Requirements for input VAT deduction for non-commercial imported goods


Non-commercial imported products are donated items or presents given by overseas organizations or individuals to organizations or individuals in Vietnam, and are non-commercial imported products in accordance with regulations. Prior to January 1, 2015, there were no provisions regarding the deduction of input value added tax (VAT) on non-commercial imported goods. As a result, the decisions made by the Tax Bureau were inconsistent, and there were many cases in which input VAT was not allowed to be deducted. However, from January 1, 2015, detailed regulations regarding input VAT deduction for non-commercial imported products have been enacted, and input VAT deduction will be allowed if the requirements are met. In this article, we will explain the specific provisions and the evidence required for input VAT deduction.

1. Standards and requirements for input VAT deduction
Circular No. 219/2013/TT-BTC dated December 31, 2013, Articles 14 and 15, and Circular No. 26/2015/TT-BTC amending and supplementing parts of the same circular. Article 1 stipulates that input VAT can be deducted if all of the following requirements are met:

(i) When a purchase transaction corresponding to a VAT taxable sales transaction (sales transaction of goods or services) is conducted.
(ii) You have a proper invoice (or tax payment certificate if you paid foreign contractor tax on behalf of a foreign contractor) in accordance with the provisions of the law.
(iii) For transactions of VND 20 million or more (including import transactions), if you have obtained documentation that proves that the transaction was settled by non-cash means, such as a bank remittance certificate. Excluding exceptions according to regulations (cash payments are generally not accepted)

2. Regulations before January 1, 2015
Articles 14 and 15 of Circular No. 219/2013/TT-BTC stipulate that all requirements (i), (ii) and (iii) above must be met for input VAT deduction without exception. Ta. However, in the case of non-commercial imported goods, most import transactions do not meet requirement (iii) above, and documents proving payment to foreign parties are often lacking. As a result, there were many cases in which input VAT was not allowed to be deducted.

In addition to the guidelines in Circular No. 219/2013/TT-BTC, Official Letter No. 3217/TCT-KK was issued by the Directorate General of Taxation on August 14, 2014, which states as follows:

“Imported goods declared in the customs declaration as non-commercial imported goods are not purchased for commercial purposes, and therefore no payment obligation arises. There are no sales contracts, invoices, or proof of payment for the goods, is the norm, so companies cannot deduct input VAT on the products in question.”

3. Regulations after January 1, 2015
Circular No. 26/2015/TT-BTC, Article 1, Paragraph 10 (effective from January 1, 2015) has been issued, which partially amends and supplements Article 15 of Circular No. 219/2013/TT-BTC. Circular No. 26/2015/TT-BTC stipulates that input VAT can be deducted even if you do not have documentation to prove that the payment was made by non-cash means, such as a bank transfer certificate. The following is the content of the new regulations.

“There must be a certificate of non-cash payment for purchase transactions (including imported goods) of VND 20 million or more. However, if the price of imported goods and services is less than VND 20 million (price including VAT) , and excluding cases where a company imports goods such as donations or gifts from overseas organizations or individuals.

Therefore, if an enterprise imports non-commercial imported goods, the imported goods may be subject to Article 14 of Circular No. 219/2013/TT-BTC (amended and supplemented by Article 1 of Circular No. 26/2015/TT-BTC). ), when dealing with VAT taxable sales transactions, companies can deduct input VAT by preparing the following documents:
– Customs declaration form for non-commercial imported products
– VAT payment certificate for imported goods with all information including company name and tax code accurately stated

In conclusion
The above mentioned above describes the requirements for deduction of purchase VAT on imported non-commercial goods. Although Circular No. 26/2015/TT-BTC has eased the requirements for deduction of VAT on purchases of imported non-commercial goods, it should be noted that customs declarations and appropriate VAT payment certificates are still required. Please also refer to Official Letter No. 97742/CT-TTHT dated November 10, 2020 issued by Hanoi Department of Taxation regarding the guidance on VAT deduction on purchase of imported non-commercial goods, and Official Letter No. 9251/CTTPHCM-TTHT dated December 1, 2021 issued by Ho Chi Minh City Department of Taxation We would also be grateful if you could refer to the following information.

– Circular No. 219/2013/TT-BTC: Guidelines for VAT Law
– Circular No. 26/2015/TT-BTC: Guidelines on tax administration for VAT in Circular No. 12/2015/ND-CP and part of Circular No. 39/2014/TT-BTC on sales invoices and service provision. Amendments and supplements to section provisions
– Official letter No. 3271/TCT-KK dated August 14, 2014
– Official letter No. 97742/CT-TTHT dated November 10, 2020
– Official letter No. 9251/CTTPHCM-TTHT dated December 1, 2021

(Created on February 20, 2024)

*This article was translated by Yarakuzen.

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