What is the method of calculating excise tax 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 is the method of calculating excise tax in Vietnam?

According to Article 5 of the Law on Excise Tax 2008, the law stipulates:

Tax bases

Excise tax bases include the taxed price of a taxable goods or service and the tax rate. The payable excise tax amount is the excise taxed price multiplied by the excise tax rate.

Thus, the method of calculating excise tax is determined by the following formula:

excise tax amount = taxable price x tax rate

What is the method of calculating excise tax in Vietnam? (Image from Internet)

What is the determination of the excise taxable price in Vietnam?

According to Article 6 of the Law on excise tax 2008, with certain provisions amended by Clauses 3 of Article 1 of the Law on Amendments to the Law on excise tax 2014 and Clause 1 of Article 2 of the Law on Amendments to Law on Value-Added Tax, Law on excise tax and Law on Tax Administration 2016, taxable prices of goods/services are selling prices of goods services exclusive of excise tax, environmental protection tax, and VAT, and are prescribed as follows:

- Taxable prices of goods domestically produced and imports are selling prices imposed by manufacturers or importers.

Where goods subject to excise tax are sold to a trading establishment which has a parent company-subsidiary company relationship or subsidiaries in the same parent company as the manufacturer or importer, or a trading establishment has an association therewith, the taxable price must not fall below the percentage (%) of average price paid by the trading establishments directly buying from the manufacturers or importers prescribed by the Government;

- Taxable prices of imports at importation are the prices subject to import duty plus (+) import duty. If imports are eligible for exemption or reduction of import duty, taxable price shall not include the reduction or exemption. excise tax on goods that was paid at importation may be deducted when determining the excise tax on goods when they are sold;"

- For processed goods, it is the taxed price of the goods sold by processing-ordering establishment or the selling price of the product of the same or similar kind at the same time with the time of goods sale;

- For goods sold on installment or deferred payment, it is the one-off selling price of such goods, exclusive of the installment or deferred payment interest;

- For services, it is the service charge set by the service provider. The service provision in a number of cases is specified as follows:

+ For golf business, it is the selling price of the membership card or golf-playing ticket, inclusive of the golf playing charge and deposit (if any);

+ For casino, prize-winning video game and betting business, it is the turnover from such business minus the prize already paid to customers;

+ For dance hall, massage parlor and karaoke bar business, it is the turnover from such business.

- For goods and services used for barter, internal consumption or donation, it is the excise taxed price of the goods or service of the same or similar kind at the time of barter, internal consumption or donation.

Excise-taxed prices of goods and services specified in this Article are inclusive of additional charges and revenues (if any) enjoyed by business establishments.

Taxed prices are calculated in Vietnam dong. If taxpayers have foreign currency turnover, foreign currency amounts must be converted into Vietnam (long at the average exchange rate on the inter-bank foreign currency market, announced by the State Bank of Vietnam at the time of turnover generation) for determination of taxed prices.