To: Provincial Departments of Taxation

In response to enquiries of Provincial Departments of Taxation and gas manufacturers and sellers (hereinafter referred to as “gas enterprises”) regarding the implementation of Official Dispatch No. 1484/BTC-TCT dated 10/02/2009 on taxation and accounting of deposits on gas cylinders, below are guidance of the Ministry of Finance:

1. Distribution of costs of gas cylinders when calculating corporate income tax (CIT):

Gas cylinders that are worth less than 10 million VND each are considered instruments serving the gas enterprise’s business operation and their costs will be recorded as follows: Costs of gas cylinders that are worth less than 10 million VND each shall be distributed for 5 – 10 years. For those whose costs have been distributed in accordance with Official Dispatch No. 7640 TC/TCT dated 21/06/2005, no further adjustments are required.

2. VAT on gas cylinders and other methods of recording deposits on gas cylinders:

- Selling gas cylinders: Gas enterprises and gas cylinder sellers shall issue VAT invoices, calculate, declare and pay VAT and CIT on the gas cylinders before selling them similarly to other goods.

- Leasing gas cylinders: Gas sellers that lease out gas cylinders to the gas buyers shall have lease contracts which specify the lease period, quantity and value of the cylinders leased, deposit, rent, etc. The amount obtained from the lease of gas cylinders shall be recorded as revenue which is subject to VAT. In case the rent is deducted from the deposits on the gas cylinders, the lessor shall declare and pay VAT on the revenue from leasing those gas cylinders. Deposits on leased gas cylinders shall be separately monitored and not included in revenue or income.

- In case of lending gas cylinders and collecting deposits, even if there is a written commitment to return the deposit when the cylinders are returned, income and cost as the basis for calculating CIT shall be calculated as follows: Deposits on gas cylinders received by gas enterprises and gas sellers (owners of gas cylinders) from customers shall be put into a deposit account for monitoring. During annual distribution of the costs of gas cylinders (for 5 – 10 years as mentioned in (1) hereof), the deposits that are not returned to customers shall be included in “other incomes”.

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Regarding deposits of gas cylinders that have not been recorded as revenue or expense over the years:

- Deposits collected within 05 years before the effective date of this Official Dispatch shall be declared as revenue or expense as prescribed above.

- Deposits collected earlier than 05 years before the effective date of this Official Dispatch shall be recorded as revenue that is subject to CIT.

- Tax authorities shall verify debts of gas enterprises on 30/06/2009. The deposits that are no longer payable (the deposit payers have been dissolved, bankrupt, missing, etc.) shall be included in “other incomes” when calculating CIT.    

This Official Dispatch replaces Official Dispatch No. 1484/BTC-TCT dated 10/02/2009 of the Ministry of Finance and comes into force from July 01, 2009. Deposits that have been recorded as revenue under Official Dispatch No. 7640/TC/TCT dated 21/06/2005 may remain unchanged. Difficulties that arise during the implementation of this Circular should be reported to the General Department of Taxation – the Ministry of Finance for timely consideration./.

PP MINISTER
DEPUTY MINISTER




Do Hoang Anh Tuan