Vietnam: What does indirect tax include?

Vietnam: What does indirect tax include?

Currently, the law does not have specific provisions explaining the concept of indirect taxes. However, indirect taxes can be understood as taxes where the person bearing the tax is not the one who pays it. The taxpayer is the seller of goods, the provider of services, or the importer, while the person who ultimately bears the tax is the buyer of goods or the user of services. The tax amount is included in the sale price of the goods or services used.

The most common types of indirect taxes include:

(1) Excise Tax

Special consumption tax applies to certain luxurious goods and services to regulate their production, importation, and social consumption.

According to clause 1, Article 2 of the Law on Excise Tax 2008, amended and supplemented by clause 1, Article 1 of the 2014 Law on Amendments to Law on Excise Tax and Article 2 of Decree 108/2015/ND-CP, goods subject to special consumption tax include:

- Cigarettes, cigars, and other tobacco preparations used for smoking, sniffing, chewing, inhaling, or retaining in the mouth.

- Alcohol.

- Beer.

- Cars with less than 24 seats, including vehicles designed to carry both people and cargo with two or more rows of seats and a permanent partition between the passenger and cargo area.

- Motorcycles with engine displacement over 125cm3.

- Airplanes and yachts (for civilian use).

- Various types of gasoline.

- Air conditioners with a capacity of 90,000 BTU or less.

- Playing cards.

- Paper votive and joss products, excluding those used as children's toys or educational tools.

Note: Goods subject to tax are finished products and do not include the kits for assembling these goods.

(2) Value-Added Tax (VAT)

According to Article 2 of the Law on Value-Added Tax 2008, VAT is calculated on the value added at each stage of the production, circulation, and consumption of goods and services.

(3) Environmental Protection Tax

As stipulated in clause 1, Article 2 of the Law on Environmental Protection Tax 2010, environmental protection tax is an indirect tax levied on products and goods that, upon use, have adverse effects on the environment.

(4) Severance tax

Currently, there are no specific legal definitions for the concept of resource tax. However, resource tax can be understood as an indirect tax paid by individuals or organizations to the state when exploiting natural resources.

The taxable subjects of resource tax are stipulated in Article 2 of the Law on Severance tax 2009 as follows:

- Metallic minerals.

- Non-metallic minerals.

- Crude oil.

- Natural gas and coal gas.

- Products from natural forests, except for animals.

- Natural aquatic products, including marine animals and plants.

- Natural water, including surface and underground water.

- Bird's nest.

- Other resources as prescribed by the Standing Committee of the National Assembly.

Organizations, business households, and individuals exploiting natural resources are obliged to register as taxpayers, declare taxes, pay taxes, and finalize taxes according to regulations.

(5) Import and Export Duties

As prescribed in clauses 1, 2, and 3 of Article 2 of the Law on Export and Import Duties 2016, taxable subjects include:

- Goods exported or imported through Vietnamese border gates and borders.

- Goods exported from the domestic market to non-tariff zones and goods imported from non-tariff zones into the domestic market.

- Goods exported, imported on the spot, and goods exported, imported by enterprises exercising export, import, and distribution rights.

Consumers purchasing these taxed goods will be the ones to pay the import-export taxes. However, this tax amount will be added to the product price (similar to VAT) when consumers buy goods, and the taxpayer is the owner of the goods; thus, this also constitutes an indirect tax.

Vietnam: What does indirect tax include? (Image from the Internet)

What are rights of taxpayers in Vietnam?

Based on Article 16 of the Law on Tax Administration 2019, taxpayers have the following rights:

- To receive assistance and guidance in tax payments; to be provided with information and documents to fulfill their tax obligations and benefits.

- To receive written documents concerning tax obligations from functional agencies during inspections, examinations, and audits.

- To request the tax administration agency to explain tax calculations, tax assessments; to request assessments of quantity, quality, and type of exported and imported goods.

- To have their information kept confidential, except for information required to be provided to competent state agencies or publicly disclosed as per legal regulations.

- To enjoy tax incentives and tax refunds as regulated by tax law; to know the deadlines for tax refunds, the amount of tax not refunded, and the legal basis for denied tax refunds.

- To enter into contracts with service providers dealing in tax procedures, customs brokerage to carry out tax agency services and customs procedures.

- To receive tax handling decisions, tax inspection and audit reports, to request explanations for the content of tax handling decisions; to reserve opinions in tax inspection and audit reports; to receive tax inspection, audit conclusions, and post-inspection tax handling decisions from the tax administration agency.

- To be compensated for damages caused by tax administration agencies or tax officials according to legal provisions.

- To request the tax administration agency to certify compliance with their tax obligations.

- To file complaints and initiate lawsuits against administrative decisions, administrative actions related to their legal rights and interests.

- Not to be administratively penalized for tax violations or charged penalties for late payment in the event that they comply with guidance and decisions from the tax or competent state agencies concerning the confirmation of tax obligations.

- To report violations committed by tax officials and other organizations or individuals according to the law on denunciations.

- To access, view, and print all electronic documents they have sent to the tax administration agency's electronic portal as per this Law and electronic transaction law.

- To use electronic documents in dealings with the tax administration agency and related organizations.

What are responsibilities of taxpayers in Vietnam?

According to Article 17 of the Law on Tax Administration 2019, taxpayers have the following responsibilities:

- To conduct taxpayer registration and use tax identification numbers in accordance with the law.

- To declare taxes accurately, honestly, fully, and submit tax records on time; to be responsible before the law for the accuracy, honesty, and completeness of tax records.

- To pay taxes, late payment fines, and penalties fully, on time, and at the correct location.

- To comply with accounting policies, statistics, and management as well as use invoices and documents as prescribed by law.

- To record accurately, truthfully, and fully activities creating tax obligations, tax deductions, and transactions that require tax information declaration.

- To create and issue invoices and documents to buyers according to the exact quantity, type, and true payment value when selling goods or providing services as prescribed by law.

- To provide accurate, complete, and prompt information and documents related to tax obligation determination, including investment values; numbers and transaction content of accounts opened at commercial banks or other financial institutions; to explain tax calculations, declarations, and payments as requested by the tax administration agency.

- To comply with decisions, notifications, and requests from the tax administration agency and tax officials according to legal regulations.

- To bear responsibility for fulfilling tax obligations as prescribed by law if they have legal representatives or authorized representatives who improperly carry out tax procedures.

- Taxpayers conducting business in areas with information technology infrastructure must declare, pay taxes, and transact with the tax administration agency through electronic means according to legal regulations.

- Based on actual circumstances and information technology conditions, the Government of Vietnam details the cases in which taxpayers are not required to submit documents in their tax declaration, payment, refund records, and other tax-related records that state management agencies already possess.

- To establish, manage, and operate technical infrastructure systems ensuring the execution of electronic transactions with the tax administration agency, applying information connections related to fulfilling tax obligations with the tax administration agency.

- Taxpayers engaging in related party transactions must prepare, store, declare, and provide information records about the taxpayer and their associated parties, including information about related parties residing in countries or territories outside Vietnam as prescribed by the Government of Vietnam.