Decree No. 79/2000/NĐ-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 Government Organization Law dated September 30, 1992;

Pursuant to the Value Added Tax Law No. 02/1997/QH9 dated May 10, 1997;

WHEREAS, Decision No. 90/NQUBTVQH10 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 value-added tax and the rate of value-added tax for certain goods and services; Within 10 working days from the date of receipt of the dossier as mentioned in Sub-clause b, Clause 1, Article 3 above, the Ministry of Foreign Affairs will review and submit to the competent authority for decision (Issues exceeding the Ministry of Foreign Affairs' jurisdiction will be referred to the Prime Minister for consideration and decision).The Standing Committee of the National Assembly on amending and supplementing some lists of goods and services that are not subject to value-added tax and the rate of value-added tax for some goods and services;

WHEREAS, Decision No. 240/2000/NQUBTVQH10 dated October 27, 2000 of the Within 10 working days from the date of receipt of the dossier as mentioned in Sub-clause b, Clause 1, Article 3 above, the Ministry of Foreign Affairs will review and submit to the competent authority for decision (Issues exceeding the Ministry of Foreign Affairs' jurisdiction will be referred to the Prime Minister for consideration and decision).Standing Committee of the National Assembly on amending and supplementing the list of goods and services not subject to value-added tax and the rate of value-added tax for certain goods and services;

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 Law on Value-Added Tax are organizations and individuals engaged in production and business activities involving taxable goods and services in Vietnam, regardless of industry, form, or type of business (collectively referred to as businesses) and other organizations and individuals importing taxable goods (collectively referred to as importers).

Article 4.Objects exempt from value-added tax as stipulated in Article 4 of the Law on Value-Added Tax, Article 1 of Decision No. 90/1999/NQUBTVQH10 dated September 3, 1999, and Article 1 of Decision No. 240/2000/NQUBTVQH10 dated October 27 Within 10 working days from the date of receipt of the dossier as mentioned in Sub-clause b, Clause 1, Article 3 above, the Ministry of Foreign Affairs will review and submit to the competent authority for decision (Issues exceeding the Ministry of Foreign Affairs' jurisdiction will be referred to the Prime Minister for consideration and decision).of the Standing Committee of the National Assembly on amending and supplementing the list of goods and services not subject to value-added tax and the rate of value-added tax for certain goods and services are specifically defined as follows:

1. Agricultural products (including forest products), livestock products, 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 themselves;

Simple processing is processing associated with the production of agricultural products, livestock products, and aquaculture products, where such products remain the same type after processing.

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

3. Goods and services subject to special consumption tax do not need to pay value-added tax at the stages of production, importation, and service provision already taxed under the special consumption tax;;

4. Special-purpose equipment, machinery, transportation vehicles included in production lines and construction materials that are not yet produced domestically and must be imported to create fixed assets for enterprises; aircraft, drilling platforms, marine vessels leased from abroad that are not yet produced domestically and used for production and business; spare parts, special-purpose equipment, machinery, and construction materials that are not yet produced domestically and must be imported to conduct exploration, development of oil and gas fields.

In cases where an enterprise imports a complete set of equipment and machinery that is exempt from value-added tax but the set includes equipment and machinery already produced domestically, value-added tax will not be applied to the entire set.

The Ministry of Planning and Investment shall take the lead, in coordination with relevant ministries and agencies, to issue a list of equipment, machinery, spare parts, special-purpose transportation vehicles, and construction materials that are already produced domestically to serve as a basis for distinguishing from those not yet produced domestically and exempt from value-added tax as stipulated herein.

The Ministry of Finance shall provide guidance on procedures and documents for cases exempt from value-added tax as stipulated herein;

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

6. Housing owned by the State sold to tenants by the State;

7. Credit services and investment funds, including: lending activities, financial leasing activities of credit institutions, banks, investment funds, finance companies, and capital transfer activities; securities trading activities;;

8. Life insurance; student insurance; pet and crop insurance, and other types of insurance not for profit purposes;

9. Medical examination, treatment, disease prevention, health rehabilitation services for people and veterinary services;

10. Cultural, exhibition, and mass sports and physical training activities that are non-commercial, whether they charge fees or not;

Artistic performance activities such as singing, dancing, music, drama, circus, and other artistic performances; organizing artistic performance services; film production of all kinds;

Importing, distributing, and screening films: for celluloid films regardless of genre; for video tapes and discs, only documentary, news, and scientific films;

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

12. Broadcasting radio and television programs using state budget funds;

13. Printing, publishing, importing, and distributing: newspapers, magazines, specialized newsletters, political books, textbooks (including in audio or video format), teaching materials, legal texts, books printed in ethnic minority languages, posters, and banknote printing;

