Official Letter No. 4657/TCT-KK (OL 4657): VAT refund for exported goods without documents of cash receipts prepared by the bank

On 11th October 2017, the General Department of Taxation issued OL 4657, answering Soc Trang Department of Taxation on a case where a company claims VAT refund for exported goods without credit note (cash receipt notice) issued by the bank.

In this case, a company exported frozen shrimp to a customer using L/C payment method in September 2016. The payment became over-due, but the company has not collected the payment from the customer yet. Therefore, the company does not have credit note issued by the bank to prove cash receipt.

This OL states that if the company has one of the documents (which is called “alternative documents”) listed in point d1, Clause 3, Article 16 of Circular No. 219/2013/TT-BTC issued by the Ministry of Finance on 31st December 2013, corresponding input VAT for export can be deducted and will be refunded to the company.

If the company does not meet the requirements about payment via bank or does not have alternative documents, corresponding input VAT for exported goods cannot be deducted and will not be refunded to the company.


Official Letter No. 4740/TCT-CS (OL 4740): guidance on VAT refund calculation for input VAT for exports

On 13th October 2017, the General Department of Taxation issued OL 4740 answering Kien Giang Department of Taxation about VAT refund with the following content:

If a business entity, in a month or in a quarter, not only has goods and services for export, but also has goods and services for domestic consumption, the company must record the corresponding input VAT separately for exported goods/services (which is called “input VAT”). If the company cannot record input VAT for exported goods/services separately from the rest of transactions, the input VAT for exported goods/services will be determined by using the proportion of revenue from exports over the total revenue from goods and services. The total revenue and revenue from exports are calculated from the tax period following the period of latest tax refund to the current tax period that the Company requests for refund.

After offsetting input VAT for exported goods/services to payable VAT of domestically consumed goods and services, if the remaining input VAT (including separately recorded input VAT and allocated input VAT by above mentioned proportion) is equal or higher than VND 300 million, this VAT amount can be refunded to the company. Refunded VAT amount should not be higher than 10% of revenue from exported goods/services.


Official Letter No. 3988/TXNK-CST (OL 3988): guidance on treatment of scrap materials for processing companies

On 18th October 2017, the Department of Export and Import Tax – General Department of Custom issued OL 3988 guiding how the processing company should treat sales of scraps in the domestic market or return of scraps back to the supplier (contractor that supplies materials for processing) with the following contents:

  1. Customs procedures to return scraps to the supplier under a processing contract.

Treatments and customs procedures for return of scraps for processing contracts are regulated by Clause 2 and Clause 3 Article 64 of Circular No. 38/2015/TT-BTC issued by the Ministry of Finance on 25th March 2015. The General Department of Customs also issued Official Letter No. 2765/TCHQGSQL on 1st April 2015 guiding the code declaration in VNACCS system.

  1. Tax policy on scraps of processing contracts.

According to Clause 4 Article 10 of Decree No. 134/2016/ND-CP dated 1st September 2016, scraps and discarded materials and excessive imported materials for processing, which does not exceed 3% of total quantity of each kind of imported materials stated in the processing contract, shall be exempted from import tax when consumed domestically. The company is required to declare and pay other taxes (if any) to the customs office.