Legal News

[Taxation] Information from the National Tax Agency regarding the liquidation of assets of representative offices

2024/11/14

Based on Article 6, Paragraph 1 of Circular No. 78/2014/TT-BTC of the Ministry of Finance (amended and supplemented by Article 4 of Circular No. 96/2015/TT-BTC), in order for expenses to be deducted as corporate tax expenses, all three of the following conditions must be met.
a) The expenses must be related to the company’s business activities.
b) Appropriate supporting documents, such as VAT invoices, contracts, or internal regulations, must be provided.
c) Payments of 20 million dong or more (including VAT) must be settled by means other than cash (e.g., bank transfer or credit card payment).

However, the General Department of Taxation has provided guidance on the handling of VAT invoices in cases where a representative office liquidates its assets, as outlined in Official Letter No. 957/TCT-CS dated March 13, 2024. Under current regulations, there is no explicit provision regarding the issuance of VAT invoices by representative offices using codes issued by tax authorities. Therefore, the guidelines state that representative offices cannot issue VAT invoices during asset liquidation.

In light of this, VAT invoices cannot be used as supporting documents when representative offices liquidate assets. As a result, the seller and buyer must prepare the following documents as supporting documents separately:
– Asset liquidation agreement
– Minutes of handover
– Invoice
– Non-cash payment evidence

Note that pursuant to Article 4 of Circular 96/2015/TT-BTC, when purchasing goods or services from an individual, the buyer is generally required to prepare a list of purchased goods and services as specified in Form 01/TNDN (Appendix to Circular 78/2014/TT-BTC). However, this is not required in the case of asset liquidation by a representative office. When a representative office liquidates its assets, the issuance of a VAT invoice is not required; however, please note that the above documents must be prepared.

References:
• Circular No. 78/2014/TT-BTC of the Ministry of Finance
• Circular No. 96/2015/TT-BTC of the Ministry of Finance
• Official Letter No. 957/TCT-CS of the General Department of Taxation dated March 13, 2024