What is the tax rate applicable for mud used in bio-fertilizer production in Vietnam? Which entities are VAT payers?

What is the tax rate applicable for mud used in bio-fertilizer production in Vietnam?

Pursuant to Article 10 of Circular 219/2013/TT-BTC as amended by Clause 6 Article 1 of Circular 26/2015/TT-BTC, specific provisions on the tax rate of 5% are outlined as follows:

Tax Rate 5%

1. Clean water for production and domestic use, excluding bottled, canned beverages, and other drinks subject to a tax rate of 10%.

2. Ores for the production of fertilizers; pesticides and growth stimulants for livestock and crops include:

a) Ores for the production of fertilizers are ores used as raw materials for the production of fertilizers such as Apatite ore for phosphate fertilizers, mud for bio-fertilizer;

b) Pesticides include plant protection drugs according to the list of plant protection drugs issued by the Ministry of Agriculture and Rural Development, and other types of pesticides;

c) Growth stimulants for livestock and crops.”

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Thus, mud used for bio-fertilizer production is subject to a tax rate of 5%.

What is the tax rate applicable for mud used in bio-fertilizer production in Vietnam? Which entities are VAT payers? (Image from the Internet)

Which entities are VAT payers in Vietnam?

According to Article 4 of the Law on Value Added Tax 2008, specific regulations on taxpayers are as follows:

The taxpayer for value-added tax is an organization or individual that produces, trades goods, or provides services subject to value-added tax (hereinafter referred to as a business establishment) and an organization or individual that imports goods subject to value-added tax (hereinafter referred to as an importer).

How is the taxable value determined in Vietnam?

According to Article 7 of the Law on Value Added Tax 2008 as amended by Clause 2 Article 1 of the Law on Amendment of the Value Added Tax Law 2013 and provisions on exchange rate for determining taxable value abolished by point c Clause 2 Article 6 of the Law on Amendments to Tax Laws 2014 specifically regulate the determination of taxable value as follows:

- For goods and services sold by production or business establishments, the price is the selling price excluding value-added tax; for goods and services subject to special consumption tax, the price includes the special consumption tax but excludes value-added tax; for goods subject to environmental protection tax, the price includes environmental protection tax but excludes value-added tax. When subject to both special consumption tax and environmental protection tax, the price includes both taxes but excludes value-added tax.

- For imported goods, the price is the import price plus import tax (if any), special consumption tax (if any), and environmental protection tax (if any). The import price is determined according to regulations on the taxable price of imported goods;

- For goods, services exchanged, internally consumed, or gifted, the taxable value is the value-added taxable price of similar goods or services at the time these activities occur;

- For lease activities, the rental price excludes value-added tax.

- In cases of rental on a periodic or pre-payment basis, the taxable value is the rental amount for each period or pre-payment without value-added tax;

- The taxable price for machine, equipment, and transport rental from abroad that is not produced domestically for re-lease, is deductible from the rent paid to the foreign party.

- For products sold on installment or deferred payment, the taxable value is the one-time sale price excluding any installment or deferred payment interest;

- For subcontracted goods, the processing price excludes value-added tax;

- In construction and installation activities, the value is the project, item, or job value delivered excluding value-added tax. If construction, installation excludes material, machinery, equipment costs, the taxable value is the construction and installation value excluding material and equipment costs.

- In real estate business activities, the taxable value is the sale price excluding value-added tax, excluding land use rights or land rent payments to the state budget.

- For agency, brokerage sales, and commission services that earn commission, the taxable value is the commission received excluding value-added tax;

- For goods, services with payment documents showing the payment price including VAT, the taxable value is determined as follows:

Taxable price exclude VAT = Payment price / (1 + goods or services tax rate (%))

- The taxable value for goods and services as regulated in Clause 1 Article 7 includes any additional charges and fees that the business establishment receives.