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Consult on Issue

Invoices, Fixed Asset Transfers, Tax Administration, & Foreign Contractors

Released at: 04:21, 17/06/2014 TAX CONSULT

What is the tax treatment for invoices with information presented incorrectly?

Q: What is the tax treatment for invoices with information presented incorrectly?

A: According to Official Letter No 1781/BTC-TCT dated February 11, 2014 issued by the Ministry of Finance (MoF), where enterprises issue invoices with information presented incorrectly, such as those with the name and address of purchasers being in abbreviated form but with the correct tax codes, etc., MoF requires local tax authorities to examine if such invoices are issued in accordance with accounting books and adequately reflecting the business nature and payments via banks, before either warning the enterprise about the incorrect presentation and processing the VAT refund or allowing a VAT credit.

Q: Are there any updates on the transfer of fixed assets?

A: Pursuant to Official Letter No 284/TCT-CS dated January 22, 2014 on the transfer of fixed assets, the General Department of Taxation (GDT) provides the following guidance: where an enterprise purchases assets and transfers such assets to its dependent accounting unit, the enterprise is not required to issue an invoice or declare and pay VAT.

Q: What about the strengthening of tax administration on enterprises with high tax risks?

A: Official Letter No 1752/BTC-TCT dated February 10, 2014 from MoF specifies measures to strengthen tax administration on enterprises using invoices of “inactive” enterprises, as follows:

• Suspending VAT refunds in relation to invoices with signs of violations that are under investigation; and

• If enterprises have been granted VAT refunds, tax authorities shall inform enterprises in writing of VAT adjustments. When enterprises determine that the purchase of goods and associated input VAT invoices used for tax declaration are in accordance with regulations, the enterprises are legally liable for VAT declarations and refunds.

Q: What are the conditions for VAT refunds for foreign contractors?

A: According to Official Letter No 81/TCT-CS dated January 8, 2014 issued by the GDT, where a foreign contractor operates in Vietnam (and is registered for VAT credit and deemed CIT) but fails to comply with the regulations on accounting specified in Article 10, Chapter III of Circular No 244/2009/TT-BTC, a VAT refund shall not be permitted.

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