable type), the entire cost is allocated in one lump sum during the fiscal year of use.

- For LPG cylinder shells with a capacity over 300 ml per shell:

+ For metal LPG cylinder shells (steel) and hybrid LPG cylinder shells (steel and composite), the cost allocation period is from 5 to 10 years.

Part C - FINANCIAL REGIME AND TAXES

Article 6. Regarding the sale of LPG canisters

LPG canister business establishments and businesses selling LPG canisters shall account for revenue and expenses from the sale of LPG canisters (including reusable and single-use types) in accordance with current accounting regulations for enterprises, declare and pay taxes in accordance with laws on value-added tax and corporate income tax.

Business establishments selling LPG canisters must issue value-added tax invoices, calculate value-added tax, declare and pay value-added tax, and record revenue when determining taxable corporate income from the sale of LPG canisters like other goods.

Article 7. Provisions on depositing LPG canisters

The depositing of LPG canisters as stipulated in this Circular shall be directly carried out by the owner of the LPG canisters with end-users who are consumers. In cases where the depositing is conducted through distribution systems (including general agents, agents, and retail stores selling LPG canisters), general agents, agents, and retail stores selling LPG canisters shall act on behalf of the LPG canister owners to handle relevant procedures directly with end-users.

1. On the amount of deposit for LPG canisters:

The unified collection amount for deposit on LPG canisters (LPG canisters meeting conditions for refilling and circulation, complying with Vietnamese standards or national technical regulations issued by competent authorities) for general agents selling LPG canisters, agents selling LPG canisters, retail stores selling LPG canisters, specialized retail stores, and consumers shall be determined by the LPG canister owner and shall not exceed 100% of the purchase price of the LPG canister at the nearest time point to the deposit date (including the valve installed inside the LPG canister but excluding VAT) according to each type of LPG canister.

In cases where LPG canister business establishments produce their own LPG canisters for sale, the unified collection amount for deposit on LPG canisters shall not exceed 100% of the actual warehouse price at the nearest time point to the deposit date (excluding VAT) plus any actual costs incurred during use (if any).

2. Collecting deposit on LPG canisters:

- When LPG canister business establishments and businesses selling LPG canisters collect deposits from customers, they must have a Deposit Receipt form uniformly used throughout the distribution system, and provide a written notice specifying the deposit amount publicly so that consumers are aware.

The Deposit Receipt for LPG canisters shall be made in one copy including the receipt stub and the receipt itself. The LPG business establishment retains the receipt stub, while the consumer keeps the receipt and must clearly indicate all details such as the name of the main entity owning the LPG canister and its seal, the authorized agent collecting the deposit, the user's name, the deposit amount based on the owner's document (specifying the deposit amount), the start date of the deposit, the deposit period agreed upon, the type of LPG canister deposited (weight of the LPG canister, steel/mixed/composite... type), the brand of the LPG canister, origin of the LPG canister, and the specific time and amount to be refunded to the customer if the canister is returned. Intermediate distribution systems such as general agents and agents retain copies of the receipt.

- LPG canister business establishments owning LPG canisters are responsible for notifying their distribution system units about the deposit amount for LPG canisters as well as informing adjustments to deposit amounts and refund amounts in case of returning LPG canisters. The notification must clearly specify the deposit amount and the application period, and the corresponding refund amount according to the guidance provided in Point 3 of this Article.

- Entities owning LPG canisters are responsible for collecting the deposit amount recorded on the Customer Deposit Receipt for LPG canisters directly from end-users (including cases collected through general agents, agents, and retail stores selling LPG canisters). Apart from the deposit amount recorded on the Deposit Receipt for LPG canisters, general agents, agents, and retail stores selling LPG canisters (which are not LPG canister owners) shall not charge additional fees related to the deposit of LPG canisters from customers.

3. Transfer of income from deposits

- When LPG canister business establishments and businesses selling LPG canisters (LPG canister owners) receive deposits from customers, the entity must account for the deposit amount in the deposit tracking account.

- Annually, when allocating costs according to Article 5 of this Circular, the entity must transfer the deposit amount into other income when determining taxable corporate income, with the income transfer time corresponding to the cost allocation period for LPG canisters in business expenses.

Example: In 2009, Company A, which owns LPG canisters with a production cost of 400,000 VND per canister, transferred the cost over 10 years, thus Company A allocated a cost of 40,000 VND per canister annually. The company decided to set the deposit amount at 100% of the purchase price of the canister and collected a deposit of 400,000 VND per canister. Accordingly, Company A must transfer 40,000 VND (400,000 VND / 10) into other income in 2009.

- In cases where refunds are due to customers for returning LPG canisters before fully allocating costs, the entity shall deduct from the customer's deposit (before transferring other income).

Part D - IMPLEMENTATION ORGANIZATION

Article 8. This Circular takes effect 45 days from the date of signature and shall be applied starting from October 1, 2010. It abolishes all guiding documents on accounting for deposits, cost allocation, and depreciation of LPG bottle shells that are contrary to the provisions of this Circular.

Article 9. In cases where LPG bottle retail businesses and LPG bottle shell retail businesses have rental, loan, deposit, and pledge contracts for LPG bottle shells that arise before this Circular comes into force:

- If they are currently implementing income transfers and cost allocations for LPG bottle shells according to previous guidelines of the Ministry of Finance, they shall continue to implement for the remaining period.

- If they have already implemented cost allocations for LPG bottle shells but have not yet implemented income transfers according to previous guidelines of the Ministry of Finance, the business shall transfer the entire corresponding income to other income when determining corporate income tax revenue for the year 2010.

Article 10. During the implementation of this Circular, if difficulties arise, organizations and enterprises are requested to report to the Ministry of Finance for timely resolution./.