To reduce subjects exempted from VAT in Vietnam

To reduce subjects exempted from VAT in Vietnam (Internet image)

1. Non-taxable objects in Vietnam

In Article 5 of the draft Law on amendments to Law on Value-Added Tax, the regulations on non-taxable objects in Vietnam are as follows:

(1) 1. Products of cultivation, husbandry, and aquaculture, which have not been processed into other products or are only preliminary processed, are sold by organizations and individuals themselves and at the import stage.

Enterprises and cooperatives that purchase crop, livestock, and aquaculture products that have not yet been processed into other products or are only preliminarily processed and sold to other enterprises or cooperatives are not required to declare, calculate and pay value-added tax, but input value-added tax is deducted.

(2) Products are livestock breeds, plant varieties, including breeding eggs, breeding animals, seedlings, seeds, semen, embryos, genetic materials.

(3) Irrigation and drainage; plowing and harrowing the land; dredging canals and ditches in the field to serve agricultural production; agricultural product harvesting services.

(4) Fertilizers; specialized machinery and equipment for agricultural production; offshore fishing vessels; fodder, poultry and other pet foods.

(5) Salt products are produced from sea water, natural rock salt, refined salt, iodized salt with the main ingredient being sodium chloride (NaCl).

(6) State-owned housing sold by the State to tenants.

(7) Transfer of land use rights.

(8) Life insurance, health insurance, learner's insurance, and other insurance services related to people; livestock insurance, crop insurance, and other agricultural insurance services; insurance for ships, boats, equipment, and other necessary tools in direct service of fishing; and reinsurance.

(9) The following financial, banking, and securities trading services:

- Credit granting services include:

Loan; discount, rediscount negotiable instruments, and other valuable papers; guarantee; financial leasing; credit card issuance; domestic factoring; international factoring; other forms of credit extension as prescribed by law;

- Lending services of taxpayers who are not credit institutions;

- Securities trading includes:

Stockbroker; securities trading; underwriting securities; securities investment consulting; securities depository; securities investment fund management; securities portfolio management; market organization services of the stock exchange or securities trading center; other securities business activities in accordance with the law on securities;

- Capital transfer includes:

Transferring part or all of the invested capital, including the case of selling the enterprise to another enterprise for production, business, or securities transfer; other forms of capital transfer as prescribed by law;

- Selling debt;

- Foreign currency trading;

- Derivative financial services include:

Interest rate swaps; forward contracts; futures contracts; the right to buy and sell foreign currencies; other derivative financial services as prescribed by law;

- Sale of collateral for debts of organizations in which the State owns 100% of charter capital, established by the Government to handle bad debts of Vietnamese credit institutions.

(10) Medical and veterinary services, including medical examination, treatment, and prevention services for humans and animals; care services for the elderly and people with disabilities.

(11) Postal services, public telecommunications and universal Internet according to the Government's program.

(12) Maintenance services of zoos, flower gardens, parks, street trees, and public lighting; funeral services.

(13) Maintenance, repair, and construction with the contribution of the people, humanitarian aid for cultural and artistic works, public service works; infrastructure; and housing for social policy subjects.

(14) Teaching and vocational training according to the provisions of law.

(15) Radio and television broadcasting with state budget capital.

(16) Publishing, importing, and distributing newspapers, magazines, specialized bulletins, political books, textbooks, legal documents, scientific, and technical books; books printed in ethnic minority characters and propaganda, and propaganda pictures, photos, and posters, including in the form of audio tapes or discs, video recordings, and electronic data; money, and printing money.

(17) Public transportation of passengers by bus or tram.

(18) Machinery, equipment, spare parts, and supplies that cannot be produced at home and need to be imported for direct use in scientific research and technological development; machinery, equipment, spare parts, special-use means of transport, and supplies that cannot be produced domestically and need to be imported to conduct search, exploration, and development of oil and gas fields; aircraft, drilling rigs, and ships that cannot be produced at home and need to be imported to create fixed assets of enterprises or leased from abroad for use in production, business, lease, or sublease.

(19) Weapons and equipment used exclusively for national defense and security.

(20) Goods imported in the case of humanitarian aid or non-refundable aid; gifts for state agencies, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations, and people's armed forces units ; gifts and gifts for individuals in Vietnam according to the levels prescribed by the Government; belongings of foreign organizations and individuals according to the standards of diplomatic immunity; carry-on items in the duty-free baggage allowance.

Goods and services sold to foreign organizations and individuals or international organizations for humanitarian aid or non-refundable aid to Vietnam.

(21) Goods transshipped or transited through the Vietnamese territory; goods that are temporarily imported for re-export; goods temporarily exported or re-imported; raw materials that are imported for the production or processing of goods for export under the export processing or production contract signed with a foreign party; and goods and services that are traded between foreign countries and non-tariff zones and between non-tariff zones.

(22) Technology transfer in accordance with the Law on Technology Transfer; transfer of intellectual property rights in accordance with the Law on Intellectual Property; software.

(23) Imported gold in ingots and pieces that have not been processed into fine art products, jewelry or other products.

(24) Exported products are goods made from exploited natural resources and minerals that have not been processed into other goods; exported products are goods processed from natural resources and minerals, with the total value of the resources and minerals plus energy costs accounting for 51% or more of the product cost.

(25) Artificial products that are used to replace the patient's body parts; crutches, wheelchairs, and other specialized equipment for the disabled.

(26) Goods and services of business households and individuals with an annual turnover of one hundred million dong or less.

Establishments trading in goods and services that are not subject to the value-added tax specified in this Article are not allowed to deduct and refund input value-added tax, unless the tax rate of 0% is applied as prescribed in Clause 1, Article 8 of the Law on Value Added Tax 2008.

2. Reducing subjects exempted from VAT in Vietnam

Orientation to amend and supplement a number of goods and services that are not subject to value added tax in the following directions:

- Reducing the number of groups of goods and services that are not subject to value added tax, such as:

+ Fertilizers;

+ Specialized machinery and equipment for agriculture;

+ Offshore fishing vessels;

+ Postal services, public telecommunications, and universal Internet;

Services to maintain zoos, flower gardens, parks, street trees, public lighting;...

- Amending a number of groups of goods and services to remove difficulties for production and business activities, reform administrative procedures such as:

+ Fees in the loan contract between the Vietnamese Government and the foreign lender;

+ Exported products processed from natural resources and minerals;

+ Maintenance, repair, and construction activities with capital contributions from the people;

+ Teaching and vocational training;

+ Imported goods to support and finance the prevention of natural disasters, epidemics and wars;

+ Computer software;

+ The level of turnover from the sale of goods and services that are not subject to VAT of business households and individuals;

+ Goods imported by the financial leasing company for financial leasing;

+ Assets and goods of non-business organizations and individuals;

+ Transfer of investment projects, sale of assets;...

- Amending and supplementing a number of groups of goods and services to ensure the consistency and synchronism of the legal system, such as:

+ Moveable property;

+ Goods traded and exchanged by border residents;

+ Weapons and equipment used exclusively for national defense and security;

+ Cargo transshipment;

+ Trading in securities;

+ Plant varieties;...

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE