What are the circumstances in which input VAT is not deducted?

What are the circumstances in which input VAT is not deducted?

Hi Hoang

Thank you for your question to Long Viet Tax.

Regarding his question, Long Viet Tax would answer as follows:

According to current regulations on declaration of associated transaction information, related parties are determined under Clause 2, Article 5 of Decree 20/2017 / ND-CP dated February 24, 2017 of the Government. covered, specifically as follows: …

2. Related parties in Clause 1 of this Article are specified as follows:

a) An enterprise holds directly or indirectly at least 25% of the equity of the other enterprise;

b) Both enterprises have at least 25% of equity of the owner, held directly or indirectly by a third party;

c) An enterprise is the largest shareholder of the equity of the other enterprise, holding directly or indirectly at least 10% of the total shares of the other enterprise;

d) An enterprise guarantees or lends to another enterprise in any form (including loans from third parties secured from related financial sources and related financial transactions. similar nature) provided that the loan amount is at least equal to 25% of the equity of the owner of the borrower and accounts for more than 50% of the total value of the medium and long-term debts of the borrowing enterprise;

dd) An enterprise appoints members of the management board or takes control of another enterprise provided that the number of members appointed by the first enterprise accounts for over 50% of the total number of members of the management board run or take control of the second business; or a member appointed by the first enterprise is entitled to decide the financial policies or business activities of the second enterprise;

e) Two enterprises with more than 50% of members of the board of directors or the same board member have the right to decide on financial policies or business activities appointed by a third party;

g) Two enterprises run or controlled by personnel, financial and business activities by individuals in one of the relationships of husband, wife, father, adoptive father, natural mother, adoptive mother , biological, adopted children, biological siblings, younger siblings, brother-in-law, brother-in-law, sister-in-law, sister-in-law, grandfather, grandmother, grandson, maternal grandmother, maternal grandmother, grandchild, aunt, uncle, uncles, aunts and nephews;

h) The business establishment has a relationship with its head office and permanent establishment or is the permanent establishment of a foreign organization or individual; i) One or many enterprises are controlled by an individual. through the capital contributed by this individual to that enterprise or directly involved in managing the enterprise;

k) Other cases in which the enterprise is actually under management and control of the decision on its production and business activities.

On HTKK, in Appendix GDLK-01 attached to the CIT return, forms of associated transactions A, B, C, D, E, … are determined corresponding to points a) to k) cited above.
The enterprise lists the Parties with related relations and selects the box showing the respective related relationship.

It can be seen that these interrelationships fall into one of the following groups:

Relationship of capital ownership and capital investment;

Relations of control and administration;

or Business relationship

Hope the above comments are helpful to him!