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1. Invoice issuance for goods/services used for promotions and advertising, as sample goods, for gifts, as an exchange or for paying wages to employees.

Pursuant to Clause 7, Article 3, Circular 26/2015/TT-BTC, Point b, Clause 1, of Article 16, Circular 39/2014/TT-BTC on Sales invoices is amended as follows:

b) When selling goods and services, including those used for trade promotion, advertising, samples, goods and services used for donation, exchange, or paid as salaries (except for goods internally circulated or internally used to proceed with the production), the seller must issue invoices.

Accordingly, whenever using goods/services for promotions, advertising, gifts, exchange or paid as salaries, the seller is responsible for issuing invoice for those goods/services used.

2. The Value Added Tax (“VAT”) on goods/services used for promotions, advertising or gift

2.1 The input value added tax

According to clause 5, Article 14, Circular 219/2013/TT-BTC on Value Added Tax Law providing rules for deducting input VAT, it is regulated that:

5. Input VAT on the goods (whether purchased externally or produced by the taxpayer) used as gifts, used for sale promotions or advertising serving the manufacture of sale of taxable goods may be deducted.

It means that the input VAT on the goods/services used for promotions, advertising of gifts is deductible regarding that the tax payer needs to maintain the sufficient supporting documents for those expenses.  

2.2 Value added taxable prices

As regulated at clause 3 and clause 5, Article 7, Circular 219/2013/TT-BTC, the taxable prices of the goods/services used for promotions, advertising or gift are defined as:

3. Taxable prices of the goods and services (whether bought externally or not) used as gifts, donations, or substitute for wages are the taxable prices of the same kinds or equivalent goods and services at the same time.

5. Taxable prices of goods and services used for sales promotion in accordance with trade laws are zero (0). In case they are not conformable with trade laws, tax shall be declared and paid as if they are used internally, given, or donated.

In summary, the value added taxable prices of the goods/services used for promotions are as follows:

  • Good/services used for promotions campaign which is registered with the Provincial Department of Industry and Trade are non-taxable, i.e. the taxable price is zero;
  • Good/services used for promotions campaign which is NOT registered with the Provincial Department of Industry and Trade are taxable. The taxable prices are taxable prices of the same kinds or equivalent goods and services at the same time.

Above is the general regulation on VAT applied for goods/services used for promotions and advertising, as sample goods, for gifts, as an exchange or for paying wages to employees.

 

To get into details for specific cases, please feel free to contact us as at:

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521 Kim Ma Street, Ba Dinh District, Hanoi

+ 84 24 3974 4181/ 4182

+ 84 24 3974 3090

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