Lecture taxation chapter 5 value added tax (vat)

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[.]

Chapter 5: Value-Added Tax (VAT)

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/QH14 dated 26 November 2014 on

amendments and complements of VAT;

4 Law No.106/2016/QH14 dated 06 April 2016 on

amendments and complements of VAT;

5 Decree 209/2013/ND-CP dated 18 December 2013;

6 Decree 91/2014/ND-CP dated 01 October 2014;

References (cont.)

7 Decree 12/2015/ND-CP dated 12 February 2015;

8 Decree 100/2016/ND-CP dated 01 July 2016;

9 Circular 219/2013/TT-BTC dated 31 December 2013;

10 Circular 119/2014/TT-BTC dated 25 August 2014;

11 Circular 151/2014/TT-BTC dated 10 October 2014;

12 Circular 26/2015/TT-BTC dated 27 February 2015;

13 Circular 130/2016/TT-BTC dated 12 August 2016

Learning Objectives

and role of VAT.

subject to current VAT of Vietnam.

Vietnam.

tax rate of current VAT of Vietnam.

• 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

LO 5-1: Understand concept, origin, characteristics and role of VAT.

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

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)

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

▪ 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)

LO 5-2: Specify goods/services subject and not subject to current VAT

of Vietnam

▪ A

See details in Article 4 Circular 219/2013, Article 8 Circular 151/2014, Article 3 Law 71/2014, Article 1 Law 106/2016

and Article 1 Circular 26/2015

1 Products from farming (including agroforestry

products), breeding, and aquaculture)

2 Breeds of livestock, plant varieties;

3 Irrigation services, plowing services, dredging

channels, dredging in-field trenches serving

agricultural production; harvesting services.

Fertilizers; machinery, special-use equipment for

agricultural production; offshore fishing vessels;

and feeds for cattle, poultry and other domestic

animals;

4 Salt derived from seawater, rock salt, pure salt,

refined salt, iodized salt composed primarily of

sodium chloride (NaCl);

5 State-owned houses sold to tenants;

6 Transfer of right to use land;

7 Certain insurance services (including life insurance,

health insurance, agricultural insurance and

reinsurance);

8 Financial services including credit extension; separate loans; security services; capital transfer; selling debts; foreign currency trading; derivative financial services; selling collateral;

9 Medical services, veterinary services;

10 Public postal and telecommunications services, and public Internet services provided by the government, postal and telecommunications services from abroad (inbound);

11 Maintenance of zoos, flower gardens, parks, street greeneries, public lighting, funeral services;

12 Maintenance, repairs, and construction funded by the people, humanitarian aid for cultural and artistic works, public works, infrastructure, and housing for beneficiaries of incentive policies;

13 Teaching and training;

14 Audio and video broadcasting funded by government budget;

Input VAT on non taxable goods and services serving the manufacture or sale must not be deducted.