Circular No. 274-TC/TCT provides guidance on the collection of special consumption tax on alcohol.

LETTER

OF THE MINISTRY OF FINANCE NUMBER 274-TC/TCT DATE 05-3-1991 GUIDANCE
COLLECTION OF SPECIAL CONSUMPTION TAX ON ALCOHOL

I- SCOPE OF APPLICATION OF THE SPECIAL CONSUMPTION TAX FOR ALCOHOL
FOR ALCOHOL PRODUCTS

1- All types of alcohol with an alcohol content of 16o etylic or higher produced through the following methods must pay special consumption tax as prescribed in Article 9 of the Special Consumption Tax Law.

- Alcohol produced through distillation methods, including traditional distillation methods: crude alcohol, refined alcohol, white alcohol;

- Alcohol produced using refined or crude alcohol and flavoring or medicinal ingredients to make aromatic alcohol, white alcohol, medicinal alcohol, tonic alcohol;

- Alcohol produced from fruit fermentation: wine, fruit juice.

2. All types of beverages with an alcohol content below 16o etylic shall be subject to a tax rate of 50% as specified for various types of beer in Article 9 of the Special Consumption Tax Law.

3. Products recovered from alcohol production such as: head alcohol (blue alcohol, industrial alcohol), tail alcohol, and alcohol sold to healthcare (not used for mixing drinking alcohol) are not subject to special consumption tax but must pay turnover tax at the rate specified in Point 15 Section I of the industry production tax detailed table issued together with Circular No. 45-TC/TCT dated 4-10-1990 of the Ministry of Finance.

4. Alcohol products that have paid special consumption tax at the production stage do not need to pay special consumption tax when circulating on the market.

Direct production units only pay special consumption tax when selling alcohol without having to pay turnover tax on products that have already been taxed with special consumption tax.

5. Units paying special consumption tax can deduct the amount of special consumption tax already paid on alcohol products when calculating special consumption tax at the blending stage if they meet the following conditions:

- The alcohol product has already paid special consumption tax.

- The alcohol product is used as raw material for blending alcohol.

- One of the following documents proving payment of special consumption tax:

+ Payment receipt;

+ Goods transport certificate for goods that have paid tax or sales invoice issued by the Ministry of Finance or registered with the tax authority.

The deduction formula is as follows:

Where:

For simplicity, the deduction of taxes already paid may be based on the average special consumption tax paid per liter of alcohol and the consumption quota of alcohol per liter of alcohol to calculate the deduction. When quarterly settlement occurs, the tax deduction will be adjusted according to the actual amount of alcohol used.

6. Alcohol intended for export does not need to pay special consumption tax. In cases where it is not exported and is to be consumed domestically, it must pay special consumption tax.

The Ministry of Finance will examine and decide not to collect special consumption tax for specific cases. Units requesting exemption from special consumption tax for alcohol intended for export must submit the following documents to the Ministry of Finance:

- A letter explaining the request for exemption from special consumption tax for alcohol products produced for export under agreements or contracts with foreign countries.

- A copy of the export permit issued by the Ministry of Commerce allowing the export of alcohol.

- Purchase contract for exported alcohol between the production unit and the trading unit for export and import or a consignment export contract between the production unit and the trading unit for export and import (in the case of consignment export by enterprises).

- Opinion confirmation and recommendation of the local tax bureau. The entire set of documents should be submitted to the Ministry of Finance before receiving a formal written response from the Ministry of Finance. Until then, production units must still pay special consumption tax.

