Is VAT reduction applicable to warehouse and factory leasing in Vietnam?
Is VAT reduction applicable to warehouse and factory leasing in Vietnam?
Based on Article 11 of Circular 219/2013/TT-BTC stipulating cases of applying a 10% value-added tax rate as follows:
10% Tax Rate
A 10% tax rate applies to goods and services not specified in Articles 4, 9, and 10 of this Circular.
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Simultaneously, according to the provisions under Articles 4, 9, and 10 of Circular 219/2013/TT-BTC concerning objects not subject to value-added tax and cases applying 0%, 5% tax rates, warehouse and factory leasing are subject to 10% tax rate.
Additionally, based on Article 1 of Decree 180/2024/ND-CP regulating value-added tax reduction as follows:
VAT reduction
- Reduce value-added tax for groups of goods and services currently applying the 10% tax rate, except for the following goods and services:
a) Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details in Annex I attached to this Decree.
b) Products and services subject to special consumption tax. Details in Annex II attached to this Decree.
c) Information technology as per the information technology laws. Details in Annex III attached to this Decree.
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- Value-Added Tax Reduction Rate
a) Business establishments calculating value-added tax by deduction method are applied an 8% VAT rate for the goods and services specified in Clause 1 of this Article.
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In addition, referring to the listing provisions in Annex 1 of Decree 180/2024/ND-CP includes code 6810410 - Leasing non-accommodation real estate and land rights services.
Thus, warehouse and factory leasing will not receive value-added tax reduction and are subject to a 10% tax rate.
Is VAT reduction applicable to warehouse and factory leasing in Vietnam? (Image from Internet)
When is the time for determining VAT for service provision in Vietnam?
Based on Clause 2, Article 8 of Circular 219/2013/TT-BTC regulating the time to determine value-added tax for service provision as follows:
- For service provision, it is the time of completing the service provision or the time of invoicing the service provision, regardless of whether the payment has been collected or not.
- For telecommunications services, it is the time of completing data reconciliation for telecommunication connection services fees per the economic contract between telecommunications service business entities, but no later than 2 months from the month the telecommunication connection service fees arose.
Where is VAT paid?
Based on Article 20 of Circular 219/2013/TT-BTC stipulating the place to pay value-added tax as follows:
Place to Pay Tax
- Taxpayers declare and pay VAT at the locality where production and business occur.
- Taxpayers declare and pay VAT by the deduction method with a dependent accounting production establishment located in a province or city directly under the Central Government, different from the province or city where the head office is located must pay VAT at the locality where the production establishment and the locality where the head office is located.
- In cases where enterprises, cooperatives apply the direct method with a production establishment in a province or city different from where the head office is located or have out-of-province retail activities, the enterprise or cooperative shall declare and pay VAT according to a percentage of revenue for the revenue arising out-of-province at the locality where the production establishment or retail location is situated. Enterprises and cooperatives do not have to pay VAT by a percentage of revenue at the head office for out-of-province revenue that has been declared and paid.
- In cases where telecommunication service business entities offer post-paid services in a province or city distinct from where the head office is located and have set up dependent accounting branches paying VAT by the deduction method joining the post-paid telecom service provision in that locality, the telecom service business shall declare and pay VAT for the post-paid telecom services as follows:
- Declare VAT for post-paid telecom service revenue of the entire business entity to the tax authority directly managing the head office.
- Pay VAT at the locality where the head office is located and at the locality where the dependent accounting branch is located.
The VAT payable at the locality where the dependent accounting branch is located is determined by a 2% rate (for post-paid telecom services subject to a 10% VAT) on revenue (without VAT) of post-paid telecom services at the locality where the dependent accounting branch exists.
- VAT declaration and payment are performed following the Law on Tax Administration and its guiding documents.
Thus, the place to pay value-added tax as stipulated is:
- The locality where production and business take place.
- The locality where the production establishment and the locality where the head office is located if the taxpayer declares and pays VAT by the deduction method with a dependent accounting production establishment in a different province or city from the head office.
- The locality where the production establishment or temporary retail location if enterprises, cooperatives apply the direct method with a production establishment in a different province or city from where the head office is located or have out-of-province retail activities.
- The locality where the head office is located and where the dependent accounting branch is located if the telecommunication service business offers post-paid services in a different province or city from the head office and has set up a dependent accounting branch paying VAT by the deduction method joining the post-paid telecom service provision there.
