New points of Decree No. 100/2016/NĐ-CP of Vietnam’s Government on taxes

Products not subject to VAT

According to Decree No. 100/2016/NĐ-CP of Vietnam’s Government on elaboration and guidelines for some Articles of the Law on amendment of the Law on Value-added tax, the Law on special excise duty and the Law on Tax administration of Vietnam:

- Products that have undergone insufficient working or processing are products that have only been cleaned, dried, shelled, deseeded, cut, salted, cooled or otherwise preserved with common methods;

- Medical services include transport, testing, imaging, blood and blood products used for patients;

- Care services for elderly people and disabled people include medical and nutritional care, organization of cultural, sport and entertainment activities, physical therapy and rehabilitation for elderly people and disabled people;

- Public transportation includes intra-provincial, urban and extra-provincial suburban public transportation by bus and tram (including metro) according to traffic laws;

- Exports that are processed or unprocessed natural resources and/or minerals whose total value inclusive of energy cost makes up at least 51% of the products derived from such natural resources and/or minerals, exports that are products derived from natural resources and/or minerals whose total value inclusive of energy cost makes up at least 51% of the manufacturing cost.

Cases in which 0% VAT shall not apply

According to Decree No. 100/2016/NĐ-CP of Vietnam’s Government, 0% VAT does not apply to:

- Transfer of technology, transfer of intellectual property rights to abroad;

- Selling reinsurance to abroad;

- Extension of credit to abroad;

- Transfer of capital to abroad;

- Investment of securities to abroad;

- Derivative financial services;

- Post and telecommunications services;

- Exports which are domestically obtained natural resources and minerals comprised of metallic minerals, non-metallic minerals, crude oil, natural gas and coal gas;

- Goods/services provided for an individual who does not do business in a free trade zone;

- Tobacco, alcohol and beer imported and then exported.

VAT refund

According to Decree No. 100/2016/NĐ-CP of Vietnam’s Government, a business establishment derived from an investment project which has been registered and pays VAT under credit-invoice method, a petroleum exploration and development project which has been invested for at least 01 year and has not been put into operation shall have VAT on goods/services purchased during investment stage refunded in each year. If accumulated VAT on goods/services during the investment stage is VND 300 million or over, it shall be refunded.

Moreover, VAT shall not be refunded and shall be offset against that of the next period in case the project of investment in a conditional area has not obtained a license for conditional business.

Determination of taxable price

The taxable prices for domestically manufactured goods and imported goods are the selling prices fixed by the manufacturer or importer. If the selling price imposed by the manufacturer or importer is significantly different from market price, a tax authority shall impose tax in accordance with the Law on Tax administration. Taxable price is determined as follows:

Reduce the penalty for late tax payment to 0.03%/day

According to Decree No. 100/2016/NĐ-CP of Vietnam’s Government: A taxpayer who fails to pay tax by the deadline or extended deadline or deadline written in the notice or tax decision issued by the tax authority shall fully pay tax and late payment interest at 0.03% per day on the outstanding amount (0.05% per day compared to previous regulation).

Moreover, while paying the tax arrears in installments, the taxpayer still has to pay late payment interest at 0.03% of the tax arrears per day.

In particular, exemption and reduction of excise tax, resource royalty, personal income tax granted to a taxpayer who suffers from a natural disaster, fire or unexpected accident and consequently is not able to pay tax in accordance with law; exemption of tax on non-agricultural land, tax on agricultural land, land rent, water surface rent, registration fee granted to taxpayers; tax exemption granted to a household or individual that pays less than VND 50,000 in annual non-agricultural land tax.

In comparison with previous regulations, new points mentioned in Decree No. 100/2016/NĐ-CP of Vietnam’s Government have partly created a transparent and fair legal corridor for State tax policy, creating favorable conditions for businesses to develop in production and business activities, contributing to stabilizing the state budget.

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