Circular No. 49/2000/TT-BTC guides the implementation of Decree No. 15/2000/ND-CP of the Government detailing the implementation of Resolution No. 90/NQ-UBTVQH10 dated September 3, 1999 of the Standing Committee of the National Assembly regarding amendments and supplements to certain lists of goods and services not subject to VAT and the VAT rate for some goods and services, as well as amendments and supplements to certain provisions on VAT.

CIRCULAR

Guidelines for Implementing Decree No. 15/2000/NĐ-CP dated May 9, 2000 of the Government detailing the implementation of Resolution No. 90/NQ-UBTVQH10 dated September 3, 1999 of the Standing Committee of the National Assembly on amending and supplementing certain lists of goods and services not subject to VAT and VAT rates applicable to certain goods and services, and amending and supplementing certain provisions on VAT.

Pursuant to the Law on Value Added Tax (VAT), Resolution No. 90/1999/NQ-UBTVQH10 dated September 3, 1999 of the Standing Committee of the National Assembly on amending and supplementing certain lists of goods and services not subject to VAT and VAT rates applicable to certain goods and services; Decree No. 15/2000/NĐ-CP dated May 9, 2000 of the Government detailing the implementation of Resolution No. 90/NQ-UBTVQH10 dated September 3, 1999 of the Standing Committee of the National Assembly.
Pursuant to Decrees No. 28/1998/NĐ-CP dated May 11, 1998, No. 102/1998/NĐ-CP dated December 21, 1998, and No. 78/1999/NĐ-CP dated August 20, 1999 of the Government detailing the implementation of the Law on Value Added Tax.
The Ministry of Finance issues guidelines for implementing Decree No. 15/2000/NĐ-CP dated May 9, 2000 of the Government and amending and supplementing certain provisions on VAT as follows:

1. Regarding objects not subject to VAT:

Objects not subject to VAT as stipulated in Resolution No. 90/NQ-UBTVQH10 dated September 3, 1999 of the Standing Committee of the National Assembly and Decree No. 15/2000/NĐ-CP dated May 9, 2000 of the Government detailing its implementation are as follows:

a) Specialized equipment, machinery, transportation vehicles that are part of production lines and construction materials that are not yet produced domestically and need to be imported to form fixed assets of enterprises; aircraft, drilling platforms, and watercraft leased from abroad that are not yet produced domestically and used for production and business activities:

In cases where production and business establishments import complete sets of equipment and machinery that are not subject to VAT but the complete set includes equipment and machinery that are already produced domestically, VAT will not be applied to the entire set of equipment and machinery.

For example, Company A imports some weaving machines that are not yet produced domestically, including some synchronous motors that are already produced domestically, these imported synchronous motors will also not be subject to VAT.

In cases where specialized equipment, machinery, and transportation vehicles that are not yet produced domestically are imported under direct supply contracts or entrusted importation by units for use as fixed assets according to approved investment projects, they do not have to pay VAT at the import stage, nor when selling or returning entrusted imported machinery and equipment to using units according to contracts. Other revenues such as import commissions, transportation, and installation fees (if any) still must be subject to VAT and separate invoices must be issued for tax calculation.

Financial leasing companies importing specialized equipment, machinery, and transportation vehicles that are not yet produced domestically to form assets for enterprises to lease purchase as fixed assets.

To determine specialized equipment, machinery, and transportation vehicles that are not yet produced domestically, the importing unit must present the following documents:

Import contract (if importing directly); entrusted import contract and import contract signed with foreign parties (if importing through entrustment); notification of winning bid and import contract (if the importing unit provides for a bidding project); import contract or entrusted import contract and lease purchase contract (if a financial leasing company imports for enterprises to lease purchase).

Specialized equipment, machinery, and transportation vehicles that need to be imported because they are not yet produced domestically are determined based on the list of types of specialized equipment, machinery, and transportation vehicles that are already produced domestically, attached to Decision No. 214/1999/QĐ-BKH dated April 26, 1999 of the Ministry of Planning and Investment.

Confirmation of imported specialized equipment, machinery, and transportation vehicles to form fixed assets by the General Director of the enterprise using the imported assets.

