Enterprises must meet the requirements for Value Added Tax refund on exported goods

The business concern about the determination of the rate allocated Corporate Income Tax and the Value Added Tax refund on the on-spot export goods

Questions of enterprises on the determination of the allocation rate for Corporate Income Tax, the General Department of Taxation said, Circular 78/2014/TT-BTC dated June 18, 2014 of the Ministry of Finance guiding on Corporate Income Tax regulates the principles of determination of places for tax payment: “The enterprises shall pay tax in places where they are headquartered. For an enterprise that has dependent cost-accounting production establishment (including processing and assembly establishments) operating in provinces or central run cities other than the locality where it is headquartered, tax must be calculated and paid in both the locality where the enterprise is headquartered and the places where its production establishments are based”.

The Circular 78/2014/TT-BTC also stipulated “the Corporate Income Tax amount calculated and paid in a province or centrally run city where a dependent cost-accounting production establishment is based is the payable CIT amount in a period multiplied by (x) the ratio between expenses incurred by such production establishment and total expenses incurred by the enterprises”.

The ratio of expenses shall be determined based on the enterprise’s income tax finalization data in the year proceeding the tax year, which shall be determined by the enterprise itself as a basis for determining the payable amount and used for the CIT declaration and payment for the subsequent years.

The Circular No.151/2014/TT-BTC of the Ministry of Finance on guiding the implementation on the Government’s Decree No.91/2014/ND-CP on amendment and supplementation a number of the articles to Decrees on taxation regulated that an enterprise that has dependent cost-accounting production establishment (including processing and assembly establishments) operates in provinces or central run cities other than the locality where it is headquartered and it must pay the expenses which incurred in the headquarter location and the dependent cost-accounting production establishment.

According to Mr.Cao Anh Tuan, the Deputy Director General of the General Department of Taxation, based on the provisions above, in the case of the enterprise has dependent cost-accounting production establishment (branch) operating in provinces or central run cities other than the locality where it is headquartered, the enterprise has responsibility to declare and pay Corporate Income Tax which is incurred in the headquarter location and the dependent cost-accounting branch. The ratio of expenses shall be determined as follows: The ratio of expenses incurred by the dependent cost-accounting production establishment is equal to the total expenses incurred by the dependent cost-accounting production establishment is divided by the total expenses incurred by the enterprise.

Besides, the obstacles on the Corporate Income Tax, the enterprise also interested in the issue of the Value Added Tax refund, especially the conditions for deducting and refunding input VAT on domestic exported goods. For this issue, Mr.Cao Anh Tuan said, the regulations under Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance stipulating on the conditions for deducting and refunding input VAT on exported goods and services.

VAT drawback reaches 96% of estimate VCN- Along with VAT drawback valued at 96% of the estimate, the remaining amount to be refunded ...

For cases which have requirements on deducting and refunding input VAT on domestic exported goods, enterprises must meet all conditions: the sales contract or the contract of process goods which is appointed for delivery goods in Vietnam, the Customs declaration of the on-spot imported and exported goods which have been completed the Customs procedure and the payment documents which made by the bank transfer. If the enterprise has full cost-accounting of the turnover of the exported goods on the accounting book but uses the commercial invoice without issuing the VAT invoice or imported invoice for the on-spot export activity, it will still be declared for the deducting and refunding input VAT of the actual on-spot export goods.