Công văn 5806/TCT-KK

To: Departments of Taxation in provinces and centrally-affiliated cities

General Department of Taxation has received opinions from certain Departments of Taxation on difficulties related to evidencing documents on non-cash payments (bank payments) valid for use in VAT deductions and refunds. On this issue, based on opinions consolidated by the State Bank of Vietnam in the Official Dispatch No. 6615/NHNN-TCKT dated September 10, 2014 and the Official Dispatch No. 9117/NHNN-TCKT dated December 8, 2014, and after reporting to and obtaining consent from the leadership of the Ministry of Finance, by this document, the General Department of Taxation gives the following opinions:  

Pursuant to the Law on Value-added Tax (VAT), the Law on State Bank, the Law on Credit Institutions, the Ordinance on Foreign Exchange and the Law on Accounting (including other relevant Laws and Ordinances on amendments and supplements, and other documents providing guidance on implementation thereof), the General Department of Taxation further elaborates on evidencing documents on non-cash payments (bank payments) for goods and services which are valid for consideration of VAT deductions and refunds as follows:

1. Evidencing documents on bank payments:

a) Evidencing documents on bank payments for purchased goods and services: These evidencing documents are sent by credit institutions licensed to operate in Vietnam (where payers open their accounts) to payers in order to inform "Debit" on sums transferred to accounts that beneficiaries have opened at related credit institutions.

b) Evidencing documents on bank payments for exported goods and services:  These evidencing documents are sent by credit institutions licensed to operate in Vietnam (where beneficiaries open their accounts) to beneficiaries in order to inform "Credit" on sums received from accounts that payers have opened at related credit institutions.

c) Evidencing documents on bank payments valid for consideration of VAT deductions and refunds are those evidencing documents in conformity with provisions of Article 5 of the Regulations on accounting documents of banks which are annexed to the Decision No. 1789/2005/QD-NHNN dated December 12, 2005 of the Governor of the State Bank of Vietnam, specifically including the following information:

- Document name and number.

- Date (dd/mm/yyyy) of preparation of document.

- Name, address and number of ID card/Passport, number of payer’s (or transferor's) account; name and address of bank provide services to the payer (or transferor).

- Name, address and number of ID card/Passport, number of account of the beneficiary specified on an evidencing document; name and address of bank providing services to the beneficiary.

- Quantity, unit price and amount of each economic or financial transaction written in numerals; total paid or received sum of the entire evidencing document which must be written in both numerals and words.

- Subject matters of economic or financial transactions that may arise (credit institutions shall be required to note down information provided by payers).

In case where information about “quantity and unit price” of each economic transaction has been clearly shown in relevant sales invoices (or sale and purchase contracts or export cargo manifests), payers (or transferors) must clearly specify “Payment for the relevant sales invoice (or sale and purchase contract or export cargo manifest) No…dated…” at the information field “Subject matters of economic or financial transaction” in place of the information “quantity, unit price” of that economic or financial transaction. 

- Signature and full name of the writer, the approver of and the person related to the accounting document.   Evidencing documents related to fund inflows, outflows and payments via money transfers between banks must have signatures of comptrollers (i.e. Chief Accountant or the person in charge of accounting affairs) and the approver (i.e. the entity’s Head) or the authorized person. Evidencing documents on payments via electronic purse organizations must be endorsed by signatures of both electronic purse organizations and credit institutions involved.    Electronic payment documents shall be subject to regulations on electronic transactions.

- Other information under regulations of credit institutions (if any).

d) In case where evidencing documents on bank payments have unclear information, tax authorities may request credit institutions or electronic purse organizations involved to provide more information as a basis for consideration of VAT deductions and refunds.

2. Collation and checking of evidencing documents on bank payments:

a) With regard to evidencing documents on bank payments for exported goods and services in which sums used for these payments are transferred from accounts of foreign customers opened at banks in Vietnam:

- Sums remitted to accounts of foreign customers shall have to conform to applicable regulations on foreign exchange management.

- Tax authorities shall have the burden of inspecting and cooperating with credit institutions and customs authorities concerned in verifying sums deposited into accounts of foreign customers opened at banks in Vietnam in order to have sufficient grounds for consideration of VAT deductions and refunds under the instructions given in the Official Dispatch No. 12485/BTC-TCT dated September 18, 2013 and the Official Dispatch No. 10024/BTC-TCT dated July 22, 2014 of the Ministry of Finance on a number of measures to strengthen tax and customs management for goods exported across land borders.

b) Upon performing tax management duties, if tax authorities discover any suspicious payment (for example, a sum is paid multiple times in a day or is transferred via multiple accounts, etc.), they must request the State Bank in writing to provide more information so that they have sufficient bases for consideration of tax deductions and refunds.  

c) In case where, after carrying out inspection and audit, regulatory bodies discovers that bank payments are in breach of existing regulations on banks, credit and foreign exchange management, and instructions given in this document, taxpayers shall not be entitled to tax deductions and refunds, or shall be obliged to reimburse relevant tax refunds (if tax deductions have already been declared in tax declarations, supplements to tax returns shall be required in accordance with regulations in force), and shall be subject to sanctions defined in the Circular No. 166/2013/TT-BTC dated January 15, 2013 of the Ministry of Finance elaborating on administrative penalties for tax-related violations, specifically including:

+ Penalties for violations against regulations on provision of information related to determination of tax obligations, which are not defined as declaration of insufficient taxes, tax evasions or tax frauds under the instructions given in Article 10, shall be imposed in case deductible tax amounts are reduced but tax amounts payable remain unchanged; or

+ Penalties for the act of incorrect tax declaration that reduces tax amounts payable under the instructions given in Article 12 shall be imposed in case decreases in deductible tax amounts result in increases in tax amounts payable; or penalties for the act of incorrect tax declaration that increases tax refund amounts under the instructions of Article 12 shall be imposed in case tax refunds have to be reclaimed; or

+ Penalties for acts of tax evasion or tax fraud according to the instructions given in Article 13 shall be imposed in case taxpayers directly remit cash into accounts of foreign customers.

+ In case of detecting serious and tax-related violations or any sign of crime, tax authorities shall forward documents related to such case to regulatory authorities for their investigation and criminal prosecution according to the instructions given in the Official Dispatch No. 1725/BTC-TCT dated February 10, 2014 of the Ministry of Finance on strengthening of tax management for enterprises posing high tax-related risks.

This document is intended for your information and is used to provide instructions for taxpayers./.