Is the irrigation canal dredging service for agricultural production subject to VAT in Vietnam?

Is the irrigation canal dredging service for agricultural production subject to VAT in Vietnam?

Pursuant to Clause 2, Article 8 of the Law on Value Added Tax 2008 (supplemented by Clause 3, Article 1 of the Law Amending the Law on Value Added Tax 2013 and amended by Clauses 2 and 3, Article 3 of the Law Amending Tax Laws 2014), a 5% tax rate is applied to goods and services as follows:

Tax Rate

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2. The 5% tax rate applies to the following goods and services:

a) Clean water for production and living purposes;

b) Ore for fertilizer production; pesticides and growth stimulants for livestock and crops;

c) [Repealed];

d) Services of excavation and dredging of canals, ditches, ponds, and lakes for agricultural production; cultivation, care, pest control for crops; preliminary processing, preservation of agricultural products;

đ) Unprocessed agricultural, livestock, and aquatic products, except products specified in Clause 1, Article 5 of this Law;

e) Preliminarily processed rubber latex, rosin; nets, ropes, and fibers for fishnet weaving;

g) Fresh food; unprocessed forestry products, except timber, bamboo shoots, and products specified in Clause 1, Article 5 of this Law;

h) Sugar; by-products in sugar production, including molasses, bagasse, mud bagasse;

i) Products made from jute, sedge, bamboo, rattan, leaves, straw, coconut shells, water hyacinth, and other handicraft products made from utilized agricultural materials; preliminarily processed cotton; newsprint;

k) [Repealed];

l) Medical equipment, medical hygiene cotton, and bandages; preventive and therapeutic drugs; pharmaceutical products, medicinal materials as raw materials for preventive and therapeutic drugs;

m) Teaching and learning aids, including models, drawings, boards, chalk, rulers, compasses, and specialized teaching, research, and scientific experiment equipment and tools;

n) Cultural, exhibition, physical training, sports activities; art performances, film production; film import, distribution and screening;

o) Children's toys; books of all kinds, except books specified in Clause 15, Article 5 of this Law;

p) Scientific and technological services in accordance with the Science and Technology Law.

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Thus, the irrigation canal dredging service for agricultural production is subject to VAT and is subject to a 5% tax rate.

Except for the case where the service of dredging in-field canals for agricultural production is not subject to VAT according to the provisions of Clause 3, Article 5 of the Law on Value Added Tax 2008.

Is the irrigation canal dredging service for agricultural production subject to VAT in Vietnam? (Image from the Internet)

What is the basis for calculating VAT on irrigation canal dredging services for agricultural production in Vietnam?

According to the provisions of Article 6 of the Law on Value Added Tax 2008, the basis for calculating VAT on irrigation canal dredging services for agricultural production is the taxable price and tax rate.

What is the taxable price for VAT on irrigation canal dredging services for agricultural production in Vietnam?

According to the provisions of Clause 1, Article 7 of the Law on Value Added Tax 2008 (amended by Clause 2, Article 1 of the Law Amending the Law on Value Added Tax 2013), VAT calculation for irrigation canal dredging services for agricultural production is based on the taxable price and tax rate.

Taxable Price

1. The taxable price is determined as follows:

a) For goods and services sold by the production or business establishment, it is the selling price excluding VAT; for goods and services subject to special consumption tax, it is the selling price including special consumption tax but excluding VAT; for goods subject to environmental protection tax, it is the selling price including 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;

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

c) For goods and services used for exchange, internal consumption, gifting, it is the taxable VAT price of similar goods and services at the time of these activities occurring;

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Therefore, the taxable price for VAT on irrigation canal dredging services for agricultural production is the selling price excluding VAT.