II. BASIS FOR CALCULATING TAX

The basis for determining the tax is as follows:

1. Quantity of goods consumed:

a) For state-owned enterprises and large production units accepted by the tax authority regarding accounting books and accounting methods:

The quantity of goods consumed includes the total production volume of alcohol dispatched for sale, exchange of raw materials and goods, gifts, or internal consumption needs.

b) For small production units: If the declaration and registration of tax payment and accounting books do not meet the requirements of the tax authority, the tax authority will advise the local management committee against alcohol revenue loss (in areas where such committees exist) or the tax authority will coordinate with relevant departments at the local level such as the People's Committee, police, market management, etc. (in areas without such committees) to investigate the actual production capacity such as capital, tools, production, usage raw materials, product quality and quantity, market prices, etc., to determine the quota production for each household producing alcohol.

The determination of the quota production for each household must be recorded in a protocol signed by the production unit and the tax collection authority's staff before setting up the tax ledger and issuing the notification.

2. Price for tax calculation:

a) For state-owned enterprises and large production units: tax declaration method:

- The price for tax calculation is the actual selling price at the production unit recorded on the sales invoice of the unit, which includes special consumption tax.

- For processed goods, the price for tax calculation is the selling price including special consumption tax of similar goods or equivalent goods sold by the production unit. In cases where the processing unit produces goods not of the same type or different from the production unit's products, the processing unit must send a letter to the local tax bureau where it is located to specify the price for tax calculation. The price specification for processed goods must be copied to the tax bureau where the production unit is located.

- In cases where the production unit sells and transports goods to the buyer's warehouse, the sales invoice must clearly indicate: selling price - transportation cost. The price serving as the basis for calculating special consumption tax is the selling price shown on the invoice.

b) For small production bases, the tax price shall be the actual selling price at the production base, recorded on sales invoices. In cases where the production base does not have sufficient conditions to determine the selling price, the tax price shall be 7 to 10 percent lower than the retail price on the market.

The determination of the tax price for alcohol products by the Tax Department must be appropriate to the local situation. When prices increase or decrease by 20% or more, the Tax Department must adjust accordingly to match the local price level.

3. Tax rate:

- Alcohol over 40 degrees^° : 65%

- Alcohol from 30o to 40o^° : 60%

- Alcohol from 16o to 30o^° : 55%.

In cases where the tax authority and the production base do not have conditions to determine the concentration of each type of alcohol, the tax rate for alcohol from 30o shall apply.^° - 40^°: 60%.

III- REGISTRATION, DECLARATION AND PAYMENT OF TAX AND
TRANSPORTATION OF GOODS

1. All alcohol production bases are responsible for business registration and tax declaration with the tax authority.

- State-owned enterprises managed by central, provincial, or municipal authorities producing alcohol shall declare taxes to the local tax department.

- State-owned enterprises under district or county management, cooperatives, private enterprises, and individual producers producing alcohol shall declare taxes to the tax branch offices or places authorized by the tax authority to collect taxes.

When registering to pay taxes at the tax authority, the bases shall purchase the declaration form issued according to Circular No. 46 TC/TCT dated October 4, 1990, of the Ministry of Finance. The declaration form shall be made in two copies, confirmed by the tax officer directly managing the base, one copy retained by the tax authority, and one copy returned to the business for retention as proof of having completed the declaration registration procedure.

After receiving the tax registration declaration form, the tax authority shall:

- Assign staff to check the declared registration materials against actual figures. Confirm on the declaration form.

- Impose penalties on production bases that declare incorrectly as stipulated in Point a, Clause 1, Article 20 of the Special Consumption Tax Law.

- Record in the registry book for each production base according to the economic sector.

- Conduct classification of production bases within the assigned area, reasonably allocating tax management officers.

2. Procedures for tax payment and transportation of goods:

- Alcohol production bases shall pay special consumption tax when selling goods, exporting goods for exchange, or internal consumption. For processed goods: the processing base shall pay tax when returning the goods to the unit that sent them for processing, thus the sending unit must settle the special consumption tax payable before receiving the goods.

a) Procedures for paying special consumption tax for state-owned enterprises and large production bases:

For large production bases with many regularly consumed products and significant tax liabilities, the bases shall pay special consumption tax daily or periodically every 3 to 5 days upon selling goods or returning processed goods.