14. Public utility services related to sanitation, street drainage, and residential areas; maintaining zoos, flower gardens, parks, street trees, public lighting, funeral services;

15. Maintenance, repair, and construction of cultural and artistic facilities, public service facilities, infrastructure, and charitable houses funded by donations from the public and humanitarian aid, including cases where the State provides partial funding not exceeding 30% of the total actual expenditure on the project;;

16. Public passenger transport by bus serving residents' travel needs within urban and town centers, industrial zones, or between cities and nearby industrial zones, according to unified ticket prices set by authorized authorities;

17. Basic geological surveys, measurements, and map-making conducted by the State and funded by the state budget.

18. Water for agricultural production; clean water extracted by organizations and individuals to serve daily life in rural areas, mountainous regions, islands, remote and border areas;

19. Special weapons and equipment for national 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 using state budget funds, the exemption from tax must be specifically defined in the state budget estimate;

20. Goods imported under the following circumstances: humanitarian aid, non-reimbursable aid; gifts to state agencies, political organizations, social-political organizations, social organizations, occupational social organizations, people's armed units; gifts and presents to individuals in Vietnam according to the level specified by the Government; goods of foreign organizations and individuals within diplomatic exemption standards; goods carried by persons within tax-free luggage allowances; personal items of Vietnamese citizens living abroad when returning to Vietnam. The importation of goods under these circumstances shall be determined according to the regulations set by the State; Goods sold to international organizations, foreigners for humanitarian aid, non-reimbursable aid to Vietnam; goods and services sold to diplomatic exemption subjects under the Diplomatic Exemption Ordinance; projects using non-reimbursable ODA funds;

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

22. Goods and services directly supplied to international transportation and consumption outside Vietnam, except for repair services for machinery, equipment, and transport means for foreign countries and labor export services;

23. Technology transfer as stipulated in Chapter III of the Civil Code of the Socialist Republic of Vietnam. For technology transfer contracts accompanied by machine and equipment transfer, the tax exemption applies only to the value of the transferred technology; computer software, except for exported computer software;

24. Gold imported in bar, ingot form, and other types of gold not yet processed into artistic products, jewelry, or other products. Bars, ingots, and unprocessed gold types are determined in accordance with international regulations;

25. Unprocessed mineral resources that are exported as specified below:

Crude oil;

Slate, sand, rare earth;

Precious stones;

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

The Ministry of Finance will base on the management requirements of natural resources and minerals by the State to adjust and supplement the types of mineral resources specified in this clause;

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 subtracting reasonable business expenses from business revenue;

Organizations and individuals purchasing, selling, importing goods, and supplying services exempted from VAT under this Article shall not deduct or refund input VAT on goods and services at the stage exempted from VAT;

The basis for calculating VAT is the taxable price and tax rate;.

 

Chapter II

BASIS AND METHOD OF CALCULATING TAX

Article 51. For goods and services sold by production and business establishments, the taxable price is the selling price excluding VAT;

Article 62. For imported goods, it is the customs entry price plus import duties. The customs entry price is determined according to the regulations on the taxable price of imported goods;

3. For goods and services used for internal exchange, gifts, and donations, the taxable price is the taxable price of similar goods and services at the time these activities occur;

4. For asset leasing activities, regardless of the type of asset and leasing form, the taxable price is the lease price excluding VAT. In cases where leasing is paid periodically or prepaid for a lease period, the taxable price is the periodic or prepaid lease payment excluding VAT;

5. For leasing offshore drilling rigs, machines, equipment, and transport means that have not been domestically produced for subsequent leasing, the taxable price is reduced by the lease payment to be made to the foreign party;

6. For goods sold on installment, the taxable price is the one-time selling price excluding VAT (excluding installment interest payments), not calculated based on installment payments;

7. For construction and installation activities, the taxable price is the construction and installation price excluding VAT for the project, project component, or completed work; if construction and installation are settled based on unit prices and quantities of completed works handed over, VAT is calculated on the value of the completed works handed over;

8. For investment construction of houses for sale and infrastructure bases for transfer by units allocated land by the State, the taxable price is the house and infrastructure base price attached to the land, minus the land use fee payable to the state budget;

9. For investment in infrastructure for leasing, the taxable price is reduced by the land lease fee payable to the state budget;

10. For real estate trading activities, the taxable price is reduced by the value of the land subject to the land use right transfer tax;

11. For agency and brokerage activities in buying and selling goods and services earning commissions, the taxable price is the commission income from these activities;

12. For goods and services with special characteristics using payment vouchers indicating a price including VAT, the taxable price is determined by dividing the inclusive price by [1 + (percentage) tax rate of the goods or service].