As for construction materials that are not yet produced domestically and need to be imported to form fixed assets, they are determined based on the list of construction materials that are already produced domestically specified by the Ministry of Planning and Investment.

Cases where machinery, equipment, and construction materials that are not subject to VAT at the import stage according to the above regulations if imported before the publication of the list of types that are already produced domestically as the basis for determination, and taxes have been collected or refunded, will not be re-determined.

For aircraft and watercraft leased regardless of the leasing form (leasing individual aircraft or watercraft or leasing personnel).

For leased drilling platforms, excluding materials and raw materials used for drilling operations.

Enterprises leasing aircraft, watercraft, and drilling equipment from abroad as mentioned herein must have valid leasing contracts signed with foreign parties.

b) Certain products and services in the cultural, artistic, physical education, and sports sectors:

Cultural activities, exhibitions, and mass sports and physical training and competition activities that do not charge money or charge money without the purpose of business. Revenue from ticket sales for cultural performances, sports competitions, and exhibitions if there is revenue, such as selling tickets to watch artistic performances, sports competitions, and exhibitions, does not bear VAT. However, other revenues such as sales at trade fairs, exhibition fees, rental fees for venues and exhibition booths... must be subject to VAT.

Artistic performance activities such as singing, dancing, music, drama, circus; other artistic performance activities and service organization of artistic performances.

Production of all types of films (films already recorded) regardless of theme or film genre.

Import (filmed imports), distribution, and screening of films: for celluloid films, there is no distinction based on subject matter or type of film; for video tape and disc recorded films, they must be documentary, newsreel, or scientific films. The type and subject matter of films shall be determined in accordance with the regulations of the Ministry of Culture and Information.

c) Printing, publishing, importing, and distributing: newspapers, magazines, specialized newsletters, political books, textbooks (including those in audio or video form), teaching materials, books containing legal texts (books containing legal texts, documents, resolutions, other legal regulations); books printed in ethnic minority languages, paintings, photographs, posters, propaganda; printing money.

d) Goods imported in the following cases: humanitarian aid, non-repayable aid; gifts to state agencies, political organizations, socio-political organizations, social organizations, occupational social organizations, people's armed units; items of foreign organizations and individuals according to diplomatic exemption standards; goods carried by individuals within tax-free baggage allowance; items of overseas Vietnamese when returning to Vietnam. Goods imported under the provisions of this point shall be determined according to the State regulations.

Goods sold to international organizations, foreigners for humanitarian aid, non-repayable aid to Vietnam. For Vietnamese organizations using foreign organizations' and individuals' humanitarian aid and non-repayable aid funds to purchase goods in Vietnam, the value-added tax (VAT) paid on the purchase invoice can be refunded.

Business entities selling goods to international organizations, foreigners for humanitarian aid, non-repayable aid to Vietnam are exempt from VAT on these sales. When selling to these entities, the seller must request the buyer to provide a confirmation letter from the international organization or the Vietnamese representative office clearly stating the name of the international organization or individual purchasing for humanitarian aid, non-repayable aid, quantity or value of the goods needed. The seller still issues and delivers the VAT invoice as required but does not calculate VAT, thus crossing out the VAT amount and retaining the confirmation letter from the international organization or the Vietnamese representative office as evidence for tax declaration and settlement. Input VAT on goods sold to these entities can be deducted when calculating the VAT payable or for refund.

For Vietnamese organizations using foreign organizations' and individuals' funds to purchase goods in Vietnam for humanitarian aid, the VAT paid on the purchase invoice can be refunded.

The purchaser must submit a written request for VAT refund to the Provincial Tax Department where the main office is located, specifying the amount of VAT requested for refund. Accompanying the written request for VAT refund must be:

A document from the competent authority authorizing the organization to purchase goods with this funding, clearly stating the amount and type of goods purchased (if it is a copy, it must bear the stamp of authenticity of the original).

An invoice list of purchased goods (according to the purchase invoice model number 03/GTGT issued together with Circular No. 89/1998/TT-BTC of the Ministry of Finance) and copies of purchase invoices stamped by the purchasing organization. The Provincial Tax Department, upon receiving the refund application, shall have the responsibility to check the application and process the refund for each specific case within 15 days from the date of receipt of all documents.

