DECREE NO. 158/2003/ND-CP DETAILING THE IMPLEMENTATION OF THE VALUE ADDED TAX LAW AND THE AMENDMENT AND SUPPLEMENTATION OF CERTAIN PROVISIONS OF THE VALUE ADDED TAX LAW

DECREE OF THE GOVERNMENT

Regulations for the implementation of the Value Added Tax Law

and the Law Amending and Supplementing Certain Provisions of the Value Added Tax Law

_______________________

THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

"1. The tax rate of 0% shall apply to: export goods and services, including exported processed goods, goods and services exempt from value added tax when exported.

At the proposal of the Minister of Finance,

DECREE:

PART I
General Provisions

Article 1. Value Added Tax is a tax levied on the added value of goods and services generated during production, circulation to consumption.

Article 2. The objects subject to Value Added Tax are goods and services (including services purchased from organizations and individuals abroad) used for production, business, and consumption in Vietnam, except for those specified in Article 4 of this Decree.

Article 3. The taxpayers of Value Added Tax are organizations and individuals engaged in producing, trading goods and services subject to Value Added Tax in Vietnam, regardless of industry, form, type of business (hereinafter referred to as business entities) and other organizations and individuals importing goods, purchasing services subject to Value Added Tax from abroad (hereinafter referred to as importers).

Article 4. The objects exempted from Value Added Tax include:

1. Agricultural products (including forest plantation products), livestock products; aquaculture and marine products that have not been processed into other products or only undergone simple processing before being sold directly by organizations and individuals.

Products that have only undergone simple processing as stipulated in this clause are those that have been dried, sun-dried, frozen, cleaned, peeled but have not been processed at a higher level or transformed into other products.

2. Breeding animals and plants, including: breeding eggs, breeding animals, plant seedlings, seeds, semen, embryos, genetic materials at stages of cultivation, importation, and commercial trade.

3. Salt produced from seawater, natural rock salt, refined salt, iodized salt.

4. Equipment, machinery, transportation vehicles specifically used in production lines and construction materials that are not yet manufactured domestically and need to be imported to create fixed assets for enterprises; equipment, machinery, spare parts, transportation vehicles that are not yet manufactured domestically and need to be imported for direct use in scientific research and technological development activities; aircraft, drilling platforms, foreign-chartered vessels used for production and business operations; equipment, machinery, spare parts, specialized transportation vehicles, and construction materials that are not yet manufactured domestically and need to be imported to conduct exploration, development of oil and gas fields.

In cases where a business entity imports a complete set of equipment and machinery that is exempt from Value Added Tax, but the set includes equipment and machinery already manufactured domestically, Value Added Tax shall not be applied to the entire set of equipment and machinery.

The Ministry of Planning and Investment shall take the lead in coordinating with relevant ministries and agencies to issue a list of equipment, machinery, spare parts, specialized transportation vehicles, and construction materials that are already manufactured domestically to distinguish them from those that are not yet manufactured domestically and need to be imported under the exemption from Value Added Tax as stipulated in this clause.

The Ministry of Finance shall provide guidance on procedures and documents for cases exempt from Value Added Tax as stipulated in this clause.

5. State-owned housing sold by the state to tenants.

6. Transfer of land use rights.

7. Credit services and investment funds, including: lending activities; loan guarantees; discounting of bills and securities; sale of collateral assets to recover debts, financial leasing provided by financial and credit organizations in Vietnam; capital transfer activities and securities trading activities.

8. Life insurance; student insurance; pet insurance, crop insurance, and non-commercial types of insurance.

9. Medical examination, treatment, disease prevention, health rehabilitation services for people and veterinary services.

10. Cultural, exhibition, and mass sports and physical training activities organized without charge or with charge but not for profit.

Performing arts activities such as: singing and dancing, music, drama, circus, and other performances; organizing performing arts services; film production of all kinds.

Importing, distributing, and screening celluloid films, video documentary films: for celluloid films, regardless of the theme; for films recorded on tapes or discs, they must be documentaries, news reports, or scientific films.

11. Education and vocational training, including cultural education, language, computer courses, and other vocational training.

12. Broadcasting radio and television programs funded by the state budget.

13. Publishing, importing, and distributing newspapers, magazines, professional newsletters, political books, textbooks (including in audio, video, or electronic data formats), teaching materials, legal texts, scientific and technical books, books printed in ethnic minority scripts, paintings, posters, and propaganda banners; printing money.

14. Public service sanitation, drainage, street lighting, maintenance of zoos, parks, greenery, public funerals.

15. Maintenance, repair, and construction of cultural, artistic, public service facilities, infrastructure, and charitable houses using contributions from the people and humanitarian aid, including cases where the state provides partial funding not exceeding 30% of the total actual expenditure on the project.

16. Public passenger transport by bus and electric vehicle within urban areas, industrial zones, or between cities and nearby industrial zones according to unified ticket prices set by authorized authorities.

17. Basic surveys conducted by the state and funded by the state budget: including geological surveys, water resources surveys, mapping, meteorology, hydrology, and environmental surveys.

18. Irrigation and clean water supply for agricultural production; clean water extracted by organizations and individuals in mountainous, island, remote, and far-flung areas for rural, mountainous, island, remote, and far-flung area residents' daily use.

