MINISTRY OF THE SOCIALIST REPUBLIC OF VIETNAM

FINANCE Independence - Freedom - Happiness

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No. 25/2018/TT-BTC Hanoi, March 16, 2018
 

CIRCULAR

ON GUIDELINES FOR THE GOVERNMENT’S DECREE NO. 146/2017/ND-CP DATED

DECEMBER 15, 2017 AND AMENDMENTS TO SOME ARTICLES OF THE CIRCULAR NO.
78/2014/TT-BTC DATED JUNE 18, 2004 OF THE MINISTRY OF FINANCE AND CIRCULAR
NO. 111/2013/TT-BTC DATED AUGUST 15, 2013 OF THE MINISTRY OF FINANCE

Pursuant to the Law on Securities No. 70/2006/QH11 dated June 29, 2006 and Law No. 62/2010/QH12
on amendments to some articles of the Law on Securities dated November 24, 2010;

Pursuant to the Law on Personal Income Tax No. 04/2007/QH12 dated November 21, 2007 and Law
on amendments to some articles of the Law on Personal Income Tax No. 26/2012/QH13 dated
November 22, 2012;

Pursuant to the Law on Enterprises No. 68/2014/QH13 dated November 26, 2014;

Pursuant to the Law on amendments to some articles of the Law on Tax No. 71/2014/QH13 dated
November 26, 2014;

Pursuant to the Law No. 106/2016/QH13 dated April 06, 2016 on amendments to some articles of the
Law on Value Added Tax,  Law on Special Excise Tax and Law on Tax Administration;

Pursuant to the Government’s Decree No. 65/2013/ND-CP dated June 27, 2013 on elaboration of some
articles of the Law on Personal Income Tax and Law on amendments to some articles of the Law on
Personal Income Tax;

Pursuant to the Government’s Decree No. 12/2015/ND-CP dated February 12, 2015 on elaboration of
the Law on amendments to some articles of the Laws on taxation and amendments to some articles of
Degrees on taxation;

Pursuant to the Government’s Decree No. 100/2016/ND-CP dated July 01, 2016 on guidelines for the
Law on amendments to certain articles of the Law on Value Added Tax, Law on Special Excise Tax and
Law on Tax Administration;

Pursuant to the Government’s Decree No. 146/2017/ND-CP dated December 15, 2017 on amendments
to some articles of the Government’s Decree No. 100/2016/ND-CP dated July 01, 2016 and
Government’s Decree No. 12/2015/ND-CP dated February 12, 2015;

Pursuant to the Government’s Decree No. 87/2017/ND-CP dated July 26, 2017 defining functions,
tasks, entitlements and organizational structure of the Ministry of Finance;
At the request of the Director General of General Department of Taxation,

The Minister of Finance hereby promulgates a Circular on guidelines for the Government’s Decree
No. 146/2017/ND-CP dated December 12, 2017 on amendments to some articles of the Circular
No.78/2014/TT-BTC dated June 18, 2014 of the Ministry of Finance and Circular No.111/2013/TT-
BTC dated August 15, 2013 of the Ministry of Finance. To be specific:

Article 1. Amendments to Clause 23 Article 4 of the Circular No. 219/2013/TT-BTC dated

December 31, 2013 of the Ministry of Finance (amended by the Circular No. 130/2016/TT-BTC
dated August 12, 2016 of the Ministry of Finance):

“23. Extracted natural resources and minerals exported without or after further processing into other
products.

Exports that are products mainly derived from natural resources and/or minerals whose total value plus
energy cost makes up at least 51% of the prime cost, except for some cases specified in Clause 1
Article 1 of the Decree No. 146/2017/ND-CP.

a) Natural resources and minerals are domestically obtained resources and minerals including metallic
minerals, non-metallic minerals, crude oil, natural gas and coal gas.

b) The ratio of value of a natural resource/mineral and energy cost to the manufacturing cost shall be
determined according to the following formula:

Ratio of value of a  
natural
resource/mineral = Value of a natural resource/mineral + energy x 100%
and energy cost to cost
prime cost Total prime cost of the product
Where:

Value of a processed natural resource/mineral is determined as follows: Value of a natural

resource/mineral directly extracted is direct or indirect costs of extraction of such natural
resource/mineral excluding costs of transport of such natural resource/mineral from place of extraction
to place of processing. Value of a natural resource/mineral purchased for processing is the actual
purchase price excluding costs of transport of such natural resource/mineral from place of purchase to
place of processing.

