In value-added tax accounting, the term “tax deduction” is used a lot. Tax deduction helps determine the amount of VAT to be paid for each stage and each subject in the process of production and circulation of goods, preventing tax loss and helping to ensure the quality of VAT, which is mainly levied on consumers. use the final product or service. But not everyone clearly understands what tax deduction is and what are the cases that are not eligible for VAT deduction? LSX Lawfirm will give you an article about: “Cases of not deducting input value-added tax in Vietnam”, as follows:
Legal grounds
– Law on Value Added Tax No. 13/2008/QH12
– Circular No. 219/2013/TT-BTC Guiding the implementation of the Law on Value-Added Tax and Decree No. 209/2013/ND-CP detailing and guiding the implementation of a number of articles of the Law on Value-Added Tax increase.
– Circular No. 26/2015/TT-BTC Guiding Value Added Tax and Tax Administration in Decree No. 12/2015/ND-CP detailing the implementation of the Law amending and supplementing a number of articles of the Law on Taxation. tax law and amending and supplementing a number of articles of Circular No. 39/2014/TT-BTC on invoices for selling goods and providing services.
– Circular No. 151/2014/TT-BTC Guiding the implementation of Decree No. 91/2014/ND-CP on amending and supplementing a number of articles in tax regulations.
Definition
VAT is a tax charged on the added value of goods and services arising in the process from production; circulation to consumption.
VAT deduction is the determination of the amount of VAT that must be remitted into the state budget by an enterprise on the basis of subtracting input VAT from output VAT.
Understandably, when businesses buy goods and services, they will have to pay VAT on goods (input VAT). But when businesses bring those goods to resell, the purchaser will bear the VAT rate calculated on the value of that goods (output VAT). At that time; the amount of VAT that the original purchaser needs to pay will be equal to = output VAT – input VAT.
Regarding the conditions for deduction of input VAT; Clause 2, Article 13 of the 2008 VAT Law stipulates the following conditions:
- Having a value-added invoice for purchase of goods or services; or a receipt for payment of value-added tax at the stage of importation;
- Having documents of payment via bank for purchased goods and services; except for goods and services purchased each time with a value of less than VND 20 million;
- For exported goods and services, in addition to the conditions specified above; there must be a contract signed with an outside party on the sale, processing of goods, provision of service;, an invoice for the sale of goods or services, documents of payment via bank, customs declaration for exported goods.
Cases of not deducting input value-added tax in Vietnam
In case of invoice error
Pursuant to Clause 15, Article 14 of Circular 219/2013/TT-BTC, business establishments are not allowed to deduct input VAT in the following cases:
- VAT invoices used in contravention of the provisions of law such as: VAT invoices without VAT; (except for special cases where VAT invoices can be used with the payment price being the price inclusive of VAT);
- Invoices do not write or incorrectly record one of the items such as name; address; tax code of the seller, so the seller cannot be identified;
- Invoices do not include or incorrectly record one of the items such as name; address; tax code of the buyer, so the buyer cannot be identified (except for the case guided in Clause 12 of this Article);
- Forged VAT invoices and receipts, erased invoices, fake invoices (without goods or services attached);
- Invoices with incorrect value of goods and services purchased, sold or exchanged
In case goods and services are used for the production and trading of goods or services that are not subject to VAT
According to Clause 7, Article 14 of Circular 219/2013/TT-BTC; input VAT on goods and services used for production and trading of goods and services is not subject to VAT as guided in Article 4 of this Circular. not deductible, except for the following cases:
- VAT on goods and services purchased by business establishments for the purpose of producing and trading goods and services provided to foreign organizations and individuals, international organizations for humanitarian aid, non-governmental aid. refund of the guidance in Clause 19, Article 4 of this Circular shall be fully deducted;
- Input VAT on goods and services used for oil and gas prospection, exploration and development up to the first date of exploitation or the first production date shall be fully deductible.
You can also refer to the article about Dossier for registration of personal tax identification for foreigners or Procedures for registration of personal tax identification for foreigners.
Related article: The benefits of registering a personal tax number in Vietnam
In case there is no proof of non-cash payment
According to the provisions of Clause 2, Article 15 of Circular No. 219/2013/TT-BTC; (updated according to Clause 10, Article 1 of Circular 26/2015/TT-BTC); the conditions for deduction of input VAT are: from non-cash payment for purchased goods and services (including imported goods) of 20 million VND or more. Non-cash payment vouchers include bank payment vouchers and other non-cash payment documents as guided in Clauses 3 and 4 of this Article.
Thus, goods and services purchased each time according to the invoice from 20 million VND or more according to the VAT-inclusive price, if there is no proof of payment through the bank; it will not be deducted. For these invoices, the business establishment shall declare in the item of goods and services that are not eligible for deduction in the list of invoices and documents for purchased goods and services.
However, in the following cases when there is no non-cash payment voucher, input VAT is still deducted:
- In case the value of goods and services imported each time is less than 20 million VND; goods and services purchased each time according to the invoice are less than 20 million VND at the price inclusive of VAT;
- In case a business establishment imports goods as gifts or presents from overseas organizations or individuals.
Note: If you buy goods and services from a supplier with a value of less than 20 million VND; but buy them many times in the same day with a total value of 20 million VND or more; you will only be eligible for tax deduction for the following cases: have proof of payment via bank. The supplier is a taxpayer with a tax identification number, and directly declares and pays VAT.
The case for fixed assets, machinery and equipment
According to the provisions of Article 9 of Circular 151/2014/TT-BTC; input VAT on fixed assets, machinery and equipment, including input VAT on leasing of assets, machinery; This equipment and other input VAT related to property; machinery and equipment such as warranty and repair in the following cases are not deductible:
- Fixed assets used exclusively for the production of weapons and equipment for national defense and security;
- Fixed assets, machinery and equipment of credit institutions; reinsurance, life insurance; securities trading, medical examination and treatment establishments, and training institutions;
- Civil aircraft, yacht not used for business purposes of transporting goods, passengers, tourism business, hotel.
Note: Fixed assets are passenger cars with 9 seats or less; (except for cars used in the business of transporting goods; passengers, tourism, and hotels; cars used for modeling and test drive for auto business) with a value exceeding VND 1.6 billion (price excluding VAT); the input VAT amount corresponding to the value exceeding VND 1.6 billion is not deductible.
Related questions
Accordingly the Law, for transport; loading and unloading is the freight rate; loading and unloading without VAT; regardless of the facility directly transporting; loading or unloading.
Accordingly the Law, for casino services, prize-winning video games; entertainment business with bets; the proceeds from this activity include excise tax minus the amount paid to guests.
Accordingly the Law, for goods processing, it is the processing price accordingly the processing contract excluding VAT, including wages, costs of fuel, motivation, auxiliary materials and other costs for the processing of goods goods industry.
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