Circular No. 45/2009/TT-BTC guides value-added tax (VAT), resource tax, and corporate income tax for hydropower production facilities.

CIRCULAR

GUIDELINES ON VALUE ADDED TAX, MINERAL RESOURCES TAX, AND ENTERPRISE INCOME TAX FOR HYDROPOWER PRODUCTION UNITS

Pursuant to the Law on Tax Administration No. 78/2006/QH11 dated November 29, 2006; Government Decree No. 85/2007/NĐ-CP dated May 25, 2007 detailing certain provisions of the Law on Tax Administration;

Pursuant to the Law on Value Added Tax No. 13/2008/QH12 dated June 3, 2008, Government Decree No. 123/2008/NĐ-CP dated December 8, 2008 detailing and guiding the implementation of certain provisions of the Law on Value Added Tax;

Pursuant to the Law on Enterprise Income Tax No. 14/2008/QH12 dated June 3, 2008, Government Decree No. 124/2008/NĐ-CP dated December 11, 2008 detailing the implementation of certain provisions of the Law on Enterprise Income Tax;

Pursuant to the Mineral Resources Tax Ordinance (amended) dated April 16, 1998, the Ordinance amending and supplementing Article 6 of the Mineral Resources Tax Ordinance; Government Decree No. 05/2009/NĐ-CP dated January 19, 2009 detailing the implementation of the Mineral Resources Tax Ordinance and the Ordinance amending and supplementing Article 6 of the Mineral Resources Tax Ordinance.

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

The Ministry of Finance guides the declaration and payment of value added tax, mineral resources tax, and enterprise income tax for hydroelectric production units as follows:

Article 1. Scope of Application

This Circular provides guidelines on value added tax (VAT), mineral resources tax, and enterprise income tax for hydroelectric production units, including companies under and not under the Vietnam Electricity Group (hereinafter referred to as EVN) that produce hydroelectric power.

Article 2. Regarding Value Added Tax

1. Determination of VAT payable

1.1. Hydroelectric production units determine the amount of VAT payable according to the deduction method prescribed in the Law on Value Added Tax and related implementing regulations.

1.2. For hydroelectric companies affiliated with EVN, the determination of the amount of VAT payable from electricity production activities shall be carried out as follows:

The VAT output tax is determined using the following formula:

Where:

- Electricity generation volume refers to the electricity volume recorded by the meter and confirmed between the hydroelectric company and the transmission company or the electricity trading company.

- Taxable price: calculated at 60% of the average retail electricity price of the previous year excluding VAT. If the average retail electricity price of the previous year cannot be determined, it will be calculated based on the provisional price announced by EVN but not lower than the average retail electricity price of the immediately preceding year. When the average retail electricity price of the previous year is determined, the difference will be adjusted in the tax declaration period of the month when the official price is available.

The determination of the average retail electricity price of the previous year must be completed no later than March 31 of the following year.

Example: If the average retail electricity price in 2008 was 866 VND/kWh excluding VAT, then the taxable price for 2009 (according to the above guidance) would be 519.6 VND (= 866 VND x 60%).

The deductible VAT input tax for electricity production activities is based on VAT invoices for goods and services purchased by the hydroelectric company.

2. Declaration and Payment of Tax

2.1. Hydroelectric production units mentioned in Point 1.1 Clause 1 of this Article shall declare VAT at the local tax office where their main office is located and pay VAT to the local treasury where the hydroelectric power plant is located (where the turbine, dam, and other major facilities of the power plant are located). In cases where the hydroelectric power plant (where the turbine, dam, and other major facilities of the power plant are located) spans two provinces, the VAT paid by the hydroelectric production unit will be divided equally between the two provinces.

The hydroelectric production unit shall submit the VAT tax declaration form to the local tax authority where the tax declaration is registered and send a copy of the VAT tax declaration form to the local tax authority where the hydroelectric power plant is located for monitoring.

