CIRCULAR No.73-TC/TCT OF OCTOBER 20, 1997 GUIDING THE REGULATIONS ON INVOICES AND DOCUMENTS RELATED TO GOODS CIRCULATED ON THE MARKET

- Pursuant to the current tax laws and ordinances;

- Pursuant to the Ordinance on Accounting and Statistics of May 20, 1988;

- Pursuant to the Ordinance on Economic Contracts of September 25, 1990;

- Pursuant to Decision No.292/CT of November 17, 1988 of the Chairman of the Council of Ministers (now the Prime Minister) on making invoices and documents for the sale and purchase of goods and the provision of money collection service, Official Dispatch No.2759/KTTH of June 10, 1993 of the Office of the Government on the Prime Minister�s assignment to the Ministry of Finance the task of stipulating measures for the handling of violations of the regulations on invoices and documents in the purchase and sale of goods;

- Pursuant to Official Dispatch No.4201/KTTH of August 28, 1996 of the Government on coordinating the inspection and control to effectively curb the flow of illegally imported goods into the domestic market;

- Pursuant to Decree No.22-CP of April 17, 1996 of the Government defining sanctions against administrative violations in taxation;

- Pursuant to Resolution No.85/CP-m of July 11, 1997 of the Government;

- Pursuant to Directive No.853/1997/CT-TTg of October 11, 1997 of the Prime Minister;

The Ministry of Finance provides the following guidance on the regulation on invoices and documents related to goods circulated on the market:

I. GENERAL PROVISIONS

1. Goods produced or traded in by organizations and/or individuals (collectively referred to as business establishments), whether they are domestic or imported goods, when circulating on the market must be attached with valid invoices and documents proving their lawful origins.

Properties owned by organizations which are not business establishments such as administrative or non-business agencies, mass organizations..., when being transferred or transported between their attached establishments and units, shall not be regulated by this Circular. To be distinguished from goods owned by business establishments, the properties being transferred or transported en route must be accompanied with a transfer decision or delivery bill issued by the concerned organization. If the goods are purchased for equipment, a receipt is required.

2. Goods circulated on the market as prescribed in this Circular are purchased, imported, sold or exchanged by business establishments, whether they are being transported, exhibited for sale or kept in stock.

3. Invoices and documents defined in this Circular include: sale invoices, invoices -cum- delivery bills, delivery bills -cum- internal transport decisions, tax payment receipts, money receipts, tickets and stamps, which must be the originals issued uniformly by the Ministry of Finance or by the concerned enterprises upon the approval of the Ministry of Finance (the General Department of Taxation). Other documents such as economic contracts (the duplicates thereof must be notarized), delivery orders, transfer orders..., if they are duplicates (or copies), must be stamped with seal certifying that they are true copies of the originals issued by the enterprises.

4. The business establishments shall have to keep on file the documents stipulated in this Circular for a period of time as prescribed by the State.

5. Upon reception of the goods, individual household shall, apart from abiding by the general regulations on invoices and documents, also have to:

- Compile purchase books, if it conducts business at fixed places by purchasing goods for sale or raw materials for production. The purchased goods must be recorded in the exact quantities, categories and values into the purchase books before they are delivered.

- Pay tax before transporting the goods out of the purchase locality, if it conducts mobile consignment business. The goods transported must be attached with turnover tax payment and profit tax payment receipts for circulation.

II. INVOICES, DOCUMENTS REQUIRED FOR EACH SPECIFIC CASE

1. For goods produced for sale, for distribution to agents or for exchange, the sale invoice or invoice -cum- delivery bill must be issued to the customer.

If the goods are sold, distributed to agents or exchanged by mode of delivery to the place requested by the customer, an economic contract is required.

2. If the goods owned by a fixed business establishment are put up for mobile sale, a transfer order and delivery bill -cum- internal transport paper must be issued to the person assigned to sell them.

3. If a business establishment delivers raw materials and materials for processing, there must be a delivery bill clearly stating the delivery for processing, which shall be attached with the processing contract.

4. Goods transferred among warehouses or among dependent cost-accounting units of the same business establishment must acquire the internal transfer order and a delivery bill -cum- internal transport paper.

