Công văn 11754/BTC-CST

To: Tax Departments of provinces and cities under central government

Ministry of Finance has received official dispatches of some commercial banks to ask the principle to determine for a number of revenues on services of providing credit, guarantee not bearing VAT and the handling of value added taxes (VAT) collected from services of providing credit, guarantee before the written instruction No.3316/BTC-CST dated 18/3/2010 of the Ministry of Finance. In this regard, the Ministry of Finance has the following opinions:

1. The official dispatch No.3316/BTC-CST dated 18/03/2010 has instructed: "The revenues of the credit institutions regarding: handling of early repayment, the overdue debt, debt restructuring, management of loans, works related to asset transactions (management and keeping, handling, change, valuation of collateral), issuance of a letter of guarantee of the lending and guarantee process of the credit institutions for customers not subject to value added tax" Therefore:

- Letter of Credit (L /C): Letter of Credit (L/C) is a method of international payment guarantee, actually as a commitment to pay of the issuing bank (the bank for the buyer), ensuring that the buyer will pay for the purchase of goods to the seller when the conditions specified in the letter of credit is done properly and completely. If the buyer does not pay on time, the issuing bank must make ​​mandatory loan for buyer to make payment to the seller. Therefore, the revenues on issuance, confirmation, notification of letters of credit are the guarantee revenues not subject to VAT.

- Based on the other revenues of the banks, credit institutions from the guarantee service that the law does not prohibit, in accordance with international practice under the regulation of bank guarantee according to the State Bank’s provisions is subject to the VAT non-paying.

2. Before 18/03/2010 (date of official dispatch’s issuance 3316/BTC-CST as mentioned above) if the commercial banks, credit institutions have implemented the calculation of VAT and issuance of VAT invoices, the full declaration of payable tax calculated for the revenues of services providing credit, guarantee into the state budget shall not be readjusted.

During the implementation, if any problems arise, the units promptly reflect to the Ministry of Finance for study and handling./.