8. For real estate business activities, the taxable value for value-added tax shall be the sale price minus the land value subject to the land transfer right tax;

9. For agency and brokerage activities in buying and selling goods and services that earn commission, the pre-tax amount serving as the basis for calculating tax is the commission received from these activities;

10. For goods and services with specific characteristics where payment vouchers indicate the payment amount including value-added tax, the pre-tax amount serving as the basis for calculating tax shall be determined by dividing the taxed price by [1 + (percentage) tax rate of such goods and services];

The tax base for goods and services specified in this Article includes additional surcharges and extra fees that businesses enjoy.

The Ministry of Finance shall provide detailed guidance on the tax base for value-added tax for goods and services specified in this Article.

, Clause 1, Clause 2 Article 7a of this Regulation.The rate of value-added tax as prescribed in Article 8 of the Law on Value-Added Tax, Article 2 of Resolution No. 90/1999/NQ-UBTVQH10 dated September 3, 1999, and Article 2 of Resolution No. 240/2000/NQ-UBTVQH10 dated October 27, 2000 of the Standing Committee of the National Assembly regarding amendments and supplements to the list of goods and services not subject to value-added tax and the rate of value-added tax for certain goods and services is specified as follows: .

1. A zero percent tax rate applies to: exported goods, including goods subject to special consumption tax when exported, goods processed for export; repair of machinery, equipment, transportation means for foreign countries; exported computer software; labor export services.

Exporting includes exporting abroad, exporting to export processing zones, exporting to export enterprises, and other specific cases considered as exports according to the Government's regulations.

2. A five percent tax rate applies to goods and services:

Coal;

Mechanical products (excluding consumer mechanical products);

Products from black metal, non-ferrous metal, precious metal rolling, drawing, and extrusion (excluding imported gold as specified in Clause 24, Article 4 of this Decree);

Various types of molds;

Basic chemicals;

Computers and computer component kits;

Explosive materials;

Welding rods;

Tires and tire sets with sizes 90020 and above;

Goods subject to special consumption tax at the commercial stage, taxed under the tax deduction method;

Clay;

Printing paper;

Pesticide sprayers;

Soil, rock, sand, gravel;

Electrical cables with voltage of 600 volts and above;

Fishing nets, fishing ropes, and fishing threads;

Clean water for production and daily use, except clean water exempted as specified in Clause 18, Article 4 of this Decree and various types of beverages subject to a 10% tax rate;

Fertilizers, ore for fertilizer production; pesticides and growth stimulants for livestock and crops;

Medical equipment, machines, and tools; Cotton and medical sanitary pads;

Artificial limbs, crutches, wheelchairs, and other specialized tools for people with disabilities;

Medicines for treatment and prevention for humans and animals, chemical pharmaceutical products, and raw materials for producing medicines for treatment and prevention;

VIETNAM TOBACCO ASSOCIATIONNeutral glass tubing (tubes and shaped tubes);

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

Toys for children;

Various types of books, except books exempted from value-added tax as specified in Clause 13, Article 4 of this Decree;

Agricultural products, livestock, and aquaculture products that have not been processed or only undergone simple cleaning, freezing, drying, including seeds, seedlings, and breeding stock, except products directly sold by organizations and individuals without being subject to tax as specified in Clause 1, Article 4 of this Decree;

Raw forest products (excluding wood and bamboo shoots) that have not been processed; fresh food and grains;

Raw forest products that have not been processed include forest products harvested from natural forests such as bamboo, rattan, reeds, mushrooms, and medicinal plants, and other forest products;

Fresh food refers to food that has not been processed or only undergone simple preliminary processing;

Grains include rice, corn, potatoes, cassava;

Products made from rush, straw, bamboo, and leaves, which are produced and processed from main raw materials such as rush, straw, bamboo, and leaves;

Synthetic plywood;

Domestic cottonseed already de-hulled, de-seeded, and sorted;

Raw latex;

Livestock feed, poultry feed, and other animal feeds;

Construction and installation;      

Houses and technical infrastructure structures of state-assigned land investment and construction facilities for business operations;

Maintenance, repair, restoration of historical, cultural relics, museums, except activities specified in Clause 15, Article 4 of this Decree;

Scientific and technical services including research, application, and guidance on science and technology;

Channel dredging, riverbed dredging, inland port, sea port; salvage and rescue operations;

Transportation, loading and unloading;

Direct agricultural production services including plowing, harrowing agricultural land; digging, filling, dredging canals, ditches, ponds, lakes for agricultural production; raising, planting, caring, pest control; harvesting agricultural products;

Recorded tapes, discs;

Film production and projection;           

3. A ten percent tax rate applies to goods and services:

Crude oil, natural gas, ores, and other mining products;

