How to declare and pay VAT for taxpayers who are dependent units
How should a taxpayer who conducts centralized accounting at the head office have a dependent unit or business location that is a production facility (including processing and assembly facilities) in a different province from the taxpayer's head office, calculate, declare and pay VAT?
Nghe An Tax Department replied:
Pursuant to the provisions of Point b, Clause 1; Point b, Clause 2; Point b, Clause 3, Article 13, Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance:
Taxpayers shall perform centralized accounting at the head office with dependent units and business locations that are production establishments (including processing and assembly establishments), except for the case specified in Point c, Clause 1, Article 11, Decree No. 126/2020/ND-CP.nTaxpayers shall declare value added tax centrally for the production and business activities of dependent units, the business location is the production facility and submit tax declaration dossiers according to form No. 01/GTGT, appendix of the table of value added tax allocation payable to the locality where the revenue is received (except for hydropower production activities, computerized lottery business activities) according to form No. 01-6/GTGT issued with appendix II, Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance to the direct tax authority; pay the tax amount allocated to each province where the production facility is located.
The amount of value added tax payable to the province where the production facility is located is determined in one of the following two ways:
Method 1: The amount of value added tax payable to the province where the production facility is located is equal to (=) revenue at prices excluding value added tax multiplied (x) by 2% (for goods subject to a value added tax rate of 10%) or 1% (for goods subject to a value added tax rate of 5%) with the condition that the total amount of value added tax payable to the provinces where the production facility is located must not exceed the amount of value added tax payable by the taxpayer at the head office. In case the production facility transfers finished products or semi-finished products to other internal units for sale, the revenue of the manufactured products is determined based on the cost of production of the products.
Method 2: In case the taxpayer calculates to declare and pay according to method 1 above and the total value added tax payable to the provinces where the production facility is located is greater than the total value added tax payable of the taxpayer at the head office, the taxpayer shall allocate the tax payable to the provinces where the production facility is located according to the following formula: The value added tax payable to each province where the production facility is located is equal to (=) the value added tax payable of the taxpayer at the head office multiplied (x) by the ratio (%) of revenue at prices excluding value added tax of products produced in each province over the total revenue at prices excluding value added tax of products produced by the taxpayer.
The revenue used to determine the allocation ratio according to method 1 and method 2 above is the actual revenue generated in the tax period. In case the additional declaration changes the actual revenue generated, the taxpayer must determine and reallocate the tax payable of each tax period with errors that have been declared additionally to determine the difference in value added tax that has not been allocated or over-allocated to each locality.
