What are the cases of excise tax deduction in Vietnam?

What are the cases of excise tax deduction in Vietnam?

Under Clause 2, Article 8 of the Law on Excise Tax 2008, taxpayers that produce excise taxable goods from raw materials for which excise tax has been paid and that can produce lawful documents on tax payment may have the tax amounts paid for raw materials deducted upon the determination of payable excise tax amounts at the stage of production.

Detailed cases of excise tax deduction in Vietnam are guided in Clause 1 and Clause 2, Article 7 of Decree 108/2015/ND-CP (amended by Clause 3, Article 1 of Decree 14/2019/ND-CP) as follows:

(1) When determining the excise tax payable, a taxpayer that manufactures goods subject to excise tax from materials subject to excise tax may deduct the paid excise tax on the quantity of materials imported (including the excise tax paid according to the Decision on tax imposition made by the customs authority, except decisions made by customs authorities on imposition of penalties for tax fraud or tax evasion) or purchased from another domestic manufacturer. The amount of deductible excise tax corresponds to the amount of excise tax on materials used for manufacturing goods that are sold and subject to the excise tax.

For biofuel, the amount of deductible excise tax in the period depends on the amount of paid excise tax on a unit of material purchased in the previous period for manufacturing of biofuel.

An enterprise licensed to manufacture biofuel shall declare and deduct special excise duty at the tax authority in charge of the area where its headquarters is located. The excise tax on materials used for manufacturing biofuel that remains after deduction (including the excise tax that remains from the period of January, 2016) may be offset against the excise tax payable on other goods/ services in the period. The special excise duty on materials used for manufacturing biofuel that remains after offsetting shall be carried forward to the next period or refunded.

Documents and procedures for refund of excise tax are as follows:

- The manufacturer of biofuel shall prepare the request for refund of amounts paid to state budget and offsetting against other taxes payable (if any) using the form No. 01a/DNHT enclosed herewith.

- The manufacturer of biofuel shall submit the application for refund of the excise tax that remains after deduction to the tax authority in charge of the area where its headquarters is located for consideration in accordance with applicable regulations.

- Tax authorities shall assume responsibility to process applications for refund of excise tax as regulated in this Clause in accordance with Article 60 of the Law on Tax administration and the Law on amendments to the Law on Tax administration and their amending documents (if any).

- Based on the Order for refund of amounts paid to state budget given by the tax authority, the State Treasury shall refund the collected amount of excise tax on materials used for manufacturing biofuel to the manufacturer. Funding for paying refunds of excise tax is derived from the revenue on excise tax of the central-government budget.

(2) Payers of excise tax on goods subject to excise tax at import may deduct excise tax paid at importation, including excise tax paid according to the Decision on tax imposition made by the customs authority, except decisions made by customs authorities for imposition of penalties for tax fraud or tax evasion, from excise tax payable on goods sold domestically.

Deductible excise tax is equal to excise tax on goods subject to excise tax that are sold after import, and must not exceed the excise tax on goods sold domestically. The taxpayer may include excise tax that remains after deduction in expenses when calculating corporate income tax

What are the cases of excise tax deduction in Vietnam? (Image from the Internet)

What are the conditions for excise tax deduction in Vietnam?

The conditions for excise tax deduction are stipulated in Clause 3, Article 7 of Decree 108/2015/ND-CP (amended by Clause 3, Article 1 of Decree 14/2019/ND-CP) as follows:

(1)  When importing materials subject to excise tax for manufacturing goods subject to excise tax, and when importing goods subject to excise tax, the receipts for excise tax payment at importation shall be used as the basis for excise tax deduction.

(2) If materials are purchased from a domestic manufacturer:

- A sale contract which specifies that the materials are directly manufactured by the seller; the copy of the Certificate of business registration of the seller which must bear the seller's signature and seal.

- Bank transfer receipts.

- VAT invoices are the basis for deduction of excise tax. The amount of excise tax paid by the buyer when buying materials equals (=) taxable price multiplied (x) by excise tax rate; where:

The excise tax shall be deducted when making excise tax declaration and the excise tax payable is calculated by adopting the following formula:

If excise tax payable or paid on the quantity of materials used for manufacturing of goods sold in period cannot be determined yet, the figures of the previous period may be used to calculate the deductible excise tax and the actual amount shall be determined at the end of the quarter or year. In any case, deductible excise tax must not exceed the excise tax on the quantity of materials set out in technical regulations applied to such products.

What are the excise tax deduction declaration forms in Vietnam?

Under Clause 4, Article 7 of Decree 108/2015/ND-CP (amended by Clause 3, Article 1 of Decree 14/2019/ND-CP) which regulates the excise tax deduction declaration forms:

(1) Excise tax declaration form - Form No. 01/TTDB: DOWNLOAD HERE

(2) Table form of deductible excise tax  - Form No. 01-1/TTDB: DOWNLOAD HERE