Are agricultural dryers subject to VAT in Vietnam?

Are agricultural dryers subject to VAT in Vietnam?

Pursuant to clause 3a, Article 5 of the 2008 Law on Value-Added Tax, supplemented by clause 1, Article 3 of the Law Amending and Supplementing a Number of Articles of Laws on Taxation 2014, provisions on non-taxable objects are as follows:

Non-taxable objects

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3a. Fertilizers; machinery and equipment exclusively used for agricultural production; offshore fishing vessels; livestock, poultry feed, and other animal feed.

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In addition, pursuant to guidelines in clause 3a, Article 4 of Circular 219/2013/TT-BTC, supplemented by clause 2, Article 1 of Circular 26/2015/TT-BTC about non-taxable objects, stipulates as follows:

Objects Not Subject to Value-Added Tax

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3a. Fertilizers are types of organic and inorganic fertilizers such as: phosphate fertilizers, urea fertilizers, NPK fertilizers, compound nitrogen fertilizers, phosphate fertilizers, potash; microbial fertilizers and other types of fertilizers;

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Machinery and equipment exclusively used for agricultural production include: ploughs; harrows; rotavators; furrowers; root shearing machines; land levelling equipment; seeders; rice transplanters; sugarcane planters; carpet rolling seedling systems; tillers, furrowers, spreaders, fertilizers spreaders; plant protection sprayers, tanks; rice, maize, sugarcane, coffee, cotton harvesters; tuber, fruit, root harvesters; tea harvesting, shearing machines; rice threshers; corn huskers; corn shellers; soybean threshers; peanut shellers; coffee hullers; wet rice, coffee pre-processing machinery and equipment; agricultural dryers (rice, maize, coffee, pepper, cashew nuts, etc.), aquatic products; straw, rice collectors, loadings in the field; hatchery incubators, poultry hatchers; grass harvesters, straw and grass balers; milk extractors and other specialized machines.

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Accordingly, agricultural dryers are machinery and equipment specialized for agricultural production and are not subject to VAT.

Are agricultural dryers subject to VAT in Vietnam? (Image from the Internet)

Do farmers declare VAT when reselling agricultural dryers in Vietnam?

Cases not subject to VAT declaration and payment are stipulated in clause 3, Article 5 of Circular 219/2013/TT-BTC as follows:

Cases Not Required to Declare, Calculate, and Pay VAT

1. Organizations, individuals receiving compensation payments (including compensation for land and assets on land when land is recovered according to decisions of competent state agencies), bonuses, support money, emissions trading rights transfers, and other financial receipts.

Businesses receiving compensation payments, bonuses, support money received, emissions trading rights transfers, and other financial income must issue receipts according to regulations. For businesses disbursing funds, receipts should be issued based on the disbursement purpose.

In cases of compensation with goods, services, the compensating entity must issue invoices and declare, calculate, and pay VAT like selling goods or services; the compensated entity declares, deducts according to regulations.

If businesses receive money from organizations, individuals to perform services for such organizations, individuals like repair, warranty, promotion, advertising, they must declare and pay tax as prescribed.

Example 10: P&C LLC receives interest from bond purchases and dividends from stock purchases in other enterprises. P&C LLC does not have to declare and pay VAT for the interest from bond purchases and the dividends received.

Example 11: Company A receives compensation of 50 million VND for contract cancellation from company B, Company A issues receipts and does not have to declare and pay VAT for the said amount.

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3. Organizations, individuals not engaged in business activities, not VAT payers selling assets.

Example 16: Mr. A, an individual not engaged in business, sells a 4-seater car to Mr. B for 600 million VND; Mr. A does not have to declare, calculate VAT on the car sale proceeds.

Example 17: Mr. E, an individual not engaged in business, mortgages a 5-seater car to VC bank for a loan. Upon maturity failing to repay the loan, the mortgaged car gets auctioned to recover debt; the auctioned sale proceeds are not subject to VAT declaration, calculation.

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Thus, for farmers (individuals not engaged in business) wishing to resell agricultural dryers to others, they are not required to declare and calculate VAT.

How many methods are there to calculate VAT in Vietnam?

Pursuant to the provisions of Article 9 of the 2008 Law on Value-Added Tax regarding VAT calculation methods, the regulations are as follows:

Tax Calculation Methods

The methods for calculating VAT include the credit method and the direct method based on added value.

Thus, there are two methods for calculating VAT including:

- The credit method of VAT;

- The direct method on added value.