Decree No. 28/1998/ND-CP detailing the implementation of the Value Added Tax Law

DECREE OF THE GOVERNMENT

Regulations for the implementation of the Value Added Tax Law

THE GOVERNMENT

Pursuant to the Law on the Organization of the Government dated September 30, 1992;

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 the process from production, circulation to consumption.

Article 2. The objects subject to Value Added Tax are goods and services used for production, business, and consumption in Vietnam, except those specified in Article 4 of this Decree.

Article 3. The taxpayers of Value Added Tax as stipulated in Article 3 of the Value Added Tax Law are organizations and individuals engaged in producing and trading taxable goods and services in Vietnam, regardless of industry, form, or type of business (commonly referred to as businesses) and other organizations and individuals importing taxable goods (commonly referred to as importers).

Article 4. The objects not subject to Value Added Tax as stipulated in Article 4 of the Value Added Tax Law are specified as follows:

1. Agricultural products (including plantation products), livestock, and aquaculture products that have not been processed into other products or only undergone simple processing by organizations and individuals who produce and sell them.

Simple processing refers to processing attached to the production of agricultural products, livestock, and aquaculture products, where such products remain in their original form after processing.

2. Salt products produced from seawater, natural rock salt, refined salt, and iodized salt;

3. Goods and services subject to special consumption tax are exempt from Value Added Tax at the stages of production, importation, and service provision already taxed with special consumption tax;

4. Special-purpose equipment, machinery, and transportation means that are not yet manufactured domestically and imported by enterprises for fixed assets under investment projects;

If an enterprise imports a complete set of equipment and machinery that is exempt from Value Added Tax but includes domestic-manufactured equipment and machinery within the set, Value Added Tax will not be applied to the entire set of equipment and machinery.

Ministries, ministerial-level agencies, government agencies, and provincial specialized management agencies confirm the types of equipment, machinery, and transportation means that are not yet manufactured domestically and imported by businesses as fixed assets. The Ministry of Finance shall guide procedures and documents for businesses importing equipment, machinery, and transportation means exempt from Value Added Tax as stipulated herein.

5. Transfer of land use rights subject to land transfer tax;

6. State-owned housing sold by the state to tenants;

7. Lending activities of credit institutions, banks, investment funds, and capital transfers according to the law;

8. Life insurance; student insurance; pet and 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 sports activities of mass participation, training, and competition without profit-making purposes or with profit-making purposes but not aimed at commercial gain;

Artistic performances such as singing, dancing, music, drama, circus; other artistic performances and organizing artistic performance services;

Film production of all kinds;

Film distribution and screening: for film reels regardless of theme, for video films limited to documentary, news, and scientific films;

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

12. Radio and television broadcasting according to state programs funded by the state budget;

13. Printing, publishing, and distribution: newspapers, magazines, professional newsletters, political books, textbooks, teaching materials, legal texts, books printed in ethnic minority languages; paintings, photographs, propaganda posters; printing money;

14. Public service sanitation, street drainage, and residential area maintenance; maintaining zoos, flower gardens, parks, street trees, public lighting, and funeral services;

15. Maintenance, repair, and construction of cultural, artistic facilities, public service facilities, infrastructure for charitable houses using people's contributions and humanitarian aid funds, including cases where the state provides financial support up to 30% of the actual expenditure for the project;

16. Public passenger transport by bus serving the travel needs of residents within urban areas, towns, industrial zones, or between cities and nearby industrial zones according to unified ticket prices prescribed by competent authorities. The Ministry of Transport shall prescribe regulations for bus operations;

17. Geological surveys, measurements, and map-making for basic national investigations funded by the state budget;

18. Irrigation and drainage for agricultural production; clean water extracted by organizations and individuals for domestic use in rural, mountainous, island, remote, and border areas;

19. Special-purpose weapons and equipment for defense and security as specifically determined by the Ministry of Finance together with the Ministry of Defense and the Ministry of Public Security. For weapons and equipment purchased or produced with state budget funds, the exemption from tax must be specifically stated in the budget estimate;

20. Imported goods in the following cases: humanitarian aid, non-reimbursable aid; gifts to state agencies, political organizations, social-political organizations, social organizations, occupational social organizations, and people's armed forces units; items of foreign organizations and individuals according to diplomatic exemptions; personal effects carried within duty-free baggage allowances; items brought back by overseas Vietnamese citizens. These imported goods are determined according to state regulations;

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

22. Goods and services directly supplied to ships, aircraft, trains, or other transportation means departing from Vietnam to abroad, and tax-free sales of goods at duty-free shops at international airports, ports, railway stations, and border gates;

23. Technology transfer as provided for in Chapter III of the Civil Code of the Socialist Republic of Vietnam. For technology transfer contracts accompanied by machinery and equipment, the exemption from tax applies only to the value of the transferred technology.