International organizations and foreigners purchasing goods for humanitarian aid, non-repayable aid to Vietnam. Vietnamese organizations using foreign organizations' and individuals' humanitarian aid funds to purchase goods in Vietnam can be refunded the VAT on the purchase invoice from October 1, 1999.

2. Regarding VAT rates:

a) The following goods and services, which were previously subject to a 10% tax rate, will be transferred to the 5% tax rate group:

Coal, coke, mud coal;

Mechanical products (excluding consumer mechanical products);

Basic chemicals.

The list of mechanical products and basic chemicals subject to the 5% tax rate is determined in accordance with the guidelines set forth in Circular No. 106/1999/TT-BTC dated August 30, 1999, and detailed guidance documents issued by the Ministry of Finance, now supplemented with specific lists of items belonging to mechanical products (excluding consumer mechanical products): welding rods, steel mesh from B27 to B41, barbed wire, metal roofing sheets, metal cables, steel conveyor belts.

b) Goods and services: hotels, tourism, catering, which were previously subject to a 20% tax rate, will be transferred to the 10% tax rate group.

Hotels and tourism are defined according to standards set by the relevant management agency or according to business licenses.

Catering businesses are not distinguished between low-end and high-end catering.

Goods and services mentioned in Points 2a and 2b, which were previously subject to a 50% reduction in VAT rates as stipulated in Clause 3, Article 1 of Decree No. 78/1999/NĐ-CP dated August 20, 1999 of the Government, shall no longer be subject to a 50% VAT reduction from May 25, 2000, but instead apply the new tax rate specified in Point 2 of this Circular.

c) Construction and installation of projects and project components abroad and for export processing enterprises are considered exported products and apply a 0% VAT rate.

Construction and installation applying a 0% VAT rate must have the following documents:

The construction contract must clearly specify the project or component being constructed and installed abroad and for export processing enterprises.

Payment invoice for completed and handed-over projects (or project components).

Confirmation from the Customs Authority regarding the raw materials and components purchased by the enterprise for use in construction projects abroad and in export processing enterprises.

Based on the payment price excluding VAT, issue a VAT invoice at a 0% VAT rate.

d) Reduce the VAT rate by 50% for the following activities: construction and installation; business entities granted land by the State to build houses for sale, infrastructure for transfer; business entities leased land by the State to invest in infrastructure for lease.

Activities subject to a 50% reduction in VAT rate include the installation of machinery, equipment, electricity, and water associated with construction projects. For materials and goods supplied to construction and installation units, VAT rates shall be applied according to the specific item, including cases where the supplier of materials and goods performs installation on construction projects. Business entities engaged in buying and selling real estate and renting houses, which are not covered above, shall apply a VAT rate of 10%.

d) Tires and tire assemblies with sizes from 900-20 and above are subject to a 50% reduction in VAT.

e) For processing activities involving taxable items subject to VAT, the applicable VAT rate shall be based on the specific item. For example, processing of ready-made garments applies a VAT rate of 10%; processing of specialized medical equipment applies a VAT rate of 5%. Processing activities for items not subject to VAT shall not be subject to VAT.

g) For repair services of machinery, equipment, transportation vehicles, etc., which are mechanical products, if the VAT rate is 5%, then the repair service VAT rate will also be 5%.

h) Scrap materials and by-products sold out shall apply a VAT rate of 5%.

3. Regarding the tax base for VAT:

For enterprises assigned land by the state to build houses and technical infrastructure for sale or transfer along with the transfer of land use rights, the tax base for VAT on houses and infrastructure sold or transferred is the selling price or transfer price (excluding VAT), minus the land use fee payable to the State budget.

For businesses engaged in buying and selling houses and infrastructure, the tax base for VAT is the selling price excluding VAT, minus the value of land that has been taxed for the transfer of land use rights.

For businesses leasing infrastructure, the tax base for VAT is the rental price (excluding VAT), minus the land rental fee payable to the State budget.

4. Deduction of VAT:

Businesses applying the direct deduction method for VAT directly purchase agricultural, forestry, and aquatic products that have not undergone processing from farms and production stations and sell them with sales invoices or VAT invoices without VAT recorded. The deductible VAT amount is calculated based on the percentage specified for each item.

