How much is the VAT rate applying to cars in Vietnam?

How much is the VAT rate applying to cars in Vietnam?

Based on Appendix 2 of Decree 72/2024/ND-CP regulating goods subject to special consumption tax, which are not eligible for a reduction of value added tax as follows:

Goods:

a) Cigarettes, cigars, and other tobacco products used for smoking, inhaling, chewing, sniffing, and sucking;

b) Alcoholic beverages;

c) Beer;

d) Cars with less than 24 seats, including cars for both passenger and cargo transport with at least two rows of seats and a fixed partition between the passenger and cargo compartments;

đ) Two-wheel and three-wheel motorcycles with engine capacity over 125 cc;

e) Aircraft, yachts;

g) All types of gasoline;

h) Air conditioners with a capacity of 90,000 BTU or less;

i) Playing cards;

k) Votive papers and paper votive offerings.

2. Services:

a) Nightclub business;

b) Massage and karaoke businesses;

c) Casino business; electronic gaming with prizes including jackpot machines, slot machines, and similar devices;

d) Betting business;

And based on Article 1 of Decree 72/2024/ND-CP regulating the reduction of value added tax as follows:

Reduction of Value Added Tax

1. Reduction of value added tax for groups of goods and services currently applying the 10% tax rate, except for the following groups of goods and services:

a) Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated metal products, mineral products (excluding coal mining), coke, refined petroleum products, chemical products. Details in Appendix I attached to this Decree.

b) Products and services subject to special consumption tax. Details in Appendix II attached to this Decree.

c) Information technology products and services as defined by the law on information technology. Details in Appendix III attached to this Decree.

d) The reduction of value added tax for each type of goods and services specified in Clause 1 of this Article shall be uniformly applied at the stages of import, production, processing, commercial business. For coal mining items sold (including cases where mined coal is graded and categorized in a closed process before being sold) that are eligible for value added tax reduction. Coal items in Appendix I attached to this Decree, at stages other than that of mining sales are not eligible for value added tax reduction.

State-owned corporations and economic groups implementing closed processes for sales also fall under the category eligible for value added tax reduction for mined coal sold.

In cases where goods and services specified in Appendices I, II, and III attached to this Decree fall under the subjects not liable to value added tax or subjects liable to a 5% value added tax as provided by the Law on Value Added Tax, implementation shall be in accordance with the Law on Value Added Tax, and they are not eligible for reduction of value added tax.

Thus, according to this, cars that are under 24 seats used for transporting people are subject to a value added tax rate of 10%.

How much is the VAT rate applying to cars in Vietnam? (Image from the Internet)

What are cases of VAT refund in Vietnam?

Pursuant to Article 13 of the Law on Value Added Tax 2008, amended by Clause 7, Article 1 of the Amended Law on Value Added Tax 2013, and Clause 3, Article 1 of Law No. 106/2016/QH13, value added tax can be refunded in the following cases:

- Business establishments paying value added tax by the credit method may have the input value added tax that has not been fully deducted in a month or quarter carried over to the next period.

In case business establishments registered for paying value added tax by the credit method have new investment projects in the investment phase and the input value added tax on goods and services purchased for the investment that has not been deducted and have a remaining tax amount of 300 million VND or more, they shall be entitled to a value added tax refund.

- Business establishments shall not be entitled to value added tax refunds but may carry forward the undeducted tax amount of the investment project under the law on investment to the next period in the following cases:

+ The investment project of the business establishment does not contribute sufficient charter capital as registered; carrying out industries, business conditions that do not meet the business conditions as prescribed by the Investment Law or fail to maintain sufficient business conditions during the operation;

+ Investment projects for exploiting natural resources and minerals licensed from July 1, 2016, or investment projects for manufacturing products whose total value of natural resources and minerals plus energy costs account for 51% or more of the product cost as defined by the investment project.

- Business establishments with exported goods and services in a month or quarter with an input value added tax amount that has not been fully deducted of 300 million VND or more are entitled to a value added tax refund for that month or quarter, except for cases where imported goods are for export, goods exported without complying with customs procedures under the Customs Law. Implement the refund first, check later policy for taxpayers manufacturing exported goods who do not commit tax and customs law violations for two consecutive years; taxpayers not considered high-risk according to the Tax Administration Law.

- Business establishments paying value added tax by the credit method are entitled to a value added tax refund in the case of change of ownership, business transformation, merger, amalgamation, separation, dissolution, bankruptcy, or cessation of operations having excess paid value added tax or input value added tax not yet fully deducted.

- Business establishments with decisions on value added tax refund by competent authorities according to the law and cases of value added tax refund under international treaties to which the Socialist Republic of Vietnam is a contracting party.

Which entity is the VAT payer in Vietnam?

According to Article 4 of the Law on Value Added Tax 2008, VAT payers are organizations and individuals producing and trading goods and services subject to value added tax (hereinafter referred to as business establishments) and organizations and individuals importing goods subject to value added tax (hereinafter referred to as importers).