On 26 August 2026, the NTBT clarified that business operators selling air conditioners and charging separate installation fees must issue uniform invoices for the total consideration (goods plus services) and report the full amount for Value-Added Tax (VAT) purposes. This guidance addresses common industry practice of separately stating installation charges without proper invoicing.
Key Takeaways
- Single Transaction Principle: The sale of goods with installation constitutes a single mixed transaction subject to VAT at the standard 5% rate on the total contract price, not separable into goods (taxable) and services (potentially exempt).
- Invoice Requirements: Businesses must issue unified invoices showing both the air conditioner price and installation fee as a single taxable amount, with the buyer’s uniform invoice number for input tax credit claims.
- Audit Focus: Tax authorities will scrutinize retailers and contractors who fail to invoice installation fees, imposing penalties for VAT evasion under the Value-Added and Non-Value-Added Business Tax Act.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement