Thông tư 141/2013/TT-BTC

CIRCULAR

GUIDANCE ON THE IMPLEMENTATION OF THE GOVERNMENT'S DECREE NO. 92/2013/ND-CP DATED AUGUST 13, 2013, ELABORATING THE IMPLEMENTATION OF SOME ARTICLES THAT COME INTO FORCE FROM JULY 01, 2013 OF THE LAW ON THE AMENDMENTS TO THE LAW ON ENTERPRISE INCOME TAX AND THE LAW ON THE AMENDMENTS TO THE LAW ON VALUE-ADDED TAX

Pursuant to the Law on Value-added tax No. 13/2008/QH12 dated June 03, 2008 and the Law on the amendments to the Law on Value-added tax No. 31/2013/QH13 dated July 19, 2013;

Pursuant to the Law on Enterprise income tax No. 14/2008/QH12 dated June 03, 2008 and the Law on the amendments to the Law on Enterprise income tax No. 32/2013/QH13 dated July 19, 2013;

Pursuant to the Law on Tax administration No. 78/2006/QH11 dated November 29, 2006 and the Law on the amendments to the Law on Tax administration No. 21/2012/QH13 dated November 20, 2012;

Pursuant to the Government's Decree No. 92/2013/ND-CP dated August 13, 2013 elaborating the implementation of some Articles that come into force from July 01, 2013 of the Law on the amendments to the Law on Enterprise income tax and the Law on the amendments to the Law on Value-added tax;

Pursuant to the Government's Decree No. 118/2008/ND-CP dated November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the request of the Director of the General Department of Taxation;

The Minister of Finance provides guidance on the implementation of the Government's Decree No. 92/2013/ND-CP dated August 13, 2013, elaborating the implementation of some Articles that come into force from July 01, 2013 of the Law on the amendments to the Law on Enterprise income tax and the Law on the amendments to the Law on Value-added tax:

Chapter I

CORPORATE INCOME TAX

Article 1. Imposition of corporate income tax on companies of which annual revenues do not exceed 20 billion VND

1. The companies established under Vietnam’s law, including cooperatives, public service agencies (hereinafter referred to as companies) of which annual revenues do not exceed 20 billion VND shall apply 20% corporate income tax from July 01, 2013.

The total revenue being the basis for applying 20% tax is the total revenue in the previous year based on criterion No. 01 and criterion No. 08 on the Appendix of income statement of the previous tax period enclosed with the form No. 03-1A/TNDN, the corporate income tax statement No. 03/TNDN provided in the Circular No. 28/2011/TT-BTC and its amendments (if any).

New companies that are established during the period from January 01, 2013 to the end of June 30, 2013, the revenue is based on the entry No. 21 “Revenue earned in the period” (not including other incomes) on the provisional corporate income tax statement of Q1 and Q2 2013 under the form No. 01A/TNDN provided in the Circular No. 28/2011/TT-BTC dated February 28, 2011 and its amendments (if any).

If the company has been established for fewer than 12 months at the end of the tax period 2012, or the first tax period 2012 is longer than 12 months, the revenue being the basis for applying 20% tax mentioned in this Clause is the average monthly revenue in the tax period 2012, which does not exceed 1.67 billion VND.

If the company is established within the first 06 months of 2013, the revenue being the basis for applying 20% tax mentioned in this Clause is the average revenue of the first months in 2013 until the end of June 30, 2013, which does not exceed 1.67 billion VND.

The new companies that are established from July 01, 2013 shall apply 25% tax (unless tax incentives are provided). At the end of the fiscal year, if the average monthly revenue does not exceed 1.67 billion VND, the company shall apply 20% tax (except for the incomes mentioned in Clause 2 Article 1 of this Circular).

2. The 20% tax mentioned in Clause 1 of this Article does not apply to the following incomes:

a) Incomes from transfer of capital, the right to contribute capital; incomes from real estate transfer (except for incomes from social housing business mentioned in Article 2 of this Circular); incomes from transfer of projects, the right to participate in projects, the right to mineral exploration and extraction; incomes from business outside Vietnam;

b) Incomes from exploration and extraction of petroleum and other rare and valuable resources; incomes form mineral extraction;

c) Incomes from provision of services subject to excise duty according to the Law on special excise duty.

