Công văn 3671TCT/PCCS

To: Tax Department of Ho Chi Minh City

In response to Ho Chi Minh City Taxation Department’s Official Letter No. 4964/CT.TTr1-D4 of May 21, 2004, requesting for guidance on treatment of imported goods without lawful invoices or vouchers, which have been put into production and consumption, the General Department of Taxation hereby gives the following opinions :

According to Point 4, Section IV, Part B of the Ministry of Finance’s Circular No. 128/2003/TT-BTC of December 22, 2003, guiding the implementation of the Government’s Decree No. 164/2003/ND-CP of December 22, 2003, which details the implementation of the Business Income Tax Law, expenses without invoices or vouchers or with unlawful invoices and/or vouchers shall not be considered reasonable expenses.

With regard to imports without lawful invoices or vouchers, which have been put into production and consumption and have been treated under administrative sanction scheme , the accounting thereof shall be as follow:

1. Collected value added tax and import tax under recovery allow to be included in deductible expenses in determining taxable incomes according to existing regulations. However, the fine, which would, as the case may be, be set from one to five times the evaded tax amounts, shall not be accounted as reasonable expenses for deduction.

2. With regard to the value of goods imported without invoices or vouchers already put into production or consumption , which are now subject to a confiscation in money worth equal to the value of goods in question, the value of the confiscated goods shall be accounted as reasonable expenses for determination of business taxable income .

Above are the GDT's dealing principles, the HCM City Tax Department is required to take it into consideration for implementing purpose