From July 1, 2016, the Law amending and supplementing tax laws came into effect. This law amends and supplements policies related to value-added tax, special consumption tax, and tax administration.
The amendments to the Law amending and supplementing a number of articles of the Law on Value Added Tax, the Law on Special Consumption Tax and the Law on Tax Administration have contributed to resolving difficulties and promoting production development, especially the production and circulation of agricultural and aquatic products domestically; restricting the export of minerals or products where the value of minerals is included in the value of raw, unprocessed goods, and encouraging deep processing.
At the same time, adjusting the excise tax rate on automobiles aims to support businesses in proactively investing in production development and enhancing competitiveness in the context of approaching international economic integration.
The revised content of the Law also contributes to simplifying and increasing transparency, facilitating tax payment for taxpayers, promoting administrative reform and modernizing tax management, in line with the trend of tax system reform.
Many new regulations regarding value-added tax refunds.
The supplementary law stipulates that elderly care services are exempt from value-added tax, aiming to encourage social participation and attract domestic and foreign investors to invest in the field of caring for the elderly and vulnerable in society.
The law also amends regulations on value-added tax (VAT) refunds for businesses with accumulated uncredited input VAT after at least 12 months or at least 4 quarters. Instead, businesses are allowed to carry forward the uncredited VAT (non-refundable) to deduct from the VAT in the next period, ensuring consistency with the nature of VAT and reducing procedures in VAT declaration, deduction, payment, and refund.
For investment projects, the regulations are supplemented to stipulate that businesses are not entitled to a value-added tax refund but may carry forward the uncredited tax amount of the investment project to the next period in accordance with investment law in the following cases:
- The business establishment's investment project fails to contribute the full registered charter capital; or engages in conditional business activities without fulfilling the required conditions as stipulated by the Investment Law, or fails to maintain these conditions throughout its operation.
- Investment projects for the exploitation of natural resources and minerals licensed from July 1, 2016, or investment projects for the production of goods where the total value of natural resources and minerals plus energy costs accounts for 51% or more of the product's cost according to the investment project.
At the same time, to align with this regulation, the Law has added a provision that export products processed from natural resources and minerals, where the total value of natural resources and minerals plus energy costs accounts for 51% or more of the product's cost, are exempt from value-added tax to encourage deep processing and create added value domestically.
The law also stipulates that businesses are not entitled to a value-added tax refund for imported goods intended for export, or for exported goods that are not exported within the customs operational area as prescribed by the Customs Law.
The tax refund process will be implemented first, followed by an audit, for taxpayers producing goods for export who have not violated tax and customs laws for two consecutive years; and who are not classified as high-risk taxpayers according to the Law on Tax Administration.
The regulations mentioned above are intended to ensure transparency and consistency with relevant legal documents.
Adjusting the excise tax on automobiles.
The regulation on the tax base for excise tax on imported goods is based on the selling price by the importing entity, aiming to ensure equality between imported goods and domestically produced goods in the context of increasingly deep international economic integration.
Accordingly, the Law adds provisions clarifying the tax base for excise tax in cases where the importing entity or manufacturing entity sells goods to a commercial business entity that is a parent-subsidiary company or a subsidiary within the same parent company as the manufacturing entity, importing entity, or commercial business entity that is an affiliated entity, in order to ensure transparency.
Regarding the excise tax rate for passenger cars with fewer than 24 seats, in order to implement the strategy for developing the automotive industry and to be consistent with the nature of each type of vehicle, the Law has stipulated a phased reduction in the excise tax for passenger cars with fewer than 9 seats and a cylinder capacity of 2.000cm3 or less.
Increase the excise tax rate to a high and exceptionally high level for vehicles with engine capacities exceeding 3.000cm3, as these vehicles consume a lot of fuel, are large in size and unsuitable for the current traffic infrastructure and people's income levels, and produce significant emissions into the environment.
Reduced or exempted land use tax for non-agricultural land.
The law has stipulated tax exemptions for households and individuals whose annual non-agricultural land use tax is 50.000 VND or less, in order to alleviate difficulties for low-income households, especially those in mountainous and remote areas.
In addition, the Law also amends the regulations on the rate of late payment penalties in the Tax Administration Law to 0,03%/day (instead of 0,05%/day) calculated on the amount of tax overdue, in order to alleviate difficulties for taxpayers and to be consistent with current conditions where bank lending interest rates have decreased to 8%-9%/year.
Pham Dinh Thi
Director of the Tax Policy Department, Ministry of Finance
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