Circular No. 98/TC-TCT guiding the implementation of Decree No. 97/CP dated December 27, 1995 of the Government detailing the Special Consumption Tax Law and Laws amending and supplementing certain provisions of the Special Consumption Tax Law.

 

CIRCULAR

DECISION NO. 98 TC/TCT OF DECEMBER 30, 1995 GUIDING THE IMPLEMENTATION OF GOVERNMENT DECREE NO. 97/CP OF DECEMBER 27, 1995 PROVIDING DETAILS FOR THE IMPLEMENTATION OF THE LAW ON SPECIAL CONSUMPTION TAX AND LAWS AMENDING AND SUPPLEMENTING CERTAIN PROVISIONS OF THE LAW ON SPECIAL CONSUMPTION TAX.

Pursuant to the Law on Special Consumption Tax dated June 30, 1990; the Law Amending and Supplementing Certain Provisions of the Law on Special Consumption Tax dated July 5, 1993 and the Law Amending and Supplementing Certain Provisions of the Law on Special Consumption Tax dated October 28, 1995;
Pursuant to Government Decree No. 97/CP dated December 27, 1995 providing details for the implementation of the Law on Special Consumption Tax and Laws Amending and Supplementing Certain Provisions of the Law on Special Consumption Tax;
The Ministry of Finance hereby provides guidance as follows:

I. SCOPE OF APPLICATION OF SPECIAL CONSUMPTION TAX (SCT).

1. The objects subject to SCT include imported goods and goods produced domestically, namely: cigarette, cigar, various types of alcohol, fireworks (excluding explosive fireworks), gasoline, naphtha, reformulated products and other products used to blend gasoline; automobiles up to 24 seats (including CKD models) detailed in Section II of this Circular. No SCT shall be levied on domestically produced and assembled automobiles (including CKD models).

2. The taxpayers of SCT are organizations and individuals from all economic sectors, social organizations; enterprises established and operating under the Law on Foreign Investment in Vietnam (hereinafter referred to as the entity) that import or produce goods subject to SCT.

In cases of consigned imports, the organization receiving the consignment is the taxpayer of SCT.

3. Entities producing goods subject to SCT must pay SCT at the place of production and are not required to pay turnover tax on revenue from sales of products declared and paid SCT at the place of production. If the production entity has branches or stores selling its products, the entity must declare and pay SCT at the place of production; branches or stores selling the products must declare and pay turnover tax at the place of sale according to the turnover tax rate applicable to commercial activities.

4. Entities importing goods subject to SCT must pay SCT at the place of declaration for importation and declare and pay turnover tax according to commercial activities at the place of sale.

5. Each item subject to SCT is only taxed once. When entities producing goods subject to SCT pay SCT, they can deduct the amount of SCT already paid for raw materials used to produce such goods in the following cases:

a- Production entities directly importing or consigning the importation of raw materials that have been subject to SCT, with proof of payment of SCT.

b- Production entities purchasing raw materials subject to SCT from other entities that have already paid SCT, with a sales invoice issued by the seller (issued by the Ministry of Finance).

The deduction of SCT is carried out simultaneously with the declaration and payment of tax according to the formula:

Tax SCT payable = Quantity of goods x Tax rate x Value of goods - SCT paid at the raw material purchase stage or importation stage

during the period

exported or sold during the period

corresponding to the quantity of products

exported or sold during the period

Example: During the tax payment period, Factory A generated the following transactions:

+ Imported 100,000 liters of beer that had already paid SCT amounting to 135 million dong.

+ Exported 80,000 liters of beer to produce 240,000 cans of beer.

+ Sold 200,000 cans of beer at a value of 2,600 dong per can.

+ The SCT paid for the beer corresponding to the 200,000 cans of beer sold was 90 million dong.

The SCT that Factory A must pay in the month is calculated as follows: (200,000 cans x 2,600 dong/can x 75%) - 90 million dong = 300 million dong.

In cases where the exact amount of SCT paid for the raw materials corresponding to the products sold during the period cannot be determined, it may be based on the data from the previous period to temporarily calculate the deductible SCT and will be settled according to the actual amount at the end of the month or quarter. In all cases, the maximum deductible SCT shall not exceed the SCT calculated for the raw materials according to the economic and technical standards of the product.

6. Production of goods subject to SCT for export shall not be subject to SCT in the following cases accompanied by the necessary procedures to be presented to the direct tax authority:

a- Goods produced by the entity directly exporting or directly processing for foreign countries, including cases where permission is granted to take goods abroad for trade fairs and exhibitions and selling them overseas.

Procedures include:

- Export permit or export-import permit according to the prescribed regulations.

For goods participating in trade fairs and exhibitions, the export-import permit must clearly state temporary export, re-import and the type of goods for the trade fair or exhibition.

- Processing contract or sales contract to foreign countries (for direct exports or direct processing).

- Sales invoice and warehouse release note for exported goods or returned processed goods.