24. Gold imported in bar, ingot form, and gold types that have not been crafted into jewelry, decorative items, or other products. Gold in bar, ingot form, and uncrafted gold types are determined to comply with international regulations;

25. Exported products are raw mineral resources that have not been processed into other products as specified below:

Crude oil;

Coal;

Shale, sand, rare earths;

Gemstones;

Manganese ore, tin ore, iron ore, chromium ore, emery ore, apatite ore.

The Ministry of Finance shall base on the state's management requirements for natural resources and minerals at each period to submit to the Government for adjustment, amendment, and supplementation of the types of natural resources and minerals stipulated herein;

26. 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 deducting reasonable business expenses from business revenue;

Organizations and individuals purchasing, selling, importing goods, and supplying services not subject to VAT as prescribed in this Article shall not be entitled to deduct and refund input VAT on goods and services at stages not subject to VAT;

PART 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 value for VAT on goods and services as prescribed in Article 7 of the Law on Value Added Tax is specifically defined as follows:

1. For goods and services sold by production and business establishments, it is the selling price excluding VAT.

2. For imported goods, it is the import price at the customs border plus import tax. The import price at the customs border is determined according to the regulations on the taxable value for import tax.

3. For goods and services used for exchange, internal use, gifts, or donations, it is the taxable value of similar goods and services at the time these activities occur.

4. For leasing activities regardless of asset type and lease form, it is the lease price excluding VAT. In cases where lease payments are made periodically or prepaid for a lease term, VAT is calculated based on the periodic lease payment or prepaid amount.

5. For goods sold under installment payment terms, the taxable value is based on the selling price excluding VAT if the goods were sold in a lump sum (excluding installment interest), not calculated based on periodic installment payments.

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

7. For construction and installation activities, it is the construction and installation price excluding VAT for the project, project component, or work performed; in cases where construction and installation projects are settled according to the progress of completed components or works handed over, VAT is calculated based on the value of completed works handed over.

8. For goods and services with specific characteristics using payment vouchers indicating prices including VAT, the price excluding VAT for tax calculation is determined by dividing the inclusive price by (1 + VAT rate applicable to such goods and services).

9. For agency and brokerage activities in buying and selling goods and services earning commission, the price excluding VAT for tax calculation is the commission earned from these activities.

The taxable value for goods and services as prescribed in this Article includes additional surcharges and fees collected by businesses.

Based on the provisions of this Article, the Ministry of Finance shall provide detailed guidance on the taxable value for VAT on goods and services.

, Clause 1, Clause 2 Article 7a of this Regulation.The VAT rate as prescribed in Article 8 of the Law on Value Added Tax is specifically defined as follows:

1. A 0% tax rate applies to exported goods and exported processed goods. Exports include sending out of the country and cases considered as exports according to government regulations.

2. Five percent rate applies to the following goods and services:

a) Clean water for production and daily use, sold by businesses exploiting natural water sources to other entities, except clean water exempted from tax as stipulated in Clause 18, Article 4 of this Decree and water types subject to a 10% tax rate;

b) Fertilizers, ore for fertilizer production; pesticides and growth stimulants for animals and plants;

c) Equipment, machinery, and specialized tools for healthcare; medical cotton and sanitary napkins;

d) Medicines for treating and preventing diseases for humans and animals;

đ) Teaching and learning aids: models, drawings, boards, chalks, rulers, compasses used for teaching and learning, and specialized equipment and tools for teaching, research, and experiments;

e) Toys for children; science and technology books, literature and art books, children's books, law books, except legal texts prescribed in Clause 13, Article 4 of this Decree;

g) Unprocessed agricultural products, livestock, and aquaculture products including seeds, seedlings, and grains, except products exempted from tax as stipulated in Clause 1, Article 4 of this Decree;

h) Unprocessed forest products (except wood and bamboo); fresh food and staple food.

