Is health insurance subject to value added tax in Vietnam?

Is health insurance subject to value added tax in Vietnam?

Pursuant to Clause 7, Article 5 of the Law on Value Added Tax 2008, supplemented by Clause 1, Article 3 of the Law on Amendments to Tax Laws 2014 and amended by Clause 1, Article 1 of the Law on Amending the Value Added Tax 2013, there are specific provisions on subjects not subject to tax as follows:

Subjects not subject to tax

...

3. Irrigation, drainage; plowing, harrowing land; dredging canals, ditches serving agriculture; agricultural product harvesting services.

3a. Fertilizers; machinery, equipment specifically used for agricultural production; offshore fishing vessels; animal feed, poultry feed, and feed for other livestock

...

5. State-owned housing sold by the State to tenants.

6. Transfer of land use rights

7. Life insurance, health insurance, student insurance, other insurance services related to human beings; livestock insurance, crop insurance, other agricultural insurance services; insurance for ships, boats, equipment, and other necessary tools for directly engaging in fisheries; reinsurance

...

Thus, according to the above regulations, health insurance is not subject to value-added tax (VAT).

Is health insurance subject to value added tax in Vietnam? (Image from the Internet)

What are regulations on the VAT deduction methods in Vietnam?

Pursuant to Article 10 of the Law on Value Added Tax 2008, amended by Clause 4, Article 1 of the Law on Amending the Value Added Tax 2013, the specific provisions are as follows:

[1] The VAT deduction method is regulated as follows:

- The value-added tax payable under the deduction method is the output VAT minus the deductible input VAT;

- The output VAT is the total VAT of sold goods and services recorded on VAT invoices.

+ VAT of goods and services sold recorded on VAT invoices equals the tax calculation price of taxable goods and services sold multiplied by the VAT rate of those goods and services.

+ If the payment voucher states the price inclusive of VAT, the output VAT is determined by subtracting the tax calculation price from the VAT amount as specified at point k, Clause 1, Article 7 of the Law on Value Added Tax 2008;

- The deductible input VAT is the total VAT recorded on VAT invoices when purchasing goods, services, and on documents paying VAT for imported goods that meet the conditions specified in Article 12 of the Law on Value Added Tax 2008.

[2] The deduction method applies to business establishments complying fully with policies on accounting, invoices, and vouchers as stipulated by accounting and invoice law, including:

- Business establishments with an annual revenue from selling goods and providing services of one billion dong or more, excluding households and individual businesses;

- Business establishments voluntarily registered for the deduction method, excluding households and individual businesses.

What are regulations on the calculation of tax based directly on added value in Vietnam?

Pursuant to Article 11 of the Law on Value Added Tax 2008, amended by Clause 5, Article 1 of the Law on Amending the Value Added Tax 2013, there are specific provisions on the calculation of tax based directly on added value as follows:

[1] The value-added tax payable under the calculation of tax based directly on added value is calculated by multiplying the added value by the VAT rate applied to the trading, manufacturing of gold, silver, and precious stones.

The added value of gold, silver, and precious stones is determined by the sale price minus the purchase price of equivalent gold, silver, and precious stones.

[2] The value-added tax payable under the calculation of tax based directly on added value is calculated by multiplying a percentage rate by the revenue, applied as follows:

Applicable subjects:

- Enterprises, cooperatives with annual revenue below the one billion dong threshold, except for voluntary registration of the deduction method as specified

- Households, individual businesses;

- Foreign organizations and individuals doing business without a permanent establishment in Vietnam but with revenue arising in Vietnam that have not fully implemented policies on accounting, invoices, vouchers, excluding foreign entities providing goods and services for the exploration, development, and exploitation of oil and gas, paying VAT under the deduction method on behalf of the Vietnamese;

- Other economic organizations, excluding cases registered for the deduction method as specified

The percentage rate for calculating VAT is stipulated as follows:

- Distribution, supply of goods: 1%;

- Services, construction without raw materials: 5%;

- Production, transportation, services associated with goods, construction with raw materials: 3%;

- Other business activities: 2%.

Who is liable to pay VAT in Vietnam?

According to Article 4 of the Law on Value Added Tax 2008, specific provisions on VAT payers are as follows:

The value-added tax payer is the organization or individual that produces or trades goods and services subject to VAT (hereinafter referred to as a business establishment) and the organization or individual that imports goods subject to VAT (hereinafter referred to as an importer).