(Chinhphu.vn) – - Mr. Truong Kim Tan's hospital (in Quang Nam Province) is a joint stock company, it’s premises rentedby outside units to run a canteen service, car care and taxi parking. Revenues from these units are paid to the hospital every month.

Mr. Tan awould like to ask, how does his hospital have to declare and pay value-added tax (VAT) and corporate income tax (CIT) for these services? Which documents are based on for calculation?

Regarding this issue, The Quang Nam Tax Department has the following comments:

Pursuant to the Circular No. 219/2013 / TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the implementation of a number of articles of the VAT Law and the Decree No. 209/2013 / ND-CP dated December 18, 2013 of the Government:

Article 6 stipulates, “Tax basis is taxable prices and tax rates.”.

Clause 1, Article 7 stipulates:

“Điều 7. Taxable prices

1. Taxable prices of goods and services sold by taxpayer are VAT-exclusive price. Taxable prices of goods and services that are subject to special excise tax are theprices inclusive of special excise tax and exclusive of VAT.…”.

According to Article 11, “10% tax shall be levied on the goods and services that are not mentioned in Article 4, Article 9 and Article 10 of this Circular....”.

Clause 2, Article 13 of the Circular stipulates:

“2. Cases in which VAT is calculated by directly multiplying a rate (%) by the revenue (hereinafter referred to as direct VAT)::...

b) Direct VAT rates applied to various business lines::

- From goods distribution or goods supply: 1%;

 - From services or construction exclusive of building materials: 5%;

- Manufacturing, transport, services associated with goods, construction inclusive of building materials: 3%;

 - Other lines of business: 2%.” .

In Clause 5, Article 3 of the Circular No. 78/2014 / TT-BTC dated June 18, 2014 of the Ministry of Finance guiding the implementation of the Law on Corporate Income Tax regulating the payment of CIT according to the method calculated according to the percentage of turnover :

“For non-business units, other non-enterprise organizations established and operating under Vietnamese law, and enterprises paying value-added tax by the direct method