Vietnam: Is the VAT calculation time for clean water the date recorded on the water meter?

Is clean water serving everyday life exempt from VAT in Vietnam?

According to Clause 1, Article 10 of Circular 219/2013/TT-BTC, the 5% tax rate is stipulated as follows:

5% Tax Rate

1. Clean water for production and domestic use, excluding bottled drinking water, packaged water, and other types of beverages that are subject to a 10% tax rate.

...

Based on this regulation, clean water for domestic use is not exempt from VAT and is subject to a 5% tax rate.

Vietnam: Is the VAT calculation time for clean water the date recorded on the water meter? (Image from the Internet)

Vietnam: Is the VAT calculation time for clean water the date recorded on the water meter?

According to Article 8 of Circular 219/2013/TT-BTC, the time of determining VAT is specified as follows:

Time of Determining VAT

...

2. For service provision, it is the time when the service provision is completed or when the invoice for service provision is issued, regardless of whether payment has been received or not.

For telecommunications services, it is the time when the reconciliation of service connection charges is completed as per the economic contract between the telecommunications service establishments, but no later than 2 months from the month of the arising connection charges.

3. For the activity of supplying electricity and clean water, it is the date recorded on the electricity or water consumption meter for billing purposes.

4. For real estate business activities, infrastructure construction, house building for sale, transfer, or lease, it is the time of collecting money as per the project progress or the contract's stipulated payment schedule. Based on the collected amount, the business entity declares the output VAT incurred during the period.

...

Thus, according to the above regulation, the time of determining VAT for the activity of supplying clean water is the date recorded on the electricity or water consumption meter for billing purposes.

What is the penalty for late submission of VAT declarations in Vietnam?

According to Article 13 of Decree 125/2020/ND-CP, the penalties for violations related to the late submission of tax declarations are stipulated as follows:

- A warning for submitting the tax declaration 1 to 5 days late with mitigating circumstances.

- A fine ranging from 2,000,000 VND to 5,000,000 VND for submitting the tax declaration 1 to 30 days late, except as prescribed in Clause 1 of this Article.

- A fine ranging from 5,000,000 VND to 8,000,000 VND for submitting the tax declaration 31 to 60 days late.

- A fine ranging from 8,000,000 VND to 15,000,000 VND for any of the following acts:

+ Submitting the tax declaration 61 to 90 days late;

+ Submitting the tax declaration 91 days or more late without incurring tax obligations;

+ Not submitting the tax declaration without incurring tax obligations;

+ Not submitting appendices related to tax management for enterprises with related transactions along with the corporate income tax finalization file.

- A fine ranging from 15,000,000 VND to 25,000,000 VND for submitting the tax declaration more than 90 days late from the deadline, with tax obligations incurred, when the taxpayer has paid the full tax amount and late payment into the state budget before the tax authority announces the decision on tax inspection or audit, or before the tax authority records the act of late submission of the tax declaration as prescribed in Clause 11, Article 143 of the Tax Administration Law 2019.

Note: The fines mentioned in Article 13 of Decree 125/2020/ND-CP apply to organizations. Additionally, for the same administrative violations regarding taxes and invoices, the fine for organizations is twice the penalty for individuals (based on Point a, Clause 4, Article 7 and Clause 5, Article 5 of Decree 125/2020/ND-CP).

Where should VAT declarations be submitted in Vietnam?

According to Article 45 of the Tax Administration Law 2019, the specific regulations regarding the location for submitting tax declarations are as follows:

- Taxpayers shall submit tax declarations at the directly managing tax authority.

- In cases of submitting tax declarations under the single-window mechanism, the location for submitting such files shall comply with the regulations of that mechanism.

- The location for submitting tax declarations for exported and imported goods shall comply with the provisions of the Customs Law.

- the Government of Vietnam shall regulate the location for submitting tax declarations for the following cases:

+ Taxpayers with multiple production and business activities;

+ Taxpayers conducting production and business in multiple locations; taxpayers with tax obligations related to taxes declared and paid upon each occurrence;

+ Taxpayers with tax obligations related to proceeds from land; licensing fees for water resource utilization, mineral resource exploitation;

+ Taxpayers with obligations regarding personal income tax finalization;

+ Taxpayers declaring taxes through electronic transactions and other necessary cases.