Specifically, the Ministry of Finance has asked tax and customs authorities to seriously supervise and inspect businesses before and after tax refunds to control overland export-related tax and customs law infractions and ensure the interests of genuine businesses. Businesses that are to be supervised include those trading with foreign partners that bring and put cash into a current account at a Vietnamese commercial bank for payment of goods imported from Vietnam; businesses that are classified as highly risky by tax and customs authorities (businesses of the red channel); businesses exporting risky goods such as mobile phones, electronic equipment, fertilizers, chemicals, fabrics, building materials, alcohol, beer, tobacco, sugar and rice.
The Ministry of Finance told tax and customs authorities to focus on implementing the following three groups of solutions to control VAT refund frauds: 1) to check the legality of goods export contracts, cargo manifests and foreign traders’ payments through current accounts; 2) to check current accounts that foreign traders open in commercial banks in Vietnam to pay for goods imported from Vietnam, and 3) to check stock-out, stock-in and inventory documentations.
The Ministry of Finance requires customs authorities to check all of goods exported through overland border crossings, and examine commodity purchase and sale contracts, export invoices or VAT invoices, export goods transport documents, and documentation related to leasing warehouses and holding yards for exports (if any).
Export goods must comply with state regulations on licensing, quotas, conditions, and goods standards. Customs declarers must submit these documents to the concerned customs authority and the customs authority checks these documents before making a customs clearance decision.
Changes in Enterprise Income Tax regulations
The Ministry of Finance recently issued Circular 78/2014/TT-BTC providing guidelines for implementing Government Decree 218/2013/ND-CP (providing detailed guidelines for implementing the Enterprise Income Tax Law). According to the decree, there are changes in regulations governing capital and real estate transfers.
Referring to income from capital transfer, in cases where a business sells all of a one-member limited liability company owned by an organization under the mode of transferring capital enclosed with one or more real estate projects, that business declares and pays enterprise income tax according to the real estate transfer regulations and makes tax declaration flowing Form 8 (the enterprise income tax declaration form).
The enterprise income tax will be calculated based on the income that the transferor earns from the transfer contract. Businesses transferring capital to organizations and individuals must have non-cash payment documentation when implementing a transfer contract worth VND20 million upward. In cases where the transferor doesn’t have non-cash payment documentation, the concerned tax authority has the right to fix a transfer price. The price of would-be-transferred capital shall be defined in specific cases. In cases, where part of the capital that a business contributes or purchases is a loan, the capital’s price shall include the loan’s interest.
Referring to income from real estate transfer, there are tax calculation bases for real estate businesses to which customers pay in advance according to the project’s pace and that declare and temporarily pay tax according to revenue. This revenue is not yet defined as part of the concerned year’s taxable income. Costs of advertising, marketing, promotions, and commissions shall be a deduction into the taxable income according to regulations in the first year of real estate project transfer.
The real estate transfer tax has decreased from 25 percent to 22 percent and will be decreased to 20 percent on January 1, 2016. This reduction is expected to promote the real estate market.
Circular 78/2014/TT-BTC took effect on August 2, 2014 and is subject to enterprise income tax calculation from 2014./.
Nguyen Trung Kien (Source: Ministry of Finance)