- Export declaration form confirmed by customs authorities.

b- Goods produced by the entity permitted to sell to duty-free shops (considered as exports) and goods produced or processed by the entity for entities in export processing zones (excluding goods supplied for consumption and daily life as stipulated in Government Decree No. 322/HĐBT dated October 18, 1991 on the operation of export processing zones).

Procedures include:

- Sales contract or processing contract.

- Sales invoice, return invoice and export declaration form confirmed by customs authorities.

c- Goods produced or consigned by the entity to trading enterprises for export under economic contracts and export permits.

Procedures include:

- Consignment export contract or sales contract of the production entity to trading enterprises.

- Sales invoice and delivery note consistent with the signed economic contract.

- Export permit according to the prescribed regulations for trading enterprises (or certified copy) consistent with the goods sold or delivered recorded in the sales invoice and contract.

Monthly or periodically when paying taxes, production units subject to Special Consumption Tax (SCT) must prepare a detailed list of all goods sold or entrusted for export to trading enterprises engaged in import and export, which shall be submitted together with the tax declaration form to the directly managing tax authority. The directly managing tax authority is responsible for checking the list of exported goods and informing relevant tax authorities managing the trading enterprises about: the name of the purchasing unit for export; quantity and value of goods exported; and simultaneously processing confirmation procedures for the production unit regarding the quantity of goods exported without payment of SCT.

In cases where trading enterprises engaged in import and export do not export but sell domestically, in addition to paying turnover tax at the applicable rate for commercial activities, within no more than three days, such trading enterprises must declare and pay SCT on behalf of the production unit. The taxable price for SCT is the purchase price; if the purchase price cannot be determined, it will be calculated based on the actual selling price before SCT.

Example: Company A imports 1 million packs of cigarettes from Company B (with an SCT rate of 70%) for export at a price of 4,000 VND per pack (price excluding SCT since Company B does not need to pay SCT in this case). However, due to objective reasons, Company A cannot export the batch and sells it domestically at 7,000 VND per pack. Company A will have to declare and pay:

- Turnover tax at the applicable rate for commercial activities.

- SCT: 4,000 VND/pack x 70% x 1 million packs = 28 billion VND.

Assuming Company A has no basis to prove the actual purchase price, the taxable price for SCT will be:

7,000 VND

= 4,117 VND/pack

1 + 0.7

In cases where production units or trading enterprises exporting products subject to SCT must re-import due to certain reasons, the General Department of Taxation will consider and resolve the issue of not having to pay SCT when the following procedures are fully completed:

- A submission letter clearly stating the reasons for re-import, accompanied by comments from the superior management agency.

- Export permit and import permit for goods according to the prescribed regulations.

- Export declaration and import declaration for goods with confirmation of actual export and import by customs authorities matching the quantity, quality, and type of goods.

When consuming re-imported goods domestically, both production units and trading enterprises engaged in import and export must declare and pay SCT. In addition to paying SCT, trading enterprises engaged in import and export must also declare and pay turnover tax as stipulated by the regulations on turnover tax.

7. No SCT shall be levied on imported goods in the following specific cases and procedures:

a- Non-repayable aid goods, procedures include:

- Aid project or Agreement between the Government of Vietnam and foreign organizations or aid agreement or notification of aid;

- Permit for receiving, distributing, or using aid goods issued by the main ministry or People's Committee of Province/City.

- Confirmation from the Aid Management Board (Ministry of Finance) clearly stating non-repayable aid goods.

b- Temporarily imported goods for re-export, if actually re-exported within the specified period (30 days), no corresponding SCT shall be paid. Procedures include:

- Temporary import and re-export permit issued by the Ministry of Trade:

- Import declaration and export declaration for goods with confirmation from customs authorities regarding quantity, weight, and type of temporarily imported and re-exported goods.

- Foreign trade sales contract (original or certified copy).

- Entrusted import and export contract (if entrusted for export/import).

- Tax notice from the customs authority.

c- Temporarily imported goods for exhibitions, if actually re-exported within the specified period (30 days), procedures include:

- Invitation or notification to participate in exhibitions;

- Import permit for goods issued by the Ministry of Trade or General Customs Department specifying that the goods are temporarily imported for exhibition and re-export, along with the exhibition period.

After the exhibition period, if the organization or individual does not re-export temporarily imported goods for participation in the exhibition, they must declare and pay SCT immediately the next day; if the organization or individual fails to declare and is discovered during inspection, in addition to being required to pay back SCT, they will also be subject to penalties as stipulated. If the exhibition period exceeds the specified period (30 days), SCT must be paid according to the specified period and refunded upon re-export.

Goods participating in exhibitions permitted to be sold in the domestic market (including gifts, etc.) must declare and pay SCT according to the guidance provided in point 2(b) Section III of this Circular.

d. Imported goods of foreign organizations or individuals enjoying exemption standards as prescribed by the Government in accordance with international treaties to which Vietnam is a party, with an import permit issued by the General Customs Department.

e. Goods subject to SCT transported through transit, transshipment, or detouring through Vietnam's border according to government regulations, in addition to complying with all regulations of the Ministry of Trade and General Customs Department, must also meet the following conditions:

- A letter from the Ministry of Trade permitting transit services or transshipment, or a letter from the General Customs Department permitting foreign owners to detour.

