Is bottled mineral water subject to VAT in Vietnam?

Is bottled mineral water subject to VAT in Vietnam?

Pursuant to the provisions of Clause 1, Article 10 of Circular 219/2013/TT-BTC regarding objects subjected to a VAT rate of 5% as follows:

Article 10. 5% Tax Rate

1. Clean water for production and domestic use, excluding bottled water, canned water, and other types of beverages are subject to the 10% tax rate.

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Additionally, based on Official Dispatch 72571/CTHN-TTHT 2023 guiding the VAT rates as follows:

- Pursuant to Circular No. 219/2013/TT-BTC dated December 31, 2013, of the Ministry of Finance guiding the implementation of the VAT Law and Decree No. 209/2013/ND-CP dated December 18, 2013, of the Government of Vietnam detailing the implementation of a number of articles of the VAT Law.

+ At Clause 1, Article 7. Tax Price

“Article 7. Tax Price

1. For goods and services sold out by production, business units is the selling price excluding VAT. For goods and services subject to excise tax is the selling price including special consumption tax but excluding VAT.

For goods subject to environmental protection tax is the selling price including environmental protection tax but excluding VAT; for goods subject to both special consumption tax and environmental protection tax, the selling price includes special consumption tax, environmental protection tax but excludes VAT.”

+ At Clause 1, Article 10. 5% Tax Rate

“Article 10. 5% Tax Rate

1. Clean water for production and domestic use, excluding bottled water, canned water, and other types of beverages are subject to the 10% tax rate.”

Based on the above provisions, clean water for production and domestic use is subject to a VAT rate of 5% according to Clause 1, Article 10, Circular No. 219/2013/TT-BTC and is not subject to VAT reduction according to Decree 44/2023/ND-CP. Clean water for production and domestic use subject to environmental protection tax has the VAT price calculated as the selling price including environmental protection tax but excluding VAT according to the provisions of Clause 1, Article 7, Circular No. 219/2013/TT-BTC.

It is suggested that the Company refer to the actual situation and compare it with the legal provisions cited above to implement according to the regulations.

According to the above provisions, bottled mineral water is subject to VAT and applies a tax rate of 10%.

Is bottled mineral water subject to VAT in Vietnam? (Image from the Internet)

What is the taxable price for VAT on bottled mineral water in Vietnam?

Pursuant to Clause 1, Article 7 of Circular 219/2013/TT-BTC, the taxable price for VAT on bottled mineral water supplied by production and business establishments is the selling price excluding VAT.

Note: For goods subject to environmental protection tax, the selling price already includes environmental protection tax but excludes VAT. For goods subject to both excise tax and environmental protection tax, the selling price includes both excise tax, environmental protection tax but excludes VAT.

When is the time for VAT calculation on bottled mineral water in Vietnam?

The point of VAT calculation on bottled mineral water is based on Article 8 of Circular 219/2013/TT-BTC as follows:

Timing for VAT Determination

1. For the sale of goods, it is the time of transfer of ownership or the right to use goods to the buyer, irrespective of whether payment is received.

2. For service provision, it is the completion of service provision or the time of invoicing the service provision, regardless of whether payment is received.

For telecommunication services, it is the time of completing data reconciliation about interconnection service charges according to the economic contract between telecommunication service businesses but no later than 2 months from the month the interconnection charges occurred.

3. For electricity supply, clean water is the date of recording the consumption index on the meter for invoicing.

4. For real estate business activities, infrastructure construction, house construction for sale, transfer or lease is the time of receipt of money according to the project implementation schedule or the payment schedule stated in the contract. Based on the amount collected, the business declares the output VAT arising in the period.

5. For construction, installation, including shipbuilding, it is the time of acceptance, handover of works, project items, construction and installation volume completed, irrespective of whether payment is received.

6. For imported goods, it is the time of customs declaration registration.

Thus, the point of VAT calculation for bottled mineral water supplied by production and business establishments is the time of sale to the buyer, irrespective of whether payment has been received.