Most goods and services are subject to value added tax at the rate of 10% or 5%. So, what is value added tax (VAT)? Who has to pay value added tax? All will be in detail in the article below by LSX Law firm.
Law on Value Added Tax 2008
What is Value Added Tax (VAT)?
Article 2 of the Law on Value Added Tax 2008 stipulates:
Value added tax is a tax charged on the added value of goods; and services arising in the process from production, circulation to consumption.
Thus, VAT is a tax applied only on the added value; but not on the entire value of goods and services. Value-added tax is an indirect tax, added to the selling price of goods and services and paid by consumers when using that product. Although consumer pays the value-added tax, the person who directly fulfills the tax obligation to the State is the production and business unit.
Who has to pay Value Added Tax (VAT)?
Pursuant to Article 3 of Circular 219/2013/TT-BTC, value-added tax payer is an organization or individual that produces and trades in value-added taxable goods and services in Vietnam, regardless of business lines, forms, business organizations (hereinafter referred to as business establishments) and organizations and individuals that import goods or purchase services from abroad are subject to value added tax (hereinafter referred to as importers). password) include:
- Business organizations established and registered under the Enterprise Law, State Enterprise Law (now the Enterprise Law), Cooperative Law and other specialized business laws.
- Economic organizations of political organizations, socio-political organizations, social organizations, socio-professional organizations, people’s armed forces units, non-business organizations and other organizations.
- Foreign-invested enterprises and foreign parties participating in business cooperation under the Law on Foreign Investment in Vietnam (now the Law on Investment); foreign organizations and individuals doing business in Vietnam but not establishing legal entities in Vietnam.
- Individuals, households, groups of independent traders and other entities engaged in production, business and import activities.
- Organizations and individuals doing business in Vietnam that purchase services (including the purchase of services associated with goods) from foreign organizations that do not have a permanent establishment in Vietnam; or individuals abroad who are For non-residents in Vietnam, organizations; and individuals purchasing services are taxpayers.
Points to note
Value-added tax and personal income tax payers are resident individuals whose business activities are resident individuals, including individuals, groups of individuals and households with production and business activities trading goods and services in all production and business fields and line; (hereinafter referred to as business individuals). Production and business fields and lines include some of the following cases:
- Firstly, independently practice in the fields and professions for which a license; or practice certificate is granted; accordingly the law.
- Secondly, acting as an agent to sell at the right price for lottery agents, insurance agents, multi-level sales of individuals who directly sign contracts with lottery companies, insurance enterprises, and multi-level sales enterprises.
- Thirdly, business cooperation with the organization.
- Lastly, agricultural production and business, forestry, salt making, aquaculture and fishing do not satisfy the conditions for tax exemption.
Besides, taxpayers are resident individuals with business activities, excluding business individuals with a turnover of VND 100 million/year or less. In other words, individuals, groups of individuals and households engaged in production; trading of goods; services are only required to pay VAT; and personal income tax; if they have turnover in a positive year calendar > 100 million dong.
Accordingly the Law, for goods processing, it is the processing price accordingly the processing contract excluding VAT, including wages, costs of fuel, motivation, auxiliary materials and other costs for the processing of goods goods industry.
Accordingly the Law, for transport; loading and unloading is the freight rate; loading and unloading without VAT; regardless of the facility directly transporting; loading or unloading.
Accordingly the Law, for casino services, prize-winning video games; entertainment business with bets; the proceeds from this activity include excise tax minus the amount paid to guests.