Shall businesses leasing out houses to students and low-income earners receive a 2% VAT reduction in Vietnam?

Shall businesses leasing out houses to students and low-income earners receive a 2% VAT reduction in Vietnam?

Pursuant to Point a, Clause 1, Article 1 of Decree 180/2024/ND-CP prescribing the policy of value-added tax reduction as follows:

Reduction of Value-Added Tax

1. Reduction of value-added tax for groups of goods and services currently applying a 10% tax rate, except for the following groups of goods and services:

a) Telecommunications, financial activities, banking, securities, insurance, real estate business, metal and pre-fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products. Details in Appendix I issued with this Decree.

b) Goods and services subject to special consumption tax. Details in Appendix II issued with this Decree.

c) Information technology under the law on information technology. Details in Appendix III issued with this Decree.

d) The reduction of value-added tax for each type of goods and services specified in Clause 1 of this Article is uniformly applied at importation, production, processing, and commercial Business stages. For extracted coal sold (including cases where the extracted coal is later sieved, classified according to a closed process before being sold) is subject to value-added tax reduction. Coal goods belong to Appendix I issued with this Decree. They are not eligible for a value-added tax reduction at stages other than the extracted sales stage.

General corporations and economic groups implementing closed processes before selling are also subject to value-added tax reduction for extracted coal sold.

In cases of goods and services mentioned in Appendices I, II, and III issued with this Decree are not subject to value-added tax or are subject to a 5% value-added tax as per the Law on Value-Added Tax, follow the provisions of the Law on Value-Added Tax and are not eligible for value-added tax reduction.

2. Level of value-added tax reduction

a) Business establishments calculating value-added tax by the deduction method are subject to an 8% value-added tax rate for goods and services specified in Clause 1 of this Article.

Currently, concerning the 2% VAT reduction policy, for goods and services listed in the appendix, there will be no tax reduction. Moreover, leasing activities as mentioned above fall under code 681031 in Appendix I, thus not eligible for tax reduction, meaning a 10% tax rate still applies.

Shall businesses leasing out houses to students and low-income earners receive a 2% VAT reduction in Vietnam? (Image from Internet)

Shall businesses transferring land in industrial zones be exemp from VAT in Vietnam?

Pursuant to Clause 6, Article 4 of Circular 219/2013/TT-BTC, which stipulates as follows:

Entities not subject to VAT

…

2. Products as animal breeds, plant seeds, including breeding eggs, breeding animals, seedlings, seeds, branches, tubers, semen, embryos, genetic materials at the stages of breeding, import and commercial business. Products of animal breeds and plant seeds which are not subject to VAT are those produced by import, commercial businesses with registered business licenses for animal breeds and plant seeds from competent state authorities. For products as animal breeds, plant seeds to which the State has issued standards and quality specifications, they must meet the conditions stipulated by the State.

3. Irrigation, drainage; plowing, land preparation; dredging of intrafield canals and ditches for agricultural production; services of harvesting agricultural products.

4. Salt products produced from seawater, natural rock salt, refined salt, iodized salt with the main component being NaCl (Sodium Chloride).

5. State-owned houses sold to current tenants.

6. Transfer of land use rights.

7. Life insurance, health insurance, student insurance, other insurance services related to humans; insurance of pets and plants, other agricultural insurance services; insurance of ships, boats, equipment and other necessary tools directly serving fishery; reinsurance.

..

Therefore, one of the entities not subject to VAT is the Transfer of land use rights. Thus, even businesses transferring transfers of land use rights within industrial zones still benefit from this policy.

What are general regulations on the current place of VAT payment in Vietnam?

Pursuant to Article 20 of Circular 219/2013/TT-BTC, regulations on the place of VAT payment are as follows:

- Taxpayers declare and pay VAT in the locality where they produce or conduct business.

- Taxpayers declaring, paying VAT according to the deduction method with production facilities accounting for dependence located in a province or centrally-run city different from where the headquarters are located must pay VAT in the locality where the production facility is located and where the headquarters are situated.

- In cases where businesses, cooperatives applying the direct method have production facilities in a province or city different from where the headquarters are situated, or conduct mobile sales activities out of province, the businesses, cooperatives declare and pay VAT according to a percentage on revenue for revenue arising out of the province at the locality where the production facility or where mobile sales occur. Businesses, cooperatives do not pay VAT according to a percentage on revenue at their headquarters for out-of-province revenue that has been declared and paid.

- In instances of telecommunications service businesses providing post-paid telecommunications services in a province or city different from where the headquarters are situated and forming dependent branches paying VAT according to the deduction method participating in business activities for post-paid telecommunications services in that locality, the telecommunications service business must declare and pay VAT for post-paid telecommunications services as follows:

+ Declare VAT for the total revenue of post-paid telecommunications services of the entire business with the tax authority directly managing the headquarters.

+ Pay VAT at the locality where the headquarters is located and at the locality where the dependent branch is situated.

The amount of VAT to be paid in the location of the dependent branch is determined by the percentage of 2% (for post-paid telecommunications services subjected to a 10% VAT rate) on revenue (excluding VAT) from post-paid telecommunications services at the location of the dependent branch.

- The declaration and payment of VAT are executed according to regulations under the Law on Tax Administration and the guiding documents of the Law on Tax Administration.