What are the new amendments and supplements to VAT?

Question: The Ministry of Finance has recently issued Circular No. 151/2014/TT-BTC guiding the implementation of Decree No. 91/2014/ND-CP. Could the Tax Department please inform us of the new amendments and supplements to VAT?

Reply:On October 10, 2014, the Ministry of Finance issued Circular No. 151/2014/TT-BTC guiding the implementation of Decree No. 91/2014/ND-CP dated October 1, 2014 of the Government on amending and supplementing a number of articles of decrees regulating tax. The Circular takes effect from November 15, 2014. The newly amended and supplemented contents on VAT are stipulated as follows:

1.Supplementing the non-taxable subject for the case where the borrower sells the secured assets under the authorization of the lender to repay the secured loan, it is not subject to VAT and must satisfy the following conditions:

- The loan collateral sold is the collateral belonging to the secured transaction that has been registered with the competent authority in accordance with the provisions of law on registration of secured transactions.

- The handling of loan collateral is carried out in accordance with the provisions of law on secured transactions.

Before: Borrowers who sell collateral assets under the authorization of the lender must declare and pay VAT if the collateral assets sold are subject to VAT.

2.Supplementing regulations on input VAT deduction for input VAT of fixed assets being cars used for sample and test drives for car business is fully deductible (not subject to original price control at 1.6 billion VND).

Before: Enterprises do not deduct input VAT corresponding to the value exceeding VND 1.6 billion/vehicle for passenger cars with 9 seats or less (except cars specialized in passenger transport, tourism and hotel business).

3.Amendments and supplements to the deduction of input VAT for goods and services purchased on deferred payment or installments with a value of 20 million VND or more, business establishments shall base on written contracts for purchasing goods and services, value-added invoices and bank payment documents for goods and services purchased on deferred payment or installments to declare and deduct input VAT. In cases where there are no bank payment documents due to the payment time according to the contract not yet arrived, business establishments shall still be allowed to declare and deduct input VAT.

In case when making payment, the business establishment does not have a bank payment document, the business establishment must declare and adjust the amount of deducted VAT for the value of goods and services without a bank payment document in the tax period in which the cash payment occurs (including in cases where the tax authority and competent authorities have decided to inspect and examine the tax period in which the declared and deducted VAT arises).

Before: In case of purchasing goods and services on deferred payment or installment payment, if the payment deadline has not yet come, the business establishment is still allowed to declare deductions. However, by December 31 of each year, the business establishment must review all deferred payment or installment purchase contracts in the year to declare a reduction in case there is no payment document via bank.

NGHE AN TAX DEPARTMENT