Official letter 98/CTCTH-TTHT responding to tax policy.

 

GENERAL DEPARTMENT OF TAXATION CANTHO CITY TAX DEPARTMENT No: 98 /CTCTH-TTHT Regarding tax policy response

SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness Can Tho, January 7, 2025

 

To:	Vietnam Mekong Trading Service Joint Stock Company Address: Lot 49, 18th Street, Hưng Phú New Urban Area, Hưng Phú Ward, Cái Răng District, Can Tho City

The Tax Department has received Official Document No. 01/CV-24 dated December 16, 2024, from Vietnam Mekong Trading Service Joint Stock Company (hereinafter referred to as the Company) regarding tax policy guidance. The Tax Department has the following opinions:

• According to Clause 3, Article 51 of the 2014 Notary Law:

“Article 51. Notarization of amendment, supplementation, and cancellation of contracts, transactions

3. The notarization procedure for amending, supplementing, or canceling contracts, transactions already notarized shall be carried out as the notarization procedure for contracts and transactions specified in this Chapter.”

• Based on 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 certain provisions of the Value Added Tax Law (Circular No. 219/2013/TT-BTC).

• According to Clause 9, Article 14:

“Article 14. Principles for deducting input VAT

9. Input VAT that is not deductible may be accounted as business expenses to calculate corporate income tax or included in the original price of fixed assets, except for the VAT of goods and services purchased in a single transaction with a value of 20 million VND or more without payment documents using non-cash methods.”

• According to point c, Clause 3, Article 15, amended by point a, Clause 6 of Circular No. 119/2014/TT-BTC dated September 1, 20014, of the Ministry of Finance:

“c) ... By the payment date under the contract or by December 31 each year in the case of payment dates earlier than December 31, if there is no bank payment document, input VAT shall not be deducted. The business must declare and adjust the reduced input VAT of the goods and services without bank payment evidence.”

• According to Article 6 of Circular No. 78/2014/TT-BTC dated August 16, 2014, of the Ministry of Finance guiding the implementation of Decree No. 218/2013/ND-CP dated December 26, 2013, of the Government guiding the Corporate Income Tax Law, as amended by Article 4 of Circular No. 96/2015/TT-BTC effective from August 6, 2015:

“Article 4. Amendments to Article 6 of Circular No. 78/2014/TT-BTC (as amended by Clause 2, Article 6 of Circular No. 119/2014/TT-BTC and Article 1 of Circular No. 151/2014/TT-BTC) as follows:

“Article 6. Deductible and non-deductible expenses in determining taxable income

1. Except for non-deductible expenses specified in Clause 2 of this Article, businesses may deduct all expenses if they meet the following conditions:

a) The expense is actual and related to the business activities of the enterprise.

b) The expense has valid invoices and documents in accordance with the law.

c) For expenses with invoices of goods or services worth 20 million VND or more (including VAT), the payment must be documented by non-cash payment methods.

Non-cash payment evidence shall comply with the regulations of the VAT laws.

In the case of goods or services purchased worth 20 million VND or more on the invoice, and payment is not made by the time the expense is recognized, the business may deduct the expense for tax determination. However, if the payment is made without non-cash payment documentation, the business must declare and adjust the expenses, reducing the amount of the goods and services without non-cash payment documentation during the tax period in which the payment was made in cash (even if tax authorities or other agencies have made decisions regarding inspections of the relevant tax period).”

• Based on Circular No. 45/2013/TT-BTC dated April 25, 2013, of the Ministry of Finance guiding the management, use, and depreciation of fixed assets (Circular No. 45/2013/TT-BTC).

• According to point d, Clause 2, Article 4 (amended and supplemented by Article 2 of Circular No. 28/2017/TT-BTC dated April 12, 2017, of the Ministry of Finance):

“Article 4. Determining the original price of fixed assets:

2. Determining the original price of intangible fixed assets:

d) Intangible fixed assets are land-use rights:

• Intangible fixed assets for land-use rights include:

• Land use rights granted by the state with land-use payments or transferred land use rights (including limited and unlimited land-use rights).

