What is Value-added Tax Reduction Policy in 2022?

In order to stimulate growth and recover the economy after the impact of the Covid-19 pandemic, the Government has issued a policy to reduce value added tax. The reduction of value-added tax is an effective solution and tool to stimulate consumption and is expected to create a driving force for rapid development to help businesses restore business and production.

 

The value-added tax reduction policy has been promulgated by Decree 15/2022/ND-CP stipulating the tax exemption and reduction policy according to the National Assembly’s Resolution No. 43/2022/QH15 on fiscal and monetary policies currency to support the program of socio-economic recovery and development. Accordingly, value added tax will be reduced from 10% to 8%. This reduction will create conditions for consumers to increase spending, through which businesses will sell more products.

The value-added tax reduction will be applied to groups of goods and services currently subject to the 10% tax rate, except for the following groups of goods and services: (i) Telecommunications, financial and banking activities commodities, securities, insurance, real estate trading, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products; (ii) Products, goods and services subject to excise tax; (iii) Information technology under the law on information technology. However, if the goods and services are not subject to value-added tax or subject to value-added tax of 5% according to the provisions of the Law on Value-Added Tax, the provisions of the Law on Value-Added Tax shall be applied and not entitled to value added tax reduction.

It is important to note the value-added tax calculation method to apply. Accordingly, if the enterprise calculates value-added tax by the deduction method, the value-added tax rate of 8% shall apply; and in case the enterprise calculates value-added tax according to the percentage method on sales, collected, it will be reduced by 20% of the percentage rate for calculating value-added tax when issuing invoices for goods and services eligible for value-added tax reduction as prescribed.

The value-added tax reduction will be implemented quickly and businesses and consumers will immediately benefit. This tax reduction is expected to help reduce the cost of products and services, thereby stimulating consumer demand. Besides, it will help increase production output of enterprises and create more jobs for workers. Therefore, the reduction of value added tax is considered necessary solutions to promote the economy to recover soon after a long time affected by the pandemic.

The value-added tax reduction policy will be effective from February 1^st, 2022 to the end of December 31^st, 2022. Previously, value-added tax was only reduced for a few specific products, but with this policy, the object of tax reduction has been expanded in most fields of business and production. Therefore, the impact of this policy on the economy in the future is very large. However, in order for the value-added tax reduction to reach consumers, tax authorities need stricter inspection and control to meet the set goals. When in doubt, it is important to consult with tax lawyers in Vietnam for solutions and advice.

ANT Lawyers is a Law firm in Vietnam with international standards, recognized by Legal500, IFLR1000. We are an exclusive Vietnam member of Prea Legal, the global law firm network covering more than 150 juridictions. The firm provides a range of legal services as following to multinational and domestic clients.

 

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What Are Tax Obligations of a Representative Office in Vietnam?

Vietnam-based representative office of a foreign trader means a dependent unit of the foreign trader, which is established under the provisions of Vietnamese law to conduct market survey and a number of commercial promotion activities permitted by Vietnamese law.

Representative office of foreign trader in Vietnam has the rights and obligations in accordance with the law of Vietnam. Foreign trader is responsible before the law of Vietnam for all operations of its representative office in Vietnam.

 

Accordingly, representative office in Vietnam is not allowed to conduct business activities, nor carry out other activities for profit-generating purposes. The representative office in Vietnam only performs the activities for the right purposes, scope and duration specified in the certificate to establish the representative office. Besides, the representative office in Vietnam has the right to rent the head office, rent and buy the facilities and materials necessary for the operation of the representative office; to recruit Vietnamese and foreign employees to work at the representative office in accordance with the provisions of Vietnamese law; to use an account in foreign currency, in Vietnam dong of foreign currency origin opened by a foreign trader at a bank licensed to operate in Vietnam and only use this account for the operation of the representative office; to have a seal bearing the name of the representative office according to the provisions of Vietnamese law. Representative office in Vietnam can sign contracts, perform transactions with partners when authorized by the enterprise.

