On August 12, 2022, Hai Phong Tax Department issued Official Letter No. 2319/CTHPH-TTHT, according to which:
In case of the Company is an enterprise which is entitled CIT incentives since the satisfaction of the conditions on the preferential geographical area, and incurred costs related to the destruction of unused raw materials due to the customer changing in production strategy:
- Invoicing: For the compensation received from the customer, the Company does not have to issue an invoice but make a receipt for payment, the customer must make a payment receipt as prescribed.
- Regarding VAT: The company is not allowed to deduct input VAT on destroyed materials because the raw materials have not been used for business production of goods and services subjecting to VAT.
- Regarding CIT: In case, the Company has unused raw materials that must be destroyed due to a change in production strategy by the customer, this is not a case of loss due to natural disasters, epidemics, fires or damaged goods due to expiry date, damaged due to changes in natural biochemical process and other force majeure circumstances, so the Company is not included in deductible expenses when calculating CIT on the value of raw materials destroyed above.
