New Circular amending Value added tax (“VAT”) regulations

In April 2019, the Ministry of Finance released Circular 18/2019/TT-BTC (“Circular 18”) to repeal the contents of Circular 134/2014/TT-BTC dated 12 September 2014 (“Circular 134”) guiding the procedures for extending the deadline for VAT payment at import stage and VAT refund related to machinery and equipment imported to create fixed assets of investment projects. The new circular will take effect from 20 May 2019.

The key changes under Circular 18 are highlighted below:

• Previously, Circular 134 implemented the instructions under Resolution 63/NQ-CP dated 25 August 2014 on solutions for reducing difficulties for enterprises (“Resolution 63”). Specifically, Circular 134 provided detailed guidance on procedures for extending the deadline for payment of VAT at import stage and procedures for claiming VAT refund for machinery and
equipment imported to create fixed assets of investment projects. This was to support newly established enterprises but still in the investment phase or operating enterprises with new or expansion investment projects which encountered financial difficulties in order to speed up the importation process.

• However, following the recent issuance of Resolution 150/NQ-CP by the Government on 13 December 2018 which removed the deferral of VAT payment and prompt VAT refund as previously instructed under Resolution 63, the MoF has released Circular 18 which repeals all the contents of Circular 134.

• Accordingly, from 20 May 2019, investment projects importing machinery and equipment with value from VND 100 billion or more shall no longer be entitled to VAT payment deferral within a period of 60 days after the statutory deadline or prompt VAT refund (i.e. refund first, audit later).

• Applications for deferral of VAT payments or VAT refund under Circular 134 which have been submitted to the customs or tax authorities before the effective date of Circular 18 (i.e. 20 May 2019) will be handled as regulated under Circular 134.

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