Hence, due to the limited scope of activities, the tax liability of a foreign representative office in Vietnam is narrower than that of an enterprise.  As the representative office does not produce or trade in goods and services, it is not required to pay license fees as prescribed. Representative office of foreign trader in Vietnam is dependent unit of foreign trader, established to investigate the market and carry out some trade promotion activities permitted by Vietnamese law, does not carry out production and business activities, so it is not required to pay license fees.

The fact that the representative office has the right to recruit Vietnamese or foreign employees to work at the office is the basis for arising personal income tax obligation. At the same time, representative office of foreign organization is subject to personal income tax registration. For employees working at foreign representative office in Vietnam, the taxable incomes are based on salaries and wages. Declaring, with holding, paying taxes and settling personal income tax of employees working at foreign representative office is the responsibility of such representative office.

ANT Lawyers, a law firm in Vietnam with offices in Hanoi, Da Nang and Ho Chi Minh City could help client to set up representative office in Vietnam and advise on the compliance on regular basis.

 

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Vietnam Promulgated Preferential Import-Export Tariff Schedule to Implement UKVFTA Agreement

On May 21, 2021, the Government of Vietnam issued Decree No. 53/2021/ND-CP on preferential export tariffs and special preferential import tariffs of Vietnam to implement the Free Trade Agreement between the Vietnam and the United Kingdom of Great Britain and Northern Ireland for the period 2021-2022 (“Decree No. 53/2021/ND-CP”).

 

Decree No.53/2021/ND-CP promulgating the Preferential Export Tariff and the Special Preferential Import Tariff of Vietnam to implement the Free Trade Agreement between the Socialist Republic of Vietnam and the Union United Kingdom and Northern Ireland (UKVFTA) period 2021 – 2022 and conditions to enjoy preferential export tax rates, special preferential import taxes under the UKVFTA. The specific tax rates for each year of each item are specified in the appendices of that Decree.

Accordingly, in order to enjoy the preferential export tax rate under the UKVFTA, goods exported from Vietnam that are eligible for the preferential export tax rate specified in Decree No.53/2021/ND-CP must meet the following conditions: (i) Being imported into the United Kingdom; (ii) Having a transport document (copy) showing that the destination is the United Kingdom; (iii) Having the import customs declaration of the export consignment of Vietnamese origin imported into the United Kingdom (copy and translation in English or Vietnamese in case the language is showed on the declaration is not in English).

In addition, imported goods eligible for special preferential import tax rates under the UKVFTA must fully satisfy the following conditions: (i) Belonging to the special preferential import tariff schedule specified in the Appendix II promulgated together with Decree No.53/2021/ND-CP; (ii) Being imported into Vietnam from: The United Kingdom or Vietnam (Goods imported from the free trade zone into the domestic market); (iii) Meeting the regulations on origin of goods and have proof of origin according to the provisions of the UKVFTA.

Information above are the provisions on the import and export tariff of goods under the UKVFTA, goods import and export enterprises need to pay attention to be able to apply the import preferential tariff, in order to bring new business highest benefit for the business.

ANT Lawyers in an international trade dispute law firm in Vietnam, recognized by Legal500, IFLR1000. We are an exclusive Vietnam member of Prea Legal, the global law firm network covering more than 150 jurisdictions. The firm provides a range of legal services to multinational and domestic clients. For advice or services request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529

 

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Official Letter 3593/TCT-KK on Value-Added Tax Refund

On August 11th 2016, the General Department of Taxation issued Official Letter 3593/TCT-KK to implement and introduce the new contents of Circular 99/2016/TT-BTC providing guidelines on the management of value-added tax (VAT) refund.

Accordingly, the preparation and submission of VAT refund document have some new features:

Guide to the object that must have written authorization document of the enterprise’s head office when recommending for VAT refund as follows:

+ Is a branch, subsidiary unit of taxpayer under Paragraph 1, Article 45 of the Law on Enterprise 2014; and

+ Is not an accounting unit that preparing financial statement in accordance with Paragraph 4, Article 3 of the Law on Accounting 2015.