2.2. For hydroelectric companies affiliated with EVN: The company shall declare VAT at the local tax office where its main office is located using the VAT tax declaration form for dependent entities of EVN issued together with this Circular, while sending a copy of the VAT tax declaration form to the local tax authority where the hydroelectric power plant is located (if applicable) and paying VAT to the local treasury where the hydroelectric power plant is located. In cases where the hydroelectric power plant (where the turbine, dam, and other major facilities of the power plant are located) spans two provinces, the VAT paid by the hydroelectric company affiliated with EVN will be divided equally between the two provinces.

The VAT paid by hydroelectric companies affiliated with EVN (based on payment vouchers) is considered as the deductible VAT input tax of EVN, which EVN can declare for deduction according to regulations.

2.3. Procedure for Transfer of Documents

Hydroelectric production units shall pay VAT to the state budget as prescribed. In cases where the hydroelectric production unit has a hydroelectric power plant (where the turbine, dam, and other major facilities of the power plant are located) spanning multiple provinces, the hydroelectric production unit shall pay VAT to the national treasury where the tax declaration is registered (or where the company's headquarters is located) and simultaneously pay VAT to the local treasury where the revenue from VAT is received. Separate payment documents shall be prepared for each national treasury, clearly indicating the government revenue account of the localities where the hydroelectric power plants are located or where the revenue is received.

2.4. Declaration and Payment of VAT for Certain Specific Cases

2.4.1. Hoa Binh Hydroelectric Company (a dependent entity of EVN) with both the company headquarters and Hoa Binh Hydroelectric Plant located within Hoa Binh Province shall declare and pay all VAT in Hoa Binh Province.

2.4.2. Tri An Hydroelectric Company (a dependent entity of EVN) with both the company headquarters and Tri An Hydroelectric Plant located within Dong Nai Province shall declare and pay all VAT in Dong Nai Province.

2.4.3. The Yaly Hydropower Company (a subsidiary accounting unit of EVN), with its headquarters in Gia Lai Province but operating three hydropower plants: Yaly Hydropower Plant, Sesan 3 Hydropower Plant, and Pleikrông Hydropower Plant.

The Yaly Hydropower Company shall declare VAT at Gia Lai Province, and the VAT amount will be distributed as follows:

+ The VAT amount from the Yaly Hydropower Plant and the Sesan 3 Hydropower Plant will be paid by the Yaly Hydropower Company to Gia Lai and Kon Tum Provinces in equal shares of 50% each.

+ The entire VAT amount from the Pleikrông Hydropower Plant will be paid by the Yaly Hydropower Company to Kon Tum Province.

2.4.4. The Dai Ninh Hydropower Company (a subsidiary accounting unit of EVN) has its headquarters in Lam Dong Province, with the Dai Ninh Hydropower Plant located in Binh Thuan Province and the dam located in Lam Dong Province. The Dai Ninh Hydropower Company shall declare VAT at Lam Dong Province, and the VAT amount from the Dai Ninh Hydropower Plant will be paid to Binh Thuan and Lam Dong Provinces in equal shares of 50% each.

2.4.5. The Sanh San 3A Investment and Development Power Corporation, a non-EVN entity with its headquarters in Gia Lai Province, operates the Sanh San 3A Hydropower Plant across Gia Lai and Kon Tum Provinces. The Sanh San 3A Investment and Development Power Corporation shall declare VAT at Gia Lai Province, and the VAT amount from the Sanh San 3A Hydropower Plant will be paid to Gia Lai and Kon Tum Provinces in equal shares of 50% each.

Article 3. Regarding resource tax

1. Hydropower production facilities shall declare and pay resource tax on natural water used for hydropower production based on the electricity output during the declaration period, the taxable value of the resource tax, and the tax rate of the resource tax.

The amount of resource tax payable during the tax payment period is determined as follows:

Where:

- Electricity output during the declaration period is the electricity delivered and received according to the meter reading confirmed between the hydropower company and the power transmission company or the power trading company.

