Vietnam: In 2023, what goods and services will the 5% value-added tax apply to? What are the regulations on the timing of value-added tax determination?
Who are the value-added taxpayers in Vietnam?
According to the provisions of Clauses 1 and 2, Article 2 of Decree 209/2013/ND-CP on value-added taxpayers as follows:
- Value-added tax payers include organizations and individuals producing or trading in goods or services subject to value-added tax (below referred to as business establishments) and organizations and individuals importing goods subject to value-added tax (below referred to as importers).
- Vietnam-based production and business organizations and individuals that purchase services (including services associated with goods) from foreign organizations without permanent establishments in Vietnam or overseas individuals not residing in Vietnam shall be value-added tax payers, unless they are not required to declare, calculate and pay value-added tax defined at point b Clause 3 of this Article.
Permanent establishments and overseas individuals being non-residents at this Clause must comply with the laws on enterprise income tax and personal income tax.
Vietnam: In 2023, what goods and services will the 5% value-added tax apply to? What are the regulations on the timing of value-added tax determination?
Which goods and services apply a 5% value-added tax rate in Vietnam?
The cases of application of the 5% VAT rate according to Article 10 of Circular 219/2013/TT-BTC (amended by Clause 6, Clause 7, Clause 8 Article 1 of Circular 26/2015/TT-BTC) are as follows:
- Clean water for production and daily life, excluding bottled, bottled and other beverages subject to the 10% tax rate.
- Ore for the production of fertilizers; pesticides and growth stimulants for livestock and crops include:
+ Ores for fertilizer production are ores used as raw materials for fertilizer production such as Apatide ore used to produce phosphate fertilizers, muddy soil for microbial fertilizers;
+ Pesticides include pesticides according to the list of pesticides promulgated by the Vietnam Ministry of Agriculture and Rural Development and other pesticides;
+ Growth stimulants for livestock and plants.
- Services of earthworks, dredging of canals, ditches and ponds for agricultural production; cultivation, care and prevention of pests and diseases for plants; preliminary processing and preservation of agricultural products (except for scraping and dredging inland canals specified in Clause 3 Article 4 of Circular 219/2013 / TT-BTC).
Preliminary processing and preservation services of agricultural products include drying, drying, peeling, seed separation, cutting, milling, cold storage, salting and other common forms of preservation as instructed in Clause 1 Article 4 of Circular 219/2013 / TT-BTC.
- Products of cultivation, animal husbandry, fishery and seafood that have not been processed or only through preliminary processing and preservation (the form of preliminary processing and preservation according to the instructions in Clause 1 Article 4 of Circular 219/2013/TT-BTC) at the stage of commercial business, except for the cases instructed in Clause 5 Article 5 of Circular 219/2013/TT-BTC.
Unprocessed crop products referred to in this Clause include paddy, rice, corn, potatoes, cassava and wheat.
- Pre-processed latex such as flagellar latex, sheet latex, vermicelli latex, nuggets late; pre-processed turpentine; nets, ropes and yarns for knitting fishing nets include types of fishing nets, yarns, ropes specialized for knitting fishing nets regardless of production materials.
- Fresh food at the stage of commercial business; unprocessed forest products at the stage of commercial business, except wood, bamboo shoots and products specified in Clause 1 Article 4 of Circular 219/2013 / TT-BTC.
Fresh food includes foods that have not been cooked or processed into other products, only preliminarily processed in the form of cleaning, peeling, cutting, freezing, drying but still fresh food such as meat, poultry, shrimp, crab, fish and aquatic products, other seafood. In case the food has been seasoned, a tax rate of 10% applies.
Unprocessed forest products include products from exploited natural forests belonging to the group: song, rattan, bamboo, cork, stream, mushroom, carpentry; roots, leaves, flowers, medicinal plants, sap and other forest products.
Example 49: Co., Ltd. A produces fresh beef fish seasoned with spices according to the process: freshly caught beef fish is cut fillet, then marinated with sugar, salt, solpitol, packed, frozen, fresh beef fish seasoned is not subject to the 5% tax rate but is subject to the 10% VAT rate.
