Hanoi City: Applying 5% VAT rate to science and technology services of the Institute of Monuments Conservation?
What is subject to VAT in Vietnam?
According to the provisions of Article 2 of Circular 219/2013/TT-BTC guiding the Law on Value-Added Tax and Decree 209/2013/ND-CP issued by the Minister of Finance stipulating who is subject to specific value added tax can be as follows:
Article 2.Taxable goods and services
Goods and services subject to VAT (hereinafter referred to as taxable goods and services) are those used for production, trading, and consumption in Vietnam (including those purchased from overseas organizations and individuals), except for the goods and services in Article 4 of this Circular.
Hanoi City: Applying 5% VAT rate to science and technology services of the Institute of Monuments Conservation of Vietnam?
When is the time for calculating VAT in Vietnam?
Pursuant to Article 8 of Circular 219/2013/TT-BTC guiding the Law on Value-Added Tax and Decree 209/2013/ND-CP promulgated by the Minister of Finance on the time to determine The specific value added tax is as follows:
Article 8. Time for calculating VAT
1. For goods sale, VAT shall be calculated when the ownership or the right to use goods is transferred to the buyer, whether the payment is made or not.
2. For service provision, VAT shall be calculated when service provision is completed or when the invoice for service provision is made, whether the payment is made or not.
For telecommunications services, VAT shall be calculated when comparing the data about telecommunications charge according to the contracts between telecommunications service providers, but not later than 2 months from the month in which the charge is incurred.
3. For electricity and water supply, VAT shall be calculated when the electricity or water consumption is recorded.
4. For real estate trading, construction of infrastructural works, houses for sale or for lease, VAT shall be calculated when money is collected according to the project schedule or the contract. The taxpayer shall declare output VAT incurred in the tax period according to collected amount.
5. For construction and installation, including shipbuilding, VAT shall be calculated when the construction or a work is completed and put into use, Whether the payment is made or not.
6. For imported goods, VAT shall be calculated when the customs declaration is registered.
In which cases is the 5% VAT rate applicable? What is the tax rate for science and technology services of the Institute of Monuments Conservation of Vietnam?
For cases subject to the 5% tax rate, in Article 10 of Circular 219/2013/TT-BTC guiding the Law on Value-Added Tax and Decree 209/2013/ND-CP issued by the Minister of Finance and Circular 26/2015/TT-BTC guiding value-added tax and tax management in Decree 12/2015/ND-CP, amending Circular 39/2014/TT-BTC on goods sale and supply invoices The service application promulgated by the Ministry of Finance is regulated as follows:
Article 10. Tax rate of 5%
10% tax shall be levied on the goods and services below:
- Clean water serving manufacture and everyday life, except for bottled water and other soft drinks subject to 10% tax.
- Fertilizers; ores used for fertilizer manufacture; pesticides and Growth stimulants for plants and animals, including:
+ Organic and inorganic fertilizers such as phosphate fertilizers, nitrogenous fertilizer (urea), NPK fertilizer, mixed urea, potash; biofertilizers and other fertilizers;
+ Ores used for manufacture of fertilizers such as apatite ore, humus used for manufacture of biofertilizers;
+ Pesticides those in the List of pesticides complied by the Ministry of Agriculture and Rural Development and other pesticides;
+ Growth stimulants for plants and animals.
- Feeds for livestock, poultry, and other animals according to the laws on animal feeds, including processed and unprocessed feeds such as bran, press cakes, fish meal, bone meal, shrimp meal, and other feeds for livestock, poultry, and other animals.
- Dredging channels, canals, ponds, and lakes serving agriculture; plant cultivation; preprocessing and preservation of agricultural products (except for dredging in-field trenches mentioned in Clause 3 Article 4 of this Circular).
Preprocessing and preservation of agricultural products include drying, husking, threshing, cutting, grinding, putting into cold storage, salting, and other usual means of preservation mentioned in Clause 1 Article 4 of this Circular.
- The farming, breeding, aquaculture products that are unprocessed or preprocessed (defined in Clause 1 Article 4 of this Circular), except for the cases in Clause 5 Article 5 of this Circular.
The unprocessed farming products mentioned in this Clause include unhusked rice, husked rice, corn, potatoes, cassava, and wheat.
- Latex and resin that have undergone insufficient processing; fishing nets and fibers for making fishing nets regardless of materials.
- Fresh foods for business, unprocessed forestry products for business, except for wood, bamboo sprouts, and the products enumerated in Clause 1 Article 4 of this Circular.
Fresh foods include the foods that have not been cooked or processed into other products, or have only been cleaned, unhusked, cut, frozen, or dried in a way that they are still fresh foods such as meat of livestock and poultry, shrimps, crabs, fish, and other aquaculture products. 10% tax shall be levied on seasoned foods.
Unprocessed forestry products include the products from natural forests such as rattan, bamboo, mushrooms, roots, leaves, flowers, herbs, resin, and other forestry products.
- Sugar; by-products during the sugar manufacture process including molasses, bagasse.
- Products made of jute, rattan, bamboo, leaves, straws, coconut shells, hyacinth, and other handicrafts made of recycled materials from agriculture; preprocessed cotton; newspaper printing paper.
- Agricultural machinery and equipment including tractors, transplanters, seeders, threshers, harvests, combined harvester, and pesticide sprayers.
- Medical equipment include radiographic equipment, equipment and instruments for surgery and treatment; ambulances; instruments for blood pressure measurement, cardiography, blood infusion, syringes; birth control equipment, and other medical equipment certified by the Ministry of Health.
Cotton wool, bandages, gauze pads, and medical tampons; medicines including finished medicines and raw materials, except for functional foods; vaccines; bioproducts, distilled water to mix with injectable medicines or intravenous fluids; chemicals used for testing and sterilization; caps, clothing, facemasks, gloves, boots, medical towels, breast implants and skin fillers (not including cosmetics).
- Teaching aids include models, pictures, boards, chalks, rulers, compasses, other equipment and instruments for teaching, research, and scientific experimentation.
- Artistic activities, exhibitions, sports; art performances; cinematography; importing, distributing, and showing films.
+ Revenues from activities, exhibitions, sports do not include the revenues from goods sale, lease on yards or exhibition booths.
+ Art performances and art performance organization services must be licensed by competent authorities.
+ Cinematography; importing, distributing, and showing films
- Children’s toys; books other than those that are not subject to VAT mentioned in Clause 15 Article 4 of this Circular.
- Scientific and technological services, which mean the activities that serve or assist in scientific research and technology development; the activities related to intellectual property; transfer of technologies, technical regulations and standards related to measurement, product quality, goods, nuclear and radiation safety, and atomic energy; consultancy, training, dissemination, and application of scientific and technological achievements to socio-economic fields under contracts for scientific and technological services defined in the Law on Science and technology, not including online games and Internet-based entertainments.
- Sale, lease, and lease-option of social housing according to the Law on Housing. Social housing means the housing invested by the state or the organizations and individuals from various economic sectors, which satisfy the criteria for housing in terms of selling prices, rents, and eligible buyers according to housing laws.
Thus, for your question, in Official Letter 27132/CTHN-TTHT 2022 on VAT policy for science and technology services issued by Hanoi Tax Department, in case the Institute for Monuments Conservation of Vietnam is a scientific and technological public service provider under the science and technology service contract specified in the Law on Science and Technology, the service is subject to the VAT rate of 5% as guided in Clause 15, Article 10 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance.
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