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TAXATION Chapter 5 Value Added Tax (VAT) References 1 Law on VAT No 13/2008/QH12 dated 03 June 2008; 2 Law No 31/2013/QH13 dated 19 June 2013 on amendments and complements of VAT; 3 Law No 71/2014/QH1[.]
TAXATION Chapter 5: Value-Added Tax (VAT) References Law on VAT No.13/2008/QH12 dated 03 June 2008; Law No.31/2013/QH13 dated 19 June 2013 on amendments and complements of VAT; Law No.71/2014/QH14 dated 26 November 2014 on amendments and complements of VAT; Law No.106/2016/QH14 dated 06 April 2016 on amendments and complements of VAT; Decree 209/2013/ND-CP dated 18 December 2013; Decree 91/2014/ND-CP dated 01 October 2014; References (cont.) 10 11 12 13 Decree 12/2015/ND-CP dated 12 February 2015; Decree 100/2016/ND-CP dated 01 July 2016; Circular 219/2013/TT-BTC dated 31 December 2013; Circular 119/2014/TT-BTC dated 25 August 2014; Circular 151/2014/TT-BTC dated 10 October 2014; Circular 26/2015/TT-BTC dated 27 February 2015; Circular 130/2016/TT-BTC dated 12 August 2016 Learning Objectives • LO 5-1: Understand concept, origin, characteristics and role of VAT • LO 5-2: Specify goods/services subject and not subject to current VAT of Vietnam • LO 5-3: Recognize taxpayers of current VAT of Vietnam • LO 5-4: Define VAT calculation method, tax base and tax rate of current VAT of Vietnam • LO 5-5: Explain tax refund of current VAT of Vietnam Definition LO 5-1: Understand concept, origin, characteristics and role of VAT • Value-added tax (VAT) is an indirect tax, levied on the value added of goods/services in the process from production, trading and consumption • Value added is the value that producers/traders create more for their products/services based on the inputs of the previous stage such as materials, goods, services, etc History and Development of VAT • VAT appeared first in France in 1954 • In Asia VAT became the common tax: South Korea (1977), the Philippines, Japan (1988), Thailand (1992) • Nowadays, there are more than 130 countries applying this tax • In Vietnam, the VAT Law was passed by the National Assembly on 10 May 1997 and took effect from 01 January 1999 replacing the sales tax Characteristics • A regressive tax • Wide scope and objects of tax collection, few and low rates but greater revenues for the state budget • Avoid tax overlapping VAT is only levied on the added value of goods and services of all stages of production and business Therefore, the total tax collected in the period will be equal to the amount of tax calculated according to the selling price to the final consumer (Example for illustration) • Highly neutral: not directly affected by taxpayers' business results; not distort the price of goods/services since it only collects through each stage of the business production process to consumption Role of VAT • Contribute to stabilize prices, encouraging and promoting expansion of production and trading of goods; • Ensure a stable revenue for the state budget through mobilization of a portion of consumers' income; • Contribute to specialize production, improve productivity, quality and reduce production costs; • Promote exportation activities as goods/services for export are subject to a tax rate of 0% and exporters are entitled to input VAT refunds; • Promote the use of invoices in commercial transactions Taxable Objects LO 5-2: Specify goods/services subject and not subject to current VAT of Vietnam ▪ Goods and services subject to VAT (taxable goods/services) are those used for production, trading, and consumption in Vietnam (including those purchased from overseas organizations and individuals), except for 26 groups of goods/services not subject to VAT (see Non-taxable objects in the next slides) Non-taxable Objects Input VAT on non taxable goods and services serving the manufacture or sale must not be deducted ▪ Products A from farming (including agroforestry Financial services including credit extension; separate products), breeding, and aquaculture) loans; security services; capital transfer; selling debts; Breeds of livestock, plant varieties; foreign currency trading; derivative financial services; Irrigation services, plowing services, dredging selling collateral; channels, dredging in-field trenches serving Medical services, veterinary services; agricultural production; harvesting services 10 Public postal and telecommunications services, and Fertilizers; machinery, special-use equipment for public Internet services provided by the government, agricultural production; offshore fishing vessels; postal and telecommunications services from abroad and feeds for cattle, poultry and other domestic (inbound); animals; 11 Maintenance of zoos, flower gardens, parks, street Salt derived from seawater, rock salt, pure salt, greeneries, public lighting, funeral services; refined salt, iodized salt composed primarily of 12 Maintenance, repairs, and construction funded by sodium chloride (NaCl); the people, humanitarian aid for cultural and artistic State-owned houses sold to tenants; works, public works, infrastructure, and housing for Transfer of right to use land; beneficiaries of incentive policies; Certain insurance services (including life insurance, 13 Teaching and training; health insurance, agricultural insurance and 14 Audio and video broadcasting funded by government reinsurance); budget; See details in Article Circular 219/2013, Article Circular 151/2014, Article Law 71/2014, Article Law 106/2016 and Article Circular 26/2015 ... of Vietnam • LO 5- 3: Recognize taxpayers of current VAT of Vietnam • LO 5- 4: Define VAT calculation method, tax base and tax rate of current VAT of Vietnam • LO 5- 5: Explain tax refund of current... current VAT of Vietnam Definition LO 5- 1: Understand concept, origin, characteristics and role of VAT • Value- added tax (VAT) is an indirect tax, levied on the value added of goods/services in the... 12/20 15/ ND-CP dated 12 February 20 15; Decree 100/2016/ND-CP dated 01 July 2016; Circular 219/2013/TT-BTC dated 31 December 2013; Circular 119/2014/TT-BTC dated 25 August 2014; Circular 151 /2014/TT-BTC