3. Principles:

a) The company must separate the incomes eligible for 20% tax and the incomes that are not eligible for 20% tax. If the company fails to separate the, 20% tax shall be applied based on the ratio of revenue from the sale of goods and services eligible for 20% tax to the total revenue in the tax period of the company.

b) After separating the revenues, the company may offset profit against loss. The residual income after offsetting shall apply the rate of corporate income tax on profitable operations. The documents applied to offsetting of profit against loss in certain periods:

- During the period from July 01, 2013 to the end of December 31, 2013, Article 16 of the Law on Enterprise income tax No. 14/2008/QH12 dated June 03, 2008 and its guiding documents shall apply.

- From January 01, 2014, Clause 10 Article 1 of the Law on the amendments to the Law on Enterprise income tax No. 32/2013/QH13 dated June 19, 2013 and its guiding documents shall apply.

c) Identification of incomes eligible for 20% tax from July 01, 2013:

- If the company can calculate the revenue, expenditure, and taxable incomes eligible for 20% tax from July 01, 2013, 20% tax shall apply to the amount calculated by the company from July 01, 2013.

- If the company cannot calculate the taxable incomes eligible for 20% tax from July 01, 2013, 20% tax shall apply to the amount calculated by the company from July 01, 2013, then 20% tax shall be applied from July 01, 2013 based on the incomes eligible for 20% tax that are earned in the months multiplied by the number of business months from July 01, 2013 to the end of the fiscal year, and is calculated as follows:

Example 1:

In the fiscal year from April 01, 2013 to March 31, 2014 (the revenue earned in the previous fiscal year does not exceed 20 billion VND), company A earns a total taxable income of 1,200,000,000. VND. The income eligible for 20% tax from July 01, 2013 to March 31, 2014 (09 months) is calculated as follows:

Article 2. Imposition of corporate income tax on incomes from social housing business

1. Companies established under Vietnam’s law, including cooperatives and public service agencies, that engage in social housing business shall apply 20% tax on the revenues from the sale, lease, and hire-purchase of social housing earned from July 01, 2013, regardless of the dates of the sale, lease, or hire-purchase contracts.

Social housing mentioned in this Clause are housing invested by the State or other organizations and individuals from various economic sectors, which satisfies the conditions in terms of sale prices, hire-purchase prices, rents, buyers, lessees, and hirers as prescribed by legislation on housing.

Where a company engaged in social housing business signs a contract to transfer a house and receives a deposit from the buyer before July 01, 2013, and keeps collecting money after July 01, 2013 (the company has not determined the expenditure corresponding to revenue, has made a provisional statement of corporate income tax on the revenue earned), and transfers the house from July 01, 2013, the income from this transfer shall apply 10% tax.

The income from social housing business that applies 10% tax in this Clause is the income from the sale, lease, or hire-purchase from July 01, 2013. If the company fails to separate the income earned from July 01, 2013, the income that apply 10% tax is based on the ratio of revenue from the sale, lease and hire-purchase of social housing to the total revenue earned by the company during the same period.

2. Identification of incomes eligible for 10% tax from July 01, 2013:

a) If the company can calculate the revenue, expenditure, and taxable incomes eligible earned from July 01, 2013, 10% tax shall apply to the amount calculated by the company from July 01, 2013.

b) If the fiscal year of the company is the calendar year or different from the calendar year or does not start on July 01, 2013, and the company fails to determine the taxable income from July 01, 2013, then 10% tax shall apply from July 01, 2013 to the end of the fiscal year, and calculated as follows:

Example 2:

In the fiscal year from April 01, 2013 to March 31, 2014, company B has:

- Total revenue earned by the fiscal year: 100 billion VND

Revenue from sale, lease, and hire-purchase of social housing among which: 24 billion VND.

- Total assessable income in the fiscal year: 12 billion VND, including 2 billion VND of other incomes (including financial income)

Income eligible for 10% tax from July 01, 2013 to the March 31, 2014 (09 months) is calculated as follows:

Chapter II

VALUE-ADDED TAX

Article 3. Imposition of 5% tax on social housing

1. 5% tax shall apply from July 1, 2013 to sale, lease and hire-purchase of social housing.