Unprocessed forest products are those extracted from natural forests such as bamboo, rattan, reeds, mushrooms, fungi, roots, leaves, flowers, medicinal plants, and other forest products;

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

Staple food includes rice, corn, potatoes, cassava;

Fresh food and staple food produced directly by organizations and individuals from unprocessed agricultural, livestock, and aquaculture products as stipulated in Clause 1, Article 4 of this Decree are exempt from VAT;

i) Products made from rush, straw, bamboo, palm leaves are products manufactured and processed mainly from rush, straw, bamboo, palm leaves;

k) Raw cotton processed domestically is cotton that has had its hulls and seeds removed and sorted;

l) Animal feed and poultry feed and other animal feeds;

m) Scientific and technical services include research, application, and guidance on scientific and technical matters;

n) Direct services supporting agricultural production include plowing, harrowing land for agricultural production; digging, filling, dredging canals, ditches, ponds, lakes for agricultural production; pest and disease control; raising, planting, caring for, harvesting agricultural products.

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

a) Petroleum, natural gas, coal, ores, and other mineral products;

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

c) Electronic products, machinery, electrical appliances;

d) Chemical products, cosmetics;

đ) Fibers, fabrics, clothing products, embroidery;

e) Paper and paper products;

g) Sugar, milk, pastries, candies, beverages, and other processed foods;

h) Ceramic, porcelain, glass, rubber, plastic, wood, and wood products; cement, bricks, tiles, and other construction materials;

i) Construction, installation;

k) Transportation, loading and unloading;

l) Postal, telecommunications services;

m) Renting of real estate, offices, warehouses, docks, factories, machinery, equipment, transportation means;

n) Legal advisory services;

o) Photography, printing, film processing; recording tapes, renting tapes; photocopying; video recording, video screening;

p) Hair curling, tailoring, dyeing, laundry, dry cleaning;

q) Other goods and services not specified in Clause 1, Clause 2, Clause 4 of this Article and taxable goods subject to special consumption tax shall be subject to value-added tax at the retail stage;

4. The tax rate of 20% applies to the following goods and services:

a) Gold, silver, precious stones purchased and resold by businesses;

b) Hotels, tourism, catering;

c) Lottery tickets and other lottery forms;

d) Ship agency;

đ) Brokerage services.

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

Article 8. The method of calculating value-added tax as stipulated in Article 9 of the Law on Value-Added Tax is specified as follows:

1. The tax deduction method.

The amount of tax payable equals the output VAT minus deductible input VAT.

a) Output VAT is calculated by multiplying the taxable sales price of goods and services sold with the applicable VAT rate.

b) Input VAT is the total VAT amount recorded on purchase invoices for goods and services or import VAT payment certificates used for producing and trading taxable goods and services.

For raw agricultural, forestry, and aquatic products purchased from producers without further processing, and for goods and services using payment vouchers that already include VAT, the deductible input VAT shall be calculated according to the provisions of Article 9 of this Decree.

The tax deduction method is applied uniformly to all businesses, except those applying the direct calculation method based on added value as provided for in Clause 2 of this Article.

2. Direct calculation method based on added value:

The amount of tax payable equals the added value of taxable goods and services multiplied by the applicable VAT rate.

a) Added value is calculated by subtracting the purchase price of goods and services from the sales price of goods and services sold.

The purchase and sale prices of goods and services are the actual transaction prices recorded on purchase and sale invoices, including VAT and additional charges borne by the buyer.

The corresponding purchase price of goods and services is determined by the value of goods and services purchased by the business for producing and trading taxable goods and services.

In cases where the business has not fully implemented purchase and sale transactions with invoices and documents to determine added value as prescribed above, the added value is determined as follows:

For businesses that have completed sales transactions with full invoices and documents, accurately determining sales revenue but lacking purchase invoices, added value is calculated by multiplying sales revenue with the percentage of added value over sales revenue.

For individual traders who have not fully implemented or have not implemented purchase and sale invoices, the tax authority will base the taxable revenue on the business situation of each individual, and added value is calculated by multiplying the set revenue with the percentage of added value over sales revenue.

The percentage of added value over sales revenue serves as the basis for setting added value by the tax authority, suitable for each type of business.

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

b) The direct calculation method based on added value is only applicable to the following entities:

Individual producers and traders and foreign organizations and individuals operating in Vietnam under non-Foreign Investment Law regulations who have not fully met accounting and invoicing requirements for tax calculation under the tax deduction method;

Businesses buying and selling gold, silver, precious stones, foreign currencies;

Article 9. Deductible input VAT.

