THE MINISTRY OF FINANCE
THE GENERAL DEPARTMENT OF TAXATION

Official Dispatch No. 3995/TCT-KK dated September 16, 2014 of the General Department of Taxation on VAT deductions

 

To:
- Xin Chang Hua Co. Ltd. (Address: Phuoc Duc B hamlet, Phuoc Dong commune, Go Dau district, Tay Ninh province)
- Langham Garments Co. Ltd. (Address: Block 24, Street No. 06, Trang Bang Industrial Park, 32nd milestone, An Tinh commune, Trang Bang district, Tay Ninh province
- Department of Taxation of Tay Ninh province
In response to the Dispatch No. 011113/XCH-VAT of Xin Chang Hua Co. Ltd and the Dispatch No. 472/CT-TTHT of Department of Taxation of Tay Ninh province on capital settlements; the Dispatch No. 02/2014/CV-KT of Langham Garments Co. Ltd. on refund of VAT on machinery and equipment imported as capital contributions, General Department of Taxation hereby provides guidance as follows:
Pursuant to Circular No. 06/2012/TT-BTC dated January 11, 2012 of the Ministry of Finance on VAT:
- Article 14:
“Article 14. Rules for deducting input VAT
1. Input VAT on goods/services serving the manufacture or sale of other goods/services subject to VAT are shall be deducted in full, including nonrefundable input VAT on goods subject to VAT that are impaired.
3. Input VAT on fixed assets serving the manufacture or sale of both goods/services subject to VAT and goods/services not subject to VAT are shall be deducted in full...”
Article 15:
“Article 15. Requirements for deducting input VAT
1. There are legitimate VAT invoices for purchased goods/services, or receipts for payment of VAT at importation stage, or receipts for payment of VAT on behalf of foreign parties being foreign organizations that do not have legal status in Vietnam and the foreigners doing business or earning income in Vietnam as prescribed by the Ministry of Finance.
2. There are bank transfer receipts for purchased goods/services (including imported goods) that are of VND 20 million or above, except for the case in which the total value of multiple purchases is below VND 20 million (at VAT-inclusive prices). Point b.2 Clause 3 Article 16:
“b) The payments below are considered bank transfer