2. Social housing mentioned in this Article is the houses specified in Clause 1 Article 2 of this Circular.

3. 5% tax shall apply to contracts for sale and hire-purchase of social housings signed from July 1, 2013 and to the payments made from July 1, 2013 if the contract is signed before July 1, 2013.

For hire-purchase of social housing 5% tax shall apply when payment is made according to the contract (including advance payments for many instalments) from July 1, 2013. If the company has not received the rent from July 1, 2013, the date of invoice shall apply.

Example 3:

Company Y is the investor in the social housing project X. In December 2012, company Y signs a contract with Mr. B to sell an apartment in project X. Mr. B is eligible to buy social housing and the sale between company Y and Mr. B is conformable with legislation on social housing trading. The sale contract between both parties prescribes that Mr. B shall pay company Y in instalments, in particular:

1^st instalment: 20% of the value of the apartment when the contract is signed - December 2012.

2^nd instalment: 30% of the value of the apartment in May 2013.

3^rd instalment: 25% of the value of the apartment in December 2013.

4^th instalment: 25% of the value of the apartment in April 2013.

Mr. B pays such instalments in accordance with the contract. According to aforesaid regulations, company Y shall apply 5% VAT on the 3^rd instalment (in December 2013) and 4^th instalment (in April 2014) paid by Mr. B.

4. If the investor in the social housing project converts housing into social housing in accordance with legislation on housing, 5% VAT from January 01, 2013 may be applied to the sale, lease and hire-purchase of social housing since the decision to permit the conversion is issued.

5. From July 1, 2013, if the company has made an invoice with 10% tax on the sale, lease, hire-purchase of social housing eligible for 5% tax, an adjustment invoice shall be made. If the adjustment of tax rate changes the contents of the sale, lease, or hire-purchase contract, the company shall make an appendix specifying such adjustment.

Article 4. 50% reduction in VAT on commercial housing

1. A 50% reduction in VAT on the sale, lease or hire-purchase of commercial housing that are finished apartments with floor areas of under 70 m² and are sold at under 15 million VND/m².

2. Commercial housing being finished apartments mentioned in this Article are apartments that are done in accordance with the investor’s designed, can be used when they are transferred, and meet other conditions in Clause 3 or Clause 4 of this Article.

3. The 50% reduction in VAT on the sale and hire-purchase of commercial housing must satisfy the conditions below:

a) The commercial housing for sale or hire-purchase is finished apartments with floor areas of under 70 m² and sold at a price of less than 15 million VND/m².

b) The sale price or hire-purchase price of commercial housing must be specified in the contract.

The sale price and hire-purchase of commercial housing below 15 million VND/m² mentioned in this Clause is inclusive of 10% VAT and maintenance fee as prescribed.

If payment for commercial housing is made in instalments or deferred, the sale price is the lump sum inclusive of 10% VAT and maintenance fee, exclusive of interest on instalment plan, deferred payment, and other interests.

Example 4:

In October 2013, Mr. C purchases an apartment with the floor area of 54 m² from company E at 14,000,000 VND/m², inclusive of VAT and exclusive of maintenance fee.

The sale price inclusive of 10% VAT and maintenance fee is 15,680,000 VND/m² (= 14,000,000 VND + 10% VAT of 1,400,000 VND + 2% maintenance fee of 280,000 VND). 50% reduction in VAT shall be made in this case.

c) The payments made during the period from July 1, 2013 to the end June 30, 2015 are eligible for 50% reduction in VAT on the sale and hire-purchase contracts for commercial housing that are signed before July 1, 2013 and the contracts signed during the period from July 1, 2013 to the end of June 30, 2014.

Example 5:

In April 2013, company X and Mr. A signs a contract for the sale of 01 apartment with the floor plan of 60 m² and the sale price of 11,000,000 VND/m², exclusive of VAT and maintenance fee. The sale contract between both parties prescribes that Mr. A shall pay company X in instalments, in particular:

1^st instalment: 20% of the value of the apartment when the contract is signed - April 2012.

2^nd instalment: 60% of the value of the apartment in August 2013.

3^rd instalment: 20% of the value of the apartment in August 2014.