- Certified copies of transit service contracts or certified copies of purchase and sale contracts for transshipment services.

- Import permits and export permits according to the prescribed regulations.

g. Raw materials and components imported for producing export goods and exported within the specified period (90 days): The procedure for exempting SCT is implemented according to the guidance on import tax in this situation in Circular No. 53 TC/TCT dated July 13, 1995, issued by the Ministry of Finance; if the product is not exported within the specified period, SCT must be paid for the corresponding raw materials and components and refunded upon export of the product.

h. Goods within the personal luggage allowance exempt from tax carried by Vietnamese and foreign individuals when entering or leaving Vietnam through border gates.

The customs authority shall base on the above provisions to process the non-payment of special consumption tax for cases specified in points a, b, c, d, e, g, h of this section.

i. According to Article 3 of Decree No. 97/CP dated December 27, 1995 of the Government, imported materials and raw materials for processing for export under signed contracts and re-exported finished products are exempt from special consumption tax.

Local customs authorities shall manage goods subject to special consumption tax when imported for processing for export according to the guidance of the General Customs Department, together with the management of import duties in such cases.

Raw materials or other goods paid for by foreign parties if subject to special consumption tax must pay the special consumption tax upon importation.

In cases where special consumption tax is not collected as specified in points a, b, c, d, e, g, h, i, if the reasons change, such as: aid goods used outside the program/project, imported goods benefiting from exemption regimes but not re-exported, imported raw materials for processing for export but sold domestically or the processed product is not exported..., then within two days from the date the conditions change compared to the regulations, the importer must declare to the customs authority that processed the import procedures for the consignment for the customs authority to collect the full special consumption tax.

8. For goods imported from abroad into Vietnam to be sold at duty-free shops at seaports, international airports, and sold to subjects as stipulated in Decree No. 131/HĐBT dated August 27, 1987 of the Council of Ministers (now the Government), they may be considered for exemption from special consumption tax. Management of goods and procedures for exemption from special consumption tax shall be applied as for import/export taxes as prescribed in Circular No. 107/TC-TCT dated December 30, 1993 of the Ministry of Finance guiding the implementation of tax policies for duty-free shops at seaports, international airports, and Circular No. 67/TC-TCT dated October 30, 1992 and Circular No. 58/TC-TCT dated July 12, 1993 of the Ministry of Finance guiding the sale of duty-free goods to subjects as stipulated in Decree No. 131/HĐBT dated August 27, 1987 of the Council of Ministers.

9. Refund of special consumption tax in the following cases and procedures:

a. Imported goods that have paid special consumption tax and are still stored in warehouses or bonded areas at the port but are permitted to be re-exported, must have:

- A letter requesting refund of special consumption tax clearly stating the reason for the request.

- Import and export declarations with the stamp of the customs authority. Specifically, the export declaration must have confirmation from the customs authority that the goods are still stored in warehouses or bonded areas at the port or remain under customs control.

- Receipts for payment of special consumption tax.

- Entrusted export and import contract (if the goods are entrusted for export and import).

b. Goods that have paid special consumption tax based on declaration but were actually imported in smaller quantities, must have:

- A letter requesting refund of special consumption tax.

- An import permit issued according to the prescribed regime.

- An import declaration stamped by the customs authority.

- Receipts for payment of special consumption tax.

- Waybills or sales invoices.

c. For imported goods that are not in compliance with quality or type as per the contract, due to incorrect shipment by the foreign seller (as evidenced by a certificate from the competent authority and confirmed by the foreign seller and allowed to be imported), the customs authority will review and determine the actual special consumption tax payable. If overpaid, the excess amount will be refunded; if underpaid, additional payment will be required to cover the full tax liability.

In case the goods are allowed to be exported back to the foreign party, the refund of the paid special consumption tax will be processed through the following procedures:

- Purchase contract.

- Confirmation from the foreign seller regarding the incorrect delivery of goods and agreement to accept the consignment.

Inspection report from the competent authority in Vietnam.

- Import and export declarations with confirmation of actual import and export quantities from the customs authority at the port.

- Receipts for payment of special consumption tax.

In case the goods are returned to the foreign party within the prescribed tax payment period, the customs authority will check the procedures and implement the non-collection of special consumption tax corresponding to the quantity of returned imported goods.

d. Goods temporarily imported for exhibitions and fairs that have paid special consumption tax can be refunded; the procedures include:

- Invitation or notification to participate in exhibitions and fairs.

- Import and export permits issued by the Ministry of Trade or the General Customs Department specifying that the goods are temporarily imported for re-export for exhibition purposes, along with the duration of the exhibition.

- Import and export declarations with confirmation of actual import and export quantities from the customs authority.

