Is breeding cattle subject to VAT in Vietnam?

Is breeding cattle subject to VAT in Vietnam?

According to Clause 1, Article 4 of Circular 219/2013/TT-BTC (amended and supplemented by Clause 1, Article 1 of Circular 26/2015/TT-BTC), regulations regarding taxable entities are outlined. Specifically:

Entities not subject to VAT

1. Cultivation products (including planted forest products), animal husbandry, aquaculture, and captured seafood products that have not yet been processed into other products or have only undergone simple processing, produced, captured, and sold directly by organizations and individuals, as well as at the import stage.

Products only subjected to simple processing are those that are simply cleaned, dried, shelled, milled, husked, pitted, seeded, chopped, salted, refrigerated (chilled, frozen), preserved with sulfur gas, preserved through methods with chemicals to prevent rotting, soaked in sulfur solutions, or preserved through other common methods.

Products such as pigs received by Company B from Company A: if Company B sells pigs (whole) or fresh pork, the products sold are not subject to VAT. If Company B processes pigs into products like sausages, smoked meat, ham, or other processed products, then the sold products are subject to VAT.

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Thus, according to the above regulations, the buying and selling of breeding cattle fall under entities not subject to value-added tax and hence, are not required to pay value-added tax.

Is breeding cattle subject to VAT in Vietnam? (Image from Internet)

What are the current regulations on VAT deduction methods in Vietnam?

According to Article 10 of the Law on Value-Added Tax 2008 (amended and supplemented by Clause 4, Article 1 of the Law on Value-Added Tax Amendment 2013), the regulations on VAT deduction methods are specified as follows:

- The VAT deduction method is regulated as follows:

+ The VAT payable according to the deduction method equals the output VAT minus the deductible input VAT;

+ The output VAT equals the total VAT on goods and services sold as recorded on the value-added invoice.

The VAT of sold goods and services recorded on the value-added invoice equals the taxable price of the goods and services sold multiplied by the VAT rate applicable to those goods and services.

In cases where the payment document reflects the price inclusive of VAT, the output VAT is determined by subtracting the tax assessed value determined according to point k of Clause 1, Article 7 of this Law from the payment price;

+ The deductible input VAT is the total VAT recorded on the purchased value-added invoices for goods and services, the tax payment documents of imported goods and conforming to the conditions stipulated in Article 12 of this Law.

- The deduction method applies to business establishments fully compliant with accounting policies, invoices, and documents as prescribed by accounting, invoice, and documentation laws, including:

+ Business establishments with an annual turnover from selling goods or providing services of a minimum of one billion Vietnamese dong, excluding households and individual businesses;

+ Business establishments registered voluntarily to apply the tax deduction method, excluding households and individual businesses.

What are regulations on input value-added tax credit in Vietnam?

Based on Article 12 of the Law on Value-Added Tax 2008 (amended and supplemented by Clause 6, Article 1 of the Law on Value-Added Tax Amendment 2013)

- Business establishments paying VAT under the deduction method may deduct input VAT as follows:

+ Input VAT on goods and services used for producing, trading goods, and services subject to VAT are entirely deductible, including non-compensable input VAT on VAT-liable goods and services that have incurred losses;

+ Input VAT on goods and services used simultaneously for producing, trading taxable, and non-taxable goods and services is only deductible on goods and services used for producing, trading VAT-liable goods and services. The business establishment must separately account for the deductible and non-deductible input VAT; if separate accounting is not performed, the deductible input tax is determined by the percentage of the turnover of VAT-liable goods and services against the total sales of goods and services;

+ Input VAT on goods and services sold to organizations or individuals utilizing humanitarian aid and non-refundable aid funds is entirely deductible;

+ Input VAT on goods and services used for exploring, prospecting, and developing oil and gas fields are entirely deductible;

+ Input VAT incurred in any given month must be declared and deducted when determining the payable tax amount for that month. If the business establishment discovers mistakes in declaring and deducting input VAT, supplementary declarations and deductions are allowed before the tax authority announces its decision on tax inspection or audit at the taxpayer’s office.

- Conditions for input VAT deduction are regulated as follows:

+ Having a value-added invoice for purchased goods, services, or a tax payment document for imported goods;

+ Having non-cash payment records for goods and services purchased, except for purchases with individual transactions valued under twenty million Vietnamese dong;

+ For exported goods and services, besides the conditions at point a and point b of this clause, there must also be: contracts with foreign parties for selling, processing goods, providing services; sales invoices for goods and services; non-cash payment records; and customs declarations for exported goods.

Payment for exported goods and services through clearing payment methods or other payment methods recognized as non-cash payments between exported and imported goods and services will be accepted as non-cash payment."