What are the conditions for excise tax deduction in Vietnam?

Which goods and services are subject to excise tax in Vietnam?

Under Article 2 of the Law on excise tax 2008 and Article 2 of Decree 108/2015/ND-CP, the objects subject to excise tax include:

(1) Goods:

- Cigarettes, cigars and other tobacco preparations used for smoking, inhaling, chewing, sniffing or keeping in mouth;

- Liquor;

- Beer;

- Under-24-seat cars, including cars for both passenger and cargo transportation with two or more rows of seats and fixed partitions between passenger holds and cargo holds;

- Two- and three-wheeled motorcycles of a cylinder capacity of over 125 cm3;

- Aircraft and yachts;

- Gasoline of all kinds, naphtha, reformade components and other components for mixing gasoline;

- Air-conditioners of 90,000 BTU or less;

- Playing cards;

- Votive gilt papers and votive objects.

(2) Services:

- Dance halls:

- Massage parlors and karaoke bars;

- Casinos; prize-winning video games, including jackpot and slot games and games on similar machines;

- Betting;

- Golf business, including the sale of membership cards and golf playing tickets;

- Lottery business.

What are the conditions for excise tax deduction in Vietnam? (Image from the Internet)

What are the cases of excise tax deduction in Vietnam?

According to 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), the cases of excise tax deduction in Vietnam include:

(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.

(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 conditions for excise tax deduction in Vietnam?

According to Clause 3, Article 7 of Decree 108/2015/ND-CP as amended by Decree 14/2019/ND-CP specifying the conditions for excise tax deduction as follows:

- 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.

- 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.