(Previously, it is required to have the written authorization document of the enterprise’s headquarters in the process of VAT refund implementation, which is prescribed in Document 18832/BTC-TCT on December 17th 2015).

Supplement new regulation in the case that taxpayer has sent the tax refund request to the tax authorities but later submitting a written cancellation document for tax refund.

Taxpayer is allowed to adjust and supplement the amount of tax that is suggested for gyration and deduction in the VAT declaration form of the next declaration period if eligible for VAT deduction.

ANT Lawyers is a Vietnam law firm with English speaking lawyers whom understand the laws of Vietnam within the business and the local culture context.

The firm has been advising and representing foreign companies and individual clients interested in either doing business, or needing representation or legal services in Vietnam who are seeking reasonable and competitive solutions without compromising on service quality.

For advice or service request, please contact us via email ant@antlawyers.vn, or call +84 8 3520 2779.  To learn more about us, visit www.antlawyers.vn.

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Decree 129/2016/ND-CP on ATIGA Preferential Import Tariff for ASEAN goods

The Government has issued Decree 129/2016/ND-CP on preferential import tariff of Vietnam in particular to implement the ASEAN Trade in Goods Agreement (ATIGA) in the period 2016 – 2018.

This Decree prescribed the preferential import tariff of Vietnam to implement the ATIGA period 2016 – 2018 and the conditions for enjoying the preferential import tariff under this Decree.

Issued together with this Decree is the preferential import tariff of Vietnam in particular to implement the ATIGA Agreement in the period 2016 – 2018 (often referred to as ATIGA tax).

Imported goods are applied the ATIGA tax when satisfying the following conditions:

1. Included in the preferential import tariff attaching to this Decree.
2. Being imported into Vietnam from countries that are members of the ASEAN Trade in Goods Agreement, including: Brunei Darussalam; Kingdom of Cambodia; Republic of Indonesia; People’s Democratic Republic of Laos; Malaysia; Federal Republic of Myanmar; Republic of the Philippines; Republic of Singapore, Singapore; Kingdom of Thailand; Socialist Republic of Vietnam (goods in duty free area importing to the domestic market).
3. Being shipped directly from the exporting country to Vietnam.
4. Satisfy the regulations on goods origin in the ATIGA, have certificates of goods origin (C/O) – form D, prescribed by the Ministry of Industry and Trade.

See more:

Investment law firm in Vietnam

Set-up business in Ho Chi Minh City

Set-up representative office in Vietnam

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Decision 36/2016/QD-TTg Regulates the Tax Rate for Imported Goods

Decision No. 36/2016/QD-TTg dated September 1st 2016 of the Prime Minister prescribed the normal tax rate for imported goods at Point c, Clause 3, Article 5 of the Law on export and import tax.

Accordingly, the import duty of 5% will be applied to many items, such as: Smart cards; Telephone answering machines; Cell phone for cellular mobile network or other wireless networks; Vacuum cleaner; Uninterruptible power supply (UPS); Automatic payment machine; Electronic computer that can operate without external power source and recorder, reproducing and displaying data, pocket-size with calculator function; Dry washing machines; Flat iron; Offset/Roll printing machine; Printer – photocopy machine, print using inkjet/laser technology…

For imported goods that are not included in the above list of normal import tariff and not in the case of imported goods that are enjoying preferential tax rates or special preferential tax rate under Point a and b, Article 5 of the Law on export and import tax, then may be subject to the ordinary tax rate equal to 150% of the preferential import tariff of each corresponding items in Annex II of Decree No. 122/2016 /ND-CP on September 1st 2016.

The Decision takes effect from September 1st 2016.

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ANT Lawyers is a Vietnam law firm with English speaking lawyers whom understand the laws of Vietnam within the business and the local culture context.

For advice or service request, please contact us via email ant@antlawyers.vn, or call +84 8 3520 2779.  To learn more about us, visit www.antlawyers.vn.

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