19. Special weapons and equipment for national defense and security shall be specifically determined by the Ministry of Finance in conjunction with the Ministry of Defense and the Ministry of Public Security. For weapons and equipment purchased or produced using state budget funds, the exemption from tax must be specifically determined in the state budget estimate.

20. Goods imported in the following cases: humanitarian aid, non-reimbursable aid; gifts to state agencies, political organizations, social-political organizations, social organizations, occupational social organizations, people's armed units; gifts and presents to individuals in Vietnam at levels prescribed by the Government; items of foreign organizations and individuals according to diplomatic exemptions; goods carried by persons within the duty-free baggage allowance; items of Vietnamese citizens residing abroad when returning to Vietnam.

Goods sold to international organizations and foreigners for humanitarian aid and non-reimbursable aid to Vietnam.

21. Goods in transit, goods transiting through Vietnam, goods temporarily imported for re-export, goods temporarily exported for re-import, raw materials imported for production and processing of export goods under contracts with foreign countries.

22. International transportation; goods and services directly supplied for international transportation and reinsurance services provided overseas.

International transportation includes passenger transportation and cargo transportation from Vietnam to other countries.

Goods and services supplied for international transportation are goods and services sold directly by businesses in Vietnam to Vietnamese and foreign international transport means for direct use in their operations, as specified by the Ministry of Finance.

23. Technology transfer as stipulated in Chapter III of the Civil Code of the Socialist Republic of Vietnam. For technology transfer contracts that also include the transfer of machinery and equipment, the exemption from tax shall only apply to the value of the transferred technology; computer software, except for exported computer software.

24. Postal, telecommunications, and universal Internet services according to the Government’s program.

25. Gold imported in bar, ingot form, and other types of gold not yet processed into artistic products, jewelry, or other products. Gold in bar, ingot form, and other types of unprocessed gold shall be identified in accordance with international regulations.

26. Export products are unprocessed mineral resources as specifically defined below:

- Crude oil;

- Shale, sand, rare earths;

- Precious stones;

- Manganese ore, tin ore, iron ore, chromium ore, emmenite ore, apatite ore.

The Ministry of Finance shall coordinate with the Ministry of Natural Resources and Environment and relevant agencies based on the management requirements of mineral resources at each period to adjust the list of mineral resources specified herein and submit it to the Government for approval.

27. Products are artificial parts used to replace diseased body parts; crutches, wheelchairs, and other special tools for disabled persons;

28. Goods and services of individuals engaged in business with average monthly income lower than the minimum wage prescribed by the State for civil servants. Income is determined by subtracting reasonable business expenses from the revenue of the individual business.

Businesses are not allowed to deduct input VAT on goods and services used for producing and trading taxable goods and services as specified in this Article and must include them in the value of goods and services, fixed asset cost, or business expenses.

Chapter II

Basis and method of calculating tax

Article 5. The basis for calculating VAT is the taxable price and tax rate.

Article 6. The taxable price for VAT is defined as follows:

1. For goods and services sold by production and business establishments, the selling price excluding VAT. For goods and services subject to special consumption tax, the selling price including special consumption tax but excluding VAT.

2. For imported goods and services purchased from organizations and individuals abroad:

a) For imported goods, the price at the customs port plus (+) import duties (if applicable) plus (+) special consumption tax (if applicable). The price at the customs port is determined according to the regulations on the taxable price of imported goods.

b) For services purchased from organizations and individuals abroad, the payment price to foreign organizations and individuals excluding VAT.

3. For goods and services used for exchange, internal consumption (except for goods and services circulated internally to continue the production process), gifts, and donations, the taxable price is the price of similar or equivalent goods and services at the time these activities occur. 4. For leasing assets regardless of the type of asset and lease form, the taxable price is the lease price excluding VAT. In case of lease payments made periodically or paid in advance for a lease term, the taxable price is the lease payment excluding VAT made periodically or in advance. For business activities that are not subject to value-added tax (VAT) (such as gifts or donations), the taxable amount for VAT is the price of similar goods or services at the time these activities occur.

5. For goods sold on installment basis, the taxable price is the total selling price of the goods excluding VAT paid in one lump sum (excluding the installment interest), not calculated based on periodic installment payments.

6. For processing goods, the taxable price is the processing fee excluding VAT (including labor costs, fuel, power, auxiliary materials, and other costs for processing).

5. For goods sold on installment payment terms, the taxable amount is the total sale price excluding VAT paid in one lump sum (excluding the interest portion of the installments), and not calculated based on each installment payment.

6. For processing goods, the taxable amount is the processing fee excluding VAT (including labor costs, fuel, power, auxiliary materials, and other expenses for processing).

7. For construction and installation activities, the taxable value is the construction and installation price excluding tax for the project, sub-project, or portion of work completed; in cases where construction and installation projects are settled based on unit prices and quantities of completed sub-projects or portions of work handed over, VAT is calculated on the value of the completed and handed-over portion. If construction and installation are carried out under a lump-sum contract including raw materials and machinery, the taxable value includes the value of raw materials and machinery. If construction and installation are not carried out under a lump-sum contract including raw materials and machinery, the taxable value is the construction and installation price excluding the value of raw materials and machinery.

For investment activities in constructing houses for sale or infrastructure for transfer, where land is allocated by the State, the taxable value is the selling price of the house or infrastructure attached to the land, minus the land use fee payable to the state budget.

For investment activities in infrastructure for lease, the taxable value is the lease price of the infrastructure, minus the land lease fee payable to the state budget.

