Circular No. 85/2009/TT-BTC guiding the implementation of Decision No. 58/2009/QĐ-TTg dated April 16, 2009 of the Prime Minister supplementing certain tax measures to implement policies stimulating investment and consumption, preventing economic downturns, and resolving difficulties for businesses.

CIRCULAR

Guidelines for Implementing Decision No. 58/2009/QĐ-TTg dated April 16, 2009 of the Prime Minister Supplementing Certain Measures on Taxation to Implement Policies Stimulating Investment and Consumption, Preventing Economic Downturn, and Resolving Difficulties for Businesses

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Pursuant to the Law on Value Added Tax and guiding documents therefor;

Pursuant to the Law on Corporate Income Tax and guiding documents therefor;

Pursuant to the Ordinance on Fees and Charges and guiding documents therefor;

Pursuant to the Law on Tax Administration and guiding documents therefor;

Pursuant to Resolution No. 21/2008/QH12 of the 12th National Assembly on the State Budget for 2009;

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;

Pursuant to Decision No. 58/2009/QĐ-TTg dated April 16, 2009 of the Prime Minister Issuing Supplemental Measures on Taxation to Implement Policies Stimulating Investment and Consumption, Preventing Economic Downturn, and Resolving Difficulties for Businesses;

The Ministry of Finance provides guidelines for implementing Decision No. 58/2009/QĐ-TTg as follows: 

Article 1. Reduction of 50% of the Value Added Tax (VAT) rate

1. Goods and services subject to a reduction of 50% of the VAT rate from May 1, 2009 to December 31, 2009, as specified in Clause 1, Article 1 of Decision No. 58/2009/QĐ-TTg, are detailed as follows:

a) Yarn, fabric, and ready-made garments, leather shoes including:

- All types of yarn, including all types of fiber;

- All types of fabric;

- Products of the garment industry;

- Leather of all types;

- All types of shoes;

b) Paper of all types (excluding newspaper paper), including pulp, paper products of all types, except books as specified at Point 0, Clause 2, Article 8 of the Law on Value Added Tax and paper products subject to special consumption tax;

c) Cement;

d) Brick, tile of all types, including cement fiber board;

đ) Two-wheeled motorcycles, three-wheeled motorcycles with engine displacement over 125 cubic centimeters.

2. The reduction of 50% of the VAT rate applies to goods specified in Clause 1 of this Article, including waste products obtained during the production process.

3. The list of goods subject to a reduction of 50% of the VAT rate specified in Clause 1 of this Article is detailed according to the List of Goods in the Preferential Import Tariff Schedule issued together with this Circular (hereinafter referred to as the List of Goods).

Goods subject to a reduction of 50% of the VAT rate are marked with an "X" in the column "Goods Reduced" of the List of Certain Goods Subject to a 50% Reduction in the VAT Rate.

The reduction of 50% of the VAT rate for goods in this supplementary list is uniformly applied at import, production, processing, or commercial trading stages.

4. When issuing invoices for goods and services subject to a reduced VAT rate, in the VAT rate line, record "10% x 50%"; VAT amount; total payment amount.

In cases where enterprises use self-printed invoices, in the VAT rate line, record 5%, and in the "Goods, Services" line, in addition to recording the name of the goods and services provided, also record the additional line "goods subject to a 50% reduction in the VAT rate".

Example: Company A sells 100 tons of cement to Company B according to the contract signed between both parties, the selling price excluding VAT is 1,300,000 VND per ton. Cement falls under the category of goods subject to a 50% reduction in the VAT rate. Therefore, when issuing VAT invoices to deliver cement to Company B from May 1, 2009 to December 31, 2009, Company A records as follows:

In the "Goods, Services" column, record: "Cement"

Selling price recorded: 1,300,000 VND x 100 tons = 130,000,000 VND

VAT rate: "10% x 50%"

VAT amount: 6,500,000 VND

Total payment amount: 136,500,000 VND

Based on the VAT invoice, Company A declares VAT output tax, and Company B declares VAT input tax deduction according to the VAT amount recorded on the invoice, which is 6,500,000 VND.

When declaring VAT, taxpayers declare on the Invoice and Receipt Register for Goods and Services Sold (Form No. 01-1/GTGT issued together with Circular No. 60/2007/TT-BTC) in the line of goods and services subject to a 5% VAT rate (clearly noted in the "Notes" column of the Register as: "reduced by 50%").

5. The subjects eligible for a reduction of 50% of the VAT rate include households and individuals producing and trading goods subject to a 50% reduction in the VAT rate as stipulated in this Article.

Households and individuals paying VAT under the turnover tax method, producing and trading multiple goods and services, including those subject to a 50% reduction and those not subject to a reduction in the VAT rate, must separately declare the turnover of each type of goods subject to a reduced VAT rate (clearly noted in Item 3. Turnover of goods and services subject to VAT: turnover of goods subject to a 50% reduction in the VAT rate - Declaration Form No. 01/THKH issued together with Circular No. 60/2007/TT-BTC). In cases where households and individuals cannot separately determine the turnover of goods specified in this Article, they are not eligible for a 50% reduction in the VAT rate.

Article 2. Extension of Value Added Tax Payment for Imported Goods

1. The deadline for paying VAT on imported goods such as machinery, equipment, spare parts, and specialized transportation vehicles included in production lines that are not domestically produced and need to be imported to form fixed assets of enterprises shall be extended up to 180 days.