- The taxable value of the resource tax for natural water used for hydropower production is the average retail price of electricity.

The average retail price of electricity for calculating the resource tax for hydropower production facilities is published annually by the Ministry of Finance in January.

- The tax rate for natural water used for hydropower production is 2%, as stipulated in Decree No. 05/2009/NĐ-CP dated January 19, 2009, of the Government.

2. Declaration and Payment of Tax

2.1. Hydropower production facilities shall declare and pay resource tax at the local tax authority where they have registered for tax declaration and payment, using the Resource Tax Declaration Form for Hydropower Production Facilities issued together with this Circular.

In cases where the resource tax of a hydropower production facility is divided among different localities, the hydropower production facility shall submit the tax declaration form to the local tax authority where it has registered for tax declaration (or where its headquarters is located) and send a copy of the tax declaration form to the tax authority of the locality that benefits from the tax revenue.

2.2. Procedures for transferring tax payment vouchers between the Treasury and the tax authority shall be carried out in accordance with Point 2.3 of Article 2 of this Circular.

3. Declaration and payment of resource tax for specific cases are as follows:

3.1. The Hoa Binh Hydropower Company (a subsidiary accounting unit of EVN): The resource tax paid by the Hoa Binh Hydropower Company is divided equally between Hoa Binh and Son La Provinces at a ratio of 50% each.

3.2. The Tri An Hydropower Company (a subsidiary accounting unit of EVN): It shall declare and pay resource tax at Dong Nai Province.

3.3. The Yaly Hydropower Company (a subsidiary accounting unit of EVN) shall pay resource tax for its hydropower plants as follows:

- The resource tax from the Yaly Hydropower Plant will be paid to Kon Tum Province at a ratio of 70% and to Gia Lai Province at a ratio of 30%.

- The resource tax from the Sesan 3 Hydropower Plant will be paid to Gia Lai and Kon Tum Provinces in equal shares of 50% each.

- The entire resource tax from the Pleikrông Hydropower Plant will be paid to Kon Tum Province.

3.4. The Dai Ninh Hydropower Company (a subsidiary accounting unit of EVN): It shall pay resource tax for the Dai Ninh Hydropower Plant at Lam Dong Province.

3.5. The Sanh San 3A Investment and Development Power Corporation, a non-EVN entity with its headquarters in Gia Lai Province: The resource tax paid by the Sanh San 3A Hydropower Corporation will be divided equally between Gia Lai and Kon Tum Provinces at a ratio of 50% each.

3.6. The Dap Nim - Ham Tan - Dap Mi Hydropower Company, headquartered in Lam Dong Province, operates two hydropower plants:

- The Ham Tan - Dap Mi Hydropower Plant: The resource tax paid by the Dap Nim - Ham Tan - Dap Mi Hydropower Company will be divided equally between Lam Dong and Binh Thuan Provinces at a ratio of 50% each.

- The Dap Nim Hydropower Plant: The Dap Nim - Ham Tan - Dap Mi Hydropower Company shall declare and pay 100% of the resource tax to Lam Dong Province.

Article 4. Regarding corporate income tax

1. Principles of determination

Independent-accounting hydropower companies shall pay corporate income tax at their headquarters location. Independent-accounting hydropower companies with dependent-accounting production facilities operating in provinces or centrally-administered cities other than the headquarters location; dependent-accounting production facilities of the parent company within the Vietnam Electricity Group (including independent-accounting hydropower companies and dependent hydropower plants) located in provinces or centrally-administered cities other than the headquarters of EVN shall have their corporate income tax calculated and paid at both the headquarters and the locations of the dependent-accounting production facilities.

2. Determination of tax amount and procedures for declaration and payment

2.1. The corporate income tax amount to be paid at the province or centrally-administered city where the dependent-accounting hydropower facilities are located shall be determined by multiplying the corporate income tax payable for the period by (x) the ratio of the costs of the dependent-accounting production facilities to the total costs of the enterprise.

