V.A.T TAX
1. Subjects subject to value added tax
Subjects subject to value added tax (VAT) are goods and services used for production, business and consumption in Vietnam (including goods and services purchased from organizations and individuals abroad). , except for subjects not subject to VAT as instructed at Article 4 Circular 219/2013/TT-BTC (amended and supplemented in Circular No. 26/2015/TT-BTC, 151/2014/TT-BTC, 130/2016/TT-BTC, 25/2018/TT-BTC).
2. Basis and method of calculating value added tax
Value added tax = Taxable value x Tax rate
In there:
VAT calculation value of imported goods = Import price at the border gate plus (+) with import tax (if any), plus (+) with special consumption tax (if any), plus (+) with protection tax environment (if any). The import price at the border gate is determined according to regulations on taxable prices of imported goods.
In case imported goods are exempted or reduced from import tax, the VAT calculation price is the import price plus (+) with import tax determined according to the tax rate payable after exemption or reduction.
2.1. VAT rate:
2.2.1. Tax rate 0%:
2.2.1.1. Applicable objects: Applies to exported goods and services; Construction and installation activities abroad and in non-tariff zones; international transport; Goods and services are not subject to VAT when exported, except for cases where the 0% tax rate guided in Clause 3, Article 9 of Circular No. 219/2013/TT-BTC (amended and supplemented) does not apply. in Circular No. 26/2015/TT-BTC, 151/2014/TT-BTC, 130/2016/TT-BTC, 25/2018/TT-BTC).
Exported goods and services are goods and services sold and supplied to organizations and individuals abroad and consumed outside Vietnam; selling and supplying to organizations and individuals in the non-tariff zone; goods and services provided to foreign customers according to the provisions of law.
a) Exported goods include:
– Goods exported abroad, including export entrustment;
– Goods sold into non-tariff zones according to regulations of the Prime Minister; goods sold to duty-free shops;
– Goods sold where the delivery or receipt point is outside Vietnam;
– Spare parts and replacement materials to repair and maintain vehicles, machinery and equipment for foreign parties and for consumption outside of Vietnam;
– Cases considered to be exported according to the provisions of law:
+ Forwarded processed goods according to the provisions of commercial law on international goods purchase and sale activities and goods purchase, sale and processing agency activities with foreign countries.
+ Goods exported on the spot according to the provisions of law.
+ Exported goods for sale at fairs and exhibitions abroad.
b) Export services include services provided directly to organizations and individuals abroad and consumed outside Vietnam; Direct supply to organizations and individuals in non-tariff zones and consumption in non-tariff zones.
Overseas individuals are foreigners who do not reside in Vietnam, Vietnamese people residing abroad and outside Vietnam during the time the service is provided. Organizations and individuals in the non-tariff zone are organizations and individuals with business registration and other cases as prescribed by the Prime Minister.
In case of providing services where the provision takes place both in Vietnam and outside Vietnam but the service contract is signed between two taxpayers in Vietnam or with permanent establishments in Vietnam The tax rate 0% only applies to the value of services performed outside Vietnam, except in the case of providing insurance services for imported goods, where the tax rate 0% applies to the entire contract value. In case the contract does not separately specify the value of services performed in Vietnam, the taxable price is determined according to the ratio (%) of costs incurred in Vietnam to the total cost.
Business establishments providing services that are taxpayers in Vietnam must have documents proving services performed outside Vietnam.
c) International transportation specified in this Clause includes transportation of passengers, luggage, and goods on international routes from Vietnam to foreign countries or from foreign countries to Vietnam, or both departure and arrival points abroad , regardless of whether there is a direct means of transport or no means of transport. In case an international transport contract includes domestic transport, international transport includes domestic transport.
