THE MINISTRY OF FINANCE
SOCIALIST REPUBLIC OF VIET NAM
Hanoi, December 10, 1999
GUIDING THE VALUE ADDED TAX APPLICABLE TO ODA-FUNDED PROJECTS
Pursuant to Value Added Tax Law No. 02/1997/QH9 of May 10, 1997 and the Government’s Decrees detailing the implementation of this Law.
Pursuant to the National Assembly Standing Committee’s Resolution No. 90/1999/NQ-UBTVQH10 of September 3, 1999 amending and supplementing a number of lists of goods and services not subject to value added tax and the value added tax rates of a number of goods and services;
Pursuant to the Prime Minister’s Decision No. 223/1999/QD-TTg of December 7, 1999 on the value added tax applicable to ODA-funded projects;
The Ministry of Finance hereby guides the application of value added tax to ODA-funded programs and projects (hereinafter collectively referred to as projects) as follows:
I. FOR PROJECTS USING NON-REFUNDABLE ODA
1. For imported goods and supplies:
Goods and supplies imported for implementation of projects using non-refundable ODA shall not be subject to VAT. For being exempt from value added tax, when importing goods and/or supplies for their projects, the project owners or contractors shall submit to the customs offices a written certification by the competent agency that such goods and/or supplies are non-refundable aid goods, together with the import dossier.
2. For domestically-purchased goods and services:
a/ Goods and services provided by principal contractors to non-refundable ODA-funded projects shall not be subject to VAT (principal contractors are understood as organizations and/or individuals that directly sign contracts with projects owners to carry out construction and installation work, provide consultancy or major goods and supplies to the projects). Principal contractors shall be reimbursed the value added tax amount already paid when purchasing domestic goods and/or services.
After receiving the payment invoices from sub-contractors or domestic suppliers, the principal contractors shall send the dossiers to the tax office for tax reimbursement. Apart from the dossiers submitted at the first time, there must be the copy of the competent agency’s investment decision, the copy of the contract signed with the project owner (these copies must be stamped and certified by the project owner), and copies of the contracts for subcontracting part of the work to the sub-contractors or the goods or service purchase contract(s) signed with the domestic supplier(s) which must be stamped and certified by the principal contractor, for each application for tax reimbursement, the principal contractor must submit to the tax office the following:
– An official dispatch requesting tax reimbursement, made according to form No. 09/GTGT issued together with the Finance Ministry’s Circular No. 89/1998/TT-BTC of June 27, 1998.
– A list of invoices on the added value of goods and services procured for project implementation, made according to form No. 03/GTGT issued together with the Finance Ministry’s Circular No. 89/1998/TT-BTC of June 27, 1998.
b/ Goods and/or services purchased from domestic suppliers by the project owners with their value added tax already paid shall be entitled to tax reimbursement. After receiving the payment invoices from the domestic suppliers, the project owners shall send dossiers to the tax office for tax reimbursement. The tax reimbursement dossier shall be compiled as guided in Clause a above, excluding the copy(ies) of the contract(s) for subcontracting part of the work to sub-contractors.
II. FOR PROJECTS FUNDED WITH ODA LOANS AS NON-REFUNDABLE STATE BUDGET INVESTMENT
Projects funded with ODA loans as non-refundable State budget investment prescribed in Article 2 of the Prime Minister’s Decision No. 223/1999/QD-TTg of December 7, 1999, include projects funded with ODA loans and projects funded with combined ODA capital (projects partly funded with non-refundable ODA which is not provided under a separate agreement) wholly or partly invested with State budget (central or local budget) capital.
The above-said projects shall be reimbursed the VAT amounts already paid on goods and/or supplies imported and goods and supplies domestically purchased for their implementation.
1. For imported goods and supplies:
The value added tax amounts paid for imported goods and supplies as prescribed in the VAT Law shall be reimbursed. The tax reimbursement dossier includes:
+ An official dispatch requesting VAT reimbursement, made according to form No. 09/GTGT issued together with the Finance Ministry’s Circular No. 89/1998/TT-BTC of June 27, 1998;
+ The competent agency’s investment decision or project approval (a copy certified by the project owner – for the first submission);
+ The import and export goods declaration (a copy certified by the project owner)
+ The customs office’s receipt of VAT paid on imported goods, or a paper on the tax payment made via bank account transfer, with the Treasury�s certification (the original);
+ The entrusted import contract, for cases where other enterprises are entrusted to import the goods (a copy certified by the project owner or principal contractor);
+ The contract signed between the project owner and the principal contractor, for cases where the principal contractor directly fills in the goods import procedures (a copy stamped and certified by the project owner).
