Official Letter 5037/CT-TTHT on Value Added Tax Policy Issued by the Ho Chi Minh City Tax Department

GENERAL TAX DEPARTMENT HO CHI MINH CITY TAX DEPARTMENT --------	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ---------------
No: 5037/CT–TTHT Re: Value Added Tax Policy	Ho Chi Minh City, July 2, 2012

 

To:	Grand Imperial SaiGon Hotel Co., Ltd. Address: 101 Hai Ba Trung, Ben Nghe Ward, District 1 Tax code: 0300659964

 

In response to your letter No. 125/GriSH dated May 24, 2012, regarding the value-added tax (VAT) policy, the Ho Chi Minh City Tax Department provides the following opinion:

• According to Clause 4, Article 7 of Circular No. 06/2012/TT-BTC dated January 11, 2012, by the Ministry of Finance, guiding the implementation of several provisions of the Value Added Tax Law, guiding the implementation of Decree No. 123/2008/ND-CP dated December 8, 2008, and Decree No. 121/2011/ND-CP dated December 27, 2011, by the Government, it stipulates:

“4. Tax calculation price for products, goods, and services for internal consumption

For products, goods, and services that the business establishment exports or provides for internal consumption serving business activities (internal consumption), the VAT calculation price is the VAT price of the same type or equivalent products, goods, or services at the time of the occurrence of the consumption of such goods or services. The business establishment is allowed to declare and deduct VAT on invoices issued for internal consumption used in production and business activities of VAT taxable goods and services.”

• According to Point 2.4, Appendix No. 4 attached to Circular No. 153/2010/TT-BTC dated September 28, 2010, by the Ministry of Finance, guiding the implementation of Decree No. 51/2010/ND-CP dated May 14, 2010, by the Government on sales invoices for goods and services (hereinafter referred to as Circular 153), it stipulates:

“2.4. Use of invoices and documents for promotional, advertising goods and services, samples, gifts, donations, and internal consumption for organizations and individuals declaring VAT by the deduction method:

...

For goods and services used for giving, donating, exchanging, paying wages to employees, and internal consumption, VAT invoices (or sales invoices) must be issued. The invoices must show all relevant details and calculate VAT as if the goods and services were sold to customers.”

Based on the above regulations, in the case of Grand Imperial SaiGon Co., Ltd. using hotel rooms to provide accommodation for certain employees according to agreements in the labor contract and company regulations, when providing room rental services to employees (internal consumption services), the company must issue a VAT invoice and calculate VAT as if the service were provided to customers. The VAT amount on this invoice, used for the employees’ personal consumption, is not for the company’s taxable production and business activities, so it is not allowed to be declared or deducted as input VAT.

The Ho Chi Minh City Tax Department informs the company to comply with the regulations outlined in the legal documents referenced in this letter.

Recipients: As above; P.KTT No. 1; Legal Department; Ho Chi Minh City Tax Department Website; Archive: TTHT; 1120-136559/12 G.5

DEPUTY DIRECTOR GENERAL HEAD OF TAXPAYER SUPPORT AND COMMUNICATIONS DIVISION Tran Thi Le Nga

See details here.