Commercial electricity sold by electricity production and trading units;

Consumer mechanical products;

Electronic products;

Chemical products (excluding basic chemicals), cosmetics;

Fibers, fabrics, ready-made garments, embroidery;

Leather and imitation leather products;

Paper (excluding printing paper) and paper products;

Sugar, milk, cakes, candies, beverages, and other processed foods;

Ceramic, porcelain, glass, rubber, plastic, wood, and wood products; cement, bricks, tiles, and other building materials (excluding products in the 5% tax rate group);

Postal, courier, telecommunications services;

Renting houses, offices, warehouses, docks, factories, machines, equipment, transportation means;

Consulting, auditing, accounting, surveying, design services;

Photography, printing, film development; tape duplication, tape rental; video recording;

Hairdressing, tailoring, dyeing, dry cleaning, pressing;

Hotels, tourism, catering;

Other goods and services not specified in Article 4 and Clauses 1, 2, and 4 of Article 7 of this Decree;

4. A twenty percent tax rate applies to goods and services:

Gold, silver, precious stones purchased and sold by businesses;

Lottery tickets and other lottery forms;

Ship agency;

Brokerage services.

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

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

1. The tax deduction method:

The amount of value-added tax (VAT) payable shall be determined by subtracting the deductible VAT input from the VAT output.

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

In cases where the seller does not clearly specify the pre-VAT sale price and the VAT on the VAT invoice, the VAT output shall be calculated based on the sale price of the goods and services, except when using invoices or documents indicating the payment price inclusive of VAT.

b) Deductible VAT input is equal to the total VAT recorded on VAT invoices for purchased goods and services or tax payment certificates for imported goods used in producing and trading VAT-liable goods and services, plus the VAT amount deducted according to the fixed ratio specified in Article 9 of this Decree.

c) The deduction method applies to businesses, excluding those applying the direct calculation method on added value as stipulated in Clause 2 of this Article.

2. Direct Calculation Method on Added Value:

The amount of VAT payable shall be determined by multiplying the added value of taxable goods and services sold with the applicable VAT rate.

a) The added value of goods and services is determined by subtracting the purchase payment price from the sale payment price of the goods and services.

The payment price of purchased goods and services is the actual purchase price recorded on purchase invoices, including VAT and additional charges that the buyer must pay and the seller receives.

The purchase payment price of goods and services is determined by the value of purchased goods and services including VAT used by the business for producing and trading VAT-liable goods and services.

In cases where the business has not fully implemented the purchase and sale of goods and services with invoices and documents to determine the added value as prescribed above, the added value shall be determined as follows:

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

For individuals engaged in business who have not implemented or have not fully implemented purchase and sale invoices for goods and services, the tax authority will base the taxable sales revenue on the business situation of each individual; the added value is determined by multiplying the set sales revenue with the percentage of added value calculated on sales revenue.

b) The percentage of added value calculated on sales revenue, which serves as the basis for determining the added value, is set by the tax authority in accordance with each type of business activity.

The Ministry of Finance will provide detailed guidance on determining the added value for each type of business activity.

c) The direct calculation method on added value only applies to the following subjects:

Individuals and organizations, foreign individuals operating in Vietnam without complying with the Law on Foreign Investment in Vietnam regarding accounting records and invoices necessary for tax deduction methods; and businesses trading gold, silver, precious stones, and foreign currencies, which are subject to VAT under the direct calculation method on added value. If such businesses also engage in trading gold, silver, and precious stones while being subject to the deduction method, they must separately declare and calculate the VAT payable for these activities using the direct calculation method on added value.

Businesses engaged in buying and selling gold, silver, precious stones, and foreign currencies, which are subject to the calculation method of directly applying value-added tax on the added value, must pay taxes according to this method. In cases where businesses subject to the tax deduction method have activities involving the purchase and sale of gold, silver, and precious stones, they shall separately calculate and declare the tax payable for these activities using the direct calculation method based on added value.

Article 9Deduction of VAT Input.

1. Businesses subject to VAT under the deduction method shall deduct VAT input as follows:

a) VAT input of goods and services purchased for production and trading of VAT-liable goods and services can be fully deducted.

b) VAT input of goods and services purchased simultaneously for production and trading of VAT-liable goods and services and non-VAT-liable goods and services can only be deducted for the portion used for VAT-liable goods and services.

Businesses must separately account for deductible and non-deductible VAT inputs; if separate accounting is not possible, the deduction shall be made proportionally based on the ratio between taxable sales revenue and total sales revenue.

c) VAT input deductible in a month shall be declared and deducted when calculating the VAT payable for that month.