- Receipts for payment of special consumption tax.

e. Goods imported during transportation or loading/unloading that suffer damage or loss with valid reasons, must have:

- An import declaration with confirmation of actual import quantity from the customs authority.

- Inspection report on imported goods from the competent authority regarding the actual condition of damage or loss during transportation.

- Import documentation accompanying the consignment: waybills, invoices, etc.

g. Imported raw materials for production of export goods; must have:

- A letter requesting refund of paid special consumption tax (detailing the quantity of exported goods, raw material consumption standards, and the amount of tax requested for refund) with confirmation from the local Tax Bureau regarding the standards and consumption rates of raw materials used for producing export goods.

- Sales contract with the buyer detailing the quantity, specifications, quality, type, etc., of the exported goods.

- Export/import permit issued according to the prescribed regime.

- Import declaration; export declaration stamped by the customs authority.

- Receipts for payment of special consumption tax.

- Entrusted export/import contract (if entrusted for export/import).

h. Temporarily imported goods for re-export that have paid tax according to the prescribed period, must have:

- A letter requesting refund of paid special consumption tax.

- Temporary import/re-export permit issued by the Ministry of Trade.

- Import declaration. Export declaration stamped by the customs authority confirming the quantity, weight, and type of temporarily imported/re-exported goods.

- Foreign trade sales contract (original or certified copy).

- Receipts for payment of special consumption tax.

- Entrusted export/import contract (if entrusted for export/import).

i. Imported goods of Vietnamese enterprises permitted to import for agency purposes to sell to foreign countries, which have been registered with the Ministry of Finance, shall be eligible for VAT refund on the actual quantity sold and exported out of Vietnam. When considering the VAT refund, the following must be present:

- A letter requesting the refund of paid VAT.

- An export permit issued by the Ministry of Trade.

- Customs declaration forms for imported and exported goods, settled and confirmed by the customs authority.

- Receipts for payment of special consumption tax.

For the cases mentioned in points a, b, c, d, e above, the customs inspection department confirms, the tax collection department reviews and processes the VAT refund. The Director of the Provincial Customs Office signs the decision to refund VAT and agrees with the taxpayer to offset against the special consumption tax due for the subsequent imported consignment. In cases where the entity does not continue importing goods subject to special consumption tax, the customs office confirms and requests the Ministry of Finance to refund the special consumption tax.

For the cases mentioned in points g, h, i, the customs authority, when collecting special consumption tax, deposits it into a separate account at the Treasury. Based on the prescribed procedures, the Ministry of Finance (General Department of Taxation) examines and decides on the refund of special consumption tax. The customs authority implements the refund to the unit from the deposited funds within seven working days based on this decision.

Except for the cases exempted from special consumption tax as stipulated in point 7 and the cases eligible for reduced tax as provided in point 8 of Section I of this Circular, all other cases of importing goods subject to special consumption tax must pay the full amount of special consumption tax as prescribed, including those exempted from import duties.

II. BASIS FOR CALCULATING SPECIAL CONSUMPTION TAX AND THE RATE OF SPECIAL CONSUMPTION TAX.

The amount of special consumption tax is calculated using the formula:

Special Consumption Tax Amount = Quantity of Goods x Price for Tax Calculation x Tax Rate (%)

nhập khẩu (phần trăm)

1. Quantity of products consumed or imported:

The quantity of products consumed is the quantity or weight of goods produced and sold, exchanged, gifted, used for internal consumption needs, returned as processing trade goods, or supplied to affiliated stores or branches.

The quantity of imported goods is the quantity or weight of goods imported through Vietnamese border gates according to the import permit and the customs declaration form settled by the customs authority.

For cases of exporting domestically produced goods for consumption, the production and business establishments must use sales invoices or combined warehouse withdrawal and transportation forms issued by the Ministry of Finance (General Department of Taxation). For cases of supplying to affiliated stores or branches, the internal warehouse withdrawal and transportation form (model issued by the Ministry of Finance) may be used.

Production establishments subject to special consumption tax that fail to comply fully with the provisions of Article 10 of the Special Consumption Tax Law regarding registration, declaration, payment of taxes; maintenance of accounting books and records; and provision of necessary documentation related to tax calculation, the tax authority has the right to determine the quantity of products consumed and the price for tax calculation based on investigation results and consultations with relevant departments in accordance with Article 18 of the Special Consumption Tax Law.

For small-scale producers subject to quota-based special consumption tax payments, the district or county tax authority, in coordination with relevant departments, determines the production volume to set the quota of products consumed as the basis for monthly and periodic determination of the special consumption tax payable.

2. Price for Tax Calculation:

a. For domestically produced goods: The price for tax calculation of domestically produced goods subject to special consumption tax is the selling price at the place of production excluding special consumption tax, determined as follows:

Selling Price

Price for Tax Calculation =

1 + Tax Rate

Example: The actual selling price of one liter of draft beer at the place of production is 2,850 VND, with a tax rate of 90% for draft beer.

