0% Tax Rate and Non-Taxable: What Are the Differences?
According to the regulations in Circular 219/2013/TT-BTC, there are differences between 0% tax rate and non-taxable:
| Criteria | 0% Tax Rate | Non-Taxable |
| Subject | Applies per Article 9 of Circular 219/2013/TT-BTC | Applies per Article 4 of Circular 219/2013/TT-BTC |
| Tax Deduction and Refund | Input VAT for goods and services subjected to 0% VAT rate is deductible and refundable | Input VAT is not deductible and refundable, thus it must be included in the cost price of goods or business expenses |
| VAT Declaration | Enterprises and other business establishments must declare VAT because they are still subject to VAT. | Enterprises and business establishments providing non-taxable goods and services do not have to declare VAT because they are not subject to tax. |
| Meaning | Encourages enterprises to export, boosts the consumption of goods and services overseas. Potentially creates fairness in tax collection, encourages enterprises to improve management, and increases labor productivity. | Encourages enterprises to develop essential sectors for the local population. Increases labor productivity, reduces costs for competitive advantages both domestically and internationally, potentially creates fairness in tax collection. |
The above outlines the differences between a 0% tax rate and non-taxable. For more information on the above issue, you can refer to Circular 219/2013/TT-BTC.
Respectfully!
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