8. For real estate trading activities, the taxable value for VAT is the value of the real estate sold, minus the land value according to regulations to determine the land use fee payable to the state budget or to determine compensation when the State expropriates land at the time of selling real estate.

9. For agency and brokerage activities in buying and selling goods and services earning commission, the pre-tax value serving as the basis for calculating tax is the commission income from these activities.

10. For goods and services with specific characteristics that use payment vouchers recording the settlement price inclusive of VAT, the pre-tax value serving as the basis for calculating tax is determined by dividing the inclusive price by [1 + (% VAT rate applicable to such goods or services)].

The taxable value for goods and services specified in this Article includes additional surcharges and fees that the business entity earns.

The Ministry of Finance shall provide detailed guidance on the taxable value for VAT for goods and services specified in this Article.

Article 7. Value-added tax rate

1. The zero percent tax rate applies to: exported goods and services, including export processing goods, goods and services exempt from VAT upon export.

a) Exported services are services directly provided to organizations and individuals abroad and consumed outside the territory of Vietnam.

b) Exported goods include goods exported to foreign countries, goods exported to export processing zones, or goods exported to export processing enterprises, and other specific cases considered as exports under government regulations.

c) The following cases are not subject to VAT at the zero percent rate:

- International transportation; goods and services directly supplied for international transportation; outbound travel agency services; outbound reinsurance services; financial credit, investment finance, and stock investment services abroad; mineral resources extracted without processing as specified in Clause 26, Article 4 of this Decree are not subject to VAT.

- Goods and services sold to export processing enterprises and export processing zones include insurance, banking, postal, telecommunications, consulting, auditing, accounting, transportation, loading and unloading, leasing of premises, offices, warehouses, and consumer goods for individual workers, fuel sold to transport vehicles must be subject to VAT at the applicable rate for consumer goods in Vietnam.

2. The five percent tax rate applies to goods and services:

a) Clean water for production and daily use, except clean water exempt from VAT as specified in Clause 18, Article 4 of this Decree and soft drinks within the 10% tax rate category.

b) Fertilizers, ores for fertilizer production; pesticides and growth stimulants for livestock and crops.

c) Medical equipment, machines, and specialized tools; medical cotton and sanitary napkins; medicines for treatment and prevention; chemical pharmaceutical products and medicinal herbs used as raw materials for producing medicines for treatment and prevention.

d) Teaching and learning aids including models, drawings, boards, chalks, rulers, compasses used for teaching and learning, and specialized equipment and tools for teaching, research, and experiments.

đ) Printing of products exempt from VAT as specified in Clause 13, Article 4 of this Decree, except printing money.

e) Children's toys; books of all kinds, except books exempt from VAT as specified in Clause 13, Article 4 of this Decree; magnetic tapes, discs already recorded or not yet recorded.

g) Agricultural and livestock products; aquatic and marine products not processed or only simply cleaned, frozen, dried, or peeled at the trading stage.

h) Fresh food, grains, forest products (except wood and bamboo shoots) not processed at the trading stage, except those specified in Clause 1, Article 4 of this Decree.

Grains include rice, corn, sweet potatoes, cassava; wheat, rice flour, corn flour, sweet potato flour, cassava flour, wheat flour.

Fresh food is food that has not been processed or only minimally processed.

Unprocessed forest products are forest products harvested from natural forests belonging to groups such as bamboo, rattan, palm, mushrooms, roots, leaves, flowers, medicinal plants, and other forest products.

i) Sugar; by-products in sugar production including molasses, sugarcane residue, and mud residue.

k) Products made from rush, straw, bamboo, and leaves, which are products produced and processed from main raw materials belonging to groups such as rush, straw, bamboo, palm, rattan, coconut.

l) Cotton processed from domestically grown cotton, which is cotton that has had its seeds and hulls removed and sorted.

m) Livestock, poultry feed, and feed for other animals.

n) Science and technology services, except services exempt from VAT as specified in Article 4 of this Decree.

o) Direct services supporting agricultural production including activities such as plowing and harrowing agricultural land; digging, filling, dredging canals, ditches, ponds, lakes for agricultural production; breeding, planting, caring, pest control; harvesting, picking, preliminary processing, and preservation of agricultural products.

p) Coal, soil, rock, sand, gravel.

q) Basic chemicals; mechanical products (excluding consumer mechanical products); various types of molds; explosives; grinding wheels; printing paper; pesticide sprayer tanks; raw rubber; raw rosin; Synthetic wood panels; industrial concrete products, including concrete bridge beams, concrete building beams and frames, concrete piles, concrete utility poles, concrete round pipes, various types of concrete boxes, non-standard reinforced concrete prefabricated components, commercial concrete;; Tires and tire assemblies with sizes from 900 - 20 and above; neutral glass tubes (tubes and shaped tubes); nets, fishing ropes, and threads for making fishing nets;

Products of iron, steel, non-ferrous metals, precious metals smelting, rolling, drawing, except gold imported as specified in Clause 25; Article 4 of this Decree.

