Mr. Nghia's company exports promotional goods along with purchased goods to distributor company B, and issues invoices to company B, in which the promotional goods have a taxable price of 0. Company B is responsible for exporting promotional goods to retail customers.

Mr. Nghia asked, for these promotional goods that are not charged, which party is responsible for paying VAT and personal income tax (company A, company B or retail customers)?

Regarding this issue, the City Tax Department has issued a decision to issue a notice to the tax authorities. Can Tho has the following comments:

Pursuant to Clause 3, Article 1 of Decree No. 70/2025/ND-CP dated March 20, 2025 of the Government:

"Article 1. Amending and supplementing a number of articles of Decree No. 123/2020/ND-CP dated October 19, 2020 of the Government regulating invoices and documents

3. Amending and supplementing Clause 1, Clause 2, Clause 3, Clause 6, Clause 7 and adding Clause 9 to Article 4 as follows:

a) Amending and supplementing Clause 1, Clause 2, Clause 3, Clause 6 and Clause 7 as follows:

"1. When selling goods or providing services, the seller must issue an invoice to the buyer (including cases of goods and services used for promotion, advertising, samples; goods and services used for giving, presenting, donating, etc....").

Pursuant to Clause 2, Article 6 of Decree No. 181/2025/ND-CP dated July 1, 2025 of the Government:

"Article 6. Taxable price for goods and services used for exchange, internal consumption, presenting, donating, donating, and goods and services used for promotion

2. For goods and services used for promotion according to the provisions of the law on commerce, the taxable price is determined as zero (0), except in cases of selling goods or providing services at a price lower than the previous selling price or service provision, applied during the promotion period (promotion in the form of discount), the taxable price is the reduced selling price applied during the registered promotion period or notify in accordance with the provisions of the commercial law on trade promotion activities. Promotional forms of promotional goods and services with a taxable price of zero (0) or the taxable price of the goods and services sold does not include the value of the goods and services used for promotion, specifically as follows:

a) Providing sample goods or providing sample services for customers to try without paying, the taxable price of the sample goods and services is zero (0).

b) Giving away goods or providing services without collecting money, the taxable price of the donated goods and services is zero (0).

... In the case of selling goods or providing services specified in this clause but not complying with the provisions on promotion of the commercial law, the taxable price shall be the same as that of donated, donated goods specified in Clause 1 of this Article".

Pursuant to Clause 10, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Minister of Finance:

"Article 2. Taxable income

10. Income from receiving gifts

Income from receiving gifts is the income of individuals received from domestic and foreign organizations and individuals, specifically as follows:

a) For receiving gifts in the form of securities including: stocks, stock purchase rights, bonds, promissory notes, fund certificates and other types of securities as prescribed by the Law on Securities; shares of individuals in joint stock companies as prescribed by the Law on Enterprises.

b) For receiving gifts in the form of capital in economic organizations and business establishments including: capital in limited liability companies, cooperatives, partnerships, business cooperation contracts, capital in private enterprises, business establishments of individuals, capital in associations and funds permitted to be established according to the provisions of law or the entire business establishment if it is a private enterprise or an individual business establishment.

c) For receiving gifts of real estate, including: land use rights; land use rights with assets attached to the land; house ownership rights, including future houses; infrastructure and construction works attached to land, including future construction works; land lease rights; water surface lease rights; other income received from inheritance of real estate in any form; except for income from gifts of real estate as guided in Point d, Clause 1, Article 3 of this Circular.

d) For receiving gifts of other assets, the ownership or right to use must be registered with the State management agency such as: cars; motorbikes, motorcycles; ships, including barges, canoes, tugboats, push boats; boats, including yachts; airplanes; hunting guns, sports guns".

Pursuant to Point c, Clause 1, Article 8 of Circular No. 40/2021/TT-BTC dated June 1, 2021 on guidance on VAT, personal income tax and tax management for business households and business individuals:

"Article 8. Tax calculation method for cases where organizations and individuals declare and pay taxes on behalf of individuals

1. Organizations and individuals declare and pay taxes on behalf of individuals in the following cases:

... c) Organizations pay bonuses, support for achieving sales, promotions, trade discounts, payment discounts, support payments in cash or non-cash, compensation for breach of contract, other compensation for contract households;".

Based on the above regulations and instructions, in case Mr. Nghia's company implements two promotional programs registered with the Department of Industry and Trade on "promotion of giving away goods to customers for free trial use, without conditions for purchasing goods and promotion of giving away goods without charging money, with the purchase of goods", when issuing promotional goods invoices according to the provisions of the law on commerce, the VAT taxable price is determined to be 0 according to the provisions of Clause 2, Article 6 of Decree No. 181/2025/ND-CP dated July 1, 2025 of the Government.

In case, the promotion of giving away goods to retail customers (not contracted households) does not fall under the case of receiving income from gifts prescribed in Clause 10, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Minister of Finance, it is not subject to personal income tax.

In case of promotional gifts of goods to retail customers who are contracting households, they must declare and pay taxes on their behalf according to the provisions of Point c, Clause 1, Article 8 of Circular No. 40/2021/TT-BTC dated June 1, 2021.

Mr. Tran Huu Duc Nghia is requested to base on legal documents and the actual situation arising at the company to comply with the regulations.

During the implementation process, if any problems arise and need to discuss more detailed information, please contact the Business Management and Support Department No. 3 of Can Tho City Tax Department for support.