What is the VAT rate for drugs for prevention against pests in Vietnam?

What is the VAT rate for drugs for prevention against pests in Vietnam?

Based on point b, clause 2, Article 6 of Decree 209/2013/ND-CP amended by Clause 5, Article 3 of Decree 12/2015/ND-CP regulating goods and services subject to a 5% VAT rate, as follows:

VAT Rate

The VAT rate is implemented according to the provisions of Article 8 of the VAT Law and Clause 3, Article 1 of the Law amending and supplementing a number of articles of the VAT Law.

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2. The 5% VAT rate applies to goods and services specified in Clause 2, Article 8 of the VAT Law and Clause 3, Article 1 of the Law amending and supplementing a number of articles of the VAT Law. Some specific cases applying the 5% rate are stipulated as follows:

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b) Products specified at Point b, Clause 2, Article 8 of the VAT Law include:

- Ores for fertilizer production used as raw materials for fertilizer production;

- drugs for prevention against pests include plant protection chemicals and other pest control medications;

- Growth stimulants for livestock and plants.

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According to the above regulation, it is evident that the VAT rate for drugs for prevention against pests, including plant protection chemicals and other pest control medications, is 5%.

What is the VAT rate for drugs for prevention against pests in Vietnam? (Image from the Internet)

When is the VAT determined when selling drugs for prevention against pests in Vietnam?

Pursuant to Clause 1, Article 8 of Circular 219/2013/TT-BTC regulating the timing of VAT determination when selling goods as follows:

Time of VAT Determination

1. For the sale of goods, it is the time the ownership or the right to use the goods is transferred to the buyer, regardless of whether the payment has been collected.

2. For service provision, it is the completion of service provision or the time the invoice for service provision is issued, regardless of whether the payment has been collected.

For telecommunication services, it is the time of reconciliation of data about telecommunications service charges per the economic contract between telecommunication service business establishments, but not more than 2 months from the month when the telecommunications service charges arise.

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According to the above regulation, it can be observed that the timing of VAT determination when selling drugs for prevention against pests is at the time the ownership or the right to use the goods is transferred to the buyer, regardless of whether the payment has been collected or not.

What are cases where a business establishment is exempt from declaring and paying VAT in Vietnam?

According to the provision in Clause 7, Article 5 of Circular 219/2013/TT-BTC about cases where a business establishment is exempt from declaring and paying Value Added Tax (VAT) as follows:

- Contributing capital by assets to form a company. Assets contributed as capital to the company must have: a capital contribution minutes, a joint venture contract, an asset valuation minutes by the capital-contributing parties' valuation council (or a valuation document from a statutory valuation organization), accompanied by a set of documents proving asset origin.

- Transferring assets between dependent accounting units within an enterprise; transferring assets in cases of company division, separation, merger, consolidation, or conversion of business type. For assets transferred between dependent accounting units within the business establishment; assets transferred in cases of company division, separation, merger, consolidation, or conversion of business type, the business establishment transferring the assets must have an asset transfer order, accompanied by asset origin documents, and is not required to issue an invoice.

+ In cases where assets are transferred between independent accounting units or between member units with full legal status within the same business establishment, the business establishment transferring the assets must issue a VAT invoice and declare and pay VAT as prescribed.

- Collection of compensation from the third party in insurance activities.

- Collection on behalf of sums not related to the sale of goods and services of the business establishment.

- Revenue from goods and services sold on commission basis and commission revenue from acting as an agent selling at prices set by the principal, enjoying commission from services: postal, telecommunications, lottery tickets, airfare, train tickets, ship tickets; international transport agents; agents of air and maritime services applied with 0% VAT rate; insurance agents.

- Revenue from goods and services and commission revenue received from agency activities for goods and services not subject to VAT.