Readers may be aware that PwC in conjunction with the World Bank conducts an annual survey of tax payment procedures across the world, in which, inter alia, the relative administrative burden of meeting tax filing obligations in different countries is assessed.In a Resolution issued earlier this year, the
Government instructed the Ministry of Finance to review current tax and customs administration procedures, including addressing some of the problems reflected in the survey, and where possible simplify tax compliance requirements. PwC were requested to provide input on some of the areas which we believed could be simplified.Following instruction, the Ministry of Finance has now issued Circular 119/2014/TT-BTC (“Circular 119”), dated 26 August 2014, to provide for these simplified tax procedures. The Circular contains some very welcome changes which should reduce compliance costs for companies, and also enable the tax authorities to move to a more advanced risk management based approach in dealing with tax compliance, similar to what we see in other countries. Circular 119 will take effect from 1 September 2014. Some of its notable points include:

1. Changes in Value added tax (“VAT”) and invoicing

  • Goods or services for internal use will no longer be subject to output VAT, provided that they relate to the business of the company. Based on an
    example given in the Circular, if a company which produces bottled water uses such water for its internal meetings, the company is now no longer
    required to account for output VAT thereon.
  • Goods exported and then re-imported back to Vietnam due to sales returns from overseas customers are no longer subject to import VAT.
  • Commercial invoices will now constitute valid supporting documents for VAT refunds in respect of exported goods instead of VAT invoices or sales invoices.
  • VAT invoices are also no longer required for lending or return of machinery, equipment, goods. This helps simplifying the administrative procedures.
  • A new simplified VAT return will be introduced. Entities can opt to use either the old or the new return and its appendices until 31 October 2014 without registration or notification with tax authorities. Thereafter the new return should be used.
  • VAT exempt goods and services are no longer required to be reported in the VAT return by each invoice, but can instead now be declared together on a lump sum basis.


Please click here for more information.