What level of credit provision allows enterprises providing financial leasing to receive a 2% VAT reduction in Vietnam?

What level of credit provision allows enterprises providing financial leasing to receive a 2% VAT reduction in Vietnam?

Pursuant to Article 1 of Decree 180/2024/ND-CP prescribing the VAT reduction policy as follows:

VAT Reduction

1. A VAT reduction is applied for groups of goods and services currently subject to a 10% tax rate, except for the following groups of goods and services:

a) Telecommunications, financial activities, banking, securities, insurance, real estate, metals and products from fabricated metals, mineral products (excluding coal mining), coke, refined petroleum, chemical products. Details are provided in Appendix I issued with this Decree.

b) Goods and services subject to excise tax. Details are provided in Appendix II issued with this Decree.

c) Information technology as per the information technology law. Details are provided in Appendix III issued with this Decree.

d) The VAT reduction for each type of goods and services stipulated in Clause 1 of this Article shall be uniformly applied at importation, production, processing, and commercial trading stages. For mined coal products sold (including cases where mined coal is further processed through screening and classification in a closed process before being sold), which are subject to the VAT reduction. Coal items listed in Appendix I issued with this Decree, at stages other than mined sale, are not eligible for VAT reduction.

Aggregated companies and economic groups conducting a closed-end process before sale are also eligible for VAT reduction on mined coal products.

In case goods and services listed in Appendices I, II, and III issued with this Decree fall under the category not subjected to VAT or subject to 5% VAT as per the VAT Law, they shall follow the VAT Law regulations and shall not receive a VAT reduction.

2. The rate of VAT reduction

a) Business entities calculating VAT by the credit method shall apply a VAT rate of 8% for goods and services stipulated in Clause 1 of this Article.

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Currently, under the 2% VAT reduction policy, goods and services listed in the appendices are not eligible for the tax reduction. Additionally, for leasing activities mentioned above, code 6491000 in Appendix I means they are not eligible for tax reduction, regardless of the credit provision level. As long as there are financial leasing service activities, a 10% tax still applies.

What level of credit provision allows enterprises providing financial leasing to receive a 2% VAT reduction in Vietnam? (Image from Internet)

Vietnam: Are automobile assembly parts subject to excise tax eligible for 0% VAT when exported?

Pursuant to Article 9 of Circular 219/2013/TT-BTC regulations are as follows:

0% Tax Rate

1. The 0% tax rate: applies to exported goods and services; construction and installation activities abroad and in non-tariff zones; international transportation; goods and services not subject to VAT when exported, except cases not applying the 0% tax rate as guided in Clause 3 of this Article.

Exported goods and services are goods and services sold and supplied to organizations and individuals outside Vietnam and consumed outside Vietnam; sold and supplied to organizations and individuals in non-tariff zones; goods and services provided to foreign customers as per the law.

a) Exported goods include:

- Goods exported abroad, including export consignment;

- Goods sold to non-tariff zones as per the Prime Minister's regulation; goods sold to duty-free shops;

- Goods sold where the point of delivery and receipt is outside Vietnam;

- Spare parts, supplies used to repair and maintain vehicles, machinery, equipment for parties overseas and consumed outside Vietnam;

- Cases deemed as exports as per the law:

+ Processed goods handed over under commercial law on international goods trading and agency activities dealing in processing goods with foreign entities.

+ Goods exported on-site as per the law.

+ Goods exported for sales at fairs and exhibitions abroad.

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2. Conditions for applying the 0% tax rate:

a) For exported goods:

- There is a sales, processing export contract; a consignment contract;

- There are payment documents via banks for exported goods and other documents as per the law;

- There is a customs declaration as stipulated in Clause 2, Article 16 of this Circular.

For cases where goods are sold with the delivery and receipt points outside Vietnam, businesses (sellers) must have documents proving the delivery and receipt outside Vietnam, such as a goods purchase contract signed with foreign sellers; a sales contract signed with buyers; documents proving goods are delivered and received outside Vietnam such as: international commercial invoices, bills of lading, packing slips, certificates of origin…; bank payment documents include: bank documents of businesses paying foreign sellers; bank payment documents of buyers paying businesses.

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If spare parts, replacement supplies for vehicle, machinery, equipment repair and maintenance for parties overseas and consumed outside Vietnam are eligible for a 0% tax rate, compliance with Clause 2, Article 9 of Circular 219/2013/TT-BTC regarding conditions for applying the 0% tax rate to exported goods is required to ensure this right.

What are regulations on the timing for determining VAT in Vietnam?

Pursuant to Article 8 of Circular 219/2013/TT-BTC regarding the timeline for determining VAT as follows:

- For goods sales, it is at the point of transferring ownership or usage rights of goods to the buyer, regardless of whether payment is received.

- For service provision, it is upon completion of service provision or the issuance of service provision invoices, regardless of whether payment is received.

For telecommunications services, it is upon completion of data reconciliation on telecommunications service connection fees under economic contracts between telecommunications service companies, but no later than 2 months from the month the service connection fee arises.

- For electricity and clean water supply, it is on the date when the consumption indices on meters are recorded for billing.

- For real estate businesses, infrastructure construction, house construction for sale, transfer, or lease, it is upon receiving payments according to project implementation progress or payment schedules outlined in contracts. Based on received payments, businesses declare the arising output VAT in the period.

- For construction, installation, including shipbuilding, it is at the acceptance and transfer of completed works, project components, or quantities, regardless of whether payment is received.

- For imported goods, it is upon the customs declaration registration.