Automatic data processing machines and parts, accessories of such machines (including computers and parts, accessories of computers);

Maintenance, repair, restoration of historical and cultural relics, museums, except activities specified in Clause 15 of Article 4 of this Decree;

Transportation, loading and unloading; dredging of channels, rivers, inland ports, sea ports; salvage and rescue operations;

Video film distribution and screening (except video documentary distribution and screening as specified in Clause 10 of Article 4 of this Decree);

3. The tax rate of 10% applies to goods and services:

a) Petroleum, natural gas, ores, and other mining products;

b) Commercial electricity sold by power production and trading enterprises;

c) Electronic products; consumer mechanical products, electrical appliances;

d) Chemical products (excluding basic chemicals as specified in Point q Clause 2 of this Article), cosmetics;

đ) Fibers, fabrics, clothing products, embroidery; sanitary napkins and baby diapers;

e) Paper (excluding printing paper as specified in Point q Clause 2 of this Article) and paper products;

g) Milk, cakes, candies, soft drinks, and other processed foods;

Ceramic, porcelain, glass, rubber, plastic products; wood and wood products. Cement, bricks, tiles, and other construction materials (excluding products subject to a 5% tariff rate);

i) Construction, installation; buildings, technical infrastructure of facilities assigned land or leased land by the State for investment and business purposes;

k) Postal, telecommunications, and Internet services (excluding postal, telecommunications, and Internet services as specified in Clause 24 of Article 4 of this Decree);

l) Leasing of houses, offices, warehouses, docks, factories, machinery, equipment, transportation means;

m) Legal advisory services and other advisory services;

n) Auditing, accounting, surveying, design services;

o) Photography, printing, film duplication; tape recording, tape rental; video recording; photocopying;

p) Hotels, tourism, catering;

Goods and services subject to special consumption tax;

Gold, silver, precious stones (excluding gold imported as specified in Clause 25 of Article 4 of this Decree);

Marine agency services;

Brokerage services;

Other goods and services not specified in Article 4 and Clauses 1 and 2 of this Article;

Based on the tax rates prescribed in this Article, the Ministry of Finance shall provide detailed guidance on the implementation of tax rates for goods and services;

Article 8. Method of calculating value-added tax

1. The tax deduction method:

The amount of value-added tax payable is determined by subtracting (−) the deductible input value-added tax from the output value-added tax;

a) Output value-added tax is calculated by multiplying the taxable sales price of goods and services by the applicable value-added tax rate;

In cases where the seller does not clearly specify the pre-tax sales price and value-added tax on the value-added tax invoice, the output value-added tax is calculated based on the sales price of the goods and services, excluding the case where the value-added tax invoice indicates a payment price that includes value-added tax;

b) Deductible input value-added tax is the total value-added tax recorded on invoices for purchasing goods and services, tax payment certificates for imported goods used in producing and trading taxable goods and services, and tax payment certificates issued on behalf of foreign organizations and individuals as stipulated in Point e Clause 1 of Article 9 of this Decree;

c) The tax deduction method applies to businesses, except those applying the direct calculation method on value-added tax as prescribed in Clause 2 of this Article;

2. Direct calculation method on value-added tax:

The amount of value-added tax payable is determined by multiplying the value-added of taxable sales by the applicable value-added tax rate;

a) Value-added of goods and services is determined by subtracting the purchase price from the sales price of goods and services;

The purchase and sales prices of goods and services include the actual purchase and sales prices recorded on invoices, including value-added tax and additional charges and fees that the seller benefits from;

The purchase price of goods and services is determined by the value of purchased goods and services including value-added tax used for producing and trading taxable goods and services;

In cases where businesses have not fully implemented purchases and sales of goods and services with invoices and documents as prescribed above, the value-added is determined as follows:

- For businesses that have fully implemented sales of goods and services with complete invoices and documents, accurately determining sales revenue but lacking purchase invoices, the value-added is determined by multiplying the sales revenue by the percentage of value-added calculated on sales revenue;

- For individual traders who have not implemented or have not fully implemented invoices for purchasing and selling goods and services, the tax authority will determine the taxable sales revenue based on the business situation of each individual trader, and the value-added is determined by multiplying the determined sales revenue by the percentage of value-added calculated on sales revenue.

b) The percentage rate of value-added tax calculated on revenue, as determined by the Tax Authority, shall be applicable to each business sector.

The Ministry of Finance shall provide guidance on the specific determination of value-added tax for each business sector.

c) The direct calculation method based on value-added shall only apply to the following subjects:

- Individuals producing and trading who are Vietnamese citizens and organizations or individuals from foreign countries conducting business in Vietnam without complying with the Foreign Investment Law in Vietnam regarding accounting conditions, invoices, and documents necessary for tax deduction calculation.

- Business establishments engaged in buying and selling gold, silver, precious stones, and foreign currencies, which are subject to value-added tax calculation using the direct calculation method on value-added. In cases where business establishments subject to tax deduction calculation methods also engage in buying and selling gold, silver, and precious stones, they may separately calculate and declare taxes payable for such activities using the direct calculation method on value-added.

Article 9. Deduction of input value-added tax:

1. Business establishments subject to value-added tax under the tax deduction method shall deduct input value-added tax as follows:

a) Input value-added tax on goods and services purchased for production and trading of taxable goods and services shall be fully deductible.

b) Input value-added tax on goods and services purchased for both taxable and non-taxable production and trading activities shall only be deductible for the portion used in taxable production and trading activities.