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

For businesses paying VAT under the direct calculation method on added value, when switching to the deduction method, they can only deduct VAT input according to the regulations applicable to invoices and documents issued from the date of implementing the VAT deduction method.

d) Production and trading businesses paying VAT under the deduction method may deduct VAT input at a percentage rate calculated on the purchase price of goods and services without VAT invoices as follows:

A 2% rate applies to: agricultural, forestry, and aquatic products not yet processed; land; stone; sand; gravel; and waste materials purchased without VAT invoices. Businesses purchasing these items must prepare a list according to the tax authority's guidelines.

A rate of 3% applies to: goods and services subject to value-added tax purchased from production and business establishments that pay taxes using the direct calculation method on added value with sales invoices; agricultural, forestry, and aquatic products not yet processed purchased from production establishments with value-added tax invoices but not subject to production stage value-added tax; goods subject to special consumption tax purchased by commercial businesses from production establishments for resale; compensation money from insurance business activities.

d) For businesses purchasing goods and services with specific characteristics that use receipts indicating the payment price inclusive of value-added tax, the non-tax-inclusive price and deductible input VAT shall be determined based on the price including tax according to the calculation method specified in Clause 10, Article 6 of this Decree.

e) In cases where domestic businesses enter into contracts with foreign contractors to have the latter pay value-added tax on their behalf, the domestic businesses may deduct the input VAT paid on their behalf.

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

a) For purchased goods and services, it is the amount of value-added tax recorded on the purchase invoice for goods and services; in cases where the seller pays the tax on behalf of the buyer, it is the tax payment receipt issued by the seller.

b) For imported goods, it is the amount of value-added tax paid, as recorded on the import value-added tax payment receipt.

c) For purchased goods and services eligible for deduction under Point d, Clause 1 of this Article, the actual purchase price recorded on the purchase goods list or on the sales invoice or value-added tax invoice shall be used. If the purchase price recorded on the list does not match the market price, the tax authority shall base the taxable amount on the market price.

d) For purchased goods and services using receipts indicating the payment price inclusive of value-added tax, the amount of deductible input tax shall be calculated based on such receipts according to the provisions of Point d, Clause 1 of this Article.

Article 10Businesses must fully comply with the legal requirements for purchasing and selling goods and services with invoices and receipts. The invoices for purchasing and selling goods and services for businesses are regulated as follows:

1. Businesses subject to the tax deduction method must use value-added tax invoices. When issuing sales invoices for goods and services, businesses must accurately record all required elements on the invoice, including clearly stating the pre-tax sale price, additional charges and fees outside the sale price (if applicable), value-added tax, and the total payment price inclusive of tax.

2. Businesses subject to the direct calculation method on added value must use sales invoices. The sale price recorded on the invoice is the total payment price inclusive of value-added tax.

3. Businesses using self-printed invoices and receipts must register the models with the Ministry of Finance (General Tax Department) and can only use them after receiving written approval.

4. Businesses directly selling goods to consumers must issue value-added tax invoices or sales invoices for goods sold below the specified price; if they do not issue invoices, they must prepare a retail sales list according to the tax authority's model for calculating value-added tax; if the buyer requests a value-added tax invoice or sales invoice, the business must issue the invoice in accordance with regulations.

The Ministry of Finance shall stipulate the management and usage system for invoices and receipts, as well as the issuance and inspection of their usage 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. Businesses subject to value-added tax as defined in Article 3 of this Decree, including affiliated units and branches, must register with the tax authority at the place of business regarding the business location, business activities, labor force, capital, tax payment location, and other relevant indicators according to the tax authority's guidelines.

For newly established businesses, the registration period for tax payment must not exceed ten days from the date of obtaining the business registration certificate; if a business has not obtained the business registration certificate but is engaged in business activities, it must register for tax payment before commencing operations. Businesses already registered for tax payment, if there are changes such as mergers, consolidations, divisions, ownership forms, dissolution, bankruptcy, or changes in business activities or locations, must report these changes to the tax authority at least five days prior to the change.

2. Businesses applying the direct calculation method on added value, if they fully meet the conditions regarding invoice and receipt systems, accounting books, declarations, timely tax payments, and voluntarily register to apply the tax deduction method, and if the tax authority confirms that they have met all these conditions, the tax authority will notify the business to proceed; if during implementation, the business fails to meet the prescribed conditions, the tax authority will issue a notice suspending the application of the tax deduction method.

The Ministry of Finance shall guide the procedures for registering for tax payment and the authority to review and approve businesses applying the direct calculation method on added value to switch to the tax deduction method as stipulated in this Article.

