Cases Of Exemption Declaring And Paying VAT | AS Auditing

Currently, Vietnam's value-added tax law is divided into three products, services and goods that are subject to value-added tax, including:

• Subject to zero percent value-added tax (0%).
• Subject to five percent value-added tax (5%).
• Subject to ten percent value-added tax (10%).

And non-taxable objects.

In addition, there is another object, which is not required to declare, not to calculate value added tax.

So, how is the case where you do not have to declare and calculate value-added tax, which is different from the case where you are not subject to value-added tax?

About output invoice, non-taxable objects must issue invoices. In the case of not having to declare and calculate value-added tax, there are cases where an invoice must be issued, and there are cases where an invoice is not issued.

About input deduction declaration, non-taxable objects are not entitled to input deduction, but input value-added tax is included in enterprise expenses, and in case of not having to declare and calculate tax, input value-added tax is deducted completely.

Regarding the output value-added tax declaration on the software, non-taxable objects to input tax, reflected on item twenty-six of declaration No. 01/GTGT. In case that the tax declaration is not required is reflected on item thirty-two (a) of declaration No. 01/GTGT.

The following are common cases in reality that businesses do not have to declare and calculate value added tax.

First, receive money from compensation, bonuses, support money, financial revenues.

Note: when receiving bonuses and support money that have conditions attached, such as advertising, promotion, goods must have certain conditions, they must declare and pay value added tax.

Second, receive money from the transfer of investment projects that use to produce and trade in value-added taxable goods and services for enterprises and cooperatives. Note, this content must meet the conditions:

• This project that must be an investment project for production and business of goods that subject to value added tax.
• Unfinished project.
• The project that be sold to buyers who are enterprises or cooperatives.

Third, enterprises and cooperatives pay value-added tax by the deduction method, sell crop, livestock and aquatic products that have not been processed into other products, or have only preliminarily processed for businesses at the commercial stage.

Note: The above content is very complicated when applied in practice. For example, not yet processed into another product, or normally semi-processed, that is not clearly defined under the law. At the same time, when these products are purchased, sold, exchanged between enterprises declaring value added tax by the deduction method, or enterprises declaring value added tax by the direct method, will apply differently.

We have a trick that is easy to remember and easy to apply as follows:

• Enterprises or cooperatives that declare according to the deduction method when selling to enterprises or cooperatives at the stage of commercial business, do not declare and calculate tax.
• Enterprises or cooperatives that declare by the deduction method when selling to business households, businessperson and other organizations and individuals, shall declare and calculate tax at five percent (5%).
• Enterprises declaring by the method of direct selling, then declaring and calculating tax at one percent (1%).

Fourth, when transferring fixed assets, it is necessary to note 2 cases

Case 1: Transfer between dependent accounting units that is not required to declare and calculate tax.

Case 2: Transfers between independent accounting units that must satisfy the following conditions are not required to declare and calculate tax.

• Condition 1: Business premises and affiliates that be owned by a business premises or between affiliates that be owned by a business premises.  
• Condition 2: Assets in use, depreciated.
• Condition 3: Assets that do not carry out a revaluation.
• Condition 4: Assets must be used for the production of goods that subject to value added tax.

Fifth, cases of collection on behalf of, not related to business activities and cases of agents selling at the prescribed price, that are also not required to declare and calculate tax.

You can refer to Article 5, Circular 219/2013-BTC, and other documents guiding about the case of not having to declare and calculate value added tax. Within a five-minute, we only cover the most prominent issues, which often occur in reality, and businesses often go wrong.