Business establishments must separately account for deductible and non-deductible input tax; if separate accounting is not possible, the deduction shall be made according to the ratio between taxable sales volume and total sales volume.

c) Input tax deductible arising in a month shall be declared and deducted when determining the tax payable for that month. The declaration period shall not exceed three months from the date of tax declaration for the month in which the tax arose. Value-added tax invoice for goods and services purchased exceeding the three-month period, the business establishment shall not be allowed to declare deductions but must include it in the cost of goods, services, fixed asset original price, or operating expenses.

Specifically, large input tax on fixed assets can be gradually deducted or refunded according to Article 15 of this Decree.

d) Exported goods and services eligible for input tax deduction or refund must meet the following conditions and procedures:

- Export declaration form confirmed by the Customs Authority regarding the export procedures completed (applicable to exported goods).

- Sales contract or processing contract (for processed goods) or service provision contract for foreign organizations or individuals.

- Payment through a bank or equivalent bank payment methods such as offsetting foreign debt, foreign party authorizing a third party abroad to pay through a bank (except for exports settled by barter trade, repayment to the state, labor export payments directly received by workers, and certain export goods and services with special payment methods decided by the Prime Minister).

- Invoice for sale of goods and services to foreign traders.

If exported goods and services have been confirmed by the Customs Authority (for exported goods) but lack one of the remaining conditions and procedures, the business establishment shall not be allowed to deduct input tax but must include it in operating expenses. The Ministry of Finance shall provide detailed guidance on the procedures and conditions for this situation.

For business establishments paying value-added tax using the direct calculation method on value-added, when switching to the tax deduction method, they shall only be allowed to deduct input tax based on invoices and documents generated from the date of applying the tax deduction method.

đ) For business establishments purchasing goods and services with unique characteristics from foreign organizations or individuals subject to value-added tax under the tax deduction method, if the invoices indicate prices inclusive of value-added tax, the non-tax-inclusive price and deductible input tax shall be determined based on the price including tax according to the calculation method specified in Clause 10, Article 6 of this Decree.

e) When Vietnamese business establishments purchase goods and services from foreign organizations or individuals conducting business in Vietnam outside the scope of foreign investment forms regulated by the Foreign Investment Law in Vietnam and not adhering to Vietnamese accounting systems, the Vietnamese business establishments shall pay the value-added tax on behalf of the foreign contractors. The Vietnamese business establishments shall be entitled to deduct the value-added tax paid on behalf of the foreign contractors.

2. The basis for determining the amount of deductible input tax as provided above is:

a) For purchased goods and services, it is the value-added tax amount recorded on the value-added tax invoice for the purchase of goods and services; in cases of paying on behalf of foreign contractors or other entities as stipulated by law, it is the payment receipt.

b) For imported goods, it is the value-added tax amount already paid, recorded on the import value-added tax payment receipt.

c) For goods and services purchased from business establishments subject to value-added tax under the tax deduction method, if invoices indicate prices inclusive of value-added tax, the deductible input tax shall be calculated based on those invoices according to Point đ, Clause 1 of this Article.

3. Business entities shall not be entitled to deduct input VAT for value-added tax invoices that are not used in accordance with the provisions of the law, such as: using fake value-added tax invoices and vouchers, blank invoices (no purchase or sale of goods or services), invoices recording values higher than the actual value of goods or services sold.

Article 10. Business entities must fully comply with the requirements of purchasing and selling goods and services with invoices and vouchers in accordance with the provisions of the law. The invoices for purchasing and selling goods and services for business entities are regulated as follows:

1. Business entities subject to the tax deduction method must use value-added tax invoices. When issuing sales invoices for goods and services, business entities must record all necessary elements on the invoice accurately, including the selling price which must clearly state: the selling price excluding tax, additional charges and fees outside the selling price (if any), VAT, and the total payment including tax.

2. Business entities subject to the direct taxation method based on value-added must use sales invoices. The selling price recorded on the invoice is the total payment including VAT.

3. Business entities using self-printed invoices and vouchers must register their invoice and voucher models with the Ministry of Finance (General Department of Taxation) and can only use them upon receiving a written notification from the Ministry of Finance (General Department of Taxation).

4. Business entities directly selling goods to consumers at retail prices below the specified limit must issue value-added tax invoices or sales invoices. If the entity does not issue an invoice, it must prepare a retail sales list according to the Tax Authority's model as the basis for calculating VAT; if the buyer requests a value-added tax invoice or sales invoice, the entity must issue the invoice in accordance with the regulations.

5. Business entities engaging in printing, issuing, or using invoices contrary to regulations to evade taxes, defraud deductions or refunds of VAT will, in addition to being required to recover the fraudulent tax amount, also face administrative penalties for tax violations. In cases of serious violations, criminal responsibility may also be pursued according to the law.

Chapter III
Registration, declaration, payment, settlement of tax

Article 11. Business entities shall register for tax payment as follows:

1. Business entities subject to VAT as stipulated in Article 3 of this Decree, including affiliated units and branches under the main business entity, must register with the Tax Authority at the place of business regarding the location of business operations, business activities, number of current employees, capital, place of tax payment, and other related indicators according to the guidance of the Tax Authority.

For newly established entities, the latest time to register for tax payment is ten days from the date the business registration certificate is issued; in cases where the entity has not yet received a business registration certificate but has commenced business activities, it must register for tax payment before commencing business. Business entities that have already registered for tax payment, if there are changes such as mergers, consolidations, divisions, separations, changes in ownership or business form, dissolution, bankruptcy, or changes in business activities or locations, must report these changes to the Tax Authority at least five days prior to the change.

