Do dry cashew kernel processing enterprises have to pay VAT in Vietnam?

Do dry cashew kernel processing enterprises have to pay VAT in Vietnam?

Based on Clause 1, Article 4 of Circular 219/2013/ND-CP, as amended and supplemented by Clauses 1 and 2, Article 1 of Circular 26/2015/TT-BTC, it is regulated as follows:

Subjects Not Subject to VAT

1. Crop products (including plantation forest products), livestock, aquaculture, and seafood harvested or caught but not yet processed into other products or only through basic processing by organizations, individuals for sale and at the import stage.

Simple processed products are those that have only been cleaned, sun-dried, dried, peeled, shelled, ground, dehulled, polished, separated, salted, cold-preserved (chilled, frozen), or preserved by sulfur gas, chemical methods to prevent decay, soaked in sulfur solution, or other common preservation forms.

Example 2: Company A signs a contract to raise pigs with Company B, wherein Company B provides piglets, feed, and veterinary medicine. Company A hands over and sells pig products to Company B; the pig raising fee received from Company B and the pig products Company A delivers to Company B are exempt from VAT.

Pig products that Company B receives from Company A: if Company B sells pigs (whole) or fresh pork, the products sold are exempt from VAT; if Company B processes pigs into products such as sausages, smoked meat, or other processed products, the products sold are subject to VAT as per regulations.

2. Products such as breeding animals and plant varieties, including breeding eggs, animals, plant cuttings, seedlings, seeds, branches, tubers, semen, embryos, and genetic materials in the stages of breeding, importation, and commercial trading. Breeding animals and plant varieties that are not subject to VAT are products from facilities that import, trade commercially with a business registration for breeding animals and plants issued by the competent state authority. If products are breeding animals or plant varieties for which the State has issued standards, they must meet the conditions prescribed by the State.

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Thus, based on the above regulations, enterprises processing dried cashew kernels fall into the category of non-VAT taxable entities**.**

Do dry cashew kernel processing enterprises have to pay VAT in Vietnam? (Image from the Internet)

If dry cashew kernel processing enterprises receive land compensation, do they have to pay VAT in Vietnam?

Based on Clause 1, Article 5 of Circular 219/2013/ND-CP, the following is prescribed:

Cases Not Required to Declare, Calculate VAT

1. Organizations and individuals receiving monetary compensation (including compensation for land and assets on the land when the land is reclaimed by a decision of the competent state authority), bonuses, support money, emission rights transfers, and other financial receipts.

When a business establishment receives money for compensation, bonuses, support, emission rights transfers, and other financial receipts, it must issue receipt documents as prescribed. For business establishments disbursing money, it should issue disbursement documents based on the purpose of expenditure.

In cases where compensation is made by goods or services, the compensating establishment must issue invoices and declare, calculate, and pay VAT as for selling goods or services; the receiving establishment must declare and deduct according to regulations.

In cases where a business establishment receives money from organizations or individuals to perform services for them like repairs, warranty, promotions, advertising, it must declare and pay taxes as per regulations.

Example 10: P&C LLC receives interest from purchasing bonds and dividends from purchasing shares of other enterprises. P&C LLC is not required to declare or pay VAT on the interest from purchasing bonds and received dividends.

Example 11: Business A receives a compensation of 50 million VND for contract cancellation from Business B, and Business A issues receipt documents and is not required to declare or pay VAT on this compensation.

Example 12: Business X purchases goods from Business Y, Business X advances money to Business Y and receives interest for this upfront payment from Business Y. Business X is not required to declare or pay VAT on the received interest.

Example 13: Business X sells goods to Business Z, the total payment price is 440 million VND. According to the contract, Business Z pays late over the course of 3 months with a 1% monthly late payment interest on the total payment price of the contract. After 3 months, Business X receives the total contract payment from Business Z of 440 million VND and a late payment interest of 13.2 million VND (440 million VND x 1% x 3 months). Business X is not required to declare or pay VAT on the 13.2 million VND.

Example 14: Insurance company A and Company B sign an insurance contract in cash form. When an insurance risk occurs, insurer A compensates Company B in cash as per the legal regulations on insurance. Company B is not required to declare or pay VAT on the insurance compensation received.

Example 15: ABC Dairy Joint Stock Company disburses funds to distributors (being business organizations and individuals) to implement promotion programs (in accordance with laws on commercial promotion activities), marketing, and product display activities for the Company. Upon receiving money, if the distributor is a VAT payer under the deduction method, they issue a VAT invoice and calculate VAT at 10%, if the distributor is a VAT payer under the direct method, they use a sales invoice and determine the tax payable based on the percentage (%) on revenue according to regulations.

Hence, based on the above regulations, if a dry cashew kernel processing enterprise receives land compensation, this amount falls into the category not required to declare, calculate, or pay VAT according to the regulations.

Where do enterprises submit VAT declaration dossiers in Vietnam?

Pursuant to Article 11 of Decree 126/2020/ND-CP, it is prescribed as follows:

For Enterprises

Enterprises are to submit VAT declaration dossiers at the tax authority directly managing the enterprise, except for:

[1] In cases where enterprises have multiple business activities in various provinces different from the province or city where the headquarters is located:

- Declare VAT for investment projects eligible for VAT refund where the investment project is located.

- Declare VAT for the activity of transferring real estate of infrastructure investment projects, housing for transfer (including cases where advance payments are collected from customers according to progress) where the real estate transfer activity is located.

- Declare VAT where the power plant is located.

[2] In cases where business activities occur in multiple provinces differing from where the joint-stock company's headquarters are located and centralized accounting is practiced at the headquarters (except for cases under [1]) at the tax authority that manages the headquarters.

Simultaneously, the joint-stock company must submit the allocation table of taxes payable (if any) to each province where the state budget revenue is enjoyed (including dependent units, business locations) to the tax authority managing the headquarters, except for some cases not required to submit the allocation table of taxes payable:

- VAT of transportation business activities of the joint-stock company where transportation routes pass through provinces different from where the company is headquartered.

- VAT of insurance and reinsurance business activities.

- VAT of construction business activities (including road construction, power line construction, water pipeline construction, oil pipeline construction, gas pipeline construction) in provinces different from where the headquarters is located but no dependent units or business locations are established in those provinces, and the construction project value including VAT is below 1 billion VND.

- VAT of the dependent units, business locations of the joint-stock company that are classified as micro-enterprises according to the laws on support for small and medium enterprises.