Price for Tax Calculation 2,850 VND 2,850 VND

1 liter of draft beer = ---------- = --------- = 1,500 VND/liter

1+90% 1,9

Selling Price: is the actual selling price recorded on the sales invoice, including commission for agents (if sold through agents).

For processed goods, gifts, internal consumption, and exchanges, the price for special consumption tax calculation is the price for tax calculation of similar goods.

In cases where the selling price recorded on the invoice by the establishment is lower than the market price in the region by 10% or more, including small establishments subject to quota-based special consumption tax, the tax authority has the right to verify and determine a suitable selling price as the basis for calculating the tax price; the regulation for determining the tax price in such cases is as follows:

- Tax collection officers or inspection units base the proposed tax price on the local market selling price.

- The local Tax Bureau, after reaching agreement with the Department of Finance and Prices, issues a Decision on the tax price for each specific product.

If the special consumption tax is collected and paid by organizations or individuals on behalf of the production establishment, the price for tax calculation of the special consumption tax is the purchase price at the place of production excluding special consumption tax.

b) For imported goods: The price for tax calculation of imported goods subject to special consumption tax is determined as follows:

Price for Tax Calculation = Import Value for Tax Calculation + Import Duty

The import value for tax calculation is determined by the customs authority in the customs declaration form for imported goods. For cases where imported goods are exempted or granted reduced import duties, the special consumption tax price is calculated fully according to the principle stated above.

3- Tax Rate: The tax rate for special consumption tax applicable to each product is specified in the Special Consumption Tax Tariff attached to Decree No. 97/CP dated December 27, 1995 of the Government and detailed in the accompanying Tariff of this Circular.

III- REGISTRATION, DECLARATION, PAYMENT OF TAX AND TRANSPORTATION OF GOODS

1- Declaration and Registration for Payment of Special Consumption Tax:

a) According to Articles 8, 9, and 10 of Decree No. 97/CP dated December 27, 1995 of the Government, the following applies:

- Establishments producing goods subject to special consumption tax are responsible for declaring and registering for payment of special consumption tax with the directly managing tax authority (using the attached form).

The declaration form for payment of special consumption tax must be made in two copies, both confirmed by the directly managing tax authority, one copy retained by the tax authority and one copy returned to the business establishment for retention as proof of registration for tax payment.

Not later than five days before commencing production, or division, dissolution, the production facility must declare and register or report with the tax authority.

- The import facility subject to excise tax must declare and pay the excise tax together with the declaration and registration of the import declaration form.

When receiving the import declaration form and the excise tax declaration form, the Customs Authority must strictly check the bases for calculating taxes as stipulated in Chapter II of Decree No. 97/CP dated December 27, 1995 of the Government, accurately determine the amount of excise tax payable in the excise tax declaration form, and complete the notification procedure for the taxpayer within eight hours from the time of registering the import declaration form.

Excise tax revenue from imported goods shall be collected into the State budget according to appropriate chapters, types, clauses, and items in the State Budget Schedule.

In cases where payments are made into a temporary collection account at the Treasury pending submission to the State budget for refund of tax, the Customs Authority may only use funds from this account to refund tax for cases specified in Point 9 of Section I of this Circular.

b) Production and business facilities, and importers of goods subject to excise tax must strictly comply with the requirement to maintain books, accounting records, record keeping, and issue initial documents and purchase-sale invoices in accordance with the current system of the State.

c) Production and business facilities subject to excise tax have the responsibility to provide necessary documents upon request of the tax authority for checking books, accounting records, invoices, raw material warehouses, goods, etc., and may not refuse to present, provide, or explain necessary documents under the pretext of professional confidentiality or other reasons.

The tax authority is not permitted to disclose confidential information about documents and data of production and business facilities, importers to organizations and individuals who are not responsible for knowing such information.

2- Procedures for declaring and paying tax and transporting goods:

According to Article 11 of Decree No. 97/CP dated December 27, 1995 of the Government, the excise tax is paid by the production facility; for imported goods, it is paid by the importer organization or individual, and in the case of agency imports, the agency organization must pay the excise tax on behalf of the principal.

2a- For domestically produced goods:

a) Production facilities generating large amounts of excise tax must declare and pay the excise tax when selling goods, returning processed goods, and pay the tax according to the notice from the tax authority.

To align with reality, the declaration and payment procedures for units required to pay excise tax of 300 million VND or more per month are regulated as follows:

- Each day, based on sales invoices and delivery orders (in cases of deliveries to retail stores or branches), the production facility must submit the excise tax declaration form to the tax authority on the following day.

- The tax authority will check, calculate the tax, and promptly notify the production facility of the amount of tax due.

- Based on the tax authority's notice, the production facility must immediately deposit the tax amount into the State Treasury. If the payment has not been received, the deadline for tax payment is the day the payment is received, but no later than fifteen days from the date of issuance of the notice. The production facility must complete the tax payment into the State Treasury within that period. If the payment is delayed beyond fifteen days, penalties for late payment will apply from the sixteenth day onwards.

b) Production facilities required to pay less than 300 million VND of excise tax per month must declare and pay the tax periodically every five or ten days.

