Mid term essay major taxation and tax system in vietnam topic value added tax

- Nguyen Van Lanh Director of Binh Thanh and An Lanh Phat Company - Nguyen Vu Bao Hoang Thuduc House and inferior.. Trinh Tien Dung conspired with other individuals at Thuduc House to ma

This method helps the tax authority to conduct tax arrears quickly, only having to collect it once In addition, determining the amount of tax payable by business establishments is also quite simple, thereby facilitating tax administration agencies in the process of applying tax calculation in practice

In contrast, from the perspective of tax authorities, this method is a complicated problem because when determining the amount of tax to be paid, the tax authority cannot determine the exact amount of revenue of the business This easily leads to incorrect declaration to evade taxes

d Tax refund

In certain circumstances, business establishments subject to tax under the tax credit system will be given consideration for a tax refund:

- “Where a new business has been established but didn’t commence operating business yet and having a remaining amount of input VAT being 300 million VND or more it is entitled to a tax refund on a monthly/quarterly basis

- Where the input VAT not credited on exported goods and services of a business exceeds 300 million VND in a month/quarter, input VAT is refundable for that period?

- Where the ownership of an asset is transferred (either separately or in matters of mergers, acquisitions, bankruptcy or the division of business) refunds are available for excess amounts of input VAT

- Foreigners and Vietnamese people residing abroad receive refunds of tax on goods purchased in Vietnam and taken abroad

- Where goods and services are used for ODA, charity or humanitarian aid

- Where subjects eligible for diplomatic immunity purchase goods or services in Vietnam

- Pursuant to a decision of the competent authority and cases entitled to a refund

of VAT as stipulated in any international treaty signed by Vietnam.”

3 Calculation of VAT in the specified case and Case study

a Exercise:

Tax deduction method:

The transaction in ABC Company during June:

- Sell 100 products for XYZ company Price not including VAT is 150.000/1 unit VAT rate of this product is 10%

- Import 60 products from DEF company Total cost is 6.600.000 VND (all conditions for deduction is satisfied) VAT rate of this product is 10%

Question: Calculate the amount of VAT submitted

Payable amount of VAT = Output VAT - Input VAT

a Output VAT = Total VAT charged on goods and services sold out written on invoices VAT charged on goods and services written on invoices = The original amount (price not including VAT) x VAT rate

Output VAT =(100 x 150.000) x 10% = 1.500.000

b VAT deduction = Total amount of VAT written on invoices

The price including VAT = 6.600.000

The original amount on invoices = 6.600.000/ (1+10%)=6.000.000

VAT deduction = 6.000.000 x 10% =600.000

VAT submitted = 1.500.000 - 600.000 = 900.000

Direct method

ABC Company sell these two main product: Household appliances and Restaurant services

Transactions during March 2022:

- Exported 100 household appliance consignments: Total amount of money on invoices was 100 millions VND (including: 50 millions VND was collected, the rest still hasn’t been paid yet)

- Exported 500 restaurant services: Total amount of money on 500 invoices was

300 millions VND (fully collected)

Question: Calculate the amount of VAT submitted

Step 1: Determined the revenue

- Revenue for household appliance: 100 millions VND (NO difference between collected and had’t been paid)

- Revenue for restaurant servies: 300 millions VND

Step 2: Determine the VAT rate

- Distribution, transport goods and servies: VAT rate 1%

- Restaurant serive activities: VAT tax 3%

Step 3: Calculate the VAT based on different VAT rate

- VAT tax rate for household appliances : 100 trigu x 1% = 1.000.000VND

- VAT tax rate for restaurant services: 300 triệu x 3% = 9.000.000VND Step 4: Total amount of TAX = 1.000.000+ 9.000.000= 10.000.000 VND

b Case study:

Summary:

This case is about Thuduc House

- Related parties:

- Trinh Tien Dung (direct his accomplices to set up hundreds of businesses in Vietnam, the US, Cambodia, Hong Kong, Singapore, and Malaysia to counterfeitly appropriate VAT)

- Nguyen Van Lanh (Director of Binh Thanh and An Lanh Phat Company)

- Nguyen Vu Bao Hoang (Thuduc House) and inferior

Trinh Tien Dung conspired with other individuals at Thuduc House to make VAT refund dossiers, occupying more than 365 billion VND at the Tax Department of Ho Chi Minh City

This group signs a contract and issues a VAT invoice showing the sale of electronic components to Thuduc House through Thuduc House Wood Trading Joint Stock Company (a subsidiary of Thuduc House) Two companies of Lanh (Binh Thanh and

An Lanh Phat Company) will sell electronic components to Thuduc House to export to foreign partners (the "ghost" companies of Dung, appointed by Lanh) and apply for VAT refund

Nguyen Vu Bao Hoang noticed all about this matter He had also agreed to the policy of trading electronic components with Lanh

Problems:

- Exporting and importing through “ghost” companies to apply for VAT refund

- Buy cheap, sell high

- Fake contract

- Transfer money through many phrases, bank accounts

This case is about Thuduc House Trinh Tien Dung conspired with other individuals at Thuduc House to make VAT refund dossiers, occupying more than 365 billion VND at the Tax Department of Ho Chi Minh City Trinh Tien Dung, who was identified as the leader of this case, masterminded company directors and their inferior

to open a bank account, make a sales contract, import and export electronic components (fake goods, counterfeit goods, used goods, ) with foreign companies (in the US, Cambodia, Singapore, and Malaysia ) Trinh Tien Dung took advantage of the State policy to direct his accomplices to set up hundreds of businesses in Vietnam, the US, Cambodia, Hong Kong, Singapore, and Malaysia to counterfeitly appropriate VAT Two companies of Lanh (Binh Thanh and An Lanh Phat Company) will sell electronic components to Thuduc House to export to foreign partners (the "ghost" companies of Dung, appointed by Lanh) and apply for VAT refund After the transaction, Thuduc House will be entitled to 0.6% of the total value of purchased goods, but must advance the 10% tax amount to the Lanh side (this amount will be refunded VAT to Thuduc House by the state after)

To implement the plan, from February 2018 to August 2019, Thuduc House Wood Trading purchased goods from two Lanh companies and then sold them to the parent company Thuduc House Lanh provides contract information, export declarations (information about foreign companies, types, quantities, prices of goods, contract value) for Thuduc House to do input procedures Notably, the goods do not go through any processing or production stages but are directly exported to partners After exporting goods, enterprises carry out procedures for VAT refund at tax departments with business registration Exported goods are electronic components with tax rate of 0%

Thuduc House signed 334 contracts to export electronic components to 8 companies abroad, nearly earning USD 159 million (equivalent to VND 3,650 billion) Thuduc House spent 10% of tax (365 billion) and transferred it to 2 companies, Binh Thanh Company and Thuduc House Wood Trading as agreed This money Trinh Tien Dung and his acccomplices are appropriated After that, Thuduc House made 17 sets of documents and sent them to the Tax Department of Ho Chi Minh City to request a VAT refund of more than 365 billion VND General Director Nguyen Vu Bao Hoang and