What are methods of calculating VAT for gold trading activities in Vietnam?

Hello, Lawnet would like to respond as follows:

On August 21, 2023, the Hanoi City Tax Department issued Official Dispatch 60894/CTHN-TTHT regarding the method of calculating value-added tax.

1. Methods of value-added tax deduction in Vietnam

Based on Article 12 of Circular 219/2013/TT-BTC dated December 31, 2013, the methods of tax deduction are as follows:

- The tax deduction method applies to businesses that fully comply with accounting policies, invoices, and documents as required by law, including:

+ Businesses currently operating with an annual revenue from selling goods or providing services of one billion dong or more and fully complying with accounting policies, invoices, and documents as required by law, except for households and individual business entities paying taxes by the direct calculation method as stipulated in Article 13 of Circular 219/2013/TT-BTC;

+ Businesses voluntarily registering to apply the tax deduction method, except for households and individual business entities paying taxes by the direct calculation method as stipulated in Article 13 of Circular 219/2013/TT-BTC.

...

Based on Clauses 3 and 4 of Article 3 Circular 119/2014/TT-BTC (amending and supplementing Circular 219/2013/TT-BTC) guiding the implementation of the Law on Value-Added Tax and Decree 209/2013/ND-CP detailing and guiding the implementation of certain provisions of the Law on Value-Added Tax:

“3. Amending and supplementing Clauses 3 and 4 of Article 12 of Circular 219/2013/TT-BTC as follows:

Other cases:

a) In the case where businesses have activities of buying, selling, and processing gold, silver, and precious stones, the business must separately account for these activities to pay taxes by the direct calculation method on value-added as guided in Article 13 of this Circular.

Amending Clause 1 of Article 13 of Circular 219/2013/TT-BTC as follows:

“1. The value-added tax payable by the direct calculation method on value-added is calculated by multiplying the value-added with the value-added tax rate applied to the activities of buying, selling, and processing gold, silver, and precious stones.

The value-added of gold, silver, and precious stones is determined by the selling price of gold, silver, and precious stones minus (-) the purchase price of corresponding gold, silver, and precious stones...”

Based on the above regulations, the Hanoi City Tax Department provides the following opinion:

In the case where a company has activities of buying, selling, and processing gold, silver, and precious stones, the company must separately account for these activities to pay taxes by the direct calculation method on value-added as guided in Article 13 of Circular 219/2013/TT-BTC.

2. Regulations on the direct calculation method on value-added in Vietnam

Based on Article 11 of the Value-Added Tax Law 2008 (amended by Clause 5 of Article 1 of the Amended Value-Added Tax Law 2013), the direct calculation method on value-added is as follows:

(1) The value-added tax payable by the direct calculation method on value-added is calculated by multiplying the value-added with the value-added tax rate applied to the activities of buying, selling, and processing gold, silver, and precious stones.

The value-added of gold, silver, and precious stones is determined by the selling price of gold, silver, and precious stones minus the purchase price of corresponding gold, silver, and precious stones.

(2) The value-added tax payable by the direct calculation method on value-added is calculated by multiplying the percentage rate with the revenue applied as follows:

- Subjects of application:

+ Enterprises and cooperatives with annual revenue below the revenue threshold of one billion dong, except for cases of voluntary registration to apply the tax deduction method as stipulated in Clause 2 of Article 10 of the Value-Added Tax Law 2008;

+ Business households and individuals;

+ Foreign organizations and individuals doing business without a permanent establishment in Vietnam but having revenue generated in Vietnam that has not fully complied with accounting policies, invoices, and documents, except for foreign organizations and individuals supplying goods and services to conduct oil and gas exploration, development and extraction activities which pay taxes by the deduction method performed by the Vietnamese party on behalf;

+ Other economic organizations, except for cases of registration to pay taxes by the deduction method as stipulated in Clause 2 of Article 10 of the Value-Added Tax Law 2008 (amended 2013);

- The percentage rate for calculating value-added tax is stipulated as follows:

+ Distribution, supply of goods: 1%;

+ Services, construction not including raw materials: 5%;

+ Production, transportation, services associated with goods, construction including raw materials: 3%;

+ Other business activities: 2%.

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