For example: Transport company X in Vietnam has international transport ships, the company transports goods from Singapore to Korea. Revenue earned from transporting goods from Singapore to Korea is revenue from international transportation activities.
d) Services of the aviation and maritime industry provided directly to organizations abroad or through agents, including:
Aviation industry services apply tax rate 0%: Aviation catering services; aircraft takeoff and landing services; aircraft parking services; aircraft security services; Security screening of passengers, luggage and cargo; baggage carousel service at the station; ground commercial technical services; aircraft security services; aircraft push and pull services; aircraft guiding services; bridge rental service to take passengers on and off the plane; departure and arrival flight operations services; transportation service for flight crew, flight attendants and passengers in the aircraft parking area; stacking and counting goods; Services for passengers taking international flights from Vietnamese airports (passenger service charges).
Maritime industry services apply tax rate 0%: Ship towing services; maritime pilot; maritime rescue; wharves and buoys; Loading; tie and untie; opening and closing the cargo hatch cover; ship hold cleaning; counting, delivering and receiving; registry.
d) Other goods and services:
– Construction and installation activities abroad or in non-tariff zones;
– Goods and services are not subject to VAT when exported, except for cases where the tax rate 0% does not apply as guided in section 2.2.1.3 below;
– Aircraft and ship repair services provided to foreign organizations and individuals.
2.2.1.2. Conditions for applying tax rate 0%:
a) For exported goods:
– Have a contract to sell or process exported goods; entrusted export contract;
– Have proof of payment for exported goods via bank and other documents as prescribed by law;
– Have a customs declaration as prescribed in Clause 2, Article 16 of Circular 219/2013/TT-BTC.
Particularly in the case of goods sold where the delivery and receipt point is outside Vietnam, the business establishment (seller) must have documents proving the delivery and receipt of goods outside Vietnam such as: purchase contract. signed with the seller of goods abroad; goods sales contract signed with the buyer; Documents proving that goods were delivered or received outside Vietnam such as: commercial invoice according to international practices, bill of lading, packing slip, certificate of origin...; Bank payment documents include: bank documents of the business establishment making payment to the seller of goods abroad; Payment documents via bank from the buyer of goods to pay the business establishment.
For example: Company A and Company B (Vietnamese enterprises) sign a contract to buy and sell lubricants. Company A buys lubricants from companies in Singapore, then sells them to Company B at Singapore seaport. In case Company A has: Lubricant purchase contracts signed with companies in Singapore, sales contracts between Company A and Company B; Documents proving that the goods were delivered to Company B at Singapore seaport, documents of payment via bank transferred by Company A to companies selling lubricants in Singapore, documents If payment is made via bank by Company B to Company A, the revenue received by Company A from selling lubricants to Company B will be subject to VAT rate 0%.
b) For exported services:
– Have a service supply contract with an organization or individual abroad or in a non-tariff zone;
– Have proof of payment for export services via bank and other documents as prescribed by law;
Particularly for aircraft and ship repair services provided to foreign organizations and individuals, to apply tax rate 0%, in addition to the contract conditions and payment documents mentioned above, aircraft, ships Signs brought into Vietnam must go through import procedures. Once repaired, export procedures must be completed.
c) For international transportation:
– There is a contract to transport passengers, luggage, and goods between the carrier and the charterer on an international route from Vietnam to a foreign country or from a foreign country to Vietnam or both a departure point and a destination abroad. in forms consistent with the provisions of law. For passenger transportation, the contract of carriage is the ticket. International transport business establishments comply with the provisions of law on transport.
– Having documents of payment via bank or other forms of payment is considered payment via bank. In case of transporting individual passengers, there is a direct payment document.
d) For aviation and maritime services:
d.1) Aviation industry services applying tax rate 0% are performed in international airports, airports, and international air cargo terminals and meet the following conditions:
– There is a service supply contract with a foreign organization or foreign airline or a request to provide services from a foreign organization or foreign airline;
– Have documents to pay for services via banks or other forms of payment that are considered payments via banks. In case the services provided to foreign organizations or foreign airlines arise irregularly, not according to schedule and without a contract, there must be direct payment documents from the foreign organization or airline. not foreign.
