Do individuals who fish and sell on their own have to pay value-added tax in Vietnam?

Do individuals who fish and sell on their own have to pay value-added tax in Vietnam?

Based on Clause 1, Article 4 of Circular 219/2013/TT-BTC, as amended by Clause 1, Article 1 of Circular 26/2015/TT-BTC, it is stipulated as follows:

Subjects not subject to VAT

1. Products from cultivation (including plantation forest products), animal husbandry, aquaculture, catch, which have not been processed into other products or only undergone ordinary processing by organizations and individuals self-produced, caught, sold out and at the import stage.

Products that have only undergone ordinary processing are those that have been cleaned, dried, shelled, milled, hulled, polished, seed-separated, stem-separated, cut, salted, cold-stored (refrigerated, frozen), preserved with sulfur gases, preserved with chemicals to prevent decay, soaked in sulfur solutions, or other preservatives, and other ordinary preservation forms.

Example 2: Company A signs a contract to raise pigs with Company B in which Company B provides Company A with piglets, feed, and veterinary drugs. Company A delivers and sells pork products to Company B. The pig raising fee received from Company B and the pork products Company A delivers and sells to Company B are not subject to VAT.

The pork products that Company B receives back from Company A: if Company B sells the whole pigs or fresh pork meat, the sold products are not subject to VAT. If Company B processes the pork into products such as sausages, smoked meat, or other processed products, the sold products are subject to VAT as stipulated.

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Thus, according to the above regulation, individuals who fish and sell on their own are not subject to value-added tax and therefore do not have to pay tax.

Do individuals who fish and sell on their own have to pay value-added tax in Vietnam? (Image from the Internet)

Are products from fish subject to value-added tax in Vietnam?

Based on Article 2 of Circular 219/2013/TT-BTC, it is stipulated that the 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), excluding the subjects not subject to VAT guided in Article 4 of this Circular.

Thus, consumer goods are also among the subjects subject to value-added tax.

However, excluding the subjects not subject to VAT guided in Article 4 of Circular 219/2013/TT-BTC.

Can households be value-added tax payers in Vietnam?

Based on Article 3 of Circular 219/2013/TT-BTC, it is stipulated as follows:

Taxpayers

VAT payers are organizations and individuals producing and trading goods and services subject to VAT in Vietnam, regardless of industry, form, or business organization (hereinafter referred to as business establishments) and organizations and individuals importing goods or purchasing services from abroad subject to VAT (hereinafter referred to as importers), including:

1. Business organizations established and registered under the Law on Enterprises, the Law on State Enterprises (now the Law on Enterprises), the Law on Cooperatives and other specialized business laws;

2. Economic organizations of political organizations, socio-political organizations, social organizations, socio-professional organizations, armed forces units, career organizations, and other organizations;

3. Enterprises with foreign investment and foreign parties participating in business cooperation under the Foreign Investment Law in Vietnam (now the Investment Law); organizations and individuals abroad conducting business activities in Vietnam but not establishing a legal entity in Vietnam;

4. Individuals, households, groups of independent businesspeople, and other entities engaged in production, business, or import activities;

5. Organizations and individuals producing and trading in Vietnam that purchase services (including cases where services are associated with goods) from foreign organizations without a permanent establishment in Vietnam, non-resident foreign individuals; in this case, the organization or individual purchasing services is the taxpayer, except in cases where tax declaration, calculation, and payment are not required as guided in Clause 2, Article 5 of this Circular.

Provisions on permanent establishments and non-resident entities are implemented according to the law on corporate income tax and the law on personal income tax.

6. Branches of export processing enterprises established to engage in the purchase and sale of goods and activities directly related to the purchase and sale of goods in Vietnam under regulations on industrial zones, export processing zones, and economic zones.

Example 1: Sanko Co., Ltd. is an export processing enterprise. Besides the export production activities, Sanko Co., Ltd. is also licensed to exercise the right to import for resale or for export, and must establish a branch to carry out these activities according to the law. The branch must keep separate accounts and declare and pay VAT separately for these activities, not including them in export production activities.

When importing goods for distribution (resale), the Branch of Sanko Co., Ltd. declares and pays VAT at the import stage and when selling (including export), Sanko Co., Ltd. uses invoices, declares, and pays VAT in accordance with the law.

Thus, according to the regulations, households are among the entities that are value-added tax payers.