• Land-use rights leased before the effective date of the 2003 Land Law with advance payments for the entire lease period or advance payments for several years with at least five years remaining and a land-use rights certificate issued by the competent authority.

The original price of intangible fixed assets as land-use rights is determined as the total amount paid to obtain legal land-use rights plus (+) compensation costs for site clearance, ground leveling, registration fees (excluding the costs incurred for construction on the land); or the value of the land-use rights received as capital contribution.

...

• For assets such as mixed-use buildings serving both business activities of the enterprise and for sale or lease under legal regulations, the company must separately determine and account for the value of the mixed-use building based on its purpose of use:

For the part of the building's value (area) used for business operations and leasing (excluding financial leasing): The business records the value as a fixed asset, manages and depreciates it according to regulations.

For the part of the building's value (area) intended for sale: The company shall not treat it as a fixed asset, nor depreciate or track it as an asset for sale.

Criteria for determining the value of each asset and allocating depreciation for each use purpose are based on the value proportions of each usage area or the actual area used according to the purpose for accounting purposes.

For businesses that have mixed-use buildings where the values of areas serving production/business and for sale/lease cannot be separately identified, the entire value of the mixed-use building should not be accounted as a fixed asset nor depreciated as per regulations.”

• According to Article 9 (supplemented by Clause 4, Article 1 of Circular No. 147/2016/TT-BTC dated October 13, 2016):

“Article 9. Principles for depreciating fixed assets:

1. All fixed assets of the enterprise must be depreciated, except for the following fixed assets:

...

• Other fixed assets managed by the enterprise but not owned by the enterprise (except for financial lease assets).”

...

• Intangible fixed assets for long-term land use rights that involve payment for land use or transfer of long-term land use rights legally.”

Based on the above regulations and the details presented by the Company in Official Document No. 01/CV-24 dated December 16, 2024, the Tax Department has the following opinions:

• Regarding determining the original price and depreciation of fixed assets:

• The Company determines the original price of fixed assets as land-use rights according to the following regulations:

 

Nguyên giá

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Toàn bộ khoản tiền chi ra để có quyền sử dụng đất hợp pháp

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Các chi phí cho đền bù giải phóng mặt bằng, san lấp mặt bằng, lệ phí trước bạ (không bao gồm các chi phí chi ra để xây dựng các công trình trên đất)

• Regarding depreciation of fixed assets:

If the land-use rights transferred are long-term, no depreciation is applied. If the land-use rights transferred are for a limited period, depreciation may be applied, and it must comply with the depreciation rules of fixed assets as specified in Article 9 of Circular No. 45/2013/TT-BTC (amended and supplemented by Decision No. 1173/QD-BTC dated May 21, 2013, Circular No. 147/2016/TT-BTC dated October 13, 2016, and Circular No. 28/2017/TT-BTC dated April 12, 2017).

• Regarding the determination of input VAT deductible: The Company should comply with the provisions in point c, Clause 3, Article 15 of Circular No. 219/2013/TT-BTC amended by point a, Clause 6 of Circular No. 119/2014/TT-BTC dated September 1, 20014, of the Ministry of Finance, and the Contract Appendix under the provisions of Clause 3, Article 51 of the 2014 Notary Law.

In cases where the input VAT is not deductible, the Company should comply with the provisions of Clause 9, Article 14 of Circular No. 219/2013/TT-BTC. Starting from August 6, 2015, it should comply with the provisions in Article 6 of Circular No. 78/2014/TT-BTC dated August 16, 2014, of the Ministry of Finance, amended by Article 4 of Circular No. 96/2015/TT-BTC.

The Tax Department of Can Tho City recommends that Vietnam Mekong Trading Service Joint Stock Company refer to the above content and comply with the regulations in the current legal documents.

Recipients: As above; NVDTPC Department; KK&KTT Department, TTKT1,2; Tax Department Website; Save Vt, TTHT(CL).

KT. DIRECTOR GENERAL ON BEHALF OF THE DEPUTY DIRECTOR GENERAL         Huynh Tan Phat

See details here.