The National Assembly and the National Assembly Standing Committee met to give their opinions on the draft Resolution on Value Added Tax. Photo: Doan Tan - VNA

The Ministry of Finance has just requested agencies and organizations to contribute their opinions to complete the draft Decree detailing the implementation of a number of articles of the Law on Value Added Tax (VAT). Accordingly, it mentions many contents related to the fields of mineral resources, services and exported goods, agricultural products, real estate and investment projects....

Based on synthesizing opinions from enterprises and consulting the views of experts and industry associations, the Vietnam Chamber of Commerce and Industry (VCCI) said that according to the draft, the regulation stipulates that exported products are resources and unprocessed mined minerals are not subject to VAT.

According to the reflection of enterprises, the current design of the regulation is not appropriate. The list is built according to the method of listing HS codes; in which an HS code includes all products in that code, regardless of whether they are raw or deeply processed mineral resources. Such a regulation needs to consider issues such as increasing business costs for enterprises: enterprises must record all input VAT as business costs, thereby reducing the competitiveness of export products in the international market, affecting the business situation and profits of enterprises.

Many enterprises proposed that the drafting agency add some principles that should not be applied to other products or industrial products confirmed by competent authorities. In the case of products that are not subject to export tax, that is, not subject to export restrictions or incentives, this product should also enjoy the normal VAT policy.

Regarding tax rates for export services, according to businesses, the regulation does not include export sourcing services provided to foreign parties. In essence, export sourcing services are cross-border services; in which, the service users are foreign traders. Consumption and payment of implementation costs are also done abroad. This service plays a particularly important role in promoting exports, with the role of promoting the purchase of raw materials for export, helping Vietnamese businesses export goods to the world. Currently, other countries in the region such as Indonesia, Malaysia, and Thailand are applying a 0% VAT rate.

According to businesses, if the current regulations continue, foreign businesses using this service will be taxed twice, increasing the cost of doing business in Vietnam.

The draft decree also mentions tax rates for goods exported to non-tariff zones. However, many businesses have reported that this regulation is unclear and creates many risks for businesses. Specifically, the regulation defines exported goods as goods that directly serve export production activities. In essence, all goods used at export processing enterprises with 100% of export products directly serve the production and processing of export goods, which are considered valid expenses when calculating corporate income tax as well as constituting the price of exported products. Therefore, in order to create a favorable and safe business environment for businesses, VCCI recommends that the drafting agency supplement the regulation in the direction of meeting the components of the dossier such as contracts, payment documents, customs declarations, etc. to prove that goods and services actually provided and consumed in the duty-free zone will be considered goods directly serving export production activities. Regarding this, the draft also stipulates a 0% tax rate for exported goods and services such as services provided directly to organizations in non-tariff zones and consumed in non-tariff zones directly serving export production activities. However, enterprises in the export processing zone believe that this provision does not include many types of services provided to enterprises producing export products. Accordingly, in the production process, all goods and services used at export processing enterprises with 100% of export products directly serve the production and processing of export goods, which are considered valid expenses when calculating corporate income tax as well as constituting the price of exported products. These services include cleaning, protection, repair of machinery, equipment, molds, software maintenance, customs agency services, auditing, consulting, training, recruitment, etc. These are all essential and basic services to ensure the production and operation process takes place.

To facilitate the production of exported goods and services, VCCI and businesses propose that the drafting agency add services such as cleaning, protection, repair of machinery, equipment, molds, software maintenance, customs agency, auditing, consulting, training, recruitment of workers and employees, leasing of machinery, equipment, insurance, etc. to the list of services subject to a 0% tax rate.