Vietnam: Are electrical wires and cables subject to a reduction in value-added tax rates?
Regulations on value-added tax reduction in Vietnam?
For regulations on value added tax reduction, Clause 1 Article 1 of Decree 15/2022/ND-CP specifies as follows:
Article 1. VAT reduction
1. VAT on goods and services currently subject to 10% VAT shall be reduced, except the following goods and services:
a) Telecommunication, financial activities, banking activities, securities, insurance, trading of real estate, metal and precast metal products, mining products (excluding coal mining), coke mining, refined oil, chemical products. Further details are provided in Appendix I enclosed herewith.
b) Goods and services subject to excise tax. Further details are provided in Appendix II enclosed herewith.
c) Information technology as prescribed in the Law on information technology. Further details are provided in Appendix III enclosed herewith.
d) Reduction of VAT for each type of goods and services specified in Clause 1 of this Article shall be applied consistently in all stages, including import, production, processing and trading. Coal mined for sale (including coal mined and then washed, sieved and classified under a closed process) shall be eligible for VAT reduction. VAT on coal products in Appendix I enclosed herewith in stages other than the stage of mining and sale shall not be reduced.
In case goods and services in Appendixes I, II and III enclosed herewith are not subject to VAT or are subject to 5% VAT in accordance with the Law on value-added tax, regulations of the Law on value-added tax shall prevail and VAT on such goods and services shall not be reduced.
Vietnam: Are electrical wires and cables subject to a reduction in value-added tax rates?
Regulations on value-added tax reduction in Vietnam?
For regulations on value-added tax reduction, Clause 2 Article 1 of Decree 15/2022/ND-CP specifies as follows:
Article 1. VAT reduction
…
2. VAT reduction rates
a) Business establishments that pay VAT using the credit-invoice method shall pay 8% VAT on the goods and services specified in Clause 1 of this Article.
b) Business establishments (including household businesses and individual businesses) that pay VAT using the direct method (as a percentage (%) of revenue) shall be eligible for 20% reduction in the percentage (%) used as the basis for calculating VAT when issuing invoices for the goods and services eligible for VAT reduction specified in Clause 1 of this Article.
Are electrical wires and cables subject to a reduction in value-added tax rates in Vietnam?
Official Dispatch 7375/BTC-TCT in 2022 has answers to questions about the application of value-added tax rates for specific electrical wires and cables as follows:
- For products belonging to the sequence number 03(006) group V- Copper cables, fiber optic cables, twisted pair cables ... and sequence number 02 group VI - Semiconductor devices, electronic lights, electronic circuits and electrical cables for telecommunications under HS code 85.44 in Section B Appendix III of Decree 15/2022 / ND-CP, these products are not subject to VAT reduction.
- For products that are "other products left with metal that have not been classified" under code 25999 (code level 6 is 259992 "Fasteners of all kinds, chains, springs, nails, screws made of metal"; code level 7 is 2599921 and 2599922) in Appendix I of Decree 15/2022/ND-CP, these products are not subject to VAT reduction; Except for the product "wire and cable for electrolytic transmission into industry group 27230" in the content column of code level 7 is 2599921 and 2599922 in Appendix I of Decree 15/2022/ND-CP The Ministry of Finance will have specific guidance documents after discussing with relevant agencies.
Tax Departments guide taxpayers to compare goods and services that taxpayers produce and trade in with excluded groups of goods and services excluded from tax reduction in Clause 1 Article 1 of decree No. 15/2022/ND-CP and list of goods and services in Appendix I, II, III issued together with Decree No. 15/2022/ND-CP to comply with regulations.
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