Based on the amount of tax due, the tax authority will set the tax payment schedule for each production facility.

According to the prescribed schedule, the production facility will declare the tax. The tax authority will notify the production facility of the amount of tax due. The procedures for declaring, notifying, and paying the tax are as specified in point (a) above.

In the case of goods being shipped out, including shipments to agency stores, consignment stores, agency imports, etc., but without receipt of payment (including both cases specified in points a and b above), the tax payment deadline is the day the payment is received, but no later than fifteen days from the date of issuance of the tax payment notice.

At the end of each quarter and year, the production facility will settle the excise tax with the tax authority. Any discrepancies will be adjusted according to the actual settlement.

c) For individual households generating small amounts of excise tax, the tax can be paid through a quota system based on the quantity of products sold. Tax payment deadlines are set for the 10th, 20th, and last day of each month. If the tax payment date falls on a Sunday or public holiday, the payment date will be the next working day.

The tax authority will regularly notify individual producers of their tax payment deadlines based on the actual situation of the production facility. The tax authority will clearly specify the deadline for completing tax payments in the notification for the production facility to follow.

d) For small and scattered production facilities or those unable to declare and pay excise tax due to objective reasons, the purchasing facility will pay the excise tax on behalf of the producer at the place of purchase.

The Provincial Tax Department will base its regulations on the specific circumstances in the locality to regulate the collection of excise tax in such cases.

e) Goods transported on the road must have one of the following accompanying documents:

- Receipts for payment of special consumption tax.

- Sales invoice, or combined warehouse release and transport invoice issued by the Ministry of Finance (General Tax Department);

- Internal transport invoice issued by the tax authority for goods transferred between warehouses within the same facility.

g) Goods subject to excise tax stored in warehouses (excluding finished product warehouses of the producing facility) and retail stores must have proof of excise tax payment, such as tax receipts or purchase invoices.

2b- For imported goods:

a) Based on the import declaration form and the excise tax declaration form for imported goods, along with the calculation and notification of import duties, if the goods are subject to excise tax, the Customs Authority will calculate and notify the importer of the amount of excise tax due, and simultaneously record it in the logbook according to the following contents: number, date, and time of the declaration form; the amount of excise tax due according to the declaration form (model of the excise tax declaration form for imported goods and tax notification as prescribed by the General Customs Department).

Pursuant to Article 12 of Decree No. 97/CP dated December 27, 1995 of the Government, value-added tax on imported goods must be paid together with import duties, but no later than 30 days from the date of receipt of notification from the Customs authority. For imported materials and raw materials for processing or production of export goods, the payment period specified above is 90 days.

Based on the notification of the Customs authority, organizations and individuals importing goods must pay the full value-added tax within the prescribed time limit.

For non-trade imported goods, value-added tax must be paid immediately upon importation of the goods.

The reporting system for the collection and refund of value-added tax by provincial and municipal Customs authorities to the General Department of Customs and the Ministry of Finance shall be implemented as stipulated in the current regulations on import duty reporting.

b) In addition to the provisions on the transportation of goods subject to import duties, imported goods subject to value-added tax transported on roads must have one of the following accompanying documents:

- The declaration form for imported goods that has been inspected and confirmed by the Customs authority. If it is formal imported goods that need to be transported multiple times from the border gate to inland areas, there must be a confirmation on the declaration form for each transport.

- For informal imported goods, imported gifts, and non-trade imported goods under various forms subject to value-added tax transported from the border gate to inland areas, in addition to the declaration form for imported goods, there must also be a receipt for payment of value-added tax.

- In cases where purchased imported goods subject to value-added tax, the general provisions for imported goods shall apply. If purchasing informal imported goods and the Customs authority issues separate receipts for value-added tax, then a receipt for value-added tax must also be provided.

IV. REDUCTION AND EXEMPTION OF VALUE-ADDED TAX

1- Cases eligible for reduction:

a) Production units subject to value-added tax encountering difficulties due to natural disasters, epidemics, or unexpected accidents may be considered for a reduction in value-added tax. The reduction rate (%) shall be based on the proportion of asset losses relative to the total asset value, but not exceeding 30% of the value of the damaged assets and not more than 50% of the tax payable during the reduction period. The reduction period shall not exceed 180 consecutive days starting from the day after the loss occurred and the goods were stored out.

Example: Enterprise A suffered a fire on October 1, 1993, with asset losses amounting to 120 million VND. The total asset value of the enterprise was 600 million VND. The loss ratio relative to the total asset value is 20%. The enterprise had to stop production to address the aftermath and resumed production and sales on November 1, 1993. The value-added tax payable after 180 consecutive days from November 1, 1993, is 100 million VND. The reduction amount must meet the following conditions:

1- Not exceeding 30% of the value of the damaged assets, which is 40 million VND.