Where a production establishment transfers goods produced by itself to its branches and/or shops for sale, which are located in localities other than the locality of production (a province or city), an invoice -cum- delivery bill must be issued.

5. For goods which are returned to the seller due to their failure to meet the requirements on specifications and quality, there must be an official dispatch issued by the goods returning establishment stating the reason for the return delivery, attached with a delivery bill issued by the goods-returning unit and a sale invoice or an invoice -cum- delivery bill (a copy thereof must be affixed with the seal of the establishment) issued by the sale unit.

6. For consumer goods with value below the level prescribed for invoice making, if the purchaser does not ask for the invoice, the sale unit shall have to make a declaration on sold goods under the guidance of the tax agency.

7. Goods for which the seller shall not have to make invoices include:

- Unprocessed agricultural, forest and aquatic products, which are produced or exploited, and sold directly by farmers and fishermen.

- Things for personal use by individuals, non-business people.

When purchasing goods, the purchasing unit shall have to make a list of purchases under the guidance of the tax agency. If the business establishment set up its purchase station(s) at the centralized production areas, it shall have to register them with the tax agency(ies) in the locality(ies) where the purchase station(s) is(are) set up and make a list of purchases as prescribed above if the goods are transported out of a purchase station there must be a delivery order issued by the establishment together with a delivery bill -cum- internal transport paper.

8. Agricultural, forest or aquatic products directly produced and exploited by farmers or fishermen, which have not been processed into other products and sold outside the locality of direct production (the district) or outside the area of regular sale, shall not be subject to turnover tax and profit tax for circulation, but there must be certification from the communal People�s Committee regarding the quantity (weight) of the products carried by the producers themselves.

9. Business establishments purchasing or receiving goods shall have to request the goods delivering party to give them valid invoices and documents. If the goods are bought from an object other than a business establishment (as prescribed in Points 7 and 8), a list of purchases must be made. State enterprises, enterprises with foreign investment capital, limited liability companies, stock companies, private enterprises and cooperatives, that purchase, receive and directly transport the goods, shall have to obtain economic contracts or transfer orders as required for cases where goods are delivered for sale, exchange or distribution to agents.

1. Non-governmental quota import.

For goods imported according to non-governmental quotas, there must be the following documents:

- A declaration of goods imported through border gates not according to governmental quotas

- The tax payment receipt for such goods

- The purchase book, for an individual business household.

2. Goods imported according to official governmental quotas:

Goods imported according to official governmental quotas must have a declaration of import already inspected and certified by the customs agency, a tax notice issued by the customs agency or the import tax payment receipt. For the import of a big lot of goods that requires several transportations, the goods owner shall propose the border gate customs office to certify each transportation in the import goods declaration.

3. When a business establishment that undertakes the consigned import delivers goods to the consignor, it shall have to issue a sale invoice or an invoice- cum- a delivery bill.

4. Imported goods which are gifts or donations must be attached with:

- A declaration on the import already examined and certified by the customs agency.

- The import tax payment receipt and special consumption tax payment receipt (for goods subject to import tax and special consumption tax), if the value of the lot of goods exceeds the value eligible for tax exemption. In case of import tax and/or special consumption tax exemption, there must be a decision from the competent agency.

5. The luggage of a person entering Vietnam which fails to meet the criteria for duty-free luggage must have an import goods declaration already examined and certified by the customs office, the import tax receipt, the special consumption tax payment receipt or the decision on import tax and special consumption tax exemption, (if it is subject to import tax and special consumption tax).

6. A business establishment trading in import goods which are subject to tax labeling as prescribed by the State shall have to affix stamps thereto in accordance with the regulation.

7. Imported goods sold by business establishments that have directly imported them or purchased by other business establishments for business purpose, shall be subject to the regulations on invoices and documents prescribed for home-made goods in Section A above.

III. HANDLING OF VIOLATIONS

Business establishments violating the regulations on invoices and documents for goods circulated on the market shall be handled as follows:

1. Goods transported with invoices or invoices- cum- delivery bills as prescribed in Point 1, with delivery bills as prescribed in Points 3 and 5; delivery bills -cum- internal transport as prescribed in Points 2 and 4, Section A, Part II but without economic contracts or orders for internal transfer, shall have to pay turnover tax and profit tax for circulation.