1. Businesses subject to value-added tax under the tax deduction method are entitled to deduct input VAT (referred to as input tax) as follows:

a) Input tax of goods and services used for producing and trading taxable goods and services can be deducted entirely.

b) Input tax of goods and services used simultaneously for producing and trading taxable goods and services and non-taxable goods and services can only be deducted for the portion used for producing and trading taxable goods and services.

Businesses must separately account for deductible and non-deductible input tax; if separate accounting is not possible, the deduction shall be made proportionally based on the ratio of taxable sales to total sales.

c) Input tax arising in a month can be declared and deducted when determining the tax payable for that month.

Specifically, input tax on fixed assets eligible for large deductions shall be gradually deducted or refunded according to the provisions of Article 15 of this Decree.

d) In cases where production and processing enterprises purchase raw agricultural, forestry, and aquatic products directly from producers without VAT invoices, they are entitled to deduct input tax at a certain percentage of the purchase price as follows:

A rate of 5% for agricultural products such as rubber trees, resin trees, oil trees, sugarcane, fresh tea leaves, rice, corn, potatoes, cassava; livestock and poultry from animal husbandry; fish, shrimp, and other aquatic products.

A rate of 3% for agricultural and forestry products not specified in the group above eligible for a 5% deduction.

The Ministry of Finance shall base on price levels and production and business activities of each product to submit to the Government for adjustment of the list of products and the input tax deduction rates prescribed herein.

The deduction of input tax or refund of input tax for agricultural, forestry, and aquatic products purchased as prescribed above shall not apply to cases where these products are used as raw materials for producing goods for export.

d) In the case where a business entity purchases goods or services with special characteristics using invoices indicating the payment price including VAT, the basis for determining the deductible input VAT shall be the price including VAT and the method of determining the price excluding VAT as stipulated in Clause 8, Article 6 of this Decree.

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

a) For purchased goods and services, it is the amount of VAT indicated on the purchase invoice.

b) For imported goods, it is the amount of VAT paid as indicated on the import VAT payment certificate.

c) For unprocessed agricultural, forestry, and aquatic products purchased from producers, the actual purchase price recorded in the purchase goods declaration form guided by the tax authority shall be used to calculate the deductible input tax as provided for in Point d, Clause 1 of this Article.

d) For purchased goods or services with special characteristics using invoices indicating the payment price including VAT, the basis for calculating the deductible input tax as provided for in Point d, Clause 1 of this Article shall be the invoice.

Article 10. Business entities must fully comply with the regulations on purchasing and selling goods and services with invoices and certificates. The purchase and sale invoices for goods and services for business entities are regulated as follows:

1. Business entities subject to VAT under the deduction method must use VAT invoices. When issuing sales invoices for goods and services, business entities must accurately record all elements: the selling price excluding VAT, additional charges and fees outside the selling price (if any), VAT, and the total payment price including VAT.

If the invoice does not indicate the VAT amount, the VAT will be calculated by multiplying the payment price according to the invoice by the VAT rate.

2. Business entities subject to direct VAT payment must use regular invoices. The selling price of goods and services recorded on the invoice includes VAT.

3. Business entities wishing to use different types of invoices and certificates from the standard models must register the invoice and certificate models with the Ministry of Finance (General Department of Taxation) and can only use them upon receiving written notification.

In the case where a business entity directly sells goods to consumers at retail, for goods sold below the specified price, a sales invoice must be issued; if the business entity does not issue a sales invoice, it must prepare a retail sales declaration form according to the model provided by the tax authority as the basis for calculating VAT; if the buyer requests a sales invoice, the business entity must issue it in accordance with the regulations.

The Ministry of Finance shall stipulate the management and use of invoices and certificates; issuance and inspection of the use of invoices and certificates as prescribed in this Article.

CHAPTER III
REGISTRATION, DECLARATION, PAYMENT, AND SETTLEMENT OF TAXES

Article 11. Businesses must register for tax payment as follows:

1. Business entities subject to VAT as prescribed in Article 3 of this Decree, including subordinate units and branches of the main business entity, must register with the tax authority at the place of business regarding the location of business, business activities, labor force, capital, tax payment location, and related indicators according to the guidance of the tax authority.

