The Government and inspection agencies report on the VAT Bill (revised) at the National Assembly

According to the program of the 7th Session of the 15th National Assembly, in the afternoon session of June 17, authorized by the Prime Minister, Minister of Finance Ho Duc Phoc presented a Proposal on the VAT Bill (revised).

Meeting international tax reform trends

According to the Minister of Finance, after 15 years of implementation, the VAT Law has achieved many important results such as reducing administrative procedures for taxpayers and tax authorities, contributing to improving the business environment, enhancing high national competitiveness; solving difficulties and promoting production and business development; helping orient production and consumption, creating favorable conditions for businesses to develop technology, invest in innovation of fixed assets, and facilitate exports...

Furthermore, the VAT Law contributes to improving state management efficiency, creating transparency in economic activities, and preventing fraud in tax refunds by encouraging the development of non-cash payment transactions; making an important contribution to ensuring a reasonable incentive rate for the state budget, restructuring state budget revenues in a sustainable direction, gradually reducing dependence on revenues from mineral resources (crude oil) and revenues from import-export activities …

However, amid the rapid changes in world economics and politics in general and the Vietnamese economy in particular, the Minister said that the implementation of VAT policy has also revealed some shortcomings. Therefore, the draft VAT Law (revised) has 4 Chapters and 18 Articles. The Bill is inherited from the current Law but is revised to comply with the policy content.

In addition, the regulations in the revised law will also remove inadequacies and overlaps in the VAT legal system and ensure consistency with relevant laws; ensure feasibility, transparency and convenience for implementation and promoting resources for socio-economic development. At the same time, amending and supplementing regulations to comply with international tax reform trends.

Minister Ho Duc Phoc presented the amendments and supplements to the draft Law such as regulations on taxpayers, non-VAT subjects, taxable prices, tax rates...

Minister of Finance Ho Duc Phoc presents the Proposal on the VAT Bill (revised).

Removing12 types of goods and services that are not subject to VAT

Regarding subjects of VAT, the draft Law retains the 26 groups of goods and services not subject to VAT but has narrowed the goods and services not subject to VAT in these 26 groups, removing 12 types of goods and services that are not subject to VAT.

Specifically: fertilizer; specialized machinery and equipment serving agricultural production; offshore fishing vessels (the Fisheries Law has changed the new name to fishing vessels in offshore areas); securities depository; market organization services of stock exchanges or securities trading centers; public postal services; public telecommunications services; universal Internet service under the Government's program; zoo maintenance services; flower garden and park maintenance services; street tree maintenance services; and public lighting services.

Regarding the taxable price, the taxable price for imported goods is the taxable price under the Law on import and export taxes plus with additional import taxes as prescribed by law (if any), plus special consumption tax (if any) and plus environmental protection tax (if any) to ensure compliance with specialized law.

Regarding tax rates, along with many other types of goods, for subjects of the 0% tax rate, the draft law has added regulations that do not apply the 0% tax rate to products and services provided on digital platforms according to regulations of the Government to ensure flexibility in determining whether this product or service is consumed in Vietnam or abroad at the time of supply. At the same time, adding regulations on empowering to the Minister of Finance to regulate procedures and conditions to enjoy the 0% tax rate to exported goods and services.

Adding specific regulations on 3 groups of goods that are not subject to the 0% tax rate to legislate the regulations that are being stably implemented in the documents under the Law, specifically: imported cigarettes, alcohol, and beer then exported; gasoline and oil purchased domestically and sold to business establishments in the non-tariff zone; cars sold to organizations and individuals in the non-tariff zone; doods supplied to individuals who do not register for business in the non-tariff zone.

The draft Law has narrowed the goods and services subject to the 5% tax rate from 15 groups of goods and services to 12 groups of goods and services and eliminated 2 types of goods. Specifically: removing 3 groups of goods and services (fresh food, unprocessed forest products; sugar, by-products of sugar production, including molasses, bagasse, sludge residue; cultural activities, activities exhibitions, physical training, sports, performing arts, film production, import, distribution and screening of films) and 2 types of goods (preliminarily processed resin; all kinds of specialized equipment and tools for teaching, research, scientific experiments).

The draft also adds a number of regulations on tax refunds to make policies transparent, consistent with emerging realities and avoid problems in implementation, for example: regulations on goods business and production establishments and service providers subject to a 5% VAT rate if the input VAT amount that has not been fully deducted is 300,000,000 or more after 12 months or 4 quarters, then the VAT will be refunded.

To legislate regulations that have been stably implemented in by-law documents, consistent with the law on invoices and documents, and avoid fraud in VAT deduction and refund and ensure the strictness of the law, it is proposed to add regulations on prohibited acts in Article 13 of the draft Law and amend and supplement regulations on invoices and documents in Article 16 of the draft Law.