Lecture taxation chapter 4 excise tax (sct)

TAXATION Chapter 4 Excise Tax (SCT) References • Law on excise No 27/2008/QH12 dated 14 November 2008, effective from April 01, 2009 • Law on excise No 70/2014/QH13 dated 26 November 2014, effective f[.]

Chapter 4: Excise Tax (SCT)

• Law on excise No.27/2008/QH12 dated 14 November 2008, effective from April 01, 2009

• Law on excise No.70/2014/QH13 dated 26 November 2014, effective from January 01, 2016

• Law No.106/2016/QH13 dated 06 April 2016, effective from July 01, 2016

• Decree 108/2015/ND-CP dated 28 October 2015, effective from January 01, 2016

• Circular 195/2015/TT-BTC dated 24 November 2015 guiding the Decree

No 108/2015/ND-CP dated October 28, 2015, effective from January

01, 2016

• Circular 130/2016/TT-BTC dated 12 August 2016 on guidelines for the Government Decree No 100/2016/ND-CP dated 01 July 2016

Learning Outcomes

• LO 4-1: Understanding concepts, characteristics and roles of

excise tax.

• LO 4-2: Specify goods and services subject and not subject to

current excise tax of Vietnam.

• LO 4-3: Recognise taxpayers of Vietnamese current excise tax.

• LO 4-4: Define tax calculation methods, taxable prices and tax

rates of Vietnamese current excise tax.

• LO 4-5 Explain tax refund, deduction and reduction of

Vietnamese current excise tax.

Overview of Excise Tax

• Concept:

✓ Excise tax or Special Consumption Tax (SCT) is an indirect tax, imposed on

special goods and services which are not encouraged to be consumed in terms of social benefits

✓ Used to regulate incomes of income classes when consuming

high-end, expensive goods/services

✓ First applied in the Netherlands in the 17th century, in the UK in 1643 and

the United States in 1791

✓ A common tax in many countries nowadays, but special goods and

services are not the same between countries, depending on their cultural characteristics, economic growth rates and income levels of the population

LO 4-1: Understanding concept, characteristics and roles of excise tax.

Overview of Excise Tax (cont.)

• Characteristics:

✓ Goods/services subject to SCT are those which are usually non-essential,

luxurious, harmful to health and the environment and limited to consumption

✓ SCT has very high tax rates, which increase the selling price of goods/services,

causing great payment pressure on consumers, altering or restricting their consumption behavior → a huge impact on the orientation of consumers’ behavior

✓ SCT is only levied at the stage of production or importation, not at the

circulation stage to avoid tax overlapping

✓ A list of goods/services subject to SCT depends on states’ policies in regulation

and guidance of consumption in each period of socio-economic development

✓ SCT is the additional tax for other indirect taxes to reduce the regression of

indirect taxes

Overview of Excise Tax (cont.)

• Roles:

✓ Generate sources of revenues for the state budget.

✓ A tool to orient production and social consumption.

✓ A tool to regulate income, ensuring social justice.

Taxable Objects

• Merchandise:

a) Cigarettes, cigars and other tobacco preparations used for smoking, inhaling,

chewing, sniffing or keeping in mouth;

d) Under-24 seat cars, including cars for both passenger and cargo transportation with

two or more rows of seats and fixed partitions between passenger holds and cargo holds;

e) Two- and three-wheeled motorcycles

of a cylinder capacity of over 125 cm 3 ;

f) Aircraft, yachts;

g) Gasoline; h) Air-conditioners of 90,000 BTU or less; i) Playing cards; j) Votive gilt papers and votive objects.

LO 4-2: Specify goods and services subject and not subject to current

excise tax of Vietnam.

Taxable Objects (cont.)

• Services:

k) Dance halls

l) Massage parlors and karaoke bars;

m) Casinos; prize-winning video games, including jackpot and slot

games and games on similar machines;

n) Betting;

o) Golf business, including the sale of membership cards and golf

playing tickets;

p) Lottery business.

Non-taxable Objects

• Goods from (a) to (j) are not subject to SCT in the following cases:

➢ Goods directly exported by the manufacturer or processor, including

goods sold to or processed for export processing companies, except for passenger cars under 24 seats sold to export processing companies;

➢ A manufacturer of goods subject to SCT that temporarily exports and

re-imports goods under a license for temporary export and re-import is not required to pay SCT during the period over which import and export duties are exempt and has to pay SCT when selling such goods

➢ Goods exported for sale or exported by an entrusted business

establishment under an economic contract signed with foreigners

➢ Goods for sale at overseas fairs or exhibitions

Non-taxable Objects (cont.)

• Goods from (a) to (j) are not subject to SCT in the following cases:

iii If temporarily imported goods are re-exported within the period over which import duties are exempt according to regulations of law on export and import duties, SCT on the re-exported goods shall not be paid;

iv Goods temporarily imported to attend a fair

or exhibition and re-exported within the period over which import duties are exempt;

v Personal belongings of foreign entities given diplomatic immunity according to

regulations of law on diplomatic immunity;

vi Hand luggage within the tax-free allowance

of Vietnamese people and foreigners when passing through a Vietnam’s checkpoint;

vii Imported goods for sale at tax-free shops as prescribed by law;

viii Goods imported from abroad into a free trade zone, goods sold to a free trade zone from

inland and used within the free trade zone, goods traded between free trade zones, except for goods taken into a free trade zone having residents, not hard fences, and passenger cars having fewer than 24 seats.