Vietnam’s taxman says VAT collection related to L/Cs lawful
General Department of Taxation: Business household is not household | |
Positive changes in government attitudes toward private enterprises | |
Boldly handing over authority to State-owned enterprises |
Vietnam’s top taxman recently requested its local tax departments instruct credit institutions on procedures for value added tax declaration and payment related to LCs.
Many institutions reportedly raised concern whether the request is in keeping with international practice.
In response to their concern, the department cited the 2010 Law on Credit Institutions as saying that as a payment mechanism, L/Cs are subject to VAT, prompting the request.
The taxman added all the proceeds from L/C operations with and without guarantee commitments are subject to VAT since the law took effect on January 1, 2011.
Nguyen Van Phung, director of the Department of Tax Administration at Large Enterprises, told Customs News that those operations related to credits, loans and guarantees are legally beyond the scope of VAT. The regulation has been in place since 1997.
Since the introduction of the 2010 Law on Credit Institutions, L/Cs have been regarded as a provision of services of via-account payment, said the director.
He said with regards to the Law on VAT, an L/C is neither a credit guarantee nor a loan, so it will be subject to VAT.
In case the L/C includes a compulsory loan operation, banks should be responsible for making a separate account and excluding its proceeds from the VAT scope.
Credit institutions and businesses have recently voiced concerns that they might be forced to pay tax arrears.
In this case, Phong claimed these organisations have long failed to differentiate between two aspects of L/Cs, namely credits and payments, so they have wrongly listed the proceeds from L/Cs as a type of revenue not subject to VAT.
According to the director, the country’s taxman suggested local tax departments and credit institutions work together to divide the proceeds from L/Cs into two groups.
The first group includes L/Cs with compulsory loan operations while the other group involves those L/Cs with details about accounts, receipts and cash transactions.
“So far, our tax sector has yet to impose fines on any case, and has been working with authorised State agencies so that all relevant agencies are complying with laws and in line with economic nature,” Phung said.
Related News
Ensure harmony of interests of “3 parties” when applying 5% VAT on fertilizers
08:54 | 30/10/2024 Regulations
VAT policy for on-the-spot imports
13:44 | 23/10/2024 Regulations
VAT reduction is necessary but not tool used every recession: Canadian expert
09:39 | 27/09/2024 Finance
Control of major shareholders in banks
09:25 | 16/09/2024 Finance
Latest News
M&A activities show signs of recovery
13:28 | 04/11/2024 Finance
Fiscal policy needs to return to normal state in new period
09:54 | 04/11/2024 Finance
Ensuring national public debt safety in 2024
17:33 | 03/11/2024 Finance
Removing many bottlenecks in regular spending to purchase assets and equipment
07:14 | 03/11/2024 Finance
More News
Continue to handle cross-ownership in banks
10:35 | 02/11/2024 Finance
Striving for average CPI not to exceed 4%
16:41 | 01/11/2024 Finance
Delegating the power to the government to waive, lower, or manage late tax penalties is suitable
16:39 | 01/11/2024 Finance
Removing difficulties in public investment disbursement
09:30 | 31/10/2024 Finance
State-owned commercial banking sector performs optimistic growth, but more capital in need
09:28 | 31/10/2024 Finance
Stipulate implementation of centralized bilateral payments of the State Treasury at banks
09:29 | 29/10/2024 Finance
Rush to finalize draft decree on public asset restructuring
09:28 | 29/10/2024 Finance
Inspection report on gold trading activities being complied: SBV
14:37 | 28/10/2024 Finance
Budget revenue in 2024 is estimated to exceed the estimate by 10.1%
10:45 | 28/10/2024 Finance
Your care
M&A activities show signs of recovery
13:28 | 04/11/2024 Finance
Fiscal policy needs to return to normal state in new period
09:54 | 04/11/2024 Finance
Ensuring national public debt safety in 2024
17:33 | 03/11/2024 Finance
Removing many bottlenecks in regular spending to purchase assets and equipment
07:14 | 03/11/2024 Finance
Continue to handle cross-ownership in banks
10:35 | 02/11/2024 Finance