Proper Procedure for VAT Filing in Vietnam
As Vietnam’s dynamic economy continues to evolve, its tax regime is also continuing to develop to fit the new needs of the country and those doing business within it. While Vietnam is attempting to simplify its Value-Added Tax (VAT) system, properly filing your VAT and ensuring that you are entitled to, and receive, such things as exemptions and refunds, remains a confusing process. In this article, we highlight the key components of Vietnam’s VAT system and outline the proper procedure for filing.
Registration and VAT Number
The VAT number is the tax code of the company and is registered within 10 days from issuance of the business registration certificate. Business establishments, including subsidiaries, have to register VAT payment to the direct tax agency under the guidance of the tax agency.
A VAT invoice is an invoice reserved for organizations and individuals that declare and calculate VAT by the credit method in the following activities:
- Sale of goods and provision of services inland;
- International transport;
- Export of goods into non-tariff zones and cases regarded as export.
The below entities are required to provide VAT invoices:
- Enterprises established under law in industrial parks, economic zones, export-processing zones or hi-tech parks;
- Enterprises having a charter capital level prescribed by the Ministry of Finance.
Public non-business units conducting production and business activities may themselves print invoices after obtaining their tax identification numbers.
Content of the VAT invoice includes:
- Name of invoice type
- Symbol of invoice number pattern and symbol of invoice
- Serial number of invoice
- Name, address and tax identification number of the seller and buyer
- Name, unit of calculation, quantity and unit price of goods or services; total amount in figures and words
- Signatures and full names of the buyer and seller, seal of the seller (if any), and date of making out the invoice
- Name of the invoice printing organization, billing software supplier or intermediary organization providing e-invoicing solutions
- Invoices shall be made in Vietnamese
Filing and Payment of VAT
Business establishments must declare VAT each month and submit a tax declaration in the first 20 days of the following month. In the absence of incurred input or output VAT, business establishments still have to declare and submit a tax declaration.
Business establishments who trade numerous goods and services with various VAT rates must declare VAT in accordance with the tax rate prescribed for each type of good or service. If the business establishments cannot determine the tax rate, they must calculate and pay tax at the highest tax rate on goods and services.
Required electronic filing
The Law on Tax Administration requires VAT taxpayers, whose business entity is in a city or province that has the qualified IT infrastructure, to file and/or declare VAT online with the tax authorities.
Electronic tax filing is implemented periodically on a monthly, quarterly, or yearly basis.
Time of payment or deposit
Business establishments must make VAT payment no later than the 20th day of the next month. Business establishments and importers have to pay VAT upon each importation. In the tax period, business establishments pay VAT in accordance with their method of deduction, if the input VAT is more than the output VAT, the deduction is carried forward to the next period. VAT is paid in Vietnam dong (VND).
This article is an excerpt from the February 2014 edition of Vietnam Briefing Magazine, title “A Guide to Understanding Vietnam’s VAT.” In this issue of Vietnam Briefing, we clarify the entire VAT process by taking you through an introduction as to what VAT is, who and what is liable, and how to pay it properly. We first take you through the basics of VAT in Vietnam before taking you deeper into the topic. Additionally, we provide updates on the new changes to the VAT process and explain how they will impact your business. The magazine is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore until the end of April.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam, in addition to alliances in Indonesia, Malaysia, Philippines and Thailand, as well as liaison offices in Italy and the United States.
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