Conditions for VAT Deduction and Recognition of Deductible Expenses for TikTok
MINISTRY OF FINANCE
GENERAL DEPARTMENT OF TAXATION
SOCIALIST REPUBLIC OF VIETNAM
Independence – Freedom – Happiness
No: 3115/TCT-CS
Regarding Tax Policy
Hanoi, July 19, 2024
To: TikTok Pte. Ltd
The General Department of Taxation has received the document dated April 15, 2024, from the foreign supplier TikTok Pte. Ltd regarding tax policy. In response, the General Department of Taxation provides the following opinions:
Based on Article 76, Article 77, Article 78, and Article 81 of Circular No. 80/2021/TT-BTC dated September 29, 2021, of the Ministry of Finance on the tax registration, tax declaration, tax calculation, tax payment, and the responsibilities of organizations and individuals in Vietnam involved in purchasing goods or services from foreign suppliers;
Based on Article 4 of Circular No. 96/2015/TT-BTC dated June 22, 2015, of the Ministry of Finance on corporate income tax;
Based on Clause 4, Clause 5, Clause 6, Article 1 of the Law on Amendments and Supplements to Some Articles of the VAT Law No. 31/2013/QH13 dated June 19, 2013, which amends and supplements Article 10 of the VAT Law No. 13/2008/QH12 dated June 3, 2008, regarding the VAT deduction method, the direct method on VAT, and the input VAT deduction;
Based on Point a, Clause 2, Article 9 of Decree No. 209/2013/ND-CP dated December 18, 2013, of the Government on the conditions for input VAT deduction;
Based on Articles 2 and 8 of Decree No. 123/2020/ND-CP dated October 19, 2020, of the Government on applicable subjects and types of invoices;
Based on Clauses 9 and 15 of Circular No. 219/2013/TT-BTC dated December 31, 2013, of the Ministry of Finance, guiding the principles for input VAT deduction and conditions for input VAT deduction.
In accordance with the above regulations and instructions:
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Regarding the obligation to declare, deduct, and pay tax on behalf of the foreign supplier in Vietnam:
If the foreign supplier TikTok Pte. Ltd has completed registration, declaration, and tax payment according to the provisions of Articles 76, 77, and 78 of Circular No. 80/2021/TT-BTC dated September 29, 2021, of the Ministry of Finance, then the foreign supplier shall carry out the procedures directly through the General Department of Taxation's electronic portal.
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Regarding VAT declaration and deduction:
One of the conditions for input VAT deduction is having a VAT invoice for the purchased service or tax payment documents for imported goods or tax payment documents made on behalf of the foreign supplier. According to the invoice attached to the inquiry letter from the foreign supplier TikTok Pte. Ltd, this is not a VAT invoice for an organization declaring VAT under the VAT deduction method as per legal provisions on invoices and documents. Therefore, it does not meet the conditions for input VAT deduction as per the regulations.
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Regarding deductible expenses for corporate income tax calculation:
If a business in Vietnam receives invoices or documents from the foreign supplier TikTok Pte. Ltd for services related to the business's operations, showing the business's name, address, tax code, and meeting the payment conditions under the law, these can be included in deductible expenses for calculating taxable corporate income (including amounts already paid by the foreign supplier, which are identified as VAT on the invoice or document issued by the foreign supplier to the Vietnamese business).
The General Department of Taxation provides this information for TikTok Pte. Ltd to be aware of.