-Sugar; by-products in the production of sugar, including sugar rust, bagasse, slurry.
- Products made of jute, sedge, bamboo, song, rattan, bamboo, chip, cork, stream, leaf, straw, coconut shell, coconut skull, duckweed and other handmade products made with raw materials made from agriculture are the types of products produced and processed from the main raw materials of jute, sedge, bamboo, song, clouds, bamboo, warblers, cork, streams, leaves such as:
Jute mats, jute fibers, jute sacks, coconut mats, mats produced with jute, sedge; brooms, ropes, laces made of bamboo, coconut fiber; bamboo blinds, bamboo blinds, bamboo, bamboo brooms, conical hats; bamboo chopsticks, stream chopsticks; pre-processed cotton; newsprint.
- Medical equipment and instruments, including medical machines and instruments: scanners, projections, and photographs used for medical examination and treatment; specialized equipment and tools for surgery, wound treatment, ambulance cars; instruments for measuring blood pressure, heart, pulse, blood transfusion instruments; needles; contraceptive devices;
Medical instruments and equipment with import licenses or certificates of circulation registration or certificates of receipt of standard publication dossiers in accordance with the law on health;
Or according to the list of medical equipment under specialized management of the Vietnam Ministry of Health, the goods code is determined according to the List of imported and exported goods of Vietnam issued together with Circular 14/2018 / TT-BYT.
Cotton, bandages, medical gauze and medical tampons; preventive and curative drugs include finished drugs, medicinal raw materials, except functional foods; vaccines; medical bio-products, distilled water for the preparation of injections, infusions; hats, clothing, masks, surgical gloves, gloves, lower limb covers, shoe covers, towels, specialized medical gloves, breast implants and dermal fillers (excluding cosmetics); chemical supplies for testing and bactericidal products for medical use.
- Teaching and learning materials include models, drawings, boards, chalk, rulers, com-pa and specialized equipment and instruments for teaching, research and scientific experiments.
- Cultural activities, exhibitions, physical training and sports; performing arts; film production; import, release and screening of films.
+ Cultural activities, exhibitions and physical training and sports, except for revenues such as: selling goods, renting yards, booths at fairs and exhibitions.
+ Performing arts activities such as: canoeing, rowing, reforming, singing, dancing, music, drama, circus; other performing arts activities and performing arts organization services of theaters or troupes, rowing, reforming, singing, dancing, music, drama and circus with operation licenses issued by competent State agencies.
+ Film production; importing, distributing and screening films, except for the products mentioned in Clause 15 Article 4 of Circular 219/2013 / TT-BTC.
- Children's toys; Books of all kinds, except books not subject to VAT guided in Clause 15 Article 4 of Circular 219/2013 / TT-BTC.
- Scientific and technological services are activities of serving and providing technical assistance for scientific research and technological development; activities related to intellectual property; technology transfer, standards, technical regulations, measurement, quality of products, goods, radiation safety, nuclear and atomic energy;
Services on information, consultancy, training, fostering, dissemination and application of scientific and technological achievements in socio-economic fields under science and technology service contracts specified in the Law on Science and Technology, excluding online games and entertainment services on the Internet.
- Selling, renting or leasing social housing in accordance with the Law on Housing. Social housing means housing built by the State or organizations and individuals of all economic sectors and meeting the criteria of housing, housing selling price, rental price, purchase rental price, objects and conditions to be purchased or rented, to rent and buy social housing in accordance with the law on housing.
How is the timing of value-added tax determination regulated in Vietnam?
According to the provisions of Article 5 of Decree 209/2013 / ND-CP as follows:
- The time for determining value-added tax on goods is the time of transferring goods ownership or use right to purchasers, regardless of whether money has been collected or not.
- The time for determining value-added tax on services is the time of completing the provision of services or the time of making service provision invoices, regardless of whether money has been collected or not.
- The Vietnam Ministry of Finance shall specify the time for determining value-added tax in other special cases.
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