For newly established business entities, the latest time to register for tax payment is ten days from the date of issuance of the business registration certificate; in cases where a business 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 registered for tax payment, if there are changes due to mergers, consolidations, divisions, dissolutions, bankruptcies, or changes in business activities, business locations, must also report to the tax authority at least five days before the change occurs.

2. Business entities subject to direct VAT calculation method, if they fully meet the conditions: invoice and certificate system, accounting books, declaration and payment of taxes according to regulations, and voluntarily registering to apply the deduction method for VAT calculation, and the tax authority confirms that they have met all the above conditions, the tax authority will notify the business entity to implement; if during implementation, the business entity fails to meet the prescribed conditions, the tax authority will issue a notice to suspend the application of the deduction method for VAT calculation.

The Ministry of Finance shall guide the procedures for registering for tax payment and the authority to consider allowing business entities subject to the direct VAT calculation method to apply the deduction method for VAT calculation as prescribed in this Article.

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. In cases where 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 business entity must fully and correctly fill out the tax declaration form and bear responsibility for the accuracy of the declaration.

Organizations and individuals outside Vietnam without offices or management headquarters in Vietnam supplying goods or services subject to value-added tax (VAT) to entities in Vietnam shall have the organizations and individuals in Vietnam consuming such goods or services declare and pay VAT on behalf of the foreign side. The VAT payable is calculated based on the price of the goods or services paid to the foreign side.

2. Businesses and importers importing goods subject to VAT must declare and submit VAT declaration forms for each importation together with customs declarations to the customs revenue collection agency.

3. Businesses engaged in occasional trading must declare and pay taxes according to each transaction to the tax authority at the place of purchase before transporting the goods away.

4. Businesses dealing with various goods and services subject to different rates of VAT must declare VAT according to the prescribed rate for each type of goods or service; if the business cannot determine the rate for each type, they must calculate and pay VAT at the highest applicable rate for the goods or services produced or traded by the business.

Businesses buying and selling gold, silver, precious stones that engage in processing or manufacturing these products, if unable to separately account for income and tax from these activities, shall apply a uniform rate of 20% for both processing and manufacturing and directly calculate VAT based on the added value.

Article 13. Value-added tax (VAT) is paid into the state budget as follows:

1. Businesses are responsible for directly paying full and timely VAT into the state budget according to the tax payment notice issued by the tax authority.

The deadline for monthly tax payment recorded in the notice shall not be later than the 25th day of the following month.

For households and individuals operating businesses in areas far from State Treasury or those engaged in mobile or irregular business operations, 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 it must be done within six days from the date of collecting the tax.

2. Businesses and importers of goods must pay VAT according to each importation.

The deadlines for declaring and paying VAT on imported goods follow the deadlines for declaring and paying import duties. For goods that do not require import duties, the deadlines for declaring and paying VAT shall be the same as those for goods requiring import duties.

For goods (including materials, machinery, equipment, etc.) imported exempt from VAT but sold or used for other purposes, the business must declare and pay VAT according to regulations for other goods.

3. Within a tax period, if a business has overpaid VAT in the previous period, it can offset this against the VAT due in the next period. If there was underpayment in the previous period, the business must make up the shortfall. Businesses subject to VAT deduction method, if during a tax period the input VAT exceeds the output VAT, may deduct the excess amount in the subsequent tax period. In cases where new fixed assets investment results in large deductible input VAT, gradual deduction or refund according to Article 15 of this Decree shall be allowed.

4. Value-added tax (VAT) paid into the state budget must be in Vietnamese Dong.

Where businesses have revenues, output VAT, and input VAT in foreign currency, they must convert the foreign currency into Vietnamese Dong at the exchange rate published by the State Bank of Vietnam at the time of foreign currency occurrence to determine the tax payable.

The Ministry of Finance shall provide detailed guidelines on procedures for tax payment suitable for each payment method and taxpayer as stipulated in this Article.

Article 14. Businesses must settle their annual tax with the tax authority. The tax settlement year is based on the Gregorian calendar. Within sixty days from the end of the year, businesses must submit the annual tax settlement report to the tax authority and pay any outstanding tax into the state budget within ten days from the submission date of the report. Any overpayment can be deducted from the tax due in the next period.

In cases of business mergers, consolidations, divisions, spin-offs, dissolution, or bankruptcy, businesses must also settle their tax with the tax authority and submit the tax settlement report to the tax authority within forty-five days from the decision date of merger, consolidation, division, spin-off, dissolution, or bankruptcy.