Based on the sales revenue and tax liability of each state-owned enterprise and alcohol production base, the Tax Department shall specify the periodic advance tax payments for the production bases. The regulation of periodic advance tax payments for production bases must be documented with confirmation from the accounting manager, factory director (or business owner) and approval from the tax management officer.

At the specified tax payment period, the production bases shall determine the special consumption tax payable based on sales invoices and transfer funds to the Treasury or Bank to complete the tax payment process into the state budget. By the fifth day of the following month, the production bases must submit the tax declaration form for the previous month according to Circular No. 46 TC/TCT dated October 4, 1990, of the Ministry of Finance. The declaration form shall be made in two copies (one retained by the base, one transferred to the tax authority), and the tax authority shall review the declaration form, issue a tax notification to the production unit specifying the total tax generated in the month, the outstanding tax from the previous month, the advance tax paid in the current month, the remaining tax due, and the deadline for payment based on the tax authority's notification. The production unit shall then prepare a payment voucher to transfer the remaining tax to the Bank or Treasury to complete the tax payment process into the state budget.

b) Procedures for tax payment for production bases paying tax based on quota production:

For alcohol production bases paying tax based on quota production, the special consumption tax shall be paid periodically every 10 days, 20 days, or monthly. The tax payment period shall be specifically determined by the tax authority directly managing the tax collection for each base.

For localities with few scattered alcohol production bases with low production volumes, the special consumption tax collection may be delegated to the People's Committee of the commune by the tax branch office after the tax authority has completed all procedures for investigating and determining the taxable production volume, tax amount due, and tax payment deadlines for each household.

At the specified tax payment period, the households shall base their tax declarations on the production quota for the period and the tax price announced by the local tax department, applying the prescribed tax rate, and submit the tax declaration form to the tax branch office or the delegated tax collection unit. The tax collection units shall review the declaration forms and visit each household to collect taxes. When collecting taxes, they shall issue a receipt according to Model CTT11 - this model shall be made in three copies: one retained, one given to the taxpayer, and one submitted to the tax authority.

c) Tax procedures during alcohol transportation:

During alcohol transportation, one of the following documents must accompany the shipment:

- Payment receipts.

- A cargo transport document issued by the tax authority indicating that the tax has been paid.

- A sales invoice registered with the tax authority or issued by the Ministry of Finance.

- A cargo transport document issued by the tax authority for goods being transferred between warehouses within the same base without yet being consumed or subject to special consumption tax.

Cases of alcohol transportation without any of these documents will be considered as alcohol not yet subject to special consumption tax and must be taxed by the tax authority upon inspection and discovery.

The cargo transport document shall be issued when the taxpayer has fully paid the special consumption tax but the quantity of goods transported needs to be divided into multiple shipments. The tax authority shall issue the transport document for each shipment based on the unified form issued by the Ministry of Finance.

Goods subject to special consumption tax stored in warehouses or retail stores must have proof of payment of the special consumption tax such as a tax receipt or purchase invoice.

IV- EXEMPTION AND REDUCTION OF SPECIAL CONSUMPTION TAX
FOR ALCOHOL PRODUCTS

According to Article 19 of the Special Consumption Tax Law, only production units producing alcohol that encounter difficulties due to natural disasters, enemy attacks, or unexpected accidents affecting their business operations may be considered for exemption or reduction of the special consumption tax. When production units producing alcohol suffer losses due to natural disasters, enemy attacks, or unexpected accidents, they must complete the following documentation as required below and submit it to the Ministry of Finance for consideration and decision on the level of exemption or reduction:

- A request for exemption or reduction of the special consumption tax stating the reasons for requesting a tax reduction.

- A record confirming the damage caused by natural disasters, enemy attacks, or unexpected accidents to fixed assets, current assets, fixed capital, working capital, and expected revenue if there had been no accident - the record must be confirmed by the production unit, the tax management agency, the supervising authority, or the People's Committee of the locality (for non-state-owned economy).

