To: - Provincial/municipal Tax Departments

The Finance Ministry has received official letters from several enterprises and provincial/municipal Taxation Departments, reporting on their problems in allocating input VAT on goods and services used for production of and trading in both goods and services subject and not subject to VAT under the guidance on the making of the Table of allocation of creditable VAT amounts on purchased goods and services in the period (Form No. 02B/GTGT), issued together with the Finance Ministry's Circular No. 127/2004/TT-BTC of December 27, 2004. Regarding this matter, the Finance Ministry gives the following opinion:

Point 1.2.c, Section III, Part B of the Finance Ministry's Circular No. 120/2003/TT-BTC of December 12, 2003, guiding the implementation of the Government's Decree No. 158/2003/ND-CP of December 10, 2003, which details the implementation of the VAT Law and the Law Amending and Supplementing a Number of Articles of the VAT Law, guides that: "Business establishments must separately account input VAT on goods and services used for production of and trading in both goods and services subject and not subject to VAT. Where goods or services are used for production of and trading in both goods and services subject and not subject to VAT but the establishments cannot separately account the creditable input VAT amounts, they may calculate such amounts according to the ratio (%) of the turnover of goods or services subject to VAT to the total turnover of goods or services sold."

Pursuant to the above-said provisions, the phrase "VAT on goods and services purchased in the period: Data to be written for this criterion shall be consistent with those written for criterion coded [22] in the VAT declaration" in the "Notes" section of the Table of allocation of creditable amounts of VAT on purchased goods and services in the period (Form No. 02B/GTGT) shall be replaced with the phrase "VAT on goods and services purchased in the period: Data to be written for this criterion shall be the amounts of VAT on goods and services used for production of and trading in both goods and services subject and not subject to VAT for which business establishments cannot separately account their creditable input taxes."

The Finance Ministry hereby notifies the above-said opinion to provincial/municipal Tax Departments for providing implementation guidance to business establishments.

UNDER THE AUTHORIZATION OF THE MINISTER OF FINANCE
FOR THE GENERAL DIRECTOR OF TAXATION
DEPUTY GENERAL DIRECTOR




Pham Duy Khuong

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