On 18 December 2013, theMinistry of Finance issued Official Letter (OL) 17557 providing guidance on registration of VAT declaration method for 2014.According to OL 17557, companies with revenue subject to VAT in 2013 of less than VND 1 billion are required to pay VAT under the “direct method” (where VAT is paid based on a company’s “value added”) from 2014 unless they register to pay VAT under deduction method (where VAT is paid under the conventional credit method) Registration for using the deduction method must be done by 31 December 2013 by submitting form06/GTGT to the local tax authorities.

This requirement will affect not only small companies, but also those companies that have mainly VAT exempt income (such as those in the banking, life insurance and agricultural sectors) and a small amount of VATable income.

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