Circular No. 294-TC/TCT regarding the implementation of the Law on Value Added Tax for Electricity and Coal Industries

DOCUMENT

OF THE MINISTRY OF FINANCE NUMBER 294-TC/TCT DATE MARCH 11, 1991
ON THE IMPLEMENTATION OF THE VALUE ADDED TAX LAW FOR ELECTRICITY AND COAL
REGARDING

Pursuant to the Value Added Tax Law adopted by the National Assembly of the Socialist Republic of Vietnam at its seventh session of the eighth term on June 30, 1990, and Decree No. 351-HĐBT dated October 2, 1990 of the Council of Ministers detailing the Value Added Tax Law, the Ministry of Finance has coordinated with the Ministry of Energy to issue guidelines for implementing the Value Added Tax Law for electricity companies, coal production companies, and the Coal Supply Corporation as follows:of Electricity companies, coal production companies, and the Coal Supply Corporation as follows:

I. REGARDING ELECTRICITY PRODUCTION AND BUSINESS COMPANIES

1. Taxable entities:

The electricity sector is organized into three independent accounting companies. Each company includes several dependent accounting units. Power plants (thermal, hydroelectric, diesel, gas turbine...), power transmission systems, distribution offices, construction management departments, material supply enterprises, transportation enterprises, insulating materials enterprises, testing centers, computer centers, information centers, health centers, guesthouses, and some training institutions...

In addition to their main activities of producing and selling electricity, each company also engages in auxiliary activities. Therefore, the taxable revenue of the electricity sector is determined as follows:

a) Revenue from the following products must be subject to value added tax:

Commercial electricity revenue, including: consumer electricity, agricultural electricity, electricity supplied to foreigners and embassies, electricity sold at guaranteed prices, electricity sold at progressive prices, fines for unauthorized consumption, and fines for theft of electricity...

- Production of transformers, electrical cabinets, insulated cables, porcelain insulators, steam, lime, bricks, lamp soil, fired clay...

- Mechanical processing: steel bars, meter boxes, screws, nuts...

- Major repair of transformers, diesel generators...

- Installation of power lines and substations for external customers and projects funded by the State Budget.

- Wiring, lighting installation, meter installation

- Lubrication, calibration: meters, electrical equipment...

- Revenue from leasing meters, electricity meters, transformers if not included in the cost of electricity.

- Material supply and transportation

- Technical management contracting

- Printing

- Services: catering, rental of rooms, sleeping quarters, and other services...

b) Revenue from the following products and activities is not subject to value added tax:

- Electricity revenue between electricity companies.

- Internal product circulation within the company.

2. Tax rate:

a) Commercial electricity: 8% of taxable revenue.

b) For other activities, the applicable tax rate is specified in the detailed value added tax table accompanying Circular No. 45-TC/TCT dated October 4, 1990 of the Ministry of Finance.

3. Taxpayer:

a) Distribution offices must pay value added tax on commercial electricity.

b) For other activities, the taxpayer is the place where sales revenue and payment are generated.

4. Procedures for Payment:

a) Declaration and Payment:

- Within five days, the unit must declare revenue and the amount of tax payable, sending one copy to the Tax Bureau responsible for collecting taxes based on sales invoices (regardless of whether payment has been received).

- For commercial electricity, declaration must be made according to the type of electricity user: individual households, government agencies, and production units (including foreigners and embassies), agricultural electricity.

- Electricity payment invoices follow a standardized format agreed upon by the Ministry of Energy and the General Department of Taxation. Sales invoices for other activities follow a unified format issued by the Ministry of Finance.

- Units may implement a provisional tax payment system. Units can prepare tax payment vouchers in cash or by bank transfer (issued by the tax authority) without requiring the tax authority's signature. If tax payment vouchers are not available, they may temporarily use payment authorization forms to make timely tax payments.

b) Provisional Tax Payment Deadline:

Units in the electricity sector must pay provisional value added tax according to the following deadlines:

b1) For commercial electricity:

+ No later than five days after the unit prepares the tax declaration form for individual households.

+ No later than fifteen days after the unit prepares the tax declaration form for government agencies and business units.

+ For agricultural electricity, the tax deadline is agreed upon by the Tax Bureau and the unit but must not exceed sixty days from the date the unit prepares the tax declaration form.

- For other activities, no later than five days after preparing the tax declaration form.

c) Review and Settlement of Monthly Tax Liability:

By the fifth day of the month, the unit must submit the previous month's tax declaration form to the Tax Bureau responsible for collecting taxes.

The tax authority will review the declared revenue, tax liability, provisional tax paid, and remaining tax due for the previous month. At least three days before the tax payment deadline, the tax authority must notify the unit of the remaining tax due so that it can pay the outstanding amount to the state treasury.

