Decree No. 146/2017/ND-CP Amending and Supplementing Some Provisions of Decree No. 100/2016/ND-CP dated July 1, 2016 and Decree No. 12/2015/ND-CP dated February 12, 2015 of the Government

DECREE

AMENDING AND SUPPLEMENTING CERTAIN PROVISIONS OF THE GOVERNMENTAL DECREE NO. 100/2016/ND-CP DATED JULY 1, 2016 AND THE GOVERNMENTAL DECREE NO. 12/2015/ND-CP DATED FEBRUARY 12, 2015

On the basis of Law on Government Organization dated June 19, 2015;

On the basis of Law on Value Added Tax dated June 3, 2008; Law amending and supplementing certain articles of the Law on Value Added Tax June 19, 2013; Law amending and supplementing certain provisions of the Law on Value Added Tax, the Special Consumption Tax Law, and the Tax Administration Law April 6, 2016;

On the basis of Law on Corporate Income Tax dated June 3, 2008; Law amending and supplementing certain articles of the Law on Corporate Income Tax June 19, 2013;

On the basis of Law amending and supplementing certain provisions of the Tax Laws November 26, 2014;

At the proposal of the Minister of Finance;

The Government promulgates this Decree to amend and supplement certain provisions of the Governmental Decree No. 100/2016/ND-CP dated July 1, 2016 and the Governmental Decree No. 12/2015/ND-CP dated February 12, 2015.

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

“11. Export products are natural resources and minerals extracted without being processed into other products.

Export products are goods processed directly from raw materials mainly consisting of natural resources and minerals, where the total value of natural resources and minerals plus energy costs account for 51% or more of the production cost of the product, except for the following cases:

- Export products processed from natural resources and minerals directly extracted and processed by the business entity or contracted to another entity for processing, wherein during the processing process, they have already become other products before being further processed into export products (closed-loop processing or establishment of workshops, factories for processing in separate stages), such export products fall under the application of a 0% VAT rate if they meet the conditions stipulated in point c, Clause 2, Article 12 of the Law on Value Added Tax.

- Export products processed from natural resources and minerals purchased by the business entity for processing or contracted to another entity for processing, wherein during the processing process, they have already become other products before being further processed into export products (closed-loop processing or establishment of workshops, factories for processing in separate stages), such export products fall under the application of a 0% VAT rate if they meet the conditions stipulated in point c, Clause 2, Article 12 of the Law on Value Added Tax.

- Export products processed from main raw materials that are not natural resources and minerals (natural resources and minerals already processed into other products) purchased by the business entity for processing or contracted to another entity for processing into export products, such export products fall under the application of a 0% VAT rate if they meet the conditions stipulated in point c, Clause 2, Article 12 of the Law on Value Added Tax.

Natural resources and minerals specified in Clause 23, Article 5 of the Law on Value Added Tax are domestic natural resources and minerals including: metallic minerals; non-metallic minerals; crude oil; natural gas; coal gas.

The value of natural resources and minerals put into processing is determined as follows: For directly extracted natural resources and minerals, it is the direct and indirect costs of extracting natural resources and minerals excluding transportation costs from the extraction site to the processing site; for natural resources and minerals purchased for further processing, it is the actual purchase price excluding transportation costs from the purchase site to the processing site.

Energy costs include: fuel, electricity, thermal energy.

The ratio of the value of natural resources and minerals and energy costs to the production cost of the product is determined based on the final settlement of the previous year and this ratio is applied consistently throughout the export year. In the case of the first year of exporting the product, the ratio of the value of natural resources and minerals and energy costs to the production cost of the product is determined according to the investment plan and this ratio is applied consistently throughout the export year; in the absence of an investment plan, the ratio of the value of natural resources and minerals and energy costs to the production cost of the product is determined based on the actual situation of the exported product.

The Ministry of Finance shall take the lead and coordinate with relevant agencies to provide specific guidance on determining natural resources and minerals extracted without being processed into other products as provided in this clause.”

2. Amend and supplement Clause 3 of Article 10 as follows:

“3. Business entities in a month (for monthly declaration cases) or quarter (for quarterly declaration cases) that have exported goods and services, including cases where imported goods are subsequently exported to duty-free zones; imported goods are subsequently exported abroad, with the remaining input VAT not deducted reaching 3 billion VND or more, shall be refunded the VAT monthly or quarterly; in the case where the remaining input VAT not deducted in a month or quarter is less than 3 billion VND, it can be deducted in the next month or quarter; in the case where there are both exported goods and services and domestically consumed goods and services, if after offsetting against the tax payable, the remaining input VAT of exported goods and services is 3 billion VND or more, the business entity shall be entitled to a refund. Business entities must separately record the input VAT used for producing and trading exported goods and services; in cases where separate recording is not possible, the input VAT shall be determined based on the ratio between the revenue from exported goods and services and the total revenue from goods and services over the periods of VAT declarations from the period immediately following the last refund request to the current refund request period.

Business entities shall not be entitled to a refund of VAT in the following cases: Imported goods subsequently exported but the exported goods are not exported at the customs territory as prescribed by the Customs Law; exported goods are not exported at the customs territory as prescribed by the Customs Law.

The tax authority shall implement advance refund of taxes followed by post-refund inspection for taxpayers producing goods for export who have not been subject to administrative penalties for smuggling, illegal cross-border transportation of goods, tax evasion, or commercial fraud for two consecutive years; taxpayers who are not classified as high-risk subjects under the Law on Tax Administration and its guiding documents.

Article 2. Amend and supplement Point o of Clause 2, Article 9 of Decree No. 218/2013/NĐ-CP dated December 26, 2013 of the Government detailing and guiding the implementation of the Law on Corporate Income Tax, which has been amended and supplemented by Clause 7, Article 1 of Decree No. 12/2015/NĐ-CP dated February 12, 2015 of the Government.

“o) The portion of expenses exceeding three million VND per month per person for voluntary pension fund contributions, purchase of voluntary pension insurance, and life insurance for employees; the portion exceeding the limits prescribed by laws on social insurance and health insurance for contributions to social welfare funds (compulsory supplementary pension insurance fund, health insurance fund, and unemployment insurance fund) for employees;

Expenses for voluntary pension fund contributions, social welfare funds, purchase of voluntary pension insurance, and life insurance for employees shall be deductible from taxable income provided that such expenses do not exceed the limits set forth herein and are clearly recorded with the conditions and amounts in one of the following documents: Employment contracts; Collective labor agreements; Financial regulations of companies, corporations, or groups; Reward regulations established by the Chairman of the Board of Directors, General Director, or Director according to the company's financial regulations.

Article 3. Implementation Provisions

This Decree takes effect from February 1, 2018.

The Head of the Ministry’s Office, Heads of Departments, Director of the Vietnam Registration Agency, Heads of agencies, units, and individuals related to this Circular shall be responsible for its enforcement.

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

2. Ministers, heads of ministerial-level agencies, heads of government-affiliated agencies, Chairmen of provincial and centrally-administered city People's Committees, and related organizations and individuals are responsible for implementing this Decree.