Farmers or fishermen who transport a big quantity of agricultural, forest or aquatic products, which they have directly produced or exploited, out of the production locality without certification from the communal People�s Committee, shall have to pay turnover tax and profit tax for circulation.

2. Goods delivered without invoices as prescribed in Points 1, 2, 3, 4 and 5, Section A, Part II shall have to pay the turnover tax and profit tax arrears for circulation and a fine of 1 to 3 times the amount of turnover tax and profit tax amount for circulation, depending on the seriousness of the violation. Violating establishments engaged in the production of goods subject to the special consumption tax shall have to pay the special consumption tax arrears and be fined from 1 to 3 times the special consumption tax amount.

3. Acts of buying or receiving goods without invoices issued by the seller or the goods-delivering party or without list of purchases (where such list is required) shall be considered acts of complicity in evading tax and have to pay turnover tax and profit tax for circulation based on the market prices at the time of inspection (for goods being transported) or on the value of the goods indicated in accounting books by the concerned establishment. If the prices of goods stated in the accounting books fail to conform with the actual prices, the tax calculation shall be based on the market value of the goods at the time of goods� purchase and the tax agency shall be entitled to determine a reasonable and lawful cost according to the result of the inspection. The value of the purchases and the collected tax amount shall be accounted into the reasonable and lawful cost when determining the taxable profit.

4. A business establishment engaged in mobile consignment business without turnover tax and profit tax payment receipts, shall have to pay the turnover tax and profit tax arrears for circulation and shall, depending on the seriousness of the violation, be fined from 1 to 3 times the turnover tax and profit tax amount. The taxable value shall be calculated on the basis of the goods� market prices in the locality where the violation is detected by the tax agency.

5. An individual household engaged in property dealing, that purchases goods for sale or purchases materials and raw materials for production with invoices but without purchase book, shall have to pay turnover tax and profit tax for circulation and be administratively sanctioned for its tax violation.

6. A business establishment violating the regulations on invoices and documents, evading a big tax amount or repeating its violation may be subject to examination for penal liability in accordance with the provisions of law.

7. Where sanctions are imposed on violators of the regulations on invoices and documents in the trading of home-made goods, the sanctioning decisions and money collection receipts are required.

1. Goods imported without adequate invoices and documents as prescribed in Points 1, 2, 3, 4, 5 and 6, Section B, Part II shall be considered illegally imported goods and confiscated.

2. Selling import goods without issuing invoices to the purchasers shall be subject to not only the payment of turnover tax and profit tax arrears for circulation but also a fine from 1 to 3 times the turnover tax and profit tax amount.

3. Imported goods bought for business without valid invoices and documents shall all be considered illegally imported smuggled goods and be confiscated.

4. Where an imports dealer violates the regulations on invoices and documents evades a big tax amount or repeats the violation, he/she may be examined for penal liability in accordance with the provisions of law.

5. Where sanctions are imposed on imports dealer for their violation, the sanctioning decisions and money collection receipts are required.

A business establishment shall have the right to file a complaint if the handling decision is improper. Such complaint shall be submitted to the agency that has issued the handling decision or the higher-level agency. The procedures and competence for the settlement of complaints shall comply with the provisions of the tax legislation.

Pending the settlement of its complaint, the business establishment shall still have to strictly abide by the already signed decision.

IV. ORGANIZATION OF IMPLEMENTATION

1. The handling of violations of the regulations on invoices and documents for goods circulated on the market as prescribed in this Circular shall come under the competence of the tax agency or inspection agency that has detected the violation and issues handling decisions after consulting and reaching agreement with the tax agency.

2. All violations must be recorded in reports according to regulations. When the payment of tax arrears and fines is imposed, the tax payment receipt and fine receipt must be issued to the sanctioned business establishment. The amount of tax arrears and fines as well as the money gained from the sale of the confiscated goods shall be remitted to the State Treasury in accordance with the current regulations.

3. An organization and/or individual that obstructs the circulation of goods or improperly handle violations, thus causing losses to the involved business establishment shall have to pay compensation thereto.