Instructions to convert direct VAT calculation method to deduction
Facing the problem of Gia Y Trading and Service Co., Ltd about the procedure for declaring and converting the value-added tax (VAT) method from direct method to deduction, the General Department of Taxation has issued Official Letter No. 4526/TCT-KK dated November 5, 2019 for specific instructions.
From the difficulties encountered in the production and business process, Gia Y Trading and Service Co., Ltd. has asked the state management agency to guide the procedures for enterprises to declare and implement the conversion method. calculate VAT from the direct method to the deduction method.
The General Department of Taxation said that Clause 1, Article 12 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance (amended and supplemented according to the provisions of Clause 3, Article 3 of Circular No. 119). /2014/TT-BTC of the Ministry of Finance) has specified the method of tax deduction.
Thus, the tax credit method is applied to business establishments that fully implement the accounting, invoice and voucher regime in accordance with the law on accounting, invoices and documents. Detail:
- Operating business establishments with annual revenue from selling goods and providing services of VND 1 billion or more and fully complying with the accounting, invoice and voucher regime in accordance with the law on accounting. payments, invoices and vouchers, except for business households and individuals that pay tax by the direct calculation method;
- Business establishments voluntarily register to apply the tax credit method, except for business households and individuals that pay tax by the direct calculation method…
Business establishments that voluntarily register to apply the tax credit method, including operating enterprises and cooperatives with annual revenue from selling goods or providing services subject to VAT of less than one billion dong, have fully adequate accounting regimes, invoices, books and vouchers in accordance with the law on accounting, invoices and vouchers…
In addition, at the end of the first calendar year since its establishment, if the enterprise or cooperative has a turnover of 1 billion VND or more and fully implements the accounting, invoice and voucher regime as prescribed. of the law on accounting, invoices and documents, the tax deduction method will continue to be applied. In case the enterprise or cooperative fails to achieve a turnover of VND 1 billion or more but still fully implements the accounting, invoice and voucher regime in accordance with the law on accounting, invoices and vouchers then they may voluntarily register to continue applying the tax credit method under the guidance at Point a, Clause 3 of this Article. After the first calendar year since its establishment, enterprises and cooperatives shall stably apply the tax calculation method for 2 consecutive years.
The General Department of Taxation also issued Official Letter No. 4253/TCT-CS dated September 20, 2017 to introduce new points in Circular No. 93/2017/TT-BTC dated September 19, 2017 on guiding tax calculation methods.
Previously, when converting to apply value-added tax calculation methods (from direct method to deduction method and vice versa), business establishments had to submit Form 06/GTGT to the tax office. However, from the effective date of “Circular No. 93/2017/TT-BTC”, the “determination of VAT calculation method” is based on the VAT declaration dossier sent by the business establishment to the tax authority. Inside:
- If the business establishment registers to apply VAT according to the khấudeduction method gửi, it shall send the VAT declaration form No. 01/GTGT, 02/GTGT to the tax office.
- If the business establishment registers to apply the trựcdirect method , then send the VAT declaration form No. 03/GTGT, 04/GTGT to the tax office.
Source: Financial Magazine