Article 12Businesses and importers must declare value-added tax according to the following regulations:

1. Business entities engaged in goods and services subject to value-added tax must declare such tax monthly and submit the tax declaration form along with a list of purchased and sold goods and services as the basis for determining the amount of tax payable for that month to the tax authority within the first ten days of the following month. In cases where there is no sales revenue, input tax, or output tax generated, business entities must still declare and submit the declaration form to the tax authority. The entity must complete the tax declaration form fully and accurately and bear legal responsibility for the accuracy of the declaration.

Organizations or individuals outside Vietnam without offices or management headquarters in Vietnam providing goods and services subject to value-added tax to entities in Vietnam shall have the organizations or individuals in Vietnam consuming such goods and services be the taxpayers responsible for declaring and paying the value-added tax on behalf of the foreign party. The value-added tax payable is calculated based on the price of the goods and services payable to the foreign party.

2. Business entities and importers importing goods subject to value-added tax must declare and submit the value-added tax declaration form each time they import, together with the customs declaration for import duties to the customs authority.

3. Business entities dealing with various types of goods and services subject to different rates of value-added tax must declare value-added tax according to the prescribed rate for each type of goods and service; if the business entity cannot determine separately according to each rate, it must calculate and pay the tax at the highest rate applicable to the goods and services produced or traded by the entity.

Business entities trading in gold, silver, precious stones, which engage in processing or manufacturing these products, if unable to account for revenues and taxes from these activities separately, shall apply a unified rate of 20% for both processing and manufacturing and directly calculate tax on the value added.

Article 13.Payment of value-added tax into the state budget is regulated as follows:

1. Business entities are responsible for directly paying the full amount of value-added tax into the state budget according to the tax payment notice issued by the tax authority.

The deadline for tax payment of the month is recorded in the notice and must not exceed the 25th day of the following month.

For households or individuals engaged in business in remote areas far from the State Treasury or those operating in mobile or irregular businesses, the tax authority will collect the tax and pay it into the state budget. The tax authority must deposit the collected tax into the state budget within no more than three days, except for mountainous, island, and difficult-to-reach regions, where the deadline is extended to six days from the date of collecting the tax.

2. Business entities and importers of goods must pay value-added tax each time they import.

The deadlines for notification and payment of value-added tax on imported goods are carried out simultaneously with the deadlines for notification and payment of import duties.. For goods that do not require payment of import duties, the deadlines for declaration and payment of value-added tax shall be implemented according to the deadlines set for goods requiring import duties.

For goods (including materials, machinery, equipment, etc.) imported exempt from value-added tax but subsequently sold or used for other purposes, the entity must declare and pay value-added tax according to the regulations applicable to other goods.

3. Within a tax period, if a business entity has overpaid tax in the previous period, this excess can be deducted from the tax payable in the subsequent period. If underpayment occurred in the previous period, the entity must make up the shortfall. Business entities subject to value-added tax under the deduction method may deduct the excess input tax over output tax in the current tax period from the tax payable in the next tax period. In cases where a business entity invests in new fixed assets with a large deductible input tax, gradual deduction or refund of tax may be implemented as stipulated in Article 15 of this Decree.

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

In cases where a business entity's revenue, output tax, and input tax are in foreign currency, the foreign currency must be converted into Vietnamese Dong at the average exchange rate of the interbank market at the time of occurrence to determine the tax payable.

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

Article 14Business entities must settle their annual tax with the tax authority. The tax settlement year is calculated according to the Gregorian calendar. Within sixty days from the end of the year, the business entity must submit the annual tax settlement report to the tax authority and must pay any outstanding tax into the state budget within ten days from the date of submitting the tax settlement report; any overpayment will be deducted from the tax payable in the following period.

In cases of merger, consolidation, division, spin-off, dissolution, or bankruptcy, the business entity must settle its tax with the tax authority and submit the tax settlement report to the tax authority within forty-five days from the date of the decision on merger, consolidation, division, spin-off, dissolution, or bankruptcy.

The business entity is responsible for declaring the total amount of tax payable, the amount already paid, and any outstanding or overpaid tax up to the deadline for tax settlement. The entity must complete all required fields and figures in the tax settlement form and submit the tax settlement report to the local tax authority where the entity registered to pay taxes within the specified timeframe.

The Ministry of Finance shall prescribe the forms and provide guidance on the implementation of the annual value-added tax settlement as stipulated in this Article.

Article 15Refunds of value-added tax paid in accordance with Article 16 of the Law on Value-Added Tax are specifically regulated as follows:

1. Business entities subject to the deduction method of tax payment may be eligible for a refund if they have excess input tax deductible greater than output tax for three consecutive months or longer. Businesses exporting seasonal or periodic goods in large quantities, if they generate a larger amount of input tax on exported goods compared to output tax, may be eligible for periodic refunds.

2. Business entities subject to tax under the tax deduction method, which invest inor purchase fixed assets, shall be considered for refund of input VAT on fixedassets as follows:

a) For newly established business entities that have registered with the taxauthorities but have not yet generated output VAT, if the investment period isone year or more, they may be considered for refund of input VAT annually. Incases where the amount of input VAT refund for fixed asset investment is large,they may be considered for quarterly refunds.

b) For business entities expanding their investments or deepening theirinvestments, if the amount of input VAT for fixed asset investment remains largethree months after being deducted, they may be considered for refund of theunrecovered VAT.

3. Business entities consolidating, merging, splitting, dissolving, or goingbankrupt, with excess VAT paid, shall be eligible for a refund.

4. Refund of VAT for projects using Official Development Assistance (ODA) funds:

a) For projects using non-repayable ODA funds: The project owner or maincontractor shall be refunded the VAT already paid in the price of goods andservices used for the project.

b) For projects using ODA funds that are non-repayable from the state budget:The project owner or main contractor shall be refunded the VAT already paid uponimportation and purchase of goods and services within the country used for theproject.

5. Organizations in Vietnam using humanitarian aid or non-repayable assistancefrom foreign organizations or individuals to purchase goods in Vietnam shall berefunded the VAT already paid on invoices when purchasing goods for aid.

6. Business entities with a decision to refund taxes issued by competentauthorities according to the provisions of the law.

To process tax refunds, the relevant organizations and individuals must submit apetition along with the tax refund documentation to the local tax managementauthority. The tax authority is responsible for verifying the amount of taxrefund and processing the refund or recommending the competent authority torefund the tax to the entity.

The Ministry of Finance shall stipulate procedures, deadlines, and authoritiesfor resolving tax refunds as prescribed in this Article.

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

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

Business entities that fail to comply with regulations on registration,declaration, and payment of taxes shall be notified for the first time. If theentity still fails to comply after the first notification, the authority mayimpose administrative penalties for tax violations. For entities engaged inbusiness without registration, if discovered during inspection, they shall beinstructed to register, declare, and pay taxes in accordance with the law andadministrative penalties for tax violations shall be imposed on such entities.

2. Notify business entities of the amount of tax due and the deadline forpayment in accordance with the prescribed time. The tax payment notice must begiven to the taxpayer at least three days before the payment date specified inthe notice. The tax payment deadline for the month indicated in the notice shallnot exceed the 25th day of the following month.

If the taxpayer fails to pay the tax by the deadline specified in the notice, afollow-up notice shall be issued regarding the amount of tax and late paymentpenalties as stipulated in Clause 2, Article 19 of the Value Added Tax Law. Themonthly late payment penalty period starts from the 26th day of the followingmonth. The late payment penalty period for imported goods and other cases isafter the legal payment date specified in the tax notice. If the business entitystill fails to pay the tax and penalties as notified, the tax authority mayapply or recommend the competent authority to apply the measures prescribed inClause 4, Article 19 of the Value Added Tax Law to ensure full collection of taxpaid and penalties. If these measures are implemented and the business entitystill fails to pay the full amount of tax and penalties, the tax authority shalltransfer the case file to relevant legal authorities for handling.

3. Inspect and audit the declaration and payment of taxes and finalization oftaxes by business entities in accordance with the provisions of the law.

4. Handle administrative tax violations and resolve tax complaints inaccordance with the provisions of the law.

5. Require taxpayers to provide accounting books, invoices, supportingdocuments, and other related documents for tax calculation and payment; requirefinancial institutions, banks, and other related organizations and individuals toprovide documents related to tax calculation and payment.

6. Retain and use data and documents provided by business entities and otherparties in accordance with the prescribed regime.

Article 17The 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 supporting documents.

For business entities subject to direct taxation based on value added that havenot implemented or fully implemented the purchase and sale of goods and servicesthat are invoiced and documented, the tax authority shall base the determinationof value added and the amount of tax payable on the situation of businessoperations as prescribed in Clause 2, Article 8 of this Decree.

For small and medium-sized individual businesses, the amount of tax determinedto be paid each time can be set as the basis for collecting tax for each periodof six months or twelve months, depending on the industry, price fluctuations,and business conditions of the taxpayer. The tax authority is responsible forpublicly announcing the determined tax rate for these entities.

Small and medium-sized individual businesses paying taxes according to thedetermined rate for each period, if there are changes in business activities,scale, or sales volume, must report to the tax authority for review andadjustment of the determined tax rate. In cases where no report is made or thereport is not truthful, the tax authority has the right to determine the taxpayment rate appropriate to the actual business conditions. Individuals whostop business operations must report to the tax authority to be considered forexemption or reduction of taxes. If they stop operating for 15 days or more in amonth, they will be considered for a 50% reduction in the monthly tax payable;if they stop operating for the entire month, they will be exempt from paying themonthly tax.

The Ministry of Finance shall guide the determination of the percentage of value-added tax calculated on turnover as the basis for determining the amount of value-added tax payable in accordance with each business sector; procedures for declaring suspension of business operations and reduction of taxes for suspended businesses as provided for herein.

2. Failure to declare or submit the declaration form beyond the prescribed time despite being reminded, or submitting the tax declaration form but incorrectly declaring the bases for determining the amount of value-added tax;

3. Refusal to present accounting books, invoices, supporting documents, and other relevant materials related to the calculation of value-added tax;

4. Engaging in business without registration, failing to declare and pay taxes as required and being detected during inspection;

Tax authorities shall base their assessment of the amount of tax payable for each business entity on investigation documents regarding the business operation situation of such entities or on the amount of tax payable for similar-sized businesses in the same industry, in the cases mentioned above.

In case a business entity disagrees with the assessed amount of tax payable, it has the right to appeal to the tax authority that made the assessment or to the higher-level tax authority directly supervising such tax authority. During the appeal process, the business entity or appellant must still pay according to the assessed tax amount.

 Chapter IV

VIOLATION HANDLING AND REWARD

Article 18.Taxpayers and tax officials who violate the Value-Added Tax Law shall be subject to handling based on their actions and the degree of violation as stipulated in Articles 19 and 21 of the Value-Added Tax Law.

Article 19. Tax authorities and tax officials who complete their assigned tasks well, organizations and individuals who achieve results in implementing the Value-Added Tax Law, taxpayers who fulfill their tax payment obligations will be rewarded in accordance with the regulations of the Government.

Chapter V

IMPLEMENTING PROVISIONS

Article 20.The specific provisions regarding the reduction of value-added tax as stipulated in Article 28 of the Value-Added Tax Law are as follows:

1.For business entities paying tax using the deduction method, if they incur losses in the initial years of applying value-added tax due to the amount of value-added tax payable exceeding the tax calculated based on previous income tax rates, they may be considered for a reduction in the amount of value-added tax payable. The reduction amount corresponds to the loss caused by the aforementioned reason, but shall not exceed the amount of value-added tax payable by the business entity in the year under consideration.

2. The period for reducing value-added tax as stipulated herein shall be reviewed annually according to the calendar year and shall only be implemented within the first three years, from 1999 to 2001.

The review for tax reduction shall be based on the business results and tax settlement of the business entity. For business entities specified in Clause 1 of this Article, if the projected annual plan shows a loss, to alleviate financial difficulties, the tax authority may temporarily reduce the value-added tax payable for the entity. The temporary reduction rate shall be determined based on the financial budget and actual business conditions of the previous year, but shall not exceed 70% of the tax amount expected to be reduced according to the law.

Cases where tax exemptions or reductions are granted due to international treaties signed and joined by Vietnam or commitments made by the Government shall be implemented as corresponding tax exemptions or reductions according to those treaties or commitments.

The Ministry of Finance shall guide the procedures and define the authority for reviewing tax reductions as stipulated in this Article.

Article 21.The organization of value-added tax collection 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 produced and traded by business entities.

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 value-added tax collection as stipulated in this Article.

Article 22. The amount of value-added tax refunded to the subjects specified in Article 15 of this Decree shall be funded from the tax refund fund, which is extracted from the collected value-added tax. The Ministry of Finance shall specify the detailed organization of tax refunds, accounting for tax revenue and refunds as stipulated in this Article.

Article 23.This Decree takes effect from January 1, 2001 and replaces Decrees No. 28/1998/NĐ-CP dated May 11, 1998, No. 102/1998/NĐ-CP dated December 21, 1998, No. 78/1999/NĐ-CP dated August 20, 1999, and No. 15/2000/NĐ-CP dated May 9, 2000 of the Government detailing the implementation of the Value-Added Tax Law.

Matters concerning the resolution of outstanding tax issues, tax settlements, tax exemptions and reductions, and the handling of violations of business tax before January 1, 1999 shall continue to be handled in accordance with the relevant provisions of the Business Tax Law, the Law Amending and Supplementing Certain Provisions of the Business Tax Law, and other tax regulations in legal normative documents.

Article 24. The Minister of Finance shall provide guidance on the implementation of this Decree.

Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairmen Within 10 working days from the date of receipt of the dossier as mentioned in Sub-clause b, Clause 1, Article 3 above, the Ministry of Foreign Affairs will review and submit to the competent authority for decision (Issues exceeding the Ministry of Foreign Affairs' jurisdiction will be referred to the Prime Minister for consideration and decision).of provincial people's committees directly under the central government are responsible for implementing this Decree./.