The above contract conditions and payment documents do not apply to passenger service charges on international flights from Vietnamese airports (passenger service charges).
d.2) Maritime industry services applying tax rate 0% are performed in port areas and meet the following conditions:
– There is a service supply contract with an overseas organization, a shipping agent, or a request to provide services from a foreign organization or a shipping agent;
– Have proof of payment for services via a bank from an organization abroad or have proof of payment for services through a bank from a shipping agent to a service provider or other forms of payment considered is payment via bank.
2.2.1.3. Cases where tax rate 0% does not apply include:
– Reinsurance abroad; technology transfer, transfer of intellectual property rights abroad; transferring capital, granting credit, investing in securities abroad; derivative financial services; Postal and telecommunications services going abroad (including postal and telecommunications services provided to organizations and individuals in non-tariff zones; providing mobile phone scratch cards with codes and numbers price sent abroad or brought into a non-tariff zone); Exported products are natural resources and minerals guided in Clause 23, Article 4 of Circular 219/2013/TT-BTC; cigarettes, alcohol, and beer imported and then exported; goods and services provided to individuals not registered for business in the non-tariff zone, except in other cases as prescribed by the Prime Minister.
Cigarettes, alcohol, and beer that are imported and then exported do not have to calculate output VAT when exported, but cannot deduct input VAT.
– Gasoline and oil sold for cars of business establishments in the non-tariff zone purchased domestically;
– Cars sold to organizations and individuals in the non-tariff zone;
– Services provided by business establishments to organizations and individuals in the non-tariff zone include: renting houses, halls, offices, hotels, warehouses; transportation services to pick up and drop off workers; Catering services (except for industrial catering services and catering services in non-tariff areas);
– The following services provided in Vietnam to organizations and individuals abroad are not subject to tax rate 0% including:
+ Sports competitions, performing arts, culture, entertainment, conferences, hotels, training, advertising, travel and tourism;
+ Online payment service;
+ Services provided associated with the sale, distribution, and consumption of products and goods in Vietnam.
2.2.2. Tax rate 5%:
– Clean water for production and daily life, excluding bottled water and other beverages subject to the tax rate of 10%.
– Ore for fertilizer production; Pesticides and growth stimulants for animals and plants include:
- a) Ores for fertilizer production are ores used as raw materials for fertilizer production such as Apatite ore used to produce phosphate fertilizer, mud soil used for microbial fertilizer;
- b) Pest control drugs include plant protection drugs according to the List of plant protection drugs issued by the Ministry of Agriculture and Rural Development and other types of pesticides;
- c) Growth stimulants for animals and plants.
– Excavation and dredging services of canals, ditches, ponds and lakes for agricultural production; cultivating, caring for, and preventing pests and diseases of plants; Preliminary processing and preservation of agricultural products (except dredging and dredging infield canals as prescribed in Clause 3, Article 4 of Circular 219/2013/TT-BTC).
Services for preliminary processing and preservation of agricultural products include drying, peeling, seeding, cutting, milling, cold storage, salting and other common forms of preservation according to the instructions in Clause 1 of Article 4 Circular 219/2013/TT-BTC.
– Cultivation, livestock, aquaculture and seafood products that have not been processed or have only been pre-processed and preserved (form of pre-processing and preservation according to instructions in Clause 1, Article 4 of Circular 219/2013/TT- BTC) at the commercial business stage, except for the cases guided in Clause 5, Article 5 of Circular 219/2013/TT-BTC.
Unprocessed crop products guided in this Clause include paddy, rice, corn, potatoes, cassava, and wheat.
– Preliminarily processed rubber latex such as flag latex, sheet latex, vermicelli latex, rice latex; Pre-processed resin; nets, ropes and yarns for weaving fishing nets include all types of fishing nets, yarns and ropes specifically used for weaving fishing nets, regardless of production materials.
– Fresh food at the commercial business stage; Unprocessed forest products at the commercial stage, except wood, bamboo shoots and products specified in Clause 1, Article 4 of Circular 219/2013/TT-BTC.
Fresh foods include foods that have not been cooked or processed into other products, only processed in the form of cleaning, peeling, cutting, freezing, drying, but after preliminary processing they are still fresh foods. such as cattle, poultry, shrimp, crab, fish and other aquatic products. In case the food has been marinated with spices, the tax rate 10% applies.
