Registration of voluntary application of credit-invoice method to payment of value-added tax
The value-added tax (hereinafter referred to as “VAT") shall be calculated by adopting one of 02 following methods:
- Direct method: VAT payable is calculated by multiplying a ratio (%) by revenue or by multiplying added value by VAT rate (only applied to trading and manual processing of gold, silver and precious stones).
- Credit-invoice method:
A new enterprise shall pay VAT using direct method whereby the VAT payable shall be determined by multiplying a ratio (%) by its revenue. However, it may voluntarily register to pay VAT using credit-invoice method if it falls into one of the following cases:
1. It is a new enterprise that is established from an investment project of an operating business entity that pays VAT using credit-invoice method.
2. It is a new enterprise that makes investment in, purchases or receives capital contribution by fixed assets, machinery, equipment, tools and devices or enters into a lease of business location.
Pursuant to previous regulations, an enterprise that wishes to use the credit-invoice method must submit Notice of VAT accounting method (the form No. 06/GTGT attached to the Circular No. 156/2013/TT-BTC – commonly called as Form 06/GTGT) to its supervisory tax authority by the deadline for submitting the VAT declaration of the first quarter.
But, as from November 05, 2017, a new enterprise that falls into one of the abovementioned cases must not submit Form 06/GTGT for registering its voluntary application of the credit-invoice method.
The supervisory tax authority of an enterprise shall determine the VAT accounting method adopted by that enterprise based on the type of VAT declaration for the first quarter submitted by that enterprise. To be specific:
- If an enterprise uses the credit-invoice method, it shall submit VAT Declaration Form No. 01/GTGT or Form No. 02/GTGT in case it has an investment project.
- If an enterprise still uses the direct method, it shall submit VAT Declaration Form No. 04/GTGT or Form No. 03/GTGT in case it engages in trading and manual processing of gold, silver and precious stones.
An enterprise is not required to submit documents proving its eligibility to pay VAT using the credit-invoice method but it shall keep and present these documents at the request of a tax authority.
If an enterprise engages in trading and/or manual processing of gold, silver and precious stones, VAT on these activities shall be separately declared and paid using the direct method whereby the VAT payable equals the added value multiplied by VAT rate.