2- Not exceeding 50% of the tax payable during the period, which is 50 million VND.

3- Corresponding to the loss ratio of 20%.

4- The reduction period does not exceed 180 consecutive days.

In this case, the enterprise is entitled to a reduction of 20 million VND in value-added tax (100 million VND x 20%).

To have grounds for considering a reduction according to the above provisions, the production unit must submit to the tax management agency; the dossier includes:

- An application for exemption or reduction of value-added tax detailing the reasons for the loss.

- A record confirming the extent and value of the loss of assets and capital from the competent authority.

- Confirmation of the asset and capital value based on the declaration submitted to the tax authority or the final report closest to the time of the loss.

- A declaration of the value-added tax payable according to the law and actually paid during the period requested for reduction, certified by the tax authority and the State Treasury Office where the unit pays taxes.

The tax management agency must send the entire dossier to the Ministry of Finance (General Tax Department).

Before receiving an official decision from the Ministry of Finance, the unit must declare and pay taxes as prescribed. Once the official decision is made, the reduced tax will be deducted from the tax payable in the subsequent period.

b) Newly established production units officially operating from 1993, if they incur losses while paying value-added tax, may be considered for a reduction in tax annually. The reduction level corresponds to the loss amount, but not exceeding 30% of the tax payable each year. The tax reduction period does not exceed two years, starting from the first year of operation.

Newly established production units refer to those newly invested and constructed according to the decision of the competent authority and granted a business license. Units that were previously established and subsequently split, merged, renamed, dissolved, and re-established do not qualify for tax reduction under this provision.

Example 1:

The newly established Huacuc Beer production unit officially began operations in 1993. Business performance in 1993 is as follows:

- Production volume: 5,000,000 liters of draft beer.

- Value-added tax payable: 750 million VND.

- Operating loss: 300 million VND.

- The value-added tax reduction amount for the unit is 225 million VND (750 million VND x 30%).

Example 2: Following example 1, but the loss in 1993 is 100 million VND.

The value-added tax reduction amount corresponding to the loss is 100 million VND, which is less than 30% of the maximum allowable reduction (750 million VND x 30% = 225 million VND).

c) Production units expanding production or applying new production technology, if they incur losses while paying value-added tax, may be considered for a reduction in value-added tax. The reduction level corresponds to the annual loss amount, but not exceeding 30% of the value-added tax payable for the additional production volume in the year due to expansion or new technology application. To determine the additional production volume in the year, it should be compared with the actual production volume of the previous year. The tax reduction period does not exceed two years, starting from the year when the production volume increases due to expansion or new technology application.

In cases where production units expanding production or applying new technology cannot separately account for the results of the additional production volume, the basis for considering a tax reduction is the overall results of the production unit in the tax reduction year and the value-added tax payable for the additional production volume due to expansion or new technology application.

Example: A beer production unit invests in expanding production by installing a new beer can production line. It started production in 1993. The results of the new production line are as follows:

- Production volume of beer cans produced by the new line: 500,000 cans.

The value-added tax (VAT) payable is: 1,000 million VND.

The business results for the year 1993 of the newly established production line incurred a loss of: 500 million VND.

The VAT reduction due to expansion of production activities in the year is: 300 million VND (1,000 million VND x 30%).

Production facilities falling under the category eligible for tax reduction as stipulated in points b and c must complete all procedures to request tax reduction as prescribed below and submit them to the tax authority managing the facility:

- A request letter from the production facility clearly stating the reasons for requesting tax reduction. In cases specified in point c, a detailed explanation of the additional production volume must be provided.

- Financial settlement statements accompanied by explanations of the financial settlement for the year requested for tax reduction.

- An inspection report on costs and business outcomes issued by the local tax authority, which clearly states the causes of losses and the VAT on the additional production volume generated during the year.

- Decision approving the feasibility study for expanding production and applying new production technology (for cases involving production expansion and application of new technology).

- A letter from the directly managing tax authority recommending the level and duration of tax reduction.

The tax authority managing the unit must send the entire file to the Ministry of Finance (General Department of Taxation).

Production facilities eligible for VAT reduction as stipulated in points b and c above, during the period before receiving the official decision on tax reduction from the Minister of Finance, the provincial tax authority shall base their quarterly settlements and determine the amount of loss for the facility to delay payment of VAT.

The amount of VAT that can be delayed each quarter corresponds to 70% of the loss incurred but not exceeding 30% of the VAT payable for the quarter.

d- Production facilities established previously (either independent production facilities or those set up by enterprises to utilize capital, labor...) with small scale, fully utilizing capacity, having reasonable product cost and selling price but still incurring losses while paying VAT according to the law, may be considered for VAT reduction.

The level of VAT reduction will be determined based on specific circumstances, but it shall not exceed the amount of loss and shall not exceed 50% of the total VAT payable based on actual occurrence.

