Is the therapeutic service provides for persons with disabilities subject to VAT in Vietnam?

Is the therapeutic service provides for persons with disabilities subject to VAT in Vietnam?

Pursuant to Clause 9, Article 4 of Circular 219/2013/TT-BTC on objects not subject to VAT as follows:

Objects not subject to VAT

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9. Medical services, veterinary services, including medical examination, treatment, prevention for humans and animals, family planning services, health care services, rehabilitation for patients, services for the elderly, the disabled; patient transportation, room and bed rental services by medical institutions; testing, imaging, blood, and blood product services for patients.

Elderly and disabled care services include medical care, nutrition, and organization of cultural, sports, recreational, physical therapy, and rehabilitation activities for the elderly and the disabled.

In case a medical service package (as prescribed by the Ministry of Health) includes the use of treatment drugs, the revenue from treatment drugs in such a package is also not subject to VAT.

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Therefore, a business providing therapeutic services for persons with disabilities is not required to pay VAT as it is not within the scope of VAT taxation.

Is the therapeutic service provides for persons with disabilities subject to VAT in Vietnam? (Image from the Internet)

If the therapeutic service provides for persons with disabilities is not subject to VAT, is there a requirement to declare and pay VAT in Vietnam?

Based on Official Dispatch 4943/TCT-KK of 2015 guiding difficulties in tax declaration and supplementary tax declaration documentation as follows:

"The General Department of Taxation has received several issues regarding tax declaration and supplementary tax declarations in implementing the Law on Tax Administration; the law amending and supplementing several provisions of the Law on Tax Administration and guiding documents. On this matter, after reporting and obtaining approval from the Ministry of Finance, the General Department of Taxation provides the following opinions:

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7. Other situations

a) Article 4 of the VAT Law No. 13/2008/QH12 dated June 03, 2008, provides:

“VAT payers are organizations, individuals producing and trading goods and services subject to VAT (hereinafter referred to as business establishments), and organizations, individuals importing goods subject to VAT (hereinafter referred to as importers).”

Based on the above guidelines, if a taxpayer only produces or trades goods and services not subject to VAT, they are not required to declare and pay VAT. If there is a transaction involving the sale of goods and services subject to VAT (e.g., liquidation of assets, ...), the taxpayer must use invoices from the tax authority and pay according to regulations.

b) A VAT declaration file submitted by the taxpayer where the indicator “VAT creditable carried forward from previous period” must equal the indicator “VAT creditable carried forward to the next period” on the official tax return of the previous tax period.

Example 13:

- On May 20, 2015, Company K submitted the official declaration 01/GTGT for the tax period of April 2015, with the indicator “VAT creditable carried forward from previous period” (indicator 22) must equal the indicator “VAT creditable carried forward to the next period” (indicator 43) on the official declaration 01/GTGT for the tax period of March 2015.

- On June 15, 2015, Company K submitted a supplementary declaration 01/GTGT for the tax period of April 2015, with the indicator “VAT creditable carried forward from previous period” (indicator 22) on the supplementary declaration must equal the indicator “VAT creditable carried forward to the next period” (indicator 43) on the official declaration 01/GTGT for the tax period of March 2015.

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Thus, for facilities only engaged in providing therapeutic services for persons with disabilities not subject to VAT, they are not required to declare or pay VAT.

Who are persons with disabilities?

According to Clause 1, Article 2 of Law on Persons with Disabilities 2010, a person with disabilities is someone with a defect in one or more body parts or a diminishing function that manifests as a disability, thus causing difficulties in labor, daily activities, and learning.

To be specific: persons with disabilities are classified according to the level of disability as follows:

(i) Persons with severe disabilities are those who, due to disabilities, completely lose function and are unable to self-regulate or perform personal activities such as movement, dressing, personal hygiene, and other daily personal needs without complete supervision or assistance.

(ii) Persons with moderate disabilities are those who have partial or diminished functions due to disabilities and cannot independently regulate or perform some activities such as movement, dressing, personal hygiene, and other daily personal needs without supervision or assistance.

(iii) Persons with mild disabilities are those which do not fall under the stipulations in item (i) or (ii).

(According to Clause 2, Article 3 of Decree 28/2012/ND-CP)