The Ministry of Finance issued Circular 20/2017/TT-BTC (Circular 20) amending and supplementing Article 8.2 of Circular 195/2015/TT-BTC, dated November 24, 2015 detailing and guiding the implementation of some articles of the Law on Special Consumption Tax (SCT).
Question: What are regulations on deduction of special consumption as stipulated in Circular 20/2017/TT-BTC (Circular 20) amending and supplementing Article 8.2 of Circular 195/2015/TT-BTC, dated November 24, 2015 detailing and guiding the implementation of some articles of the Law on Special Consumption Tax (SCT)?
Answer: The regulation on the deduction of SC tax in Circular 20 still remains the same as the current one with some remarkable points as follows:
SCT payers will be subject to the deduction of SCT amount which has been paid on import or purchase of input materials after determination of the amount of SCT payable for domestic sales. The SCT amount deducted must not exceed the SCT amount calculated for domestic sales. For the SCT amount which is not subject to deduction in particular, tax payers must record it into the expense account to calculate corporate income tax.
In the period of tax declaration, if it is not yet possible to determine the SCT amount paid on import or purchase of input materials, the SCT amount deducted will be calculated based on the data of the previous period and the redetermination thereof will be performed at the end of the quarter or the year. In addition, the SCT amount which is allowed to be deducted in this case must not exceed the one calculated for the material part based on the economic technical norms of the product. The manufacturer must register the economic technical norms of this product with the tax authority directly in charge.
For enterprises which are licensed to make E5 or E10 gasoline, the tax declaration and payment, and the deduction of SCT are performed at the tax authority in the local area where the enterprises’ headquarters are located. The SCT amount of E5 or E10 gasoline has not been fully deducted in the period and will be offset against the payable SCT amount of other goods and services.
Conditions for deducting SCT
According to Circular 20, the conditions on dossiers and source documents to enjoy the deduction of SCT are prescribed as follows:
- For the case where materials subject to SCT are imported to produce goods subject to SCT and the case where goods subject to SCT are imported, the source documents serving as the basis to deduct SCT are the ones recording SCT payment on import.
- For the case where materials are purchased directly from domestic manufacturers, the dossiers for deducting
+ Sales contracts in which there are contents proving that goods are produced directly by the seller;
+ Copy of the Certificate of Business of the seller (including the signature and stamp of the seller).
+ Documents recording payments made through banks.
+ VAT invoices
Circular 20 came into effect as from April 20, 2017./.