KPMG experts answer customer VAT queries

1. We are a manufacturing company. We sell our products through distributors who subsequently sell them on to retailers. To boost sales from this distribution channel, we plan to provide support payments to retailers. Can we claim corporate income tax deductions (CIT) for these payments?

According to recent guidelines issued by the General Department of Taxation, if an enterprise provides support payments to retailers who do not have direct contractual agreements with the company, support payments should not be deductible for CIT calculation purposes.

2. We are a cement manufacturing company. We send shipments to our customers. The contract term of ownership transfer states that “title and risks shall be transferred at the time products are received by or delivered to customers”. Therefore, our VAT invoices are issued when customers receive their goods. However, when the goods are in transit, do we need a VAT invoice or are there any alternative documents for transportation purposes?

Pursuant to point dd, Clause 3, Article 13, Decree 123/2020/ND-CP regulating the application of e-invoices, ex-warehousing-cum-internal transportation slips are one of the types of e-invoices that can be used to prove the legitimacy and origin of the goods. Accordingly, the company can consider issuing an ex-warehousing-cum-internal transportation slip in accordance within current regulations to provide to authorities (i.e. market supervisors, police) when requested during transportation.

3. We are a manufacturing company, and provide free tours for our distributors who meet their sales targets. Are we required to issue a VAT invoice to distributors for these tours?

The free tours offered to your distributors may be considered a promotional program under Article 14 of Decree No. 81/2018/ND-CP, and thus must be notified to the provincial Department of Industry and Trade in advance, except for when the cost of the tour is under VND100 million ($4,300). The company is required to issue an output VAT invoice in this case. The taxable price for VAT for free tours would be nil if the promotional programs are carried out in accordance with commercial laws.