Official Letter 397/TCT-CS 2025 on Value-Added Tax Policy.

 

MINISTRY OF FINANCE GENERAL DEPARTMENT OF TAXATION _____________ No.: 1152/TCT-CS Subject: Tax Policy

SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ________________________ Hanoi, March 22, 2024

 

 

To:

- Department of Taxation of Binh Duong Province; - PRORIT CORPORATION VIETNAM LLC (Address: No. 6, VSIP II-A, Road No. 27, Vietnam-Singapore Industrial Park II-A, Vinh Tan Ward, Tan Uyen City, Binh Duong Province); - RIC CORPORATION LIMITED (Address: No. 2, VSIP II-A, Road No. 27, Vietnam-Singapore Industrial Park II-A, Vinh Tan Ward, Tan Uyen City, Binh Duong Province).

 

The General Department of Taxation has received documents No. PV 03/2023 dated December 7, 2023 and PV 04/2023 dated December 19, 2023 from PRORIT CORPORATION VIETNAM LLC; documents No. RIC 03/2023 dated December 14, 2023 and RIC 04/2023 dated December 19, 2023 from RIC CORPORATION LIMITED regarding tax policies. On this issue, the General Department of Taxation has the following comments:

Pursuant to Article 174 of the 2013 Land Law, which stipulates the rights and obligations of organizations that are allocated land by the state with a one-time land use fee, leasing land with a one-time rental payment for the entire lease term;

Pursuant to Clause 2 of Article 185 of the 2013 Land Law, which stipulates the rights and obligations of overseas Vietnamese and foreign-invested enterprises using land in industrial zones, industrial complexes, export processing zones, high-tech zones, and economic zones;

Pursuant to Clause 1 and Clause 2 of Article 8 of Decree No. 123/2020/ND-CP dated October 19, 2020, of the Government on types of invoices;

Pursuant to Articles 7 and 8 of Decree No. 209/2013/ND-CP dated December 18, 2013, of the Government on methods of tax deduction and direct tax methods;

Pursuant to Articles 11, 12, and 13 of Circular No. 219/2013/TT-BTC dated December 31, 2013, of the Ministry of Finance guiding the implementation of the Value-Added Tax Law and Decree No. 209/2013/ND-CP dated December 18, 2013, of the Government, detailing and guiding the implementation of some provisions of the Value-Added Tax Law regarding a 10% tax rate, tax deduction methods, and direct tax methods;

Based on the above regulations and guidelines:

Article 174 and Clause 2 of Article 185 of the 2013 Land Law specifically stipulate the rights and obligations of foreign-invested enterprises leasing land with a one-time payment for the entire lease period; according to this, foreign-invested enterprises have the right to transfer or lease out land use rights associated with land-attached assets in accordance with the law on land.

According to the company’s letter: RIC CORPORATION LLC and PRORIT CORPORATION VIETNAM LLC, both foreign-invested export enterprises, have leased land with a one-time payment for the entire lease term and have carried out the transfer or lease of land use rights associated with assets on the land to purchasers who are not operating under the export processing zone regime. Therefore, the General Department of Taxation recommends that the Department of Taxation cooperate with relevant authorities (Industrial Park Management Board, Department of Natural Resources and Environment) to review and examine whether the transfer and lease of land use rights associated with land-attached assets by the above companies comply with the 2013 Land Law.

In case the lease of land use rights associated with assets on the land by the export enterprises to purchasers who are not operating under the export processing zone regime is conducted in accordance with the 2013 Land Law, it will be subject to the 10% VAT rate.

The export enterprise (the lessor) shall apply the VAT calculation method in accordance with Articles 7 and 8 of Decree No. 209/2013/ND-CP dated December 18, 2013, of the Government, Articles 12 and 13 of Circular No. 219/2013/TT-BTC dated December 31, 2013, of the Ministry of Finance, and use invoices in accordance with Article 8 of Decree No. 123/2020/ND-CP dated October 19, 2020, of the Government.

In case the export enterprise (the lessor) registers to apply the deduction method and registers to use VAT invoices, the lessor shall issue electronic VAT invoices with a 10% tax rate to the lessee. The lessee’s VAT declaration and deduction will be carried out in accordance with Articles 14 and 15 of Circular No. 219/2013/TT-BTC dated December 31, 2013, of the Ministry of Finance.

The General Department of Taxation has shared these opinions with the Department of Taxation of Binh Duong Province and the relevant companies for their reference./.

 

Recipients: As above; Deputy General Director Đặng Ngọc Minh (for reporting); Department of Taxation (CST), Department of Customs Supervision and Management (QLCS), Department of Policy - Ministry of Finance (BTC); Department: PC, KK & KTT; TCT Website; Archive: VT, CS.

On behalf of the General Director, The Deputy Director of the Department of Policy, Deputy Head of the Department.         Pham Thi Minh Hien

See details here.