Recently, Mr. Tung's company has issued construction investment consulting service invoices to some investors (sales invoices), but some investors do not accept to pay construction consulting costs according to the contract, they pay only the contract value before tax (minus 10% VAT) and explain the sales invoice without the 10% VAT line like the VAT invoice.

In addition, some investors pay an additional 5% tax and explain that businesses pay 5% tax on revenue directly, so they only pay the contract price before tax and 5% tax.

Mr. Tung asked, is the payment of the above investors correct? If not, what is correct?

The Tax Department of Binh Phuoc province responded to this problem as follows:

Clause 2, Article 13 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the method of calculating VAT directly on VAT as follows:

"2. The amount of VAT payable by the method of calculating directly on VAT is equal to the percentage multiplied by the turnover applied as follows:

a) Subjects of application:

- Operating enterprises and cooperatives with annual revenue below the threshold of one billion dong, except for the case of voluntary registration to apply the tax credit method specified in Clause 3, Article 12 of this Circular;

- Newly established enterprises and cooperatives, except for voluntary registration under the guidance in Clause 3, Article 12 of this Circular;

… b) The percentage for calculating VAT on revenue is prescribed for each activity as follows:

- Distribution and supply of goods: 1%;

- Services, construction excluding raw materials: 5%;

- Production, transportation, services associated with goods, construction including raw materials: 3%;

- Other business activities: 2%.

c) Turnover for VAT calculation is the total amount of sales of goods and services actually written on the sales invoice for goods and services subject to VAT, including additional surcharges and fees collected by the business establishment. business is entitled to.

In case a business establishment has a turnover from selling goods or providing services that are not subject to VAT and the turnover of exported goods and services, the rate (%) on revenue for the turnover of exported goods and services shall not be applied. this".

According to the above instructions, in case Mr. Tung's company registers to declare and pay VAT by the direct method on VAT and perform a construction consultancy contract, when completing the service, it must issue a sales invoice to delivered to customers according to regulations.

Revenue for VAT calculation is the total amount of sales of goods and services, including surcharges and additional fees that the company is entitled to.

The amount of VAT payable by the method of calculating directly on VAT is equal to the percentage multiplied by the turnover.

The percentage for calculating VAT applies according to Point b, Clause 2, Article 13 of Circular No. 219/2013/TT-BTC mentioned above.

Note: In case Mr. Tung's company was established on December 17, 2018, and generates revenue in 2019, then:

- If the revenue generated in 2019 is less than 1 billion VND, the company can apply the direct method for 2020 and 2021.

- If the revenue generated in 2019 is VND 1 billion or more, the company must apply the deduction method for 2020 and 2021.

The method of determining the revenue in the year to apply the VAT calculation method requires the company to follow the instructions in Clause 2, Article 12 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance.

According to the Government Newspaper