Energy costs include fuel, electrical energy and heat energy.

The value of a natural resource/mineral and energy cost shall be determined according to the
accounting book value in line with the prime cost sheet.

The prime cost of a product includes direct material cost, direct labor cost and general manufacturing
cost. Indirect costs of sale, administration, finance and other affairs are not included in the prime cost.
The ratio of value of natural resources/minerals and energy cost to prime cost of the exports shall be
determined according to the previous year’s statement and apply stably in the exporting year. In the
first exporting year, the ratio of value of resources/minerals and energy cost to prime cost of the
products shall be determined according to the investment plan and apply stably in the exporting year. If
an investment plan is not available, the aforementioned ratio will apply.

c) If an enterprise does not export but sells its products to another enterprise that then exports such
products, the enterprise purchasing then exporting the products shall declare VAT as levied on similar
products exported directly by the manufacturing enterprise.

d) Departments of Taxation of provinces and cities shall cooperate with regulatory authorities within
their provinces in instructing enterprises manufacturing, trading and exporting products derived from
natural resources/minerals to determine natural resources/minerals exported without or after further
processing into other products according to product characteristics and product manufacturing process
in order to make declaration as prescribed.

In case the enterprise declares a natural resource/mineral that has been processed into other products
but it is it is ungrounded for classifying them as other products, the Department of Taxation shall
inform the General Department of Taxation that will cooperate with Ministries and regulatory
authorities in determining such natural resource/mineral exported without or after further processing
into other products in accordance with regulations of law according to the enterprise’s exports
manufacturing process.

Article 2. Amendments to Clause 4 Article 18 of the Circular No. 219/2013/TT-BTC dated

December 31, 2013 of the Ministry of Finance (amended by the Circular No. 130/2016/TT-BTC
dated August 12, 2016 of the Ministry of Finance):

“4. Refund of tax on exported goods/services

a) In a month (in case of monthly declaration) or quarter (in case of quarterly declaration), if the input
VAT on exported goods/services (including goods that are imported and subsequently exported to non-
tariff areas and the goods that are imported and subsequently exported to other countries) of a business
establishment remains at least 300 million dong after being offset against, it shall be refunded by month
or quarter. If such input VAT is less than 300 million dong, it shall be offset against in the next
month/quarter.

In a month/quarter, if a business establishment has both exported goods/services and goods/services

sold domestically, input VAT on purchases used for manufacturing of exported goods/services shall be
separately recorded. Otherwise, input VAT shall be determined according to the ratio of revenue from
exported goods/services to total revenue from goods/services accrued from the tax period succeeding
the period in which tax is refunded to the current period in which tax refund is claimed.

If the input VAT on exported goods and services (including the input VAT separately recorded and the
input VAT determined through the aforementioned ratio) remains at least 300 million dong after having
been deducted from VAT on goods and services sold domestically, the business establishment shall
receive a refund of VAT on exported goods and services. The refunded amount of VAT on exported
goods and services shall not exceed the revenue from such exported goods and services multiplied by
(x) 10%.
Certain cases of eligibility for tax refund upon exportation: The business establishment that has goods
exported through entrustment; the business establishment that processes exports for foreign principals
on a contract basis; the business establishment that has goods and materials exported for overseas
construction works; and the business establishment whose exports are delivered to other domestic
entities as requested by the importers.

b) VAT will not be refunded if the goods are imported and then exported outside a customs controlled
area in accordance with regulations of law on customs or the goods are exported outside the customs
control area in accordance with regulations of law on customs.

c) The tax authority shall grant a refund before inspection if the taxpayer who is a manufacturer of
exports has not incurred any penalty for smuggling, illegal cross-border transport of goods, tax evasion,
tax fraud, trade fraud for two consecutive years or the taxpayer does not pose a high risk according to
the Law on Tax Administration and its instructional documents.”

Article 3. Addition of sub-point e to Point 2.2 and amendments to sub-point b Point 2.6, Point
2.11 and Point 2.30 Clause 2 Article 6 of the Circular No. 78/2014/TT-BTC dated June 18, 2014
of the Ministry of Finance (amended in Article 4 of the Circular No. 96/2015/TT-BTC dated June
22, 2015 of the Ministry of Finance):

1. Sub-point 2 below is added to Point 2.2 Clause 2 Article 6 of the Circular No. 78/2014/TT-BTC
(amended in Article 4 of the Circular No. 96/2015/TT-BTC dated June 22, 2015 of the Ministry of
Finance) as follows:

“The enterprise transfers part or entire capital to another enterprise in accordance with regulations of
law, in case of transfer of assets, the transferee shall only include the depreciation fixed assets in the
deductible expenses with regard to the transferred assets eligible for being depreciated according to the
residual book value of the transferor.".

2. The first passage of Sub-point b Point 2.6 Clause 2 Article 6 of the Circular No. 78/2014/TT-BTC
(amended in Article 4 of the Circular No. 96/2015/TT-BTC dated June 22, 2015 of the Ministry of
Finance) is amended as follows:

“b) Salaries and bonuses for employees for which the conditions for entitlement and rates of
entitlement are not specified in one of the following documents: employment contract; collective labor
agreement; financial regulations of the company, corporation or group; reward regulations issued by
the President of the Board of Directors, general director or director under the financial regulations of
the company or corporation.”.

3. Point 2.11 Clause 2 Article 6 of the Circular No. 78/2014/TT-BTC (amended in Article 4 of the
Circular No. 96/2015/TT-BTC dated June 22, 2015 of the Ministry of Finance) is amended as follows:

“2.11. The amount in excess of 3 million dong a month a person which is paid to voluntary pension
fund, purchase of voluntary pension insurance and life insurance for employees; the amount in excess
of the limits prescribed by the law on social insurance and health insurance which is paid to social
insurance funds (social insurance, compulsory additional pension insurance), health insurance fund,
and unemployment insurance fund for employees.
The amount paid to voluntary pension fund, social insurance funds, purchase of voluntary pension
insurance and life insurance for employees which is included in deductible expenses shall not exceed
the limits prescribed in this Clause and have its conditions for entitlement and rates of entitlement
specified in one of the following documents: employment contract; collective labor agreement;
financial regulations of the company, corporation or group; reward regulations issued by the President
of the Board of Directors, general director or director under the financial regulations of the company or
corporation.

The payments for aforementioned voluntary programs must not be included in expenses if the
enterprise fails to fulfill its obligation to buy compulsory insurance for its employees (including
outstanding compulsory insurance premiums).”.

4. The first passage of the fifth dash of Point 2.30 Clause 2 Article 6 of the Circular No. 78/2014/TT-
BTC (amended in Article 4 of the Circular No. 96/2015/TT-BTC):

“- Direct expenditures on the employees’ welfare: expenditures on employees’ family occasions;

expenditures on holiday allowance or treatment assistance; expenditures on professional training;
assistance in employees’ families affected by natural disasters, hostilities, accidents, illness;
expenditures on rewarding employees’ children for their educational achievements; allowances for
traveling during holidays of the employees; payment for unemployment insurance, health insurance,
and other voluntary insurance for employees (except for life insurance, voluntary pension insurance
mentioned in Point 2.11 of this Article), and other welfare expenditures.  The aforementioned total
expenditures must not exceed the practical average 01 month’s salary in the tax year.”

Article 4. Amendments to Point b Clause 4 Article 2 of the Circular No. 111/2013/TT-BTC dated
August 15, 2013 of the Ministry of Finance

“b. Income from securities transfer includes income from transfer of stocks, the right to buy stocks,
bonds, treasury bills, fund certificates and other securities according to Clause 1 Article 6 of the Law
on Securities. Income from transfer of stocks by individuals in a joint-stock company is specified in
Clause 2 Article 6 of the Law on Securities and Article 120 of the Law on Enterprises. ”

Article 5. Effect

1. This Circular comes into force from May 01, 2018.

2. Cases that arise from February 01, 2018 and are the subject of the Decree No. 146/2017/ND-CP shall
comply with the Decree No. 146/2017/ND-CP and Article 1, Article 2 and Clauses 2, 3 and 4 Article 3
of this Circular.

3. Difficulties that arise during the implementation of this Circular should be promptly reported to the
Ministry of Finance for consideration./.

  PP. THE MINISTER

THE DEPUTY MINISTER
 
 Do Hoang Anh Tuan
 

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