On 12 August 2016, the Ministry of Finance (“MOF”) issued Circular 130/2016/TT- BTC (“Circular 130”) guiding Decree 100/2016/ND-CP dated 1 July 2016 on value added tax, special consumption tax and tax administration, and amending some Circulars on tax. Circular 130 took effect from 1 July 2016 (being the effective date of Decree 100 and the Law on Amendments and Supplementations of Certain Provisions of the Law on Taxes).
Value Added Tax
Under Circular 130, business establishments having input VAT which has not been fully credited in a month or quarter are entitled to a credit in the next period. It should be noted that the tax authority shall resolve VAT refund for business establishments which have outstanding deductible VAT incurred prior to the tax calculation period of July 2016 or the tax calculation period of the third quarter of 2016.
Circular 130 provides more detailed guidelines on VAT refund for investment projects and VAT refund for exported goods and services. Business establishments are not entitled to VAT refund for imported goods which are subsequently exported or exported goods which are not exported in the geographical area of customs operations as stipulated in the Law on Customs and its implementing documents.
Corporate Income Tax
For the period from 2009 to 2013, if enterprises carried out regular investments on additional machine and equipment without increasing the production capacity according to the registered or approved project in the following forms, the investments shall not be considered as investment expansion:
- using the enterprise’s fixed asset depreciation fund;
- using after tax profit for re-investment; or
- using capital within the scope of investment capital registered with the competent State
Special Consumption Tax
Under Circular 130, where goods subject to special consumption tax (“SCT”) are sold to a trading entity in the relationship of parent-subsidiary company with the seller (producer or importer) or subsidiary company of the same parent company of the seller or the trading entity has an associated relationship with the seller, the SCT taxable price must not be lower than 7% of the average selling price of trading entities. In case the selling price of the seller is lower than 7% of the average selling price of trading entities, the SCT taxable price shall be fixed by the tax agency following the tax administration regulations. For the purpose of this provision, “the trading entity has an associated relationship with the seller” when the trading entity holds directly or indirectly at least 20% of investment capital of the seller’s investors/owners.