– Pursuant to Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the implementation of the Law on Value Added Tax and Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government detailing and guiding the implementation of a number of articles of the Law on Value Added Tax.
+ Clause 1, Article 5 stipulates cases of exemption declaring and paying VAT:
“1. An organization or individual receives a monetary compensation (including compensation for land and property on land that is withdrawn by a competent authority), bonus, allowance, or payment for transfer of emission permit, or other revenues.
Any taxpayer that receives a monetary compensation, bonus, allowance, payment for transfer of emission permits, or other revenues must make a receipt for such revenues. The taxpayer shall make receipts for spending according to the spending purposes.
Example 11: Company A receives a compensation of 50 million VND for contract termination from company B. Company A shall make a receipt and is not required to declare and pay VAT on such amount.
Pursuant to the above regulations, in case the Company receives monetary compensation, the Company is exempt from declaring and paying VAT on these compensations and makes receipts as prescribed in Clause 1, Article 5 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance.