Is the excise tax applicable to prisoner transport vehicles in Vietnam?

Is the excise tax applicable to prisoner transport vehicles in Vietnam?

Pursuant to Article 3 Law on excise Tax 2008 as amended by Clause 2, Article 1 Law on Amendments to the Law on excise Tax 2014 which regulates items not subject to tax as follows:

Exempted Entities

Goods stipulated in Clause 1, Article 2 of this Law are not subject to excise tax in the following cases:

1. Goods produced or processed by a manufacturer directly for export or sold and consigned for export through another business establishment;

2. Imported goods include:

a) Goods under humanitarian aid, non-refundable aid; gifts to government agencies, political organizations, political-social organizations, political-professional organizations, social organizations, social-professional organizations, armed forces, gifts for individuals in Vietnam as prescribed by the Government of Vietnam;

b) Goods in transit or borrowed entry through Vietnam's borders, goods transferred according to regulations of the Government of Vietnam;

c) Temporarily imported and re-exported goods, temporarily exported and re-imported goods exempt from import and export duties within the prescribed time under the law on import and export tax;

d) Personal effects of foreign organizations and individuals eligible for diplomatic immunity; carried-on items within duty-free luggage allowances; imported goods for sale duty-free under the law;

3. Aircraft, yachts used for commercial transport of goods, passengers, tourists and aircraft used for security and national defense purposes;

4. Ambulances, prisoner transport vehicles, hearses, vehicles designed for both seating and standing carrying 24 or more people, vehicles operating in amusement parks, sports venues without registration and not involved in traffic;

5. Goods imported from abroad into duty-free zones, goods sold from domestic markets into duty-free zones used exclusively in duty-free zones, goods traded between duty-free zones, except passenger cars with fewer than 24 seats.

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Additionally, Clause 4, Article 3 of Decree 108/2015/ND-CP regulates entities not subject to tax as follows:

Exempted Entities

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4. For automobiles stipulated in Clause 4, Article 3 of the Law on excise Tax, they are designed by manufacturers for use as ambulances, prisoner transport vehicles, hearses; vehicles designed with both seating and standing areas carrying 24 or more people; automobiles operating in amusement parks, sports, and recreational areas without registration and not participating in traffic, and other special-purpose vehicles not registered or participating in traffic as specified by the Ministry of Finance in cooperation with relevant Ministries and agencies.

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Thus, according to the aforementioned regulation, prisoner transport vehicles are not subject to excise tax and therefore are exempt from paying excise tax.

Is the excise tax applicable to prisoner transport vehicles in Vietnam? (Image from the Internet)

Which entities are excise taxpayers in Vietnam?

In accordance with Article 4 Law on excise Tax 2008, there are two cases regarding those liable for excise tax as follows:

Case 1: Individuals or organizations producing, importing, and trading goods or services subject to excise tax are liable for the tax.

Case 2: In case individuals or organizations engaged in export businesses purchase goods subject to excise tax from manufacturing establishments for export but eventually consume them domestically, the exporting business entities are the ones liable for excise tax.

Is the excise tax refundable for imported raw materials used for export car parts processing?

Under Article 8 Law on excise Tax 2008, cases eligible for tax refund or credit are regulated as follows:

- Taxpayers are eligible for a refund of the paid excise tax under the following circumstances:

+ Goods temporarily imported and re-exported;

+ Imported materials for the production and processing of export goods;

+ Tax settlement when merging, consolidating, dividing, splitting, dissolving, bankrupting, transferring ownership, transforming enterprises, or terminating activities with excess tax paid;

+ Decisions on tax refund by competent authorities and excise tax refunds according to international treaties of which the Socialist Republic of Vietnam is a member.

The refund of excise tax as per points (a) and (b) in this clause is only applicable to goods actually exported.

Furthermore, detailed guidelines on tax refund and credit are found in Article 6 of Decree 108/2015/ND-CP, as amended by Clause 2, Article 1 Decree 14/2019/ND-CP as follows:

excise tax refunds are implemented as specified in Article 8 of the Law on excise Tax 2008.

- For temporarily imported and re-exported goods as defined in point (a), clause 1, Article 8 of the Law on excise Tax 2008:

+ Imported goods that have paid excise tax but remain in storage under customs control can be re-exported for a tax refund;

+ Imported goods taxed under excise to be delivered, sold to overseas clients through agents in Vietnam; imported goods for sales to foreign carriers on Vietnam ports routes or to Vietnamese carriers on international transport routes as stipulated by law;

+ Temporarily imported goods for re-export business, refunded the excise tax paid corresponding to the quantity actually re-exported;

+ Imported goods taxed under excise but then re-exported may be refunded the paid tax for the goods exported back to their original country;

+ Goods temporarily imported for fairs, exhibitions, showcasing or for other temporary uses according to legal time limitations; refunded upon re-export if excise tax is paid.

If goods temporarily imported for re-export have been actually re-exported within the designated tax payment period as regulated by law on export and import tax, they are not subject to excise tax equivalent to the quantity re-exported.

- Imported materials for producing and processing export items may be refunded the paid excise tax corresponding to the amount used for goods actually exported.

- Procedures, dossiers, order, and authority for resolving excise tax refunds:

+ Procedures, dossiers, order, and authority for resolving tax refunds on temporarily imported and re-exported goods as defined in clause 1 of this Article are implemented according to provisions on import tax refunds.

+ Procedures, dossiers, order, and authority for resolving excise tax refunds on imported materials for export production or processing.

In cases where import declarations contain amounts of import tax, excise tax requested for refund, the dossier for import tax refund concurrently serves as the dossier for excise tax refund.

- Manufacturing and business establishments settling tax when merging, splitting, dissolving, bankrupting, transitioning in ownership forms, transferring, selling, leasing state-owned enterprises with excess paid excise tax.

- Refunds specified in point (d), clause 1, Article 8 Law on excise Tax 2008 include:

+ Refunds according to decisions from competent authorities as per the law;

+ Refunds according to international treaties of which the Socialist Republic of Vietnam is a party;

+ Refunds in cases where excise tax paid exceeds the payable amount as stipulated by law.

Thus, it has been clearly stated that imported materials used for processing parts for export ambulance vehicles are eligible for excise tax refunds.