2. Business entities subject to the direct taxation method based on value-added, if they fully comply with the conditions regarding invoice and voucher systems, accounting books, declarations, and timely tax payments, and voluntarily apply for the tax deduction method, and if the Tax Authority confirms that they meet all these conditions, the Tax Authority will notify the entity to proceed accordingly. If during implementation, the entity fails to comply with the prescribed conditions, the Tax Authority will issue a notice suspending the application of the tax deduction method.

The Ministry of Finance will provide guidelines for tax registration procedures and the authority to review whether business entities subject to the direct taxation method based on value-added can apply the tax deduction method as stipulated in this provision.

Article 12. Business entities and importers must declare VAT according to the following regulations:

1. Business entities engaged in goods and services subject to VAT must declare VAT monthly and submit the tax declaration form along with the declaration of purchased and sold goods and services as the basis for determining the tax payable for the month to the Tax Authority within the first ten days of the following month. Even if there is no turnover from the sale of goods and services, input tax, or output tax, the business entity still must declare and submit the declaration form to the Tax Authority. The entity must complete the tax declaration form accurately and bear legal responsibility for the accuracy of the declaration.

The time of occurrence of output VAT is when the business entity transfers ownership (or usage rights in the case of installment sales) of goods or provides services to the buyer, regardless of whether the buyer has paid or not. When selling goods or providing services, the business entity must issue an invoice in accordance with the law.

Organizations or individuals outside Vietnam without offices or management headquarters in Vietnam supplying goods and services subject to VAT to organizations or individuals in Vietnam must declare and pay VAT on behalf of the foreign organizations or individuals.

2. Business entities and importers importing goods subject to VAT must declare and submit VAT declarations for each importation together with customs declarations to the customs revenue collection authority.

3. Business entities dealing with various types of goods and services subject to different VAT rates must declare VAT according to the respective rates for each type of goods or service. If the business entity cannot determine the rate for each type, it must calculate and pay tax at the highest rate applicable to the goods or services it produces or sells.

Article 13. Payment of VAT into the State budget

1. Business entities have the responsibility to fully and timely pay value-added tax into the State budget.

a) For business entities that pay taxes using the tax deduction method after submitting the value-added tax declaration form to the Tax Authority, they must pay value-added tax into the State budget. The deadline for monthly tax payment shall not exceed the 25th day of the following month. In cases where the amount of value-added tax payable by a business entity averages 200 million VND or more per month, such entities must pay taxes periodically every 5 or 10 days within the month. At the end of the month, when declaring and calculating taxes, the business entity must pay any outstanding tax into the State budget. The latest deadline for paying any outstanding tax is the 25th day of the following month.

b) For business entities that have not fully implemented accounting systems and invoices, which pay taxes directly, they have the responsibility to fully and timely pay value-added tax into the State budget according to the tax payment notice from the Tax Authority.. The deadline for monthly tax payment shall not exceed the 25th day of the following month.

c) For households and individuals operating businesses in remote areas far from the National Treasury or those engaged in mobile or irregular trading, the Tax Authority will collect taxes and pay them into the State budget. The Tax Authority must deposit collected taxes into the State budget within no more than three days, except for mountainous, island, and difficult-to-reach regions, where the deadline is no more than six days from the date of collecting the tax.

2. Business entities and importers must pay value-added tax on each import transaction.

The notification period and the tax payment period for imported goods' value-added tax are carried out simultaneously with the notification period for import duties. For goods that do not require import duties, the declaration and payment period for value-added tax follows the regulations applicable to goods subject to import duties.

For imported goods exempted from value-added tax under Clause 4, Article 4 of this Decree, if sold or used for other purposes, they must be declared and taxed according to the regulations for other goods.

3. Within a tax period (month), if a business entity has overpaid tax in the previous period, it can deduct the excess from the tax due in the next period. If there was a shortage in the previous period, the entity must make up the difference. Business entities subject to the tax deduction method, if during the tax period the input tax exceeds the output tax, may deduct the excess input tax in the subsequent tax period. In cases where new fixed assets investment results in large deductible input tax amounts, the entity may gradually deduct or request a refund according to the provisions of Article 15 of this Decree.

4. Value-added tax paid into the State budget must be in Vietnamese Dong.

If a business entity's revenue is in foreign currency, it must convert the foreign currency to Vietnamese Dong at the exchange rate published by the State Bank of Vietnam at the time of generating foreign currency revenue to determine the tax payable.

The Ministry of Finance will provide specific guidelines for tax payment procedures suitable for different tax payment methods and taxpayers as stipulated in this Article.

Article 14. Business entities must settle their annual tax with the Tax Authority. The tax settlement year is calculated based on the Gregorian calendar. Within sixty days from the end of the year, business entities must submit the annual tax settlement report to the Tax Authority and must pay any outstanding tax into the State budget within ten days from the date of submitting the tax settlement report. If there is an overpayment, it can be deducted from the tax due in the next period.

In cases of merger, consolidation, division, spin-off, dissolution, bankruptcy, or ownership transfer; transfer, sale, lease, or assignment of state-owned enterprises, business entities must settle their tax with the Tax Authority and submit the tax settlement report to the Tax Authority within forty-five days from the date of the decision on merger, consolidation, division, spin-off, dissolution, bankruptcy, or ownership transfer; transfer, sale, lease, or assignment of state-owned enterprises.

