To: Department of Taxation of Tien Giang Province

The General Department of Taxation received the Official Dispatch No. 1426/CTTGI-TTHT dated April 05, 2024 of the Department of Taxation of Tien Giang Province on the value-added tax (VAT) and corporate income tax (CIT) policies for microfinance programs and projects funded by Tien Giang Capital Aid Fund for Women's Economic Development (MOM Fund). The General Department of Taxation gives its opinions on this issue hereunder:

A quotation from clause 1 Article 1 of the National Assembly’s Law No. 31/2013/QH13 dated June 19, 2013 on amendments to some Articles of the Law on Value-added Tax specifying goods and services not subject to tax:

“8. The following finance, banking and securities services:

a) Credit extension services including loan grant; discounted and rediscounted transfer of negotiable instruments and other valuable papers; guarantee; finance lease; credit card issuance; domestic factoring; international factoring; other forms of credit extension according to regulations of law;

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A quotation from clause 2 Article 3 of the Decree No. 12/2015/ND-CP dated February 12, 2015 on amendments to point a clause 2 Article 3 of the Government’s Decree No. 209/2013/ND-CP dated December 18, 2013 on value-added tax:

“Article 3. Amendments to Decree No. 209/2013/ND-CP dated December 18, 2013 on guidelines for the Law on Value-added Tax, Article 2 of Decree No. 91/2014/ND-CP dated October 01, 2014 on amendments to Decrees on taxation:

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2. Point a Clause 2 of Article 3 is amended as follows:

“a) Credit extension services include:

- Loan grant;

- Discounted and rediscounted transfer of negotiable instruments and other valuable papers;

- Guarantee;

- Finance lease;

- Credit card issuance;

- Domestic factoring; international factoring;

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“Article 1. Amendments to some Articles of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance on guidelines for the Law on Value-added tax and the Government's Decree No. 209/2013/ND-CP dated December 18, 2013 on guidelines for the Law on Value-added tax (amended by Circular No. 119/2014/TT-BTC dated August 25, 2014 and Circular No. 151/2014/TT-BTC dated October 10, 2014 of the Ministry of Finance) as follows:

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3. Point a clause 8 of Article 4 (amended in Article 8 of Circular No. 151/2014/TT-BTC dated October 10, 2014) is amended as follows:

“a) Credit extension services include:

- Loan grant;

- Discounted and rediscounted transfer of negotiable instruments and other valuable papers;

- Bank guarantee;

- Finance lease;

- Credit card issuance.

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A quotation from Article 9 of the Circular No. 37/2019/TT-BTC dated June 25, 2019 of the Ministry of Finance on guidelines for financial regime for microfinance programs and projects of political organizations, socio-political organizations and non-governmental organizations:

“Article 9. Policies on taxes, fees and charges

Microfinance programs and projects shall comply with regulations of laws on taxes, fees and charges.”

A quotation from clause 4 Article 15 of the Government’s Decree No. 218/2013/ND-CP dated December 26, 2013 elaborating and providing guidelines on implementation of the Law on Corporate Income Tax:

“Article 15. Preferential tax rate

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4. 20% tax rate (17% from January 01, 2016) shall be applied to people's credit funds and microfinance institutions.

People’s credit funds and microfinance institutions shall apply 20% CIT rate after the period over which 10% tax rate is applied expires as prescribed in Clause 1 of this Article, and apply 17% tax rate from January 01, 2016.  Microfinance institutions defined in this Clause must be established and operate in accordance with the Law on Credit Institutions.”

A quotation from clause 9 Article 4 of the Government’s Decree No. 218/2013/ND-CP dated December 26, 2013 (amended by clause 3 Article 1 of the Government’s Decree No. 12/2015/ND-CP dated February 12, 2015):

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9..…income from revenue-generated activities by performing the tasks assigned by the State of the State financial funds: ... Poor Women Support Fund,...”

Pursuant to the aforementioned regulations and contents of the Official Dispatch No. 1426/CTTGI-TTHT dated April 05, 2024 of the Department of Taxation of Tien Giang Province:

- Regarding VAT:

In case Tien Giang Capital Aid Fund for Women's Economic Development (MOM Fund) provides any of the credit extension services specified in clause 8 Article 4 of the Circular No. 219/2013/TT-BTC amended by clause 3 Article 1 of the Circular No. 26/2015/TT-BTC, such service shall not be subject to VAT.

- Regarding CIT:

In case MOM Fund is a microfinance program/project, conducts production or business activities (financial activities) and annually distributes profits to Tien Giang Lottery One Member Company Limited, it is required to pay CIT as prescribed in clause 4 Article 15 of the Government’s Decree No. 218/2013/ND-CP dated December 26, 2023, except for the case specified in clause 9 Article 4 of the Decree No. 218/2013/ND-CP.

For your information and compliance./.

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BY ORDER OF DIRECTOR GENERAL
PP. DIRECTOR GENERAL OF POLICY DEPARTMENT
DEPUTY DIRECTOR GENERAL




Manh Thi Tuyet Mai