Decree No. 121/2011/ND-CP was issued by the Vietnamese Government on 27 December 2011. It took effect on 1 March 2012.
Under this Decree, there are cases that do not need to declare and pay value added tax ("VAT").
These cases include the supply of goods and services by taxpayers in Vietnam in foreign markets, except for international transport activities with transportation routes having departure and arrival points in foreign countries that is zero-rated; receipts from compensation, bonus; and transfer of Certified Emission Reductions ("CERs"); organizations and individuals who are neither traders nor VAT payers when selling properties, including cases of selling properties in use to guarantee loans in banks and credit institutions. Input VAT incurred for the transactions not subject to VAT declaration and payment is creditable.
VAT-exempt services now include issuance of credit cards, factoring service and debt selling.
In principle, the transfer of land use right is VAT-exempt. Decree No. 121 provides further guidance on the taxable value with regard to real estate business where the value of the land can be excluded from the taxable value.
The current time limit for adjustment of undeclared input VAT is six months from the time the error occurs. For import VAT and VAT incurred during the pre-operating period, Decree No. 121 allows the taxpayer to adjust the declaration of input VAT in accordance with the law on tax administration, which means that adjusted declaration can be made any time before the tax authority conducts a tax audit or investigation.