Unprocessed forest products include products from natural forests exploited in the following groups: rattan, bamboo, bamboo, bamboo, mushroom, wood ear; roots, leaves, flowers, medicinal plants, resins and other forest products.
For example: Company A produces fresh seasoned beef fish according to the process: Freshly caught beef fish is cut into fillets, then marinated with sugar, salt, solpitol, packaged, and frozen. Spiced fresh beef fish is not subject to the 5% tax rate but is subject to the 10% VAT rate.
- Road; by-products of sugar production, including molasses, bagasse, and sludge.
– Products made of jute, sedge, bamboo, rattan, rattan, cork, bamboo, bamboo, bamboo, leaves, straw, coconut shells, coconut skulls, water hyacinth and other handicraft products made with materials salvaged from agriculture Industrial products are products produced and processed from the main raw materials of jute, sedge, bamboo, rattan, rattan, cork, cork, bamboo, and leaves such as: jute mats, jute fibers, jute bags, coconut fiber mats. , mats produced from jute and sedge; brooms, ropes, and ties made of bamboo and coconut fiber; Curtains, blinds made of bamboo, bamboo, bamboo brooms, conical hats; bamboo chopsticks, bamboo chopsticks; pre-processed cotton; newsprint.
– Medical equipment and tools include specialized machinery and tools for medical use such as: scanners, projectors, and cameras used for medical examination and treatment; specialized equipment and tools for surgery and wound treatment, ambulance cars; Blood pressure, heart, pulse measuring instruments, blood transfusion instruments; needles; contraceptive devices and other specialized medical tools and equipment as certified by the Ministry of Health.
Cotton, bandages, medical gauze and medical sanitary napkins; Preventive and curative drugs include finished drugs and medicinal ingredients, excluding functional foods; Vaccine; Medical biological products, distilled water for preparing injections and infusions; hats, clothes, masks, surgical gloves, gloves, lower limb covers, shoe covers, towels, specialized medical gloves, breast implants and skin fillers (excluding cosmetics); chemical testing and disinfectant supplies for medical use as certified by the Ministry of Health.”
– Teaching tools used for teaching and learning include models, drawings, boards, chalk, rulers, compasses and other types of equipment and tools specifically used for teaching, research and scientific experiments. learn.
– Cultural activities, exhibitions, physical training and sports; performing Arts; make a film; import, distribute and screen films.
- a) Cultural, exhibition and physical training and sports activities, except for revenues such as: selling goods, renting yards and booths at fairs and exhibitions.
- b) Performing arts activities such as: opera, cheo, cai luong, singing, dancing, music, theater, circus; Other artistic performance activities and art performance organization services of theaters or opera, cheo, cai luong, singing, dancing, music, drama, and circus troupes with operating licenses issued by competent State agencies granting authority.
- c) Film production; import, distribute and screen movies, except for products mentioned in Clause 15, Article 4 of Circular 219/2013/TT-BTC.
– Toys for children; Books of all types, except books not subject to VAT, guided in Clause 15, Article 4 of Circular 219/2013/TT-BTC.
– Science and technology services are service activities and technical support for scientific research and technology development; activities related to intellectual property; technology transfer, standards, technical regulations, measurement, product and goods quality, radiation, nuclear and atomic energy safety; Information, consulting, training, fostering, dissemination and application of scientific and technological achievements in socio-economic fields according to science and technology service contracts specified in the Law Science and technology, excluding online games and Internet entertainment services.
– Sell, rent, lease purchase social housing according to the provisions of the Housing Law. Social housing is housing invested and built by the State or organizations and individuals of all economic sectors and meets the criteria for housing, house selling price, rental price, and rental price. purchase, subjects, and conditions for purchasing, renting, and lease-purchasing social housing according to the provisions of housing law.
2.2.3. Tax rate 10%
Tax rate 10% applies to goods and services that are subject to VAT and are not entitled to tax rate 0% or tax rate 5%