The extension period for tax payment shall be calculated continuously from the date of registering the Customs Declaration Form, including holidays and non-working days as prescribed by law, and shall apply to customs declarations for imported goods registered with customs authorities from May 1, 2009, to December 31, 2009. In cases where the last day of the tax payment deadline specified in this clause coincides with a holiday as prescribed by law, the last day of the extension period shall be the next working day following the holiday.

2. Machinery, equipment, spare parts, and specialized transportation vehicles referred to in Clause 1 of this Article are those not listed in the Catalogue of Types of Machinery, Equipment, Specialized Transportation Vehicles, Construction Materials, Spare Parts, and Components Already Produced Domestically issued by the Ministry of Planning and Investment.

If an enterprise imports a complete set of equipment and machinery within the scope of VAT payment extension as guided in Clause 1 of this Article, but the set includes domestically produced equipment and machinery, then the entire set of equipment and machinery shall be eligible for the VAT payment extension.

To determine goods eligible for VAT payment extension at the import stage as stipulated in this Article, the importing entity must present the following documents to the Customs Authority:

- Import Contract;

In cases of agency importation, an additional Agency Import Contract must also be provided.

In cases where the enterprise has won a bid to supply goods to users for purposes specified in this Article, an additional Bid Award Notice and Sales Contract with enterprises based on the bidding results must also be provided.

In cases where a financial leasing company imports goods for leasing, an additional Financial Leasing Contract must also be provided.

- Confirmation by the Enterprise Director regarding the types of imported goods intended for use as fixed assets.

3. Goods subject to VAT payment extension as specified in Clause 1 of this Article, if their purpose changes (such as being sold or liquidated) during the extension period, shall declare and pay the deferred VAT at the customs office where the customs declaration was registered. The time for calculating VAT is the time when the change of purpose occurs.

4. Enterprises with imported goods as specified in Clause 1 of this Article may choose to pay the VAT in one lump sum for the deferred VAT on imported goods or pay it in installments, but the final installment must not exceed the extension period.

Enterprises will not be subject to late payment penalties for gradually paid VAT within 180 days, starting from the date of registering the Customs Declaration Form.

Article 3. Reduction of Corporate Income Tax

1. A reduction of 30% of the corporate income tax (CIT) payable for the fourth quarter of 2008 shall be applied to the income derived from activities such as spinning, weaving, dyeing, sewing, and leather and footwear production (hereinafter referred to collectively as the reduced-tax activities).

The production and processing activities of spinning, weaving, dyeing, sewing, and leather and footwear production, which serve as the basis for determining the tax reduction, shall be based on the current regulations concerning national economic sectors.

2. Method of Determining the Amount of CIT Reduction

The amount of CIT reduction for the fourth quarter of 2008 equals 30% of the CIT payable on the income generated from the reduced-tax activities during the quarter. The CIT payable on the income from the reduced-tax activities in the fourth quarter of 2008 serves as the basis for determining the reduction amount, and enterprises can choose to determine it according to one of the two methods below:

- Based on the business accounting results of the enterprise;

- Calculated as the total CIT payable for 2008 on the income from the reduced-tax activities divided by four.

In cases where enterprises cannot separately account for the income from the reduced-tax activities, the income eligible for reduction shall be determined based on the ratio between the revenue from the reduced-tax activities and the total revenue from all business operations of the enterprise.

For enterprises engaged in footwear production, including sandals, the income from the reduced-tax activities shall include income from the production of sandals.

In cases where enterprises are currently enjoying preferential CIT treatment under the laws on CIT, the 30% CIT reduction shall be calculated based on the remaining CIT after deducting the preferential CIT as prescribed by the CIT laws.

The fourth quarter of 2008 referred to in this Article includes October, November, and December 2008.

3. Procedures and Formalities: The reduction of 30% of the CIT for the fourth quarter of 2008 on income from the reduced-tax activities shall be implemented according to the guidance in Section II of Circular No. 03/2009/TT-BTC dated January 13, 2009, issued by the Ministry of Finance.

In cases where enterprises have declared and paid the CIT for 2008 to the state budget and completed the tax settlement, they may establish supplementary declaration forms to adjust the reduction of 30% of the CIT payable for the fourth quarter of 2008 according to Circular No. 60/2007/TT-BTC dated June 14, 2007. The CIT reduction for the fourth quarter of 2008 may be transferred to offset the CIT payable for the subsequent tax period or refunded according to regulations.

4. The CIT reduction as guided in this Circular applies to enterprises that have implemented accounting systems, invoices, and documents and registered tax payments based on declarations.

Article 4. Reduction of stamp duty

1. A 50% reduction in the amount of stamp duty payable shall apply to passenger cars with less than 10 seats (including the driver), for declaration forms submitted to tax authorities from May 1, 2009 to December 31, 2009, regardless of whether it is the first registration or subsequent registrations.

2. The 50% reduction in the amount of stamp duty payable as stipulated in this Article does not include rickshaws or automobiles designed to carry both passengers and goods.

3. Declaration of stamp duty: On the Stamp Duty Declaration Form (Form No. 02/LPTB issued together with Circular No. 60/2007/TT-BTC dated June 14, 2007 of the Ministry of Finance) at Item 2 of Part B "Amount of stamp duty payable (VND)": Supplement with "Equal to the value of the asset (for passenger cars with less than 10 seats, including the driver) calculated as Stamp Duty Rate multiplied by (x) the stamp duty rate (%) multiplied by (x) 50%".

Article 5. Implementation and Effectiveness

1. This Circular takes effect from May 1, 2009 to December 31, 2009.

2. In case of any difficulties during implementation, organizations and individuals are requested to report to the Ministry of Finance for timely guidance and resolution./.