Công văn 06TC/TCT

The Ministry of Finance has received numerous suggestions from the project management units, contractors and a number of taxation offices in relation to the certification of the application files for VAT refund for main contractors engaging in the implementation of projects using concessional ODA which is granted by State budget. The Ministry of Finance provides guidelines as follows:

Section IV.3.4 of Circular 41/2002/TT-BTC dated May 3, 2002 of the Ministry of Finance provides for the responsibilities of the project owners for certifying the application files for VAT refund as follows: in case of tax refund for main contractors, application files for VAT refund must include the certification of Project owners on the amount of VAT to be funded prior to submission thereof to taxation agency.

During the implementation of the above-mentioned provisions, project owners who have no written certification on the amount of VAT suggested by contractors due to fairlure of controlling input elements of contractors, the tax agency is unable to approve the tax refund for the main contractor. To resolve the above obstacle, in consideration of opinions from relevant ministries and project management unit, the Ministry of Finance provides its additional guidelines for the certification of the amount of VAT that the contractors suggest to be refunded as follows:

1. Upon receipt of the application files for tax refund from the principle contractors, the project owners are responsible for verifying and certifying the amount of VAT that the contractors suggest to be refunded as set forth in Section IV.3.4 of Circular No. 41/2002/TT-BTC stated above. The certification must specify the amount of VAT of input goods and services suggested to be refunded of the construction works or parts of the construction works that have been carried out or completed and handed over. The amount of VAT of goods and services that have not been used for the project shall be removed and not eligible for tax refund.

In case of failure by the project owners to specify the amount of VAT to be refunded and not eligible to be refunded as guided above, the project owners are responsible for verifying and confirming the following:

- Value of the completion volume as at the time of requesting for tax refund.

- Value of the actual payment as at the time of requesting for tax refund.

2. In respect of the principle contractors eligible for tax refund, if the principle contractors assign sub-contractors to perform part of the works in the contract signed with the project owners, the principle contractors shall (i) clearly declare the value of the volume of the construction works assigned to sub-contractors to perform, and (ii) make copies of and forward the sub-contracts to the tax agency.  VAT invoice that the contractors issue and declare in the application files of tax refund must be fully recorded in compliance with the existing provisions.

In case of implementing concurrently projects using concessional ODA allocated by the State budget and projects not using concessional ODA allocated by the State budget at the same time, the principle contractors shall clearly declare and separate value of input goods and services that are used for each project.  In case of the invoices for purchase of goods and services, which have been used for more than one projects and may not be declared separately, it is only entitled to make a single declaration for and deduction of the entire VAT inputs of the projects not using concessional ODA allocated by State budget and not allowed to declare for VAT refund with respect to the projects using concessional ODA funded by State budget.

3. Responsibilities of tax agency in relation to settlement of VAT refund for the principle contractors:

Upon receipt of the application files for tax refund from the principle contractors, the relevant tax agency has to examine the application files and then, approve and conduct the tax refund if the application files have been prepared in conformity with the existing provisions and certified by the project owners. Where it is found that the application files are insufficient or do not conform to the existing provisions or do not satisfy requirements for tax refund, the tax agency shall notify the principle contractors and project owners, clearly stating the reasons.

In order to timely and properly carry out the VAT refund, the Ministry of Finance proposed that the tax agency of provinces and centrally-managed cities strengthen their inspection of VAT refund for ODA projects. Upon consideration of the application files for tax refund from the principle contractors, who are concurrently carrying out more than one projects, it is required that VAT inputs of the ODA projects-related contracts and other contracts must be examined and collated. The examination must be conducted prior to carrying out VAT refund if the tax refund applicants are those who are the foreign contractors in the process of termination of the contracts.

The Ministry of Finance recommended that ministries, people’s committees of the provinces and centrally-managed cities coordinate and direct the project management units to examine and certify the application files for VAT refund in accordance with the aforesaid guidelines. Taxation departments of provinces and centrally-managed cities are responsible for examining and guiding the contractors to prepare the application files for tax refund in accordance with the existing provisions and then carrying out the VAT refund in a timely to principle contractors who satisfy the application file.