(Chinhphu.vn) - Lu Hoan Viet Software Co., Ltd. (in Ho Chi Minh City) has turnover of 2013, 2014, 2015, 2016 less than VND 50 billion and is subject to quarterly VAT declaration from October 1, 2014. But by 2017, the company has a turnover of over VND 50 billion.

According to the Ministry of Finance's Circular No. 151/2014 / TT-BTC, the preceding year's revenue of less than VND 50 billion is eligible for quarterly tax declaration and 3-year stable declaration period.

Through the receiving and answering system to the businesses’ recommendations. The Lu Hoan Viet Software Co., Ltd would like to ask, in 2017, does the Company apply such quarterly tax returns correctly? In 2018 and 2019, will the Company declare tax on a monthly or quarterly basis?

Regarding this issue, the General Department of Taxation - Ministry of Finance gives the following opinions:

Pursuant to Article 15 of Circular No. 151/2014 / TT-BTC dated October 10, 2014 of the Ministry of Finance amending and supplementing Point b, Clause 2, Article 11 of Circular No. 156/2013 / TT-BTC On November 6, 2013 of the Ministry of Finance guiding quarterly VAT declaration.

“Article 15. Point c Clause 2 Article 11 of Circular No. 156/2013/TT-BTC shall be amended as follows:

b.1) The taxpayers eligible to declare VAT quarterly

The VAT taxpayers that earn total revenue of VND 50 billion or less from the sale of goods and/or services in the preceding year shall be eligible to declare VAT quarterly.

The taxpayer that has just begun his business shall declare VAT quarterly. In the next calendar year after 12 months of business, VAT declarations shall be declared whether monthly or quarterly depending on the revenue from the sale of goods and/or services in the preceding calendar year (12 months).

Example 21:

- Company A begins its business from January 2015, thus VAT shall be declared quarterly in 2015 In 2016, tax shall be declared monthly or quarterly depending on the revenue in 2015 (12 months).

- Company A begins its business from January 2015, thus VAT shall be declared quarterly in 2014 and 2015.

In 2016, tax shall be declared monthly or quarterly depending on the revenue in 2015.

Taxpayers must determine their eligibility to declare tax quarterly themselves.

Any taxpayer eligible to declare VAT quarterly that wishes to declare tax monthly shall send a notification (using the form No. 07/GTGT enclosed herewith) to the supervisory tax authority not later than the submission of the VAT declaration of the first month of the tax year in which VAT are declared monthly.

b.2) Period of quarterly declaration

- VAT shall be declared monthly or quarterly throughout the calendar year and the 3-year period. The first stable period begins on October 1, 2014 and ends on December 31, 2016.

Example 22: In 2013, company C earns total revenue of VND 18 billion, thus it is eligible to declare VAT quarterly from October 1, 2014. If the revenue earned in 2014, 2015 or 2016 declared by the company (including adjustments), or determined by the inspector is VND 55 billion, company C shall keep declaring VAT quarterly until the end of 2016. The new declaration period shall be determined from 2017 according to the revenue earned in 2016.

 Example 23: In 2013, company D earns revenue of VND 57 billion, thus it shall declare VAT monthly. If the revenue earned in 2014 declared by the company (including adjustments), or determined by the inspectors is VND 48 billion, company D shall keep declaring VAT monthly until the end of 2016. The new declaration period shall be determined from 2017 according to the revenue earned in 2016.

- In the quarterly declaration stable period, if the taxpayers discovered themselves or by the inspector that revenue earned in preceding year of that period is above VND 50 billion, taxpayers not eligible to declare VAT quarterly of that period shall declare VAT monthly from the following year of the year in which the revenue is discovered.

Example 24: In 2013, company E states total revenue of VND 47 billion in the VAT declaration, which makes it eligible to declare VAT quarterly from October 1, 2014. In 2015, the inspector concludes that the taxable revenue earned in 2013 is in access of VND 5 billion against self-declared figure of VND 22 billion. Consequently, company E must declare VAT monthly in 2016. From 2017, new tax declaration period shall be determined according to the revenue earned in 2016.

Example 25: In 2013, company G states total revenue of VND 47 billion in the VAT declaration, which makes it eligible to declare VAT quarterly from October 1, 2014. In 2015, company G makes an adjusted declaration themselves specifying that the taxable revenue earned in 2013 is in excess of VND 5 billion against self-declared figure of VND 52 billion. Consequently, company G shall declare VAT monthly from 2016. From 2017, new tax declaration period shall be determined according to the revenue earned in 2016.

- In the stable monthly declaration period, if the taxpayers discovered themselves or by the inspector that revenue earned in preceding year of that period is VND 50 billion or less, taxpayers eligible to declare VAT quarterly of that period shall decide whether to make declaration monthly or quarterly from the following year of the year in which the revenue is discovered to the end of stable period.

- If the businesses make declarations quarterly before the effective date of this Circular, the first stable period shall be determined until the end of December 31, 2016.

b.3) Method of determining revenue from sale of goods or services in the preceding year (to determine the entities eligible to declare VAT quarterly)

- The revenue from sale of goods or services is total revenues stated on the VAT forms of tax periods in the calendar year (including taxable and non-taxable revenues).

- Where the taxpayer declares taxes at the head office on behalf of their affiliates, the revenues from sale of goods and services shall include the revenues earned by their affiliates.”.

Based on the above guidance, in the case of the Lu Hoan Viet Software Co., Ltd. that is subject to quarterly VAT declaration according to the first stable cycle from October 1, 2014 to the end of December 31, 2016:

From 2017, the Company will redefine the new tax period based on the revenue from sales of goods and services that are determined to be the total revenue on the VAT returns of the 2016 tax periods.

In case the Company has a total revenue of less than VND 50 billion in 2016, the Company is subject to quarterly VAT declaration according to the stable cycle (including the case of additional declaration) or because the inspection, inspection concludes that over VND 50 billion, the company will continue to declare VAT quarterly until the end of 2019.

If the Lu Hoan Viet Software Co., Ltd. is eligible for quarterly VAT declaration according to the stable cycle of 2017, 2018, 2019 and wishes to switch to monthly tax declaration, send a notice (according to Form No. 07) / VAT issued together with the Circular No. 151/2014 / TT-BTC dated October 10, 2014 of the Ministry of Finance) for the direct tax management authority no later than the deadline for submission of the first month's VAT declaration  of the year that begins to declare VAT monthly.