Enterprises purchasing items eligible for VAT input tax deduction at the specified percentage, if they transfer these purchased items to other entities for processing, the purchasing entity remains eligible for VAT deduction.

Enterprises subject to VAT under the direct deduction method, directly purchasing coffee, rice, and paddy from producers without VAT invoices, can deduct VAT at a rate of 3% of the purchase price listed on the purchase invoice for exported coffee, rice, and paddy. Input VAT deduction for domestic sales of paddy, rice, and coffee still follows the provisions set forth in Points 1a and 1b, Section II, Circular No. 106/1999/TT-BTC dated August 30, 1999, issued by the Ministry of Finance. In cases where enterprises engage in both domestic sales and exports of paddy, rice, and coffee, the VAT deduction amount is determined proportionally based on export turnover and domestic sales turnover.

5. Regarding declaration and payment of VAT:

For construction and installation activities, specific guidelines are provided for certain situations as follows:

When construction and installation units organize dependent units such as construction teams, project management boards to carry out construction and installation works in locations different from their main headquarters, the construction and installation unit must declare and pay VAT in the location where the work is carried out. If it is impossible to determine input VAT and output VAT for calculating the payable VAT, the unit must declare revenue and calculate VAT at a rate of 1% of the settlement price (excluding VAT) for the construction project or component. Construction and installation units are responsible for declaring and settling VAT according to regulations with the tax authority at their main headquarters. Dependent units carrying out construction projects or components in different locations use the tax number, invoices, and VAT declaration form (Form No. 01/GTGT) issued by Circular No. 89/1998/TT-BTC dated June 27, 1998, issued by the Ministry of Finance. When declaring VAT paid in the location of construction and installation works, units only fill in lines 1 and 2b of the VAT declaration form for taxable revenue (excluding VAT), and line 10 (VAT payable this month) is filled with the temporary VAT amount calculated as the settlement price (excluding VAT) multiplied by 1%.

When business entities undertake construction and installation works related to multiple locations, such as road construction, power transmission lines, water pipelines, oil and gas pipelines, etc., the entity with revenue and accounting for input VAT and output VAT should register, declare, and pay VAT in the location where the entity's headquarters is located.

Regarding the VAT declaration form: follow the guidance in Circular No. 89/1998/TT-BTC of the Ministry of Finance and supplement as follows:

Businesses paying VAT under the direct deduction method must record the taxpayer identification number of the buyer in the notes column when preparing the sales invoice and receipt list (Form No. 02/GTGT). When preparing the purchase invoice and receipt list (Form No. 03/GTGT), the taxpayer identification number of the seller must be recorded in the notes column. In cases where there is no taxpayer identification number, a horizontal line (-) should be drawn.

Businesses purchasing items without invoices, which are eligible for deduction through a list, if they are not agricultural, forestry, or aquatic products, must prepare a list according to Form No. 04/GTGT and rename it as a list of goods purchased from sellers without invoices.

For items purchased with invoices, businesses must prepare a separate list and use Form No. 04/GTGT, renaming it as a list of goods purchased with sales invoices.

In cases where lists for VAT deductions are prepared for multiple types of goods purchased with different deduction percentages, separate lists must be prepared for each type of good purchased with the same deduction percentage.

6. Regarding VAT refund and VAT reduction:

The reduction of VAT for businesses (as provided in Article 28 of the Law on Value Added Tax) shall only apply to businesses subject to VAT under the tax deduction method and which are independent accounting units, and such matters shall be examined and resolved by the local Tax Revenue Office where the business's main office is located.

The refund of VAT for businesses that declare and pay VAT under the tax deduction method shall only apply to businesses that maintain accounting books, invoices, vouchers, and bank accounts.

7. Implementation organization:

This Circular takes effect from May 25, 2000. The provisions regarding goods and services not subject to VAT, the taxable value for VAT, the VAT rate, VAT deduction, declaration and payment of VAT set forth in Circular No. 89/1998/TT-BTC; Circular No. 175/1998/TT-BTC; Circular No. 106/1999/TT-BTC and other guiding documents on VAT that have been amended and supplemented in this Circular shall be implemented according to the guidance in this Circular.

In the course of implementation, if there are any difficulties, it is requested that units report to the Ministry of Finance for guidance and resolution./.