Mr. B pays such instalments in accordance with the contract. According to aforesaid regulations, company X shall apply 5% reduction in VAT on the 2^nd instalment (in August 2013) and paid by Mr. A.

4. The 50% reduction in VAT on commercial housing being apartment for lease must satisfy the conditions below:

a) An apartment for lease must has the floor plan under 70 m² and has a similar value to an apartment of the same type that is soled at under 15 million VND/m².

An apartment of the same type is an apartment in the same area with similar area, characteristics and location with the apartment for lease when the lease contract is signed.

b) The sale price of the apartment of the same type being the basis for considering VAT reduction mentioned in this Clause is the price inclusive of 10% VAT and maintenance fee as prescribed.

c) The 50% reduction of VAT on commercial housing for lease is applied to the rent prescribed in the lease contract (regardless of the date of contract) from July 1, 2013 to the end of June 30, 2014, (including advance rent for many years).

If a company leases out a house from July 1, 2013 to the end of June 30, 2014 but no rent is paid, a 50% reduction of VAT on the rent from July 1, 2013 to the end of June 30, 2014 shall be made.

5. Making invoices for sale, lease, hire-purchase of commercial housing eligible for VAT reduction:

When making invoices for sale, lease, hire-purchase of commercial housing eligible for VAT reduction, write “10% x 50%” on the tax rate line, write the reduced tax on the VAT line, and the amount payable by the buyer on the total amount line.

Example 6:

Continued from Example 5, company X issue an invoice to Mr. A for the 2^nd instalment as follows:

Item: 2^nd instalment - 50% reduction in VAT.

Unit price: 11,000,000 x 60 m² x 60% = 396,000,000 VND.

Quantity: 01.

VAT rate: 10% x 50%.

VAT: 19,800,000 VND

Total amount: 415,800,000 VND.

Example 7:

In October 2013, company A signs a contract to sell a finished and operative apartment with a floor area of 50 m² at a price of 12,000,000 VND/m² (exclusive of VAT and maintenance fee. According to the contract, the entire payment for the apartment shall be made when the contract is signed and the house is transferred on November 2013.

If the apartment sold by company A is eligible for 50% reduction in VAT (because the price inclusive of 10% VAT and 2% maintenance fee is 12,000,000 + 1,200,000 (10% tax) + 240,000 (maintenance fee) = 13,440,000 VND/m²).

When the payment is collect, company A issues an invoice to Mr. B as follows:

Item: An apartment eligible for 50% reduction in VAT.

Unit price: 12,000,000 x 50 (m²) = 600,000,000 VND.

Quantity: 01 (apartment).

VAT rate: 10% x 50%.

VAT: 30,000,000 VND

Total amount: 630,000,000 VND.

6. Statement of reduced VAT:

a) The VAT statement shall be made under guidance in the Law on Tax administration, the Law on the amendments to the Law on Tax administration, and their guiding documents.

b) The invoice for reduction of VAT on the sale, lease, hire-purchase of commercial housing shall be stated as “Goods and services subject to 10% tax” on the list of invoices enclosed with the VAT statement made by a taxpayer using the deduction method. Write "50% reduction for commercial housing” on the “Notes” line.

7. From July 1, 2013, if the company has issued invoices without making 50% reduction in VAT on the sale, lease, hire-purchase of commercial housing eligible for 50% reduction in VAT as prescribed in this Article, they shall make adjustment invoices as prescribed. If the adjustment of tax rate changes the contents of the sale, lease, or hire-purchase contract, the company shall make an appendix specifying such adjustment.

Chapter III

IMPLEMENTATION

Article 5. Effects

This Circular takes effect on November 30, 2013 and is applied to the statements of corporate income tax and VAT from July 1, 2013.

Article 6. Responsibility for the implementation

1. People’s Committees of central-affiliated cities and provinces shall instruct competent authorities to comply with the regulations of the Government and guidance of the Ministry of Finance.

2. Tax authorities shall instruct the organizations and individuals under their management to implement this Circular.

3. The organizations regulated by this Circular shall comply with guidance in this Circular.

Organizations and individuals are recommended to report the difficulties arising during the course of implementation to the Ministry of Finance for consideration and settlement./.