Businesses are responsible for declaring all taxes due, paid, and still owed or overpaid up to the tax settlement deadline. They must fully and accurately fill out the tax settlement form and submit the tax settlement report to the local tax authority where the business is registered to pay taxes within the specified timeframe.

The Ministry of Finance shall specify the forms and guide the implementation of annual VAT settlement as stipulated in this Article.

Article 15. Refunds of previously paid VAT according to Article 16 of the Law on Value-Added Tax shall only be implemented in the following cases:

1. Businesses subject to the deduction method of VAT payment may be eligible for quarterly refunds if the deductible input VAT for months in the quarter consistently exceeds the output VAT generated in the same months. Businesses exporting seasonal or periodic large quantities of goods, if they incur significant input VAT on exported goods, may be eligible for periodic refunds.

2. Businesses subject to the deduction method of VAT payment, which invest in or purchase fixed assets, if the deductible input VAT for fixed assets is substantial, may be eligible for refunds of input VAT for fixed assets as follows:

a) For new business establishments that have registered to pay taxes with tax authorities but have not yet generated output VAT, if the investment period is one year or more, input VAT refunds shall be considered on an annual basis. In cases where the amount of input VAT refund for investment assets is large, refunds may be considered quarterly.

b) For business establishments expanding their operations or deepening investments, if the amount of input VAT for investment assets has been deducted for three months and the remaining undeducted VAT is still greater than the deducted amount, the undeducted VAT shall be refunded.

3. Business establishments that settle taxes upon merger, consolidation, division, separation, dissolution, or bankruptcy and have excess tax payments.

4. Business establishments that have a decision from the competent authority to refund taxes as prescribed by law.

To process tax refunds, business establishments must submit a request along with the application documents for tax refunds to the tax revenue management agency. The tax authority is responsible for verifying the amount of refundable tax and implementing the refund or recommending the competent authority to refund the tax according to the prescribed authority.

The Ministry of Finance shall specify the detailed procedures and authority for processing tax refunds as stipulated in this Article.

Article 16. The tax authority has the following tasks, powers, and responsibilities:

1. Guide business establishments that have registered for business to implement the registration, declaration, and payment of VAT in accordance with the provisions of the Value Added Tax Law.

Business establishments that fail to comply with the regulations on registration, declaration, and payment of taxes shall continue to be notified; if they still do not comply after being notified, administrative penalties for tax violations may be imposed. For business establishments engaged in business activities without registration, if discovered during inspection, they shall be required to register, declare, and pay taxes in accordance with the law, and administrative penalties for tax violations shall be imposed on such establishments.

2. Notify business establishments of the amount of tax due and the deadline for tax payment as prescribed. The tax payment notification must be sent to the taxpayer at least three days before the payment deadline specified in the notification; the latest monthly tax payment deadline shall not exceed the 25th day of the following month.

If the business establishment fails to pay the tax within the prescribed deadline, a notice shall be issued regarding the amount of tax and late payment penalties as stipulated in Clause 2, Article 19 of the Value Added Tax Law. Monthly late payment penalties shall be calculated from the 26th day of the following month; late payment penalties for imported goods and other cases shall be calculated from the date specified in the law for payment as indicated on the tax notification. If the business establishment still does not pay the tax and penalties as notified, the tax authority may apply or recommend the competent authority to apply the measures prescribed in Clause 4, Article 19 of the Value Added Tax Law to ensure full collection of the tax and penalties. If these measures are implemented and the business establishment still fails to pay the full amount of tax and penalties, the tax authority shall transfer the case to relevant legal agencies for handling in accordance with the law.

3. Inspect and audit the declaration and payment of taxes and settlement of taxes by business establishments to ensure compliance with 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 amount of VAT payable by taxpayers in the following cases:

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

For business establishments subject to direct calculation of VAT based on added value and small-scale traders who have not implemented or have not fully implemented the purchase and sale of goods and services with invoices and vouchers, the tax authority shall base its determination of added value and the amount of tax payable on the method of tax calculation prescribed in Clause 2, Article 8 of this Decree, taking into account the business situation.

For small and medium-sized individual businesses, the amount of tax determined for each payment may be set as the basis for tax collection over a period of six months or twelve months, depending on the industry and fluctuations in prices and business conditions of the taxpayer. The tax authority is responsible for publicly announcing the tax rate for these taxpayers.

