Page 10 - VSIP News QII - 2013

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1. Reverting to the old rules for VAT zero rating of exported services
Readers will be aware from our previous NewsBriefs that this has continued to be a very contentious area,
especially the condition that the overseas customer has no permanent establishment (“PE”) in Vietnam.
This PE condition was introduced several years ago now, replacing the old condition that the services must
be consumed outside of Vietnam. Despite this, the place of consumption was often still referred to when
assessing eligibility for zero rating. It therefore comes as little surprise that this condition is now being
This will make the zero rating of exported services more difficult in many cases, as the tax authorities can be
expected to take the view that most services sold to a customer overseas, if they are performed in and relate
to Vietnam, will also consequently be consumed here.
Taxpayers should check carefully the treatment they are applying to exported services and assess what
impact reversion to the old rules will have for them and their overseas customers.
2. Removal of the 6-month time limit to claim creditable input VAT
Taxpayers can now make additional VAT declarations anytime before the tax authorities do a tax audit.
3. Interest on loans provided by non-credit institutions is no longer subject to VAT
This finally clears up the confusion and inconsistency that had arisen in this area, and restores the general principle that
lending is not subject to VAT.
4. New rules on claiming VAT refunds
A VAT refund can be claimed if a taxpayer has accumulated input VAT credits for at least one year. For new projects under
construction, the threshold to claim a VAT refund is increased from VND200 million to VND300 million.
5. New rules for overseas service companies in the oil & gas sector
Foreign contractors supplying goods and services used for prospecting, exploration or development of oil and gas apply-
ing withholding method are not permitted to pay VAT under direct method.