Business entities are responsible for declaring all taxes due, paid, and outstanding up to the tax settlement deadline. They must fill out the tax settlement form completely and accurately according to the prescribed format and send the tax settlement report to the local Tax Authority within the specified time frame.

The Ministry of Finance will specify the forms and provide guidance on implementing the tax settlement procedures as stipulated in this Article.

Article 15. The refund of paid value-added tax according to Article 16 of the Law on Value-Added Tax is detailed as follows:

1. Business entities subject to the tax deduction method are eligible for a refund if, after three consecutive months, there remains unutilized input tax. This eligibility applies to both expanding and deepening investment business entities.

Business entities exporting goods or services seasonally or on a case-by-case basis with significant quantities and values, if the unutilized input tax for exported goods or services exceeds 200 million VND in a month, are eligible for a monthly refund. Business entities with export goods eligible for a value-added tax refund must meet the conditions and procedures stipulated in Point d, Clause 1, Article 9 of this Decree.

2. Newly established business entities that have registered for business and tax payment using the tax deduction method, currently in the investment phase and not yet operational, if the investment period is one year or longer, are eligible for a refund of value-added tax on goods and services used for investment annually. If the value-added tax on goods and services used for investment exceeds 200 million VND, the entity is eligible for a quarterly refund.

3. A business entity that is currently operating and subject to taxation under the tax deduction method, with a new production facility project, still in the investment phase, not yet operational, not registered for business or tax purposes, and with a value-added tax amount of at least 200 million VND for goods and services used for the investment project, shall be eligible for tax refund on a quarterly basis. The business entity must declare and prepare a separate tax refund application for this investment project.

4. A business entity settling taxes upon division, separation, dissolution, bankruptcy, ownership transfer; transferring, selling, contracting out, leasing state-owned enterprises with outstanding input value-added tax not yet deducted or excess value-added tax paid. input VAT not yet deducted or excess VAT paid.

5. Value-added tax refunds for projects using official development assistance (ODA) funds:

a) For ODA-funded projects without repayment: the project owner or main contractor shall be refunded the value-added tax already paid in the purchase price of goods and services used for the project.

b) For ODA-funded projects financed by the state budget without repayment: the project owner or main contractor shall be refunded the value-added tax already paid when importing and purchasing domestic goods and services used for the project.

6. Organizations in Vietnam using foreign organizations' and individuals' humanitarian aid funds to purchase goods in Vietnam subject to value-added tax for humanitarian aid purposes shall be refunded the value-added tax on those goods.

7. Recipients entitled to diplomatic privileges and immunities according to the Ordinance on Diplomatic Privileges and Immunities purchasing goods and services in Vietnam at prices inclusive of value-added tax for their use shall be refunded the value-added tax paid as recorded on the value-added tax invoice. be refunded the VAT already paid as recorded on the VAT invoice.

8. A business entity must have a decision on tax refund issued by the competent authority as stipulated by law.

To process tax refunds as provided for in this Article, organizations and individuals must submit a request letter along with the tax refund application to the local tax administration agency. The Tax Authority is responsible for reviewing, determining the amount of tax to be refunded, and processing the refund or requesting the competent authority to refund the tax to the business entity.

The Ministry of Finance shall specify the procedures, deadlines, and authority for handling tax refunds as stipulated in this Article.

Article 16. The Tax Authority has the following tasks, powers, and responsibilities:

1. Guide businesses that have registered for business operations to implement the registration, declaration, and payment of value-added tax in accordance with the provisions of the Law on Value-Added Tax.

Businesses that fail to comply with the regulations on registration, declaration, and payment of taxes will receive a first-time notification from the tax authority. If the business does not comply after receiving the first notification, the tax authority may impose administrative penalties for tax violations.

2. Notify businesses subject to the tax deduction method to explain, adjust, supplement, or re-declare in cases where the value-added tax declaration form does not fully or accurately reflect the tax due. Notify businesses subject to the direct payment method about the amount of tax due and the deadline for payment as prescribed. The tax payment notice must be sent to the taxpayer three days prior to the payment date specified in the notice. notify the business entity taxed under the direct method of the amount of tax due and the deadline for payment according to regulations. The tax payment notice must be sent to the taxpayer. If the business fails to pay the tax within the prescribed period, the tax authority will issue a notice regarding the tax amount and late payment penalty as stipulated in Clause 2, Article 19 of the Law on Value-Added Tax. The monthly late payment penalty calculation period starts from the 26th day of the following month or from the tax payment deadline as notified by the tax authority for taxpayers who received a tax notice. The late payment penalty calculation period for imported goods and other cases is after the statutory payment deadline noted on the tax notice. If the business continues to fail to pay the tax and penalty as notified, the tax authority may apply or propose the competent authority to apply the measures prescribed in Clause 4, Article 19 of the Law on Value-Added Tax to ensure full collection of the tax and penalty. If these measures are implemented but the business still fails to pay the full amount of tax and penalty, the tax authority will transfer the case to relevant legal authorities for further action.