The deadline for paying the outstanding tax of the previous month does not exceed the fifteenth day of the following month.

II. REGARDING COAL PRODUCTION COMPANIES

1. Taxable entities:

Coal companies are centralized accounting units comprising several dependent accounting units; coal mines (underground and open-pit), material supply enterprises, transportation enterprises, screening enterprises, living service enterprises...

Revenue from the following products and activities falls under taxable revenue for value added tax:

- Revenue from the sale of clean coal or raw coal (if applicable)

- Material supply and transportation for external customers.

- Services: catering, rental of sleeping quarters for external customers and experts.

2. Tax rate:

- Clean coal from coal companies with only underground mines: 1%.

- Clean coal from coal companies with only open-pit mines: 2%.

- Clean coal from coal companies with both underground and open-pit mines: the tax rate is determined as follows:

The provisional tax rate is calculated using the formula above during the year. At the end of the year, when finalizing the tax liability, the tax rate is recalculated based on the actual raw coal production.

- Tax rates for other activities: according to the detailed value added tax table in Circular No. 45-TC/TCT dated October 4, 1990 of the Ministry of Finance guiding the implementation of the Value Added Tax Law.

3. Taxpayer:

- Coal mines directly consuming coal.

- Coal screening enterprises.

- Units: supply materials, transportation, living services, guesthouses...

In the case of coal transported from various places to the washing plant, no tax shall be paid.

4. Tax payment procedures:

a) Declaration and Payment:

- Within 5 days after each tax payment, the unit must declare its revenue and the amount of tax due, sending one copy to the Tax Collection Department based on sales invoices regardless of whether the payment has been received or not.

- Units may implement a provisional tax payment system. The unit prepares a tax payment receipt in cash or by bank transfer (issued by the tax authority) without requiring the tax authority's signature. If there is no tax payment receipt, the unit may temporarily use a payment authorization to pay taxes promptly.

b) Provisional tax payment deadline: no later than 5 days after the unit files the tax declaration form.

c) Review and Settlement of Monthly Tax Liability:

On the 5th day of the following month, the unit must file the previous month's tax calculation declaration with the tax collection department.

The tax collection agency will check the declared revenue for tax calculation, the amount of tax due, the amount of tax provisionally paid, and the remaining tax due from the previous month. At least 3 days before the tax payment deadline, the tax authority must notify the remaining tax due so that the unit can pay the outstanding tax into the State Treasury.

The deadline for paying the outstanding tax from the previous month does not exceed the 15th day of the following month.

I - REGARDING THE COAL SUPPLY GROUP COMPANY

The Coal Supply Group Company is a centralized accounting unit comprising several dependent units: Coal Supply Companies in various provinces. The Coal Supply Group Company is responsible for purchasing and supplying coal to provinces and cities.

The application of turnover tax on coal supply activities is as follows:

1. Turnover for tax calculation:

Turnover for tax calculation is the amount of money from selling coal (regardless of whether the payment has been received or not) to consumer units at Coal Supply Companies.

Coal transferred internally within the Group Company from the source purchase location to Coal Supply Companies in the provinces (the final sale point) does not require tax payment.

Internal coal transfers within the Group Company during transportation must follow these procedures:

- Coal dispatch order from the Group Company

- Sales invoice and warehouse release form registered with the tax authority.

2. Tax rate: 1% of the turnover for tax calculation.

3. Tax payer:

Turnover tax is paid by Coal Supply Companies.

4. Tax payment procedures:

a) Declaration and Payment:

- Once every 10 days, the tax payer must declare its revenue and the amount of tax due, sending one copy to the Tax Collection Department based on sales invoices regardless of whether the payment has been received or not.

- Units may implement a provisional tax payment system. The unit prepares a tax payment receipt in cash or by bank transfer (issued by the tax authority) without requiring the tax authority's signature. If there is no tax payment receipt, the unit may temporarily use a payment authorization to pay taxes promptly.

b) Provisional tax payment deadline: no later than 5 days after the unit files the tax declaration form.

c) Review and Settlement of Monthly Tax Liability:

On the 5th day of the following month, the unit must file the previous month's tax calculation declaration with the tax collection department.

The tax authority will check the declared revenue for tax calculation, determine the amount of tax due, the amount of tax provisionally paid, and the remaining tax due from the previous month. At least 3 days before the tax payment deadline, the tax authority must notify the remaining tax due so that the unit can pay the outstanding tax into the State Treasury.

The deadline for paying the outstanding tax of the previous month does not exceed the fifteenth day of the following month.

Units must strictly comply with the above regulations.