Small and medium-sized individual businesses pay taxes based on the determined rate; if there is a change in business or cessation of business, they must report to the tax authority to review and adjust the determined tax rate; those who cease business for fifteen days or more in a month shall be eligible for a 50% reduction in the tax payable for that month, and if they cease business for the entire month, they shall be exempt from paying tax for that month.

The Ministry of Finance shall prescribe the criteria for determining small and medium-sized individual businesses; the procedures for reporting cessation of business and the reduction of tax for suspended businesses as stipulated in this Article.

2. Failure to declare or exceeding the time limit for submitting declarations after being reminded, or submitting incorrect declarations that do not accurately reflect the basis for calculating VAT;

3. Refusal to present accounting books, invoices, vouchers, and necessary documents related to the calculation of VAT;

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 establishment on the investigation materials regarding the business operation situation or on the tax payable of similar-sized business establishments in the same industry in the above-mentioned cases.

In the event that a business establishment 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 directly overseeing the tax authority that determined the tax. During the appeal process, the business establishment or the appellant must still pay according to the tax amount determined by the tax authority.

PART IV
VIOLATION HANDLING AND REWARD

Article 18. Taxpayers and tax officers who violate the Value Added Tax Law shall be subject to handling according to the provisions of Article 19 and Article 21 of the Value Added Tax Law and other legal documents on administrative violations in the field of taxation, depending on the nature and degree of violation.

Article 19. Tax authorities and tax officers who successfully complete their assigned tasks, organizations and individuals with achievements in implementing the Value Added Tax Law, taxpayers who fulfill their tax obligations well shall be rewarded according to the Government's regulations.

CHAPTER V
IMPLEMENTING PROVISIONS

Article 20. The cases eligible for reduction of value added tax as stipulated in Article 28 of the Value Added Tax Law are specified as follows:

1. For production, construction, and transportation establishments that incur losses due to the value added tax payable being higher than the tax calculated at the previous turnover tax rate during the initial years of applying the value added tax, they may be considered for a reduction in the value added tax payable.

2. The amount eligible for reduction of value added tax for each establishment corresponds to the loss caused by the aforementioned reason, but shall not exceed 50% of the value added tax payable from production, construction, and transportation activities in the year under consideration.

Production, construction, and transportation establishments eligible for reduction of value added tax, if engaging in other business sectors, the reduction of value added tax will only apply to their production, construction, and transportation activities.

3. The period for reducing value added tax as provided in this Article shall be reviewed annually based on the calendar year and shall only be implemented within the first three years, starting from 1999, the year when the Value Added Tax Law came into effect.

The assessment for tax reduction shall be based on the business results and tax settlement of the business establishment; for those establishments without a tax settlement but with a projected annual loss, to alleviate financial difficulties for the establishment, the tax authority may consider temporarily reducing taxes. The temporary reduction amount shall be based on the annual projection and the actual business situation of the previous year, but shall not exceed 70% of the projected reduction amount as stipulated by law.

The Ministry of Finance shall provide guidance on procedures and define the authority for assessing reductions in value added tax as provided in this Article.

Article 21. This Decree takes effect from January 1, 1999, abolishing all Government Decrees and other documents regulating and guiding turnover tax from the date this Decree comes into force.

Matters concerning tax settlement, tax exemption and reduction, and handling of turnover tax violations before January 1, 1999 shall still be handled according to the corresponding provisions of the Turnover Tax Law, the Law Amending and Supplementing Certain Provisions of the Turnover Tax Law, and the turnover tax regulations in other legal documents.

Cases eligible for tax exemption or reduction under international treaties to which Vietnam is a party or government commitments shall be implemented as tax exemption or reduction of value added tax according to these treaties or commitments.

Article 22. The organization of collecting value added tax is regulated as follows:

1. The General Department of Taxation is responsible for organizing the collection of value added tax and processing refunds of value added tax for goods and services of domestic production and business establishments.

2. The General Department of Customs is responsible for organizing the collection of value added tax on imported goods.

3. The General Department of Taxation and the General Department of Customs have the responsibility to coordinate 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 23. The amount of value added tax refunded to taxpayers shall be deducted from the collected value added tax.

The Ministry of Finance shall specify the detailed procedures for organizing the refund of value added tax as provided in this Article.

Article 24. The Minister of Finance shall guide the implementation of this Decree.

Ministers, Heads of ministerial-level agencies, and provincial People's Committees' Chairmen directly under the Central Government are responsible for enforcing this Decree./.