Revenue from food service of bars, karaoke is subject to excise tax in Vietnam?

1. Regulations on excise tax for karaoke services

Excise tax is an indirect tax levied on a number of special goods and services of a remote nature, which are not really necessary, produced and consumed by businesses. This tax is paid by the establishments that directly produce the goods, but the consumers are responsible for the tax because the tax is added to the selling price. The special consumption tax rate is often high to regulate the production and use of these goods and services.

Objects subject to excise tax are specified in Article 2 of the Law on Excise Tax 2008 of Vietnam:

- Goods:

+ Cigarettes, cigars and other tobacco preparations used for smoking, inhaling, chewing, sniffing or keeping in mouth;

+ Liquor;

+ Beer;

+ Under-24 seat cars, including cars for both passenger and cargo transportation with two or more rows of seats and fixed partitions between passenger holds and cargo holds;

+ Two- and three-wheeled motorcycles of a cylinder capacity of over 125 cm³;

+ Aircraft and yachts;

+ Gasoline of all kinds, naphtha, reformade components and other components for mixing gasoline;

+ Air-conditioners of 90,000 BTU or less;

+ Playing cards;

+ Votive gilt papers and votive objects.

- Services:

+ Dance halls:

+ Massage parlors and karaoke bars;

+ Casinos; prize-winning video games, including jackpot and slot games and games on similar machines;

+ Betting;

+ Golf business, including the sale of membership cards and golf playing tickets;

+ Lottery business.

Thus, the business of bars and karaoke must pay excise tax.

2. Revenue from food service of bars, karaoke is subject to excise tax?

At Point d, Clause 5, Article 6 of the Law on Excise Tax 2008 stipulates:

5. For services, it is the service charge set by the service provider. The service provision in a number of cases is specified as follows:

...

c/ For dance hall, massage parlor and karaoke bar business, it is the turnover from such business.

...

The Government shall speedy this Article."

Point d, Clause 7, Article 4 of Decree 108/2015/ND-CP stipulates:

"7. Taxable prices for services are the prices imposed by service providers.

...

d) For discotheque, massage, and karaoke business, taxable prices are revenues from activities within the discotheque, massage establishment, karaoke establishment, including revenues from food and drink services and other services;"

Thus, the Government stipulates that the excise tax calculation price from the bar and karaoke business is the revenue from activities in the discotheque, karaoke including the revenue from food service and other accompanying services.

The basis for calculating excise tax is the taxable price of taxable goods and services and the tax rate. The payable excise tax amount is equal to the excise tax calculation price multiplied by the excise tax rate.

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