TAX ALERT

March 2015

TAX AND CORPORATE SERVICES

Circular 26 – New Guidance on Value Added Tax,

Tax Administration, and Invoices
Further to Decree 12/2015/ND-CP dated 12 February 2015 of the Government, the Ministry of Finance
issued Circular 26/2015/TT-BTC (“Circular 26”) dated 27 February 2015 providing guidance on Value Added
Tax (“VAT”), tax administration, and invoices. Circular 26 took effect on 1 January 2015.
A summary of notable points of Circular 26 is presented below:

1. VAT • In the case where goods are imported as gifts from

• Circular 26 provides additional details on cattle, poultry,
and other livestock food, types of fertilizers, and
equipment used exclusively in agricultural production that
are not subject to VAT.
• In the case where a borrower cannot pay off a
collateralized loan upon the due date of the loan
agreement and the creditor acquires the collateral, the
borrower is not required to issue a VAT invoice.
• In the case where a land-use right is used as a capital
contribution, the land price used to calculate the VAT for
the real estate property transfer is the lower of the price
of the capital contribution agreement and the price of the
land-use right transferred.
• Cigarettes, spirits, and beer that are imported
and subsequently exported are VAT exempt. The
corresponding input VAT is not creditable.
• Revenue that is not subject to VAT calculation and declaration
is added up to the total revenue to allocate the deductible VAT.
overseas organizations or individuals, the corresponding
input VAT at the import stage is deductible without
requiring non-cash payment documentation.
• A single formula is applied to determine the refundable
input VAT for exported goods of both manufacturing
enterprises and trading enterprises.
• For enterprises undergoing dissolution, bankruptcy, or
termination during the investment stage where no output
VAT was generated from the main business activities,
the enterprise is not required to adjust the credited/
refunded input VAT during the process of the dissolution,
bankruptcy, or termination. Upon business termination,
the enterprise is required to repay the State Budget
on the deducted/refunded input VAT, except for the
corresponding input VAT of the liquidated assets subject
to VAT upon termination. Enterprises are not allowed to
apply for VAT refund for the remaining input VAT that has
not been refunded.

© 2015 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.

TAX ALERT / Tax and Corporate Services / March 2015


2. Tax administration
• Only construction and installation projects having revenue
in excess of VND1 billion (inclusive of VAT) are required to
declare and pay extra provincial VAT on the direct method.
Previously, there was no revenue threshold for extra
provincial VAT declaration and payment.
• Circular 26 provides guidance on the applicable foreign
exchange rate (“FX”) to determine revenue, expenses,
taxable prices, and payables to the State Budget:
-- In the case where a taxpayer is required to pay tax in
a foreign currency but then allowed to pay in Vietnam
dong, the buying FX rate announced by the commercial
bank or credit institute where the taxpayer has its bank
account at the time of remitting the tax payment to the
State Budget is used to convert to the Vietnam dong
equivalent.
-- In the case where a taxpayer generate revenue or incur
expense in foreign currencies, the FX rate announced
by the commercial bank where the taxpayer has its
bank accounts is used to convert to the Vietnam dong
equivalent. The buying FX rate shall be used to convert
the generated revenue while the selling FX rate shall
be used to convert the incurred expenses.
-- Other than the above, the provisions in Circular
200/2014/TT-BTC dated 22 December 2014 on
Vietnamese Accounting Standards should be followed.
© 2015 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
TAX ALERT / Tax and Corporate Services / March 2015
TAX ALERT
March 2015
TAX AND CORPORATE SERVICES
• Circular 26 provide detailed guidance on calculating
interest on late payments:
-- For tax liabilities incurred on or after 1 January 2015, a
single interest rate of 0.05% per day is applied.
-- For tax liabilities incurred prior to 1 January 2015 and
still outstanding on 1 January 2015:
* For the period prior up to 1 January 2015: 0.05%
for the first 90 days and 0.07% for the 91th day
onwards
* For the period on and after 1 January 2015: 0.05%
per day
-- For under-declared tax liabilities relating to tax period
prior to 1 January 2015 detected by the tax authorities
or by the taxpayers from 1 January 2015, the interest
rate of 0.05% per day will be applied.
• Foreign carriers are required to calculate and settle
provisional quarterly tax payments and declare an annual
tax finalization.
• The tax payment voucher is no longer required in the tax
refund dossier submitted under a Double Tax Avoidance
Agreement (“DTA”).
• Amend the dossier form to make the tax refund available
under a DTA for foreign carriers.
 TAX ALERT
March 2015

TAX AND CORPORATE SERVICES

Contact us
KPMG Limited
Warrick Cleine
Chairman & CEO
Vietnam and Cambodia
Tax Managing Partner

Hanoi
Do Thi Thu Ha, Senior Partner
Hoang Thuy Duong, Partner
Le Thi Kieu Nga, Partner
Nguyen Thu Huong, Director
Nguyen Ngoc Thai, Director
Nguyen Hai Ha, Director
Phan Thi Quynh Ngoc, Director
Ho Dang Thanh Huyen, Director
Taninaka Yasuhisa, Japanese Desk
46th Floor, Keangnam Hanoi
Landmark Tower 72 Building,
Slot E6, Pham Hung Street, Me Tri
Ward, South Tu Liem District, Hanoi
T: +84 4 3946 1600
3. Invoices F: +84 4 3946 1601
E: kpmghanoi@kpmg.com.vn
• Abolish the requirement to register when changing the decimal point or when
using words without accent marks on invoices. Ho Chi Minh City

• After 5 working days from the date of filing the application for invoice usage, Nguyen Cong Ai, Partner
if the tax authorities do not issue an official written opinion the taxpayer is Ninh Van Hien, Partner
allowed to use the self-printing/order-printed invoices. Ta Hong Thai, Partner
Ho Thi Bich Hanh, Partner
• Abolish the provision whereby the tax authorities determine the number of
Jeff Sea, Partner
invoices to be used within 3 to 6 months under the notification of invoice
Hoang Anh Tuan, Director
issuance.
Nguyen Thanh Hoa, Director
• Goods sold internally within the same company do not require a VAT invoice. Nhan Huynh, Director
Tran Dong Binh, Director
• In case an invoice is issued with wrong information such as the buyer’s name
Thach Tuan Anh, Director
or address but with the correct tax code information, the parties are allowed
Nguyen Thanh Tam, Director
to enter into an agreement to amend the incorrect information. No invoice
Terresa Yiu, Director
adjustment is required.
Watari Takashi, Japanese Desk
10th Floor, Sun Wah Tower,
No.115, Nguyen Hue Street,
Ben Nghe Ward, District 1,
Ho Chi Minh City, Vietnam
T: +84 8 3821 9266
F: +84 8 3821 9267
E: kpmghcmc@kpmg.com.vn
kpmg.com.vn

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely
information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
© 2015 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.

TAX ALERT / Tax and Corporate Services / March 2015