Independent hydroelectric companies and parent companies within the Vietnam Electricity Group shall independently determine the ratio of headquarters costs and production facilities' costs based on the final income tax settlement data for the year 2008, and this ratio will be consistently applied from 2009 onwards. In cases where units currently operating establish new or reduce hydroelectric production facilities in different locations, they must re-determine the cost ratio for these changes and apply it to subsequent tax declarations.

2.2. Independent hydroelectric companies and parent companies within the Vietnam Electricity Group are responsible for declaring corporate income tax arising at the headquarters and dependent accounting units according to the corporate income tax payment form for enterprises with hydroelectric dependent units. Based on the quarterly corporate income tax payable, the cost ratio of dependent units, independent hydroelectric companies and parent companies within the Vietnam Electricity Group shall determine the quarterly provisional corporate income tax payments at the headquarters and at each dependent unit.

3. Procedures for transferring documents between the State Treasury and Tax Authorities

Independent hydroelectric companies and parent companies within the Vietnam Electricity Group shall pay corporate income tax arising at their headquarters to the State Treasury at the level corresponding to the tax authority where the enterprise has registered for tax declaration, while also paying on behalf of the dependent hydroelectric production facilities in various locations. Payment receipts shall be issued separately for each State Treasury, clearly indicating the government budget account of the localities where the hydroelectric plants are located or where benefits are received.

4. Final tax settlement

Independent hydroelectric companies and parent companies within the Vietnam Electricity Group shall declare final corporate income tax at the location of their headquarters. The remaining corporate income tax payable is determined by subtracting the provisional tax paid at the headquarters and at dependent units from the total tax payable according to the final settlement. Any remaining corporate income tax (overpayment or underpayment) shall be settled and refunded or paid at the headquarters.

In cases where discrepancies (overpayment or underpayment) arise during the final corporate income tax settlement inspection, the corporate income tax (overpayment or underpayment) payable at the headquarters shall not be reallocated to the locations of dependent production facilities.

Article 5Implementation Organization

1. This Circular takes effect 45 days from the date of signature and applies to the declaration of VAT, corporate income tax, and natural resource tax as follows:

- For VAT and natural resource tax: applicable from the January 2009 tax declaration period. If hydroelectric production facilities have declared VAT and natural resource tax for the January 2009 tax declaration period differently from the guidance provided in this Circular, such facilities shall adjust their declarations according to this Circular without being penalized for late declaration.

- For corporate income tax: applicable from the first quarter of 2009 tax declaration period onwards.

2. During implementation, if there are difficulties or obstacles, entities and organizations are advised to promptly report to the Ministry of Finance for timely resolution./.

SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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VALUE ADDED TAX RETURN FORM

(For hydroelectric companies under EVN with dependent accounting)

(Annexed to Circular No. 45/2009/TT-BTC dated 11 month 3 March 11, 2009)

[01] Tax period: month ... year 200... 

 

[03] Name of business entity:...

[04] Address:...[05] District/county:... [06] Province/city:...

[07] Telephone:...[08] Fax:...[09] Email:...

 

I certify that the information declared above is true and accurate, and I am solely responsible for the accuracy of the declared information under the law.

 

SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
-----------------

CORPORATE INCOME TAX PAYMENT FORM FOR ENTERPRISES WITH
DEPENDENT HYDROELECTRIC UNITS

(Annexed to Circular No. 45/2009/TT-BTC dated March 11, 2009)

Tax period: Quarter...year...

- Taxpayer:...

(in capital letters)

- Address: ...

- District/county:...Province/city...

- Telephone...Fax:...Email...

Unit of currency: Vietnamese dong

 

I certify that the information declared above is true and accurate, and I am solely responsible for the accuracy of the declared information under the law.