Where the project owner directly imports goods and/or supplies subject to VAT, he/she may seek permission to apply the mutual ceasing of the payable VAT and import tax (if any). The mutual ceasing procedures and order shall be the same as in cases of mutual ceasing of import tax.
2. For domestically-purchased goods and services:
The VAT amount paid by the project owners when purchasing goods and/or services shall be reimbursed. Right after receiving the payment invoices from the supplier(s), the project owners shall send dossiers to the tax office for tax reimbursement. The tax reimbursement dossier shall be as prescribed in Clause b, Point 2, Section I above.
Where the project owner signs contracts with principal contracts and the contract price does not include VAT, the principal contractors, when making final settlement with the project owner, must not account VAT therein and they shall be reimbursed the VAT amount paid for purchased goods and/or services. The tax reimbursement dossier, submitted by the principal contractors, shall be as guided at Clause a, Point 2, Section I above together with the project owner’s official dispatch, for the first-time submission, requesting the VAT amount to be reimbursed directly to the principal contractor as the contract price does not include VAT.
III. FOR OTHER PROJECTS FUNDED WITH LOANS
Projects funded with ODA loans re-lent from the State budget, including projects funded with combined ODA, which are not eligible for State budget investment or partial support, must pay VAT as prescribed in the VAT Law and current guiding documents.
Project owners shall themselves seek and use the source of domestic capital, but not the ODA capital source, to pay VAT. The VAT amount paid during the course of project implementation shall be deducted or reimbursed according to the guidance in the Finance Ministry’s Circular No.89/1998/TT-BTC of June 27, 1998 and Circular No.93/1999/TT-BTC of July 28, 1999.
IV. PROCEDURES FOR TAX CODE REGISTRATION
1. For principal contractors:
– Domestic principal contractors shall use their granted tax codes for transactions and completion of the VAT reimbursement procedures.
– Foreign principal contractors doing business in Vietnam and already granted tax codes may continue using such tax codes for completing the tax reimbursement procedures.
– Foreign contractors that do business for the first time in Vietnam or are doing business in Vietnam but not yet granted tax codes (i.e. contractors that declare and pay taxes through Vietnamese organizations and/or individuals by mode of tax deduction) must compile dossiers and send them to the tax office of the locality where they have their executive offices (for contractors having executive offices) or the tax office of the locality where their project is constructed, according to form No. 04-DK-TCT issued together with the Finance Ministry’s Circular No. 79/1998/TT-BTC of June 12, 1998. The tax office shall grant tax codes to foreign contractors according to regulations.
2. For project owners:
– Project owners that have registered their tax codes, shall use these codes when carry out the tax reimbursement procedures.
– For newly-established project owners wishing to register tax codes to carry out the tax reimbursement procedures, they shall compile a dossier to register tax codes with the tax office of the place where they have their executive offices, within 10 days after receiving the investment decision of a competent agency according to the Finance Ministry’s Circular No. 79/1998/TT-BTC of June 12, 1998.
– Where a project owner that has a registered tax code but authorizes a unit (i.e. the project management board) to assume responsibility to manage and apply a separate accounting of input VAT amounts arising in the course of project investment with the ODA capital source, the tax office of the place where the project management board has its executive office shall grant a tax code applicable to dependent units to the unit authorized by the project owner.
V. VAT REIMBURSEMENT ORDER
1. Tax reimbursing agency:
The local tax offices (of the provinces and centrally-run cities) that grant tax codes shall effect the tax reimbursement according to the guidance of this Circular. In cases where a work is divided into many bidding packages or constructed in different localities, each having a separate project management board, the tax office of the locality where the project owner or principal contractor has the main executive office shall effect the tax reimbursement.
In cases where a project owner imports goods and/or supplies and fills in the procedures for mutual ceasing of VAT as guided at Point 1, Section II of this Circular, no tax reimbursement shall be made.