The two documents above must be sent to the tax management agency responsible for the production unit, which has the duty to inspect and confirm, and propose recommendations to the local Tax Bureau and the General Department of Taxation regarding the level and duration of the exemption or reduction.

All the above documents must be submitted to the Ministry of Finance (General Department of Taxation) for consideration and resolution. Until an official written opinion from the Ministry of Finance is received, the production units must continue to pay taxes according to the prescribed rates.

V- ORGANIZATION OF ALCOHOL TAX COLLECTION

To strengthen the management of alcohol tax collection, the Tax Bureaus must closely cooperate with local authorities to widely publicize special consumption tax throughout the area. Each Tax Bureau must develop appropriate measures to manage and collect taxes suitable for each taxpayer. Specifically:

1. For state-owned enterprises:

+ Guide production units and enterprises to register and pay taxes at the tax office, particularly paying attention to hospitals, pharmaceutical stores, military units, associations, and clubs that produce or mix alcohol.

+ Conduct regular inspections of tax registration and payment to identify and address cases where alcohol is produced but not registered for tax payment.

+ Arrange reasonable work schedules for tax collection officers to be present at production facilities to promptly monitor the quantity of finished alcohol entering the warehouse, the quantity sold, and the daily special consumption tax generated.

+ The Inspection Departments and inspectors at the Tax Bureaus and District Tax Offices must conduct inspections of alcohol tax collection and payment at tax offices and production facilities.

2. For production units producing alcohol in the non-state sector: Currently, this sector produces a relatively large amount of alcohol, but the tax department has not fully managed and collected taxes, resulting in significant revenue loss and competition with state-owned enterprises' alcohol.

To manage and prevent tax evasion on alcohol, the Tax Bureaus must:

- Identify key areas for alcohol production in the locality and propose the establishment of alcohol tax collection steering committees from district to village levels based on the scale of production. The members of the alcohol tax collection steering committee include the Deputy Chairman of the People's Committee as the Head, the tax office as the Standing Body, and relevant departments as members.

The local alcohol tax collection steering committee is responsible for organizing and implementing alcohol tax collection management in the area, including:

+ Training direct tax collection officers and steering committee members on business registration declaration, tax payment declaration, and tax collection procedures;

+ Assigning staff from the Tax Office to directly collect taxes in traditional alcohol-producing areas or delegating collection to villages or hamlets in small-scale production areas;

+ Conducting surveys to grasp raw material sources and alcohol production volumes of individual households - organizing meetings to allocate taxable production volumes - preparing allocation records based on the local Tax Bureau's announced tax calculation prices, specifying the tax payable during each period, location, and time of payment.

+ Classifying production and business units according to business license categories and organizing business groups by village or hamlet, with each group electing a leader and deputy. The leader is responsible for reminding and urging production and business units to strictly comply with tax policies and regulations;

+ Organizing teams to inspect and combat tax evasion on alcohol locally and support the local alcohol tax collection management committee in combating illegal alcohol sales.

3. Implementing policies to encourage localities to collect taxes from non-state production units such as:

- Within the limit of the portion of tax retained by the locality, allocating the tax revenue from alcohol to wards or communes for commune budget expenditure. - Allocating part of the tax revenue to cover expenses for commune officials performing tax collection duties.

- Implementing a reward system for those who detect and recover evaded taxes according to Circular 04 of the Ministry of Finance.

The above are detailed guidelines for collecting special consumption tax on alcohol. In the process of implementation, any issues encountered should be reported to the relevant Ministries, General Departments, and Tax Bureaus for the Ministry of Finance to study and resolve.

The above are some detailed guidelines on the collection of special consumption tax for alcoholic beverages. During the implementation process, any difficulties should be reported by the Ministries, General Departments, and Tax Bureaus to the Ministry of Finance for study and resolution.