VAT rate increased from 5% to 10% for film production services in Vietnam: What are significant amendments in the draft Value-Added Tax Law?
VAT rate increased from 5% to 10% for film production services according to the draft Law on Value-Added Tax?
The amendment to the Law on Value-Added Tax (VAT), especially the proposal to increase VAT on film production services from 5% to 10%, has been put forward. Specifically, the draft Law on Value-Added Tax (amended) has made some important adjustments related to service sectors, including culture, sports, arts, and cinema.
According to the draft amendment, Clause 2, Article 9 of the draft Law on Value-Added Tax will remove the 5% tax rate for goods and services involved in cultural activities, exhibitions, sports, arts performances, film production, import, distribution, and screening. This means that cinema services, which previously enjoyed a preferential VAT rate of 5%, will now be subject to the standard 10% tax rate.
Draft Law on Value-Added Tax...download
Note: The above information is for reference purposes only!
VAT rate increased from 5% to 10% for film production services in Vietnam: What are significant amendments in the draft VAT Law? (Image from the Internet)
What is the current VAT rate for film production services in Vietnam?
Based on point n, Clause 2, Article 8 of the Law on Value-Added Tax 2008, supplemented by Clause 3, Article 1 of the Law on Value-Added Tax Amended 2013 and amended by Article 3 of the Law Amending Tax Laws 2014, there is a specific provision on the 5% tax rate as follows:
Tax rate
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- The 5% tax rate applies to the following goods and services:
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d) Services of digging, dredging channels, canals, lakes for agricultural production; cultivation, care, pest protection for crops; preliminary processing, and preservation of agricultural products;
đ) Unprocessed products from farming, livestock, aquaculture, excluding products specified in Clause 1, Article 5 of this Law;
e) Raw rubber; raw resin; nets, ropes, and yarn for knitting fishing nets;
g) Fresh food; unprocessed forestry products, excluding wood, bamboo, and products specified in Clause 1, Article 5 of this Law;
h) Sugar; by-products in sugar production, including molasses, bagasse, mud residue;
i) Products made from jute, sedge, bamboo, rattan, straw, coconut shells, water hyacinth, and other handicraft products made from agricultural by-products; raw cotton; newsprint;
k) Specialized machines and equipment for agricultural production, including plows, harrows, seeders, threshers, harvesters, integrated harvesters, agricultural product harvesters, pesticide sprayers or tanks;
l) Medical equipment and tools; medical cotton, bandages; preventive and curative medicines; pharmaceutical products and herbal medicines used as raw materials for producing curative and preventive medicines;
m) Teaching and learning aids, including models, illustrations, boards, chalk, rulers, compasses, and specialized teaching, research, and scientific experimentation tools;
n) Cultural, exhibition, sports activities; art performances, film production; import, distribution, and screening of films;
o) Children's toys; all types of books, excluding those specified in Clause 15, Article 5 of this Law;
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Thus, according to the above regulations, the current tax rate for film production services is 5%.
How to determine the VAT base price in Vietnam?
According to Article 7 of the Law on Value-Added Tax 2008, as amended by Clause 2, Article 1 of the Law on Value-Added Tax Amended 2013 and the provision on exchange rates when determining the taxable value abolished by point c, Clause 2, Article 6 of the Law Amending Tax Laws 2014, the specific regulations on the taxable value are as follows:
- For goods and services produced and sold by business establishments, the price is the selling price exclusive of VAT; for goods and services subject to special consumption tax, the price includes special consumption tax but excludes VAT; for goods subject to environmental protection tax, the price includes environmental protection tax but excludes VAT; for goods subject to both special consumption and environmental protection taxes, the price includes such taxes but excludes VAT;
- For imported goods, the taxable value is the import price at the port plus import tax (if any), plus special consumption tax (if any), and plus environmental protection tax (if any). The import price at the port is determined according to regulations on taxable value for imported goods;
- For goods and services used for exchange, internal consumption, gifting, etc., the taxable value is the VAT taxable value of similar goods and services at the time these activities occur;
- For asset leasing activities, it is the rental amount excluding VAT.
- In case of leasing with periodical payments or advance payments for the lease period, the taxable value is the rental amount paid per period or in advance for the period excluding VAT;
- The case of leasing with periodical payments or advance payments for a lease period, the taxable value is the rental amount paid per period or in advance for the lease period excluding VAT;
In the case of leasing machinery, equipment, transport vehicles from abroad that are not produced domestically for subleasing, the taxable value is the rental payable to foreign entities deducted.
- For goods sold on an installment or deferred payment basis, the taxable value is the one-time payment selling price excluding VAT, not including installment interest or deferred interest;
- For processing goods, it is the processing price excluding VAT;
- For construction and installation activities, it is the value of the work, work items, or parts handed over excluding VAT. In cases of construction and installation without materials, machinery, or equipment, the taxable value is the construction and installation value excluding material, machinery, and equipment values;
- For real estate business activities, it is the selling price of real estate excluding VAT, except for land use right transfer prices or land rent payable to the state budget;
- For agency and brokerage activities, receiving commission from purchasing and selling goods and services, it is the commission income from these activities excluding VAT;
- For goods and services compensated with payment vouchers showing payment prices inclusive of VAT, the taxable value is determined by the following formula:
Taxable value excluding VAT = Payment price / (1 + applicable VAT rate (%))
- The taxable value for goods, services specified in Clause 1, Article 7 of the Law on Value-Added Tax 2008 includes surcharges and additional fees that businesses are entitled to.