2. Order and time limit for tax reimbursement:
a/ For refundable ODA-funded projects and projects with non-refundable State budget investment:
After receiving valid dossiers requesting tax reimbursement from project owners or principal contractors, within three working days at most, the provincial/municipal Tax Departments shall make tax reimbursement decisions and send them to the State Treasury and concurrently to the project finance management agency. Where a principal contractor is eligible for tax reimbursement, when making a tax reimbursement decisions, the tax agency shall send a copy of such decision to the concerned project owner for monitoring.
Where a dossier requesting tax reimbursement is incomplete, within two working days the Tax Department must inform the project owner or principal contractor of the reason therefor so that the latter can complete the dossier.
The State Treasury shall reimburse tax to the project owners or principal contractors within two days after receiving the tax reimbursement decisions of the tax agencies.
b/ For projects funded with ODA loans relent from the State budget and principal contractors that carry out projects using non-refundable ODA or projects funded with ODA as non-refundable State budget investment, that can not apply separate accounting to input VAT of each project, the input tax deduction or tax reimbursement shall comply with the Finance Ministry’s Circular No. 89/1998/TT-BTC of June 27, 1998 and Circular No. 93/1999/TT-BTC of July 28, 1999.
c/ For projects using non-refundable ODA or projects with non-refundable State budget investment, that have had investment decisions and are being implemented before the effective date of Decision No. 223/1999/QD-TTg, the VAT amounts already paid by the project owners or principal contractors shall be handled as follows:
– For cases where VAT amounts have been calculated and paid under the Finance Ministry’s Circular No. 82/1999/TT-BTC of June 30, 1999, the input VAT amounts which have not yet been deducted or fully deducted shall be deducted or reimbursed as prescribed in this Circular.
– For cases where a project was allocated reciprocal capital (in 1999 and before) from the local budget or central budget (of a ministry and branch) or the bid price, which has been approved for signing the contract, already contained the payable tax amount, the project owner must use the allocated reciprocal capital to pay any arising VAT amounts.
– For cases where a project has not yet been allocated any reciprocal capital for paying VAT, the project owner or principal contractor shall be reimbursed the paid VAT amount as prescribed above. The tax reimbursement dossier should be added with the certification of a competent agency that the project owner has not yet been allocated reciprocal capital for paying VAT.
As in the past a number of project owners and principal contractors were not granted tax codes, for cases where project owners or foreign contractors paid VAT but the receipts of VAT on imported goods or payment vouchers issued to them were not inscribed with the project owners’ or foreign contractors’ tax codes, tax reimbursement shall be also made as guided in this Circular.
3. Examination and settlement of reimbursed VAT amounts
Project owners or principal contractors shall be held responsible for the accuracy of their tax reimbursement dossier. Where there is a doubt, the tax agency shall be entitled to check the bases for tax reimbursement and after their works are completed the project owners or principal contractors must settle their taxes with the tax agency as prescribed.
VI. RECORDING AN INCREASE IN THE INVESTMENT CAPITAL
For project funded with ODA loans or projects funded with combined ODA sources as non-refundable budget investment, when receiving the tax reimbursement decisions from the tax agency, the financial agency in charge of such projects shall record an increase in the capital allocated to the project owners. When making the annual plan on reciprocal capital under the guidance in Joint Circular No. 06/1998/TTLT-BKH-BTC of August 14, 1998 of the Ministry of Finance and the Ministry of Planning and Investment, the project owners do not need to make a plan on reciprocal capital for paying VAT.
VII. IMPLEMENTATION PROVISIONS
This Circular takes effect from the effective date of the Prime Minister’s Decision No. 223/1999/QD-TTg of December 7, 1999 and replaces Circular No. 82/1999/TT-BTC of June 30, 1999 of the Ministry of Finance.
For localities where the VAT reimbursement fund is not enough for making tax reimbursement to ODA-funded projects, they must report such to the Ministry of Finance for consideration and adjustment as prescribed in the Finance Minister’s Decision No. 1632/1998/QD-BTC of November 17, 1998.
If, in the course of implementation, any problem arise, units are requested to report them to the Ministry of Finance for consideration and settlement.
FOR THE MINISTER OF FINANCE
Pham Van Trong