The reduction of tax is reviewed annually and based on the actual business results for the whole year, the procedures include:

- A letter requesting tax reduction from the enterprise, accompanied by:

+ Business results, detailing: production volume, selling price, revenue, production cost factors, product cost, tax payable according to the law, and the amount of loss.

+ Annual financial settlement report,

- A letter requesting tax reduction from the direct tax management authority after reviewing and confirming the business results of the enterprise as reasonable.

- A letter requesting tax reduction from the People's Committee of the province or city or the main department.

Within the same period, a production facility can only be considered for VAT reduction under one of the three cases specified in points b, c, and d above.

2- Authority to consider tax reduction: The reduction of VAT is decided by the Minister of Finance.

V- VIOLATION HANDLING

According to Article 20 of the Law on Value-Added Tax (VAT) and point c, Clause 1 of Article 20 amended by Article 1 of the Law Amending and Supplementing Certain Provisions of the Law on VAT and Regulations on Administrative Sanctions in the Field of Tax, then:

1- Organizations and individuals who fail to comply with regulations on registration procedures, declaration, accounting books, retention of vouchers, invoices as stipulated in Articles 10, 11, and 12 of the Law on VAT shall be warned or fined depending on the severity of the violation.

2- Organizations and individuals producing, processing, purchasing, trading, importing goods evading taxes, transporting goods without valid accompanying documents shall, in addition to paying the full amount of VAT as prescribed, also be fined from one to three times the amount of evaded tax. For the first violation, a fine of one time the amount of evaded tax; for the second violation, a fine of two times the amount of evaded tax; for the third violation and subsequent violations, a fine of three times the amount of evaded tax. In cases of large-scale tax evasion or repeated offenses after administrative penalties, or if tax evasion involves significant amounts or other serious offenses, criminal responsibility will be pursued according to the Penal Code.

3- Organizations and individuals delaying payment of taxes or fines recorded in tax collection orders, tax payment notices, penalty decisions shall, in addition to paying the full amount of taxes or fines as prescribed, be subject to a daily fine of 0.2% (two thousandths) of the delayed payment amount.

4- Organizations and individuals obstructing tax authorities or tax officers in inspecting goods, raw materials at production sites, warehouses, retail stores, or arbitrarily breaking seals placed on warehouses, raw material storage areas, machinery, factories within the sealing period by the tax authority... shall be dealt with according to the law based on the severity of the violation.

5- Organizations and individuals delaying tax payments or fines shall be handled as follows:

- Funds from the account of the entity at the bank shall be deducted to pay taxes and fines. The bank has the responsibility to implement the priority deduction system for funds from the entity's account at the bank to pay taxes and fines according to the tax authority's decision.

- Temporary detention of goods and evidence to ensure the full collection of taxes and fines;

- Seizure of assets in accordance with the law to secure outstanding taxes and fines.

The authority and procedures for imposing administrative sanctions under the Law on Special Consumption Tax are implemented in accordance with the Government Decree on the provisions for administrative sanctions in the field of taxation and the Circulars guiding these provisions issued by the Ministry of Finance and the General Customs Department.

VI- APPEAL AND STATUTE OF LIMITATIONS

According to the provisions of Articles 25, 26, 27, and 28 of the Law on Value-Added Tax (VAT), organizations and individuals have the right to appeal against the improper implementation of the Law on VAT concerning themselves.

The appeal letter must be sent to the issuing authority of the tax collection order or the decision on handling within thirty days from the date of receipt of the tax collection order or the decision on handling. While waiting for resolution, the appellant must pay the full amount of tax and fines as notified within the stipulated time frame. The authority receiving the appeal letter must examine and resolve the matter within fifteen days from the date of receipt of the appeal letter. For complex cases requiring more time to resolve, the resolution shall not exceed thirty days from the date of receipt of the appeal letter.

After considering the complaint, the complaint resolution authority must issue a decision to handle the matter and respond to the complainant. If there is a change from the previous handling decision that causes damage to the party concerned, compensation for direct losses suffered by the party must be provided.

In cases where the complainant disagrees with the handling decision of the receiving agency or has not been resolved within the prescribed time limit, the complainant has the right to appeal to the superior agency directly overseeing the receiving agency.

The tax collection agency must refund the incorrect tax and penalty collected and pay compensation (if any) within fifteen days from the date of receipt of the superior's handling decision. In cases where false declarations, tax evasion, or tax errors are discovered and concluded, the tax collection agency is responsible for recovering the tax within three years from the date of false declaration, tax evasion, or tax error.

VII- IMPLEMENTATION

1- This Circular takes effect on January 1, 1996. Previous guidelines issued by the Ministry of Finance and other ministries, sectors, and localities that conflict with this Circular's guidelines are hereby abolished.

2- The General Department of Taxation and the General Department of Customs are responsible for organizing and directing inspections to guide units to comply with the Law on Value Added Tax and related implementing regulations.

During implementation, if difficulties arise, units and agencies should promptly report them to the Ministry of Finance for further guidance and supplementary instructions.