Circular No. 150/2010/TT-BTC guiding value-added tax and corporate income tax for press agencies

CIRCULAR

Guidelines on value-added tax and

corporate income tax for press agencies

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Pursuant to the Press Law of 1989 and the Law Amending and Supplementing Certain Provisions of the Press Law of 1999;

Pursuant to the Law on Value-Added Tax No. 13/2008/QH12 dated June 3, 2008, the Law on Corporate Income Tax No. 14/2008/QH12 dated June 3, 2008, the Law on Tax Administration No. 78/2006/QH11 dated November 29, 2006, and related guiding documents;

Pursuant to Decree No. 43/2006/NĐ-CP dated April 25, 2006 of the Government stipulating the autonomy and responsibility for implementing tasks, organizational structure, staffing, and finance of public service units;

Pursuant to the 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;

Following the guidance of the Prime Minister in Official Letter No. 5927/VPCP-KTTH dated August 23, 2010 of the Government Office,

The Ministry of Finance issues guidelines on value-added tax (VAT) and corporate income tax (CIT) for press agencies as follows:

Article 1. Scope and Applicability

These Circulars provide guidelines on VAT and CIT for press agencies established and operating under the Press Law and Publication Law, which are public service units (hereinafter referred to as "Press Agencies") with advertising revenue, including Press Agencies that self-fund their regular operational costs according to Decree No. 43/2006/NĐ-CP dated April 25, 2006 of the Government (hereinafter referred to as "Self-Funded Press Agencies") and Press Agencies that partially self-fund their regular operational costs according to Decree No. 43/2006/NĐ-CP dated April 25, 2006 of the Government (hereinafter referred to as "Partially Self-Funded Press Agencies").

Article 2. Regarding VAT and CIT for Self-Funded Press Agencies

1. On VAT

a) Self-Funded Press Agencies separately account for advertising revenue to pay VAT according to the deduction method prescribed in the Law on VAT and related guiding documents.

b) Self-Funded Press Agencies may deduct the entire VAT input tax on fixed assets formed from the Development Fund for Public Service Activities of the Press Agency and fixed assets used simultaneously for producing and trading goods and services subject to VAT and those not subject to VAT.

In cases where fixed assets are partly formed from state budget funds, the corresponding VAT input tax shall be included in the original cost of the fixed asset rather than deducted.

c) For fixed assets formed from state budget funds, the VAT input tax on such fixed assets shall be included in the original cost of the fixed asset rather than deducted.

2. On CIT

a) Self-Funded Press Agencies engaged in commercial activities such as advertising, information dissemination, and other services subject to CIT shall account for revenues and expenses to determine taxable income according to the Law on CIT and related guiding documents. In cases where there is a significant difference between expenditures and revenues in journalistic activities and advertising revenues, the Press Agency may use advertising revenues to offset the expenditure-revenue difference in journalistic activities before determining taxable income.

b) A 25% tax rate applies to income from advertising activities and other business operations.

c) Some expenses of the Press Agency are implemented as follows:

- Wages considered reasonable expenses when determining taxable income of the Press Agency are the actual wages paid to employees with valid and legal documentation.

- Expenses for complimentary and gift newspapers directly related to production and business operations, when included in reasonable expenses to determine taxable income, are subject to limitations as provided in point n, Clause 2, Article 9 of the Law on CIT (not exceeding 10% of total deductible expenses; for newly established Press Agencies, not exceeding 15% in the first three years from establishment), except for complimentary and gift newspapers given to individuals who have rendered meritorious service to the revolution, war invalids, disabled veterans; officers and soldiers stationed at sea islands, remote areas, and extremely difficult regions; and state management agencies.

- The Press Agency cannot include expenses funded by the state budget in the determination of taxable income.

d) Other expenses outside those specified in point c of this clause shall be implemented according to the Law on CIT and related guiding documents.

đ) The Press Agency may establish a Science and Technology Development Fund according to current regulations. The establishment, management, and use of the Science and Technology Development Fund of the Press Agency shall comply with current regulations.

Article 3. Regarding VAT and Corporate Income Tax for Newspapers self-financing part of operational costs

1. On VAT

a) For newspapers self-financing part of operational costs with advertising revenue having complete invoices and documents according to prescribed regulations or having sufficient conditions to accurately determine sales revenue from goods and services as per contracts and payment documents and accurately determine deductible VAT input tax according to regulations, they shall declare, deduct, and pay VAT as provided in Clause 1, Article 2 of this Circular for newspapers self-financing operational costs.

Newspapers shall not declare and deduct VAT on goods and services purchased using state-provided funding as stipulated in Clause 1, Article 14 of Government Decree No. 43/2006/NĐ-CP dated April 25, 2006 on the rights of public service units to operate autonomously and be responsible for their tasks, organizational structure, staffing, and finance.

b) In cases where newspapers self-financing part of operational costs have complete invoices for sold goods and services according to prescribed regulations or have sufficient conditions to accurately determine sales revenue from goods and services as per contracts and payment documents but lack purchase invoices for input goods and services or cannot accurately determine deductible VAT input tax according to regulations, they shall declare and pay VAT based on direct calculation on turnover.

The amount of VAT payable shall be determined as follows:

Sales Revenue x Percentage of Value Added on Sales Revenue x VAT Rate on Sold Goods and Services.

The percentage of value added on sales revenue serving as the basis for determining value added is specified as follows:

- Commerce (distribution, provision of goods): 10%.

- Services, construction (excluding construction with materials supplied): 50%.

- Production, transportation, services attached to goods, construction with materials supplied: 30%.

c) To switch the method of calculating VAT from the deduction method to the direct calculation on turnover method and vice versa, newspapers self-financing part of operational costs must submit a written request to the directly managing tax authority for approval to change the VAT calculation method. Within ten working days from the date of receipt of the newspaper's written request to change the VAT calculation method, the tax authority has the responsibility to review and respond in writing whether to agree or disagree with the request to change the VAT calculation method of the newspaper.

2. On CIT

a) For newspapers self-financing part of operational costs engaging in commercial activities, providing services such as advertising, information posting, and other taxable services under Corporate Income Tax, if they can account for revenue and expenses, they shall declare and pay Corporate Income Tax as provided in Clause 2, Article 2 of this Circular. Specifically, regarding salary expenses, if newspapers cannot separately account for them, they may include them in reasonable expenses when determining taxable income from production and business activities (including advertising on the newspaper page) up to an additional one time the salary level set by the State.

b) For newspapers self-financing part of operational costs engaging in business activities subject to Corporate Income Tax, if they can account for revenue but cannot account for and determine expenses and income from business activities, they shall declare and pay Corporate Income Tax at a rate of percent on sales revenue of goods and services, specifically as follows:

- For services: 5%;

- For goods trading: 1%;

- For other activities: 2%.

Article 4. Organization of Implementation

This Circular takes effect 45 days from the date of signature, except for the guidance on Corporate Income Tax which applies to tax periods starting from 2010 onwards.

Matters not covered in this Circular and those not contradictory to its provisions shall be implemented according to current regulations. During implementation, if there are difficulties, organizations and individuals are advised to promptly report to the Ministry of Finance for further study and supplementary guidance.

During implementation, if there are difficulties, organizations and individuals are advised to promptly report to the Ministry of Finance for further study and supplementary guidance./.