28 April 2016
Vietnam Announces VAT, Special Consumption Tax and Tax Administration Changes
Vietnam has recently approved a number of changes to the regulations covering Value Added Tax (VAT), Special Consumption Tax (SCT) and Tax Administration. These changes will come into effect from 1 July, 2016.
Value Added Tax
The following categories of goods and services will be exempt from VAT:
- Care services for the elderly and differently-abled persons
- Products for export made from natural resources, where the total value of the resources used and the energy cost accounts for at least 51% of the cost of the products sold
Businesses who buy unprocessed or semi-processed cultivation, animal husbandry, and seafood products for trade are not required to declare output VAT, and are permitted to credit the relevant input VAT.
Special Consumption Tax
The principal amendments to SCT are as follows:
- SCT rates applicable to vehicles with less than 24 seats will vary depending on engine capacity and the period of application.
- In the manufacturing sector, price floors will be set on the taxable price of goods traded between entities enjoying the following relationships:
- Entities that share the same parent company
- Parent companies and their subsidiaries
- Companies having a commercial relationship with another company (e.g. company B is a major shareholder in company A and is selling to company A)
- In the case of goods imported into Vietnam, companies will incur SCT both at the time of import as well as the point of sale. Import SCT, however, will be creditable against SCT incurred at the point of sale.
The amendments with regard to tax administration reduce the level of late payment penalties. The rate of interest on late payment dues has been lowered from 0.05% per day on the outstanding tax amount to 0.03% per day (around 11% per annum).