If the business entity fails to pay the tax within the prescribed period, issue a notice detailing the tax amount and the late payment penalty according to Clause 2, Article 19 of the Value-Added Tax Law. The monthly late payment penalty period starts from the 26th day of the following month or from the date specified for tax payment in the tax authority's notice for taxpayers who receive such notices. The late payment penalty period for imported goods and other cases begins after the statutory due date noted on the tax notice. If the business entity still fails to comply with paying the tax and penalties as notified, the tax authority has the right to apply or propose competent authorities to apply the enforcement measures stipulated in Clause 4, Article 19 of the Value-Added Tax Law to ensure full collection of taxes and penalties. If the enforcement measures are implemented but the business entity still does not pay the full amount of tax and penalties, the tax authority transfers the case file to relevant legal authorities for further action.

3. Inspect and audit the declaration, payment, and settlement of taxes by businesses in accordance with the provisions of the law.

4. Handle administrative tax violations and resolve tax complaints in accordance with the provisions of the law.

5. Require taxpayers to provide accounting books, invoices, vouchers, and other related documents for tax calculation and payment; require financial institutions, banks, and other related organizations and individuals to provide documents related to tax calculation and payment.

6. Retain and use data and documents provided by businesses and other entities in accordance with the prescribed system.

Article 17. The Tax Authority has the right to determine the value-added tax payable by taxpayers in the following cases:

1. Failure to implement or improper implementation of accounting systems, invoices, and vouchers.

For businesses subject to the direct tax calculation method on value-added tax that have not implemented or have inadequately implemented the purchase and sale of goods and services with invoices and vouchers, the tax authority shall base its determination of the value-added tax and tax payable on the business situation in accordance with the tax calculation method prescribed in Clause 2, Article 8 of this Decree.

For small and medium-sized individual businesses, the determined tax payable per period, serving as the basis for tax collection every six months or twelve months, depending on the industry and fluctuations in prices and business conditions of the taxpayer, shall be publicly announced by the Tax Authority.

Individuals operating small and medium businesses must declare and pay taxes according to predetermined rates for each period. If there are changes in business activities, scale, or sales volume, they must report to the Tax Authority for review and adjustment of the predetermined tax rate. In cases where individuals fail to report or provide inaccurate reports, the Tax Authority has the right to determine the appropriate tax rate based on actual business conditions. Individuals who cease operations must report to the Tax Authority to be considered for tax exemption or reduction. If they cease operations for 15 days or more in a month, they will be eligible for a 50% reduction in the monthly tax payable, and if they cease operations for the entire month, they will be exempt from paying tax for that month.

The Ministry of Finance shall guide the determination of the percentage of value-added tax calculated on revenue as the basis for determining the amount of value-added tax payable, suitable for each type of business activity; procedures for reporting cessation of business operations and the reduction of tax for individual businesses as stipulated in this Article.

2. Failure to declare or submit the declaration form beyond the prescribed time despite being reminded, or submitting a declaration form with incorrect information regarding the basis for determining the value-added tax payable.

3. Refusal to present accounting books, invoices, supporting documents, and other necessary materials related to the calculation of value-added tax.

4. Engaging in business without registration, failing to declare and pay taxes, and being discovered during inspection.

The Tax Authority shall base its determination of the amount of tax payable for each business entity on investigation documents regarding the business operation situation of the entity or on the tax payable of similar-sized businesses in the same industry to set the tax payable for each business entity in the aforementioned situations.

In case a business entity disagrees with the determined amount of tax payable, it has the right to appeal to the Tax Authority that determined the tax or to the higher-level Tax Authority overseeing the Tax Authority that determined the tax. During the appeal process, the business entity or appellant must still pay according to the tax rate determined by the Tax Authority.

Chapter IV

Handling violations and rewarding

Article 18. Taxpayers and tax officials who violate the Value-Added Tax Law shall be subject to handling according to Articles 19 and 21 of the Value-Added Tax Law, depending on the nature and degree of violation.

Article 19. Tax Authorities and tax officials who complete their assigned tasks well, organizations and individuals who have achievements in implementing the Value-Added Tax Law, and taxpayers who fulfill their tax obligations properly shall be rewarded according to the regulations of the Government.

Chapter V

Implementation Provisions

Article 20. The organization of collecting value-added tax is regulated as follows:

1. The Tax Authority is responsible for organizing the collection of value-added tax and processing refunds of value-added tax for goods and services of production and business establishments.

2. Customs Authorities are responsible for organizing the collection of value-added tax on imported goods.

3. The Tax Authority and Customs Authorities are responsible for coordinating in managing the collection of value-added tax nationwide.

The Ministry of Finance shall specify the detailed organization of collecting value-added tax as stipulated in this Article.

Article 21. The amount of value-added tax refunded to entities specified in Article 15 of this Decree shall be funded from the refund fund, which is extracted from the collected value-added tax. The Ministry of Finance shall specify the detailed organization of refunds, accounting entries for tax collection and refunds of value-added tax as stipulated in this Article.

Article 22. This Decree takes effect from January 1, 2004, and replaces Decrees No. 79/2000/NĐ-CP dated December 29, 2000, No. 76/2002/NĐ-CP dated September 13, 2002, No. 95/2002/NĐ-CP dated November 11, 2002, and Decree No. 108/2002/NĐ-CP dated December 25, 2002 of the Government detailing the implementation of the Value-Added Tax Law.

Article 23. The Ministry of Finance shall provide guidance on the implementation of this Decree;

The Ministers, Heads of Ministries equivalent to ministries, Heads of government agencies, and Chairmen of provincial people's committees directly under the central government shall be responsible for implementing this Decree./.