Saturn Ha Tinh Co., Ltd specializes in mining minerals used as common building materials. Prior to the second quarter of 2019 (before April 1, 2019), mineral mining units that only sell domestically, belong to VATable items, shall declare VAT quarterly.

However, in the VAT declaration period of second quarter, the Company had both sales of domestic resources subject to VAT and export activities of natural resources (1x2 cm stone that had been processed, crushed, etc.) is not subject to VAT, this export activity may not be regular in subsequent tax periods depending on the needs of the buyer.

Through the receiving and responding system to businesses' recommendations, the Saturn Ha Tinh Co., Ltd. would like to ask, the unit must allocate deductible input VAT according to the turnover rate for the declaration period arising in the second quarter of 2019. Or temporarily calculate VAT declaration for the second quarter of 2019, and finalize at the end of 2019?

In addition, the unit of product cost calculation is divided into 2 stages, the first stage is mining stone in a hurry; After gathering the costs of the mining and importing process, some of the rock is sold domestically, and another amount is exported through the second stage for crushing, crushing, sieving, classifying into different types. Stones such as: 0.5x1 cm; 1x2 cm stone, powdered stone... All costs incurred in stage 2 are gathered and allocated to the above stones (0.5x1 cm; 1x2 cm stone, powdered stone...) according to a certain ratio and the production cost of each type.

So, determining the ratio of value of mineral resources plus energy costs to total cost is applied separately for each type of product (0.5x1 cm; stone 1x2 cm, powdered stone ...) or averaged over many type from which to determine whether exported goods (1x2 cm stone) are subject to tax or not subject to VAT?

Regarding this issue, The General Department of Taxation - Ministry of Finance has the following comments:

Declare and deduct VAT

Input VAT on goods and services used for production and trading of goods and services subject to VAT is fully deductible. Input VAT on goods and services used for the production and trading of goods and services that are not subject to VAT shall not be deducted.

Business establishments must separately account deductible and non-deductible input VAT; In case it is not possible to do separate accounting, the deductible input tax shall be calculated as a percentage of the turnover of goods and services subject to VAT compared with the total turnover of sold goods and services.

The VAT declaration shall comply with the guidance in Article 11 of Circular No. 156/2013/TT-BTC dated November 6, 2013 of the Ministry of Finance.

Tax policy for exported resources and minerals.

Exported products being natural resources and minerals that have not been processed into other products are not subject to VAT.

Exported products are goods directly processed from the main raw materials, which are natural resources and minerals, subject to the determination of the total value of resources, minerals and energy costs over the cost price to apply the VAT policy.

- If the exported product has the total value of natural resources and minerals plus energy costs accounting for 51% or more of the product's production cost, it is not subject to VAT.

- If the exported product has the total value of natural resources and minerals plus energy costs below 51% of the product's production cost, it is subject to the 0% VAT rate as prescribed.

The determination of the value of natural resources, minerals and energy costs on the production cost of products is determined by each type of exported product.

According to the presentation of Saturn Ha Tinh Co., Ltd., which exports stone products with the size of 1x2 cm (Stone mining, then through the stages of crushing, crushing, sieving, sorting), the above-mentioned export products of the Company are natural resources and minerals that have not been processed into other products, so they are not subject to VAT.

We recommend that the Saturn Ha Tinh Co., Ltd. contacts the Tax Department of Ha Tinh Province for instructions on how to comply with regulations.