Is public lighting service subject to value-added tax (VAT) in Vietnam?

Is public lighting service subject to value-added tax (VAT) in Vietnam?

Pursuant to Clause 11, Article 5 of the 2008 Law on VAT, supplemented by Clause 1, Article 3 of the Law Amending Tax Laws 2014, and amended by Clause 1, Article 1 of the Amended Law on VAT 2013, which stipulates non-taxable subjects as follows:

Non-taxable subjects

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10. Public postal, telecommunication services, and universal Internet access under programs of the Government of Vietnam.

11. Services for maintaining zoos, flower gardens, parks, street green trees, public lighting; funeral services.

12. Maintenance, repair, construction using people's contribution funds, humanitarian aid for cultural, artistic works, public service facilities, infrastructure, and housing for social policy beneficiaries.

13. Teaching, vocational training as regulated by law.

14. Broadcasting services funded by the state budget.

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Thus, according to the above regulation, public lighting service is not subject to value-added tax (VAT) as it is not within the taxable subjects for VAT.

Is public lighting service subject to VAT in Vietnam? (Image from Internet)

How is the VAT calculated in Vietnam?

According to Article 7 of the 2008 Law on VAT amended by Clause 2, Article 1 of the Amended Law on VAT 2013 and specific guidelines on tax valuation:

- For goods and services sold by production and business entities, it is the selling price excluding VAT; for goods and services subject to special consumption tax, it is the selling price including the special consumption tax but excluding VAT; for goods subject to environmental protection tax, it is the selling price including the environmental protection tax but excluding VAT; for goods subject to both special consumption tax and environmental protection tax, it is the selling price including both taxes but excluding VAT;

- For imported goods, it is the import price at the border gate plus import duty (if any), special consumption tax (if any), and environmental protection tax (if any). The import price at the border gate is determined according to the regulations on import tax calculation;

- For goods and services used for exchange, internal consumption, gifts, and donations, it is the VAT-excluded price of similar or equivalent goods and services at the time the activities occur;

- For leasing activities, it is the rental payment excluding VAT.

- For leasing by installment or upfront payments for the lease term, it's the amount paid for each installment or upfront payment for the lease term excluding VAT;

In cases of leasing foreign machinery, equipment, and means of transport that are not produced domestically for sublease, the taxable price is deducted from the rental costs payable to the foreign party.

- For goods sold by installment or deferred payment is the one-time payment price excluding VAT, not including interest for installment or deferred payment;

- For processing goods, it is the processing fee excluding VAT;

- For construction and installation activities, it is the value of the construction work, items, or parts handed over without VAT. If construction and installation do not include materials, machinery, equipment, the taxable price excludes the value of these materials and equipment;

- For real estate business activities, it is the selling price excluding VAT, excluding land use right transfer or land rent payments to the state budget;

- For agency activities, brokerage services earning commission, it is the commission earned from these activities excluding VAT;

- For goods and services using payment vouchers indicating the payment price as VAT-inclusive, the taxable price is determined using the formula:

Tax-exclusive price = Payment price / (1 + goods and services tax rate (%))

- The taxable price for goods and services as prescribed in Clause 1, Article 7 of the 2008 Law on VAT includes any surcharges and additional fees that the business entity is entitled to.

Which entities are VAT payers in Vietnam?

According to Article 4 of the 2008 Law on VAT, stipulations regarding taxpayers are as follows:

Taxpayers of value-added tax are organizations and individuals producing and trading goods and services subject to value-added tax (hereinafter referred to as business entities) and organizations and individuals importing goods subject to value-added tax (hereinafter referred to as importers).