What is the current VAT rate for construction activities in Vietnam?
What is the current VAT rate for construction activities in Vietnam?
Pursuant to Article 11 of Circular 219/2013/TT-BTC, specific provisions regarding the 10% tax rate are as follows:
10% Tax Rate
The 10% tax rate applies to goods and services not stipulated in Article 4, Article 9, and Article 10 of this Circular.
The VAT rates stated in Article 10 and Article 11 are applied uniformly for each type of goods and services across stages of import, production, processing, or commercial business.
Example 50: Garments and clothing products apply a tax rate of 10%; thus, this product at the stages of import, production, processing, or commercial business is subject to the 10% tax rate.
Scrap and waste recovered for recycling and reuse, when sold, are subject to the VAT rate applicable to the scrap and waste products sold.
Businesses supplying multiple goods and services with different VAT rates must declare VAT according to the specific rate for each type of good and service; if unable to ascertain distinct tax rates, the business must calculate and pay tax at the highest applicable rate for goods and services produced and supplied.
During implementation, if there are inconsistencies between VAT rates in the Preferential Import Tariff Schedule and the guidelines in this Circular, the Circular's guidelines prevail. In cases where unified VAT rates are not applied to the same type of imported and domestically produced goods, local tax authorities and customs departments report to the Ministry of Finance for prompt unified implementation guidance.
Additionally, according to Article 1 of Decree 72/2024/ND-CP, specific provisions regarding VAT reduction are as follows:
VAT Reduction
- Reduction of VAT for groups of goods and services currently applying a 10% tax rate, excluding the following groups:
a) Telecommunications, financial services, banking, securities, insurance, real estate business, metals and fabricated metal products, mineral products (excluding coal mining), coke coal, refined petroleum, and chemical products. Details in Appendix I attached to this Decree.
b) Goods and services subject to special consumption tax. Details in Appendix II attached to this Decree.
c) Information technology as per information technology law. Details in Appendix III attached to this Decree.
d) The reduction of VAT for each type of goods and services specified in Clause 1 of this Article is uniformly applied across stages of import, production, processing, and commercial business. For coal mined and sold (including cases where coal is mined, screened, sorted in a closed process before being sold), VAT reduction applies. Coal products listed in Appendix I attached to this decree, at stages other than mining, do not benefit from VAT reduction.
Major corporations and economic groups conducting closed-loop processing before selling also qualify for VAT reduction for mined coal products.
In cases where goods and services listed in Appendices I, II, and III attached to this Decree fall under non-VAT or 5% VAT as per the VAT Law, provisions of the VAT Law prevail, and no VAT reduction applies.
Thus, according to the above provisions, construction activities are currently subject to an 8% VAT rate.
Note: The 8% rate under Decree 72/2024/ND-CP is only effective until December 31, 2024.
What is the current VAT rate for construction activities in Vietnam? (Image from Internet)
Which entities are VAT payers in Vietnam?
According to Article 4 of the Law on Value-Added Tax 2008, specific provisions regarding taxpayers are as follows:
VAT taxpayers are organizations and individuals producing and trading goods and services subject to VAT (hereinafter referred to as business establishments) and organizations and individuals importing goods subject to VAT (hereinafter referred to as importers).
Where are locations for submitting tax declaration in Vietnam?
According to Article 45 of the Law on Tax Administration 2019, specific provisions regarding locations for submitting tax declarations are as follows:
- Taxpayers submit tax declarations at the directly managing tax authority.
- When submitting tax declarations under a single-window mechanism, the location for submitting tax declarations follows the regulations of that mechanism.
- The location for submitting tax declarations for export and import goods follows the provisions of the Customs Law.
- the Government of Vietnam stipulates locations for submitting tax declarations in the following cases:
+ Taxpayers with multiple production and business activities;
+ Taxpayers conducting production and business activities in multiple locations; taxpayers incurring tax obligations for taxes declared and paid per occurrence;
+ Taxpayers incurring tax obligations for revenues from land; license for exploitation of water resources, mineral resources;
+ Taxpayers settling personal income tax;
+ Taxpayers submitting taxes through electronic transactions and other necessary cases.
