Companies established during January and February this year, having revenue of less than 1 billion VND (47,600 USD), and which have issued invoices to their clients, may be eligible for tax deduction.

This is the latest decision of the Ministry of Finance in the Document No 3795/BTC-TCT to deal with the shortcomings derived from the amended Value Added Tax Law of January 1, 2014.

The law says that the deduction method is applicable to business establishments that comply with the accounting and invoicing rules according to the laws on accounting and invoicing, including: business establishments which earn revenue of at least 1 billion VND annually from sale of goods, except business households and individuals.

However, the amended law was issued at the end of 2013, when many companies had already printed invoices for 2014, issued invoices to clients and the invoices had already been circulated.

"If the amended law exempts them from tax deduction, it's not fair," Pham Huu Nam, director of an internal home equipment firm which has a total revenue of under 1 billion VND, told the news website

If decided on the basis of the VAT law of 2008, Nam's company would be eligible for tax deduction.

In an attempt to set up a fair ground for companies including those using sales invoices (which have not deducted input VAT tax), the General Department of Taxation and Tax's representative said the input VAT expenses would not be deducted but calculated as input business costs of companies.

Invoice rules
Under the Circular No 39/2014/TT-BTC of April 31, 2014, the Ministry of Finance guides the purchase of (self-printed) invoices and use of invoices by newly established companies.

Accordingly, the newly established enterprises with charter capital of less than 15 billion VND or 711,000 USD for acquiring fixed assets, machineries, equipment of more than 1 billion VND or 47,600 USD, and meeting conditions such as not violating tax law, and making revenue from goods and services will be allowed to self-print invoices.

The entities that use print-order invoices must submit the proposal of using such invoices to the tax authority before they order them for the first time.

Enterprises paying VAT under the direct method by percentage ratio multiplied by the revenue; enterprises involved in tax risks; and enterprises which have violated invoice rules and of tax evasion and fraud must buy the invoices from the tax authority.

Enterprises that buy invoices for the first time from the tax authority must present information about the business address and production, which match the Enterprise Registration Certificate or the Investment Certificates.

Some enterprises said that the regulation caused unnecessary waste of invoices which had already been printed.-VNA