Circular No. 55/2010/TT-BTC guiding value-added tax (VAT) and corporate income tax for Vietnam Television (VTV) and provincial/city television and radio-television stations.

CIRCULAR

Guidelines on Value Added Tax and Corporate Income Tax for Vietnam Television and other television stations, provincial and municipal radio and television stations

for Vietnam Television and other television stations,

provincial and municipal radio-television stations,

_________________

Pursuant to the Law on Value Added Tax No. 13/2008/QH12 dated June 3, 2008, the Law on Corporate Income Tax No. 14/2008/QH12 dated June 3, 2008, the Law on Tax Administration No. 78/2006/QH11 dated November 29, 2006, and related guiding documents;

Pursuant to Decree No. 18/2008/NĐ-CP dated February 4, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of Vietnam Television;

Pursuant to Decree No. 43/2006/NĐ-CP dated April 25, 2006 stipulating the autonomy and responsibility for implementing tasks, organizational structures, staffing, and finance for public service units;

is a medicine production facility certified by the competent authority of a country participating in the EMA or ICH or PIC/s to meet EU-GMP or PIC/s-GMP standards or equivalent, and announced by the Ministry of Health (Drug Administration Department) on the Drug Administration Department's electronic information website.

The Ministry of Finance issues guidelines on Value Added Tax (VAT) and Corporate Income Tax (CIT) for Vietnam Television and other television stations, provincial and municipal radio and television stations as follows:

Article 1. Scope of Application.

These guidelines apply to VAT and CIT for television stations including:

- Vietnam Television (hereinafter referred to as VTV);

- Provincial and municipal television stations, radio and television stations directly under the central government that are self-financing units for all regular operational costs as stipulated in Decree No. 43/2006/NĐ-CP dated April 25, 2006 of the Government (hereinafter referred to as self-financing operational cost units);

- Provincial and municipal television stations, radio and television stations directly under the central government that are self-financing units for part of regular operational costs as stipulated in Decree No. 43/2006/NĐ-CP dated April 25, 2006 of the Government (hereinafter referred to as partial self-financing operational cost units).

These guidelines do not apply to enterprises under Vietnam Television.

Article 2. Declaration, Deduction, Payment of VAT, CIT for VTV.

1. Declaration, Deduction, Payment, Refund of VAT

1.1. VTV and its affiliated accounting units in Hanoi shall declare, pay, and refund VAT centrally in Hanoi.

Affiliated accounting units of VTV in other provinces and cities shall declare, pay, and refund VAT at their respective localities where they are headquartered.

1.2. Deduction, Refund of VAT

a) VTV and its affiliated accounting units shall deduct and refund VAT in accordance with the provisions of the Law on VAT, the Law on Tax Administration, and related guiding documents, specifically:

- Deducting the full amount of VAT input tax on goods and services used for producing and trading taxable goods and services (including VAT input tax on goods and services used for production, transmission, broadcasting of television programs and other service activities not funded by state budget).

- Deducting the full amount of VAT on fixed assets used simultaneously for producing and trading taxable goods and services, production, transmission, broadcasting of television programs, and other service activities.

b) VTV and its affiliated accounting units shall not declare and deduct VAT on goods and services purchased for purposes funded by state budget according to the approved budget, specifically:

+ Investment in basic construction projects (projects in Group A);

+ National target program expenses;

+ Scientific research expenses for national-level research topics;

+ Training expenses according to state programs and plans.

2. Declaration, Payment of CIT

2.1. VTV shall register to declare and pay CIT at the location of its main headquarters in Hanoi.

2.2. If VTV has affiliated accounting units, these units shall not submit tax declaration forms. VTV shall be responsible for declaring and paying CIT centrally at its main headquarters for the entire portion generated by its affiliated accounting units in Hanoi and other provinces and cities directly under the central government.

2.3. VTV shall declare provisional CIT quarterly and settle final CIT annually as prescribed.

2.4. Revenue subject to CIT includes all income generated from business operations, advertising activities, and other services of VTV and its affiliated accounting units (excluding VAT) as specified in Point 1, Section B, Part II of Circular No. 09/2009/TT-BTC dated January 21, 2009 of the Ministry of Finance. Expenses deductible when determining taxable income include those specified in Points 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, Section B, Part II of Circular No. 09/2009/TT-BTC of the Ministry of Finance

2.5. and consistent with the provisions of Circular No. 130/2008/TT-BTC dated December 26, 2008 of the Ministry of Finance. VTV and its affiliated accounting units shall not include expenses specified in Point 2.7, Section B, Part II of Circular No. 09/2009/TT-BTC of the Ministry of Finance in deductible expenses when determining taxable income.

VTV and its affiliated budgetary units shall not be included in costs when determining taxable income for corporate income tax on expenses specified in Point 2.7 Section B Part II Circular No. 09/2009/TT-BTC of the Ministry of Finance.

Article 3. Declaration, deduction, payment of VAT, corporate income tax for stations self-financing operational costs.

1. Declaration, deduction, payment of VAT:

1.1. Stations self-financing operational costs shall determine the amount of VAT payable according to the deduction method prescribed in the Law on Value Added Tax and guiding documents.

1.2. Stations self-financing operational costs shall be entitled to deduct the entire VAT input tax on fixed assets formed from the Development Fund of the station and fixed assets used simultaneously for production and business of goods and services subject to VAT and not subject to VAT.

In cases where fixed assets are partially formed from state budget sources, they shall not be entitled to deduct VAT input tax at the ratio (%) of state budget capital over the total capital forming fixed assets.

1.3. For fixed assets formed from state budget capital, no deduction shall be made but instead included in the original cost of fixed assets.

2. Declaration, Payment of CIT

Stations self-financing operational costs that engage in business activities subject to corporate income tax shall record revenues and expenses to determine taxable income according to regulations.

Stations shall not include in expenses when determining taxable income for corporate income tax any amounts funded by state budget grants.

Stations self-financing operational costs shall declare provisional corporate income tax quarterly and settle final corporate income tax annually as prescribed.

Article 4. Declaration, deduction, payment of VAT, corporate income tax for stations partially self-financing operational costs.

1. Regarding VAT

1.1. Stations partially self-financing operational costs that engage in production and business of goods and services subject to VAT with full invoices for sales according to regulations or sufficient conditions to accurately determine sales revenue and VAT input tax deductible according to regulations shall declare, deduct, and pay VAT as prescribed in Clause 1, Article 3 of this Circular for stations self-financing operational costs.

Stations shall not declare and deduct VAT for goods and services purchased using funds provided by the State according to Clause 1, Article 14 of Decree No. 43/2006/NĐ-CP dated April 25, 2006 of the Government on the rights of public service units to operate autonomously and be responsible for their tasks, organizational structure, staffing, and finance.

1.2. In cases where stations partially self-financing operational costs have full invoices for sales according to regulations or sufficient conditions to accurately determine sales revenue but lack purchase invoices or cannot accurately determine VAT input tax deductible according to regulations, they shall declare and pay VAT under the direct calculation method based on turnover.

The amount of VAT payable shall be determined as follows:

Revenue x Rate (%) of VAT on revenue x VAT rate of goods and services sold.

The rate (%) of value added on revenue serving as the basis for determining value added is specified as follows:

- Commerce (distribution, provision of goods): 10%.

- Services, construction (excluding construction with materials supplied): 50%.

- Production, transportation, services attached to goods, construction with materials supplied: 30%.

1.3. To switch the VAT calculation method from the deduction method to the direct calculation method based on turnover and vice versa, stations partially self-financing operational costs shall submit a written request to the directly managing tax authority for approval to change the VAT calculation method. Within ten working days from the date of receipt of the request for changing the VAT calculation method, the tax authority shall be responsible for reviewing and responding in writing whether to agree or disagree with the request for changing the VAT calculation method.

2. Regarding corporate income tax:

2.1. In cases where stations partially self-financing operational costs engage in production and business of goods and services subject to corporate income tax and can record revenues and expenses related to such business activities, they shall declare and pay corporate income tax as prescribed in Clause 2, Article 3 of this Circular for stations self-financing operational costs.

2.2. In cases where stations partially self-financing operational costs engage in production and business of goods and services subject to corporate income tax but can only record revenues without being able to record and determine expenses and income from such business activities, they shall declare and pay corporate income tax at a percentage rate on sales revenue, specifically as follows:

- For services: 5%;

- For goods trading: 1%;

- For other activities: 2%.

Article 5. Implementation.

1. This Circular shall take effect 45 days from the date of signature.

2. Matters not covered by this Circular and matters not contrary to the provisions of this Circular shall be implemented in accordance with current regulations on VAT, corporate income tax, and tax administration.

During implementation, if there are difficulties or obstacles, please promptly report them to the Ministry of Finance for resolution./.