Rates of direct vat applied to various business lines in Vietnam

Rates of direct vat applied to various business lines in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Rates of direct vat applied to various business lines in Vietnam

Rates of direct vat applied to various business lines in Vietnam according to the Appendix issued together with Circular 219/2013/TT-BTC is as follows:

1) Goods supply and distribution: 1%

- Wholesaling and retailing goods (except for goods sold by agents that earn commissions).

2) Services, construction exclusive of building materials: 5%

- Accommodation, hotel, motel services;

- Leases on houses, land, stores, workshops, assets, and other personal chattels;

- Leases on yards, machinery, vehicles; material handling, and other services related to transport such as parking, ticket selling;

- Postal services and mailing;

- Commissions for running agents, auction and brokerage services;

- Legal counseling, audit, accounting, and financial counseling; tax brokerage and customs brokerage;

- Data processing services, lease on information portals, IT and telecommunications equipment;

- Office assistance services and other business assistance services;

- Steambath, massage, karaoke, nightclub, billards, Internet, and video game services;

- Tailoring, laundry services; hairdressing services;

- Other repair services including: computer repairs and domestic appliance repairs;

- Infrastructural development consultancy, design, and supervision services;

- Other services;

- Construction and installation exclusive of building materials (including installation of industrial machinery and equipment).

3) Manufacturing, transport, services attached to goods, construction inclusive of building materials: 3%

- Manufacturing, processing goods;

- Mineral extraction and processing;

- Cargo and passenger transport;

- Services attached to goods such as training, maintenance, technology transfers attached to goods sale;

- Food and drink services;

- Repairs and maintenance of machinery, equipment, means of transport, other motor vehicles;

- Construction and installation inclusive of building materials (including installation of industrial machinery and equipment).

4) Other lines of business: 2%

- Production of products subject to 5% VAT under credit-invoice method;

- Provision of services subject to 5% VAT under credit-invoice method;

- Other lines of business not mentioned above.

2. Regulations on deduction of input VAT

Regulations on deduction of input VAT under Article 12 of the Law on Value-Added Tax 2008 (amended 2013) are as follows:

- Business establishments that employ the deduction method shall deduct the input VAT as follows:

= Input VAT on goods and services used for the production and sale of goods and services subject to VAT is completely deductible, including input VAT that is not compensated of damaged goods and services subject to VAT;

= For goods and services used for the production and sale of both taxable and non taxable goods and services, only input VAT on the goods and services used for the production and sale of taxable goods and services is deductible.

Deductible input VAT must be separated from non-deductible VAT; if they are not separated, the deductible input VAT shall be calculated by the percentage of revenue from goods and services subject to VAT to the total revenue from sold goods and services;

= Input VAT on goods and services sold to organizations and individuals that use humanitarian aid or non-refundable aid is completely deductible;

= Input VAT on goods and services used for petroleum exploration and extraction is completely deductible;

= Input VAT that arises in a month shall be declared and deducted when calculating the tax payable in that month. When business finds that the input VAT is declared or deducted incorrectly, it may be rectified before the tax authority issues a decision on tax inspection at the premises.

- Required papers for input VAT deduction:

= Sale invoices or receipts of tax payment at the importation stage;

= There are receipts of non-cash payments for purchased goods and services, except for the purchases below 20 million VND;

= Required papers for exported goods and services apart from the papers in Point a and Point b of Clause 2 of Article 12 of the Law on Value-Added Tax 2008: a contract sign with a foreign partner to sell, process goods or provide services; sale invoices; receipts of non-cash payments; customs declarations of exported goods.

The payment for exported goods and services by offsetting the exported goods and services against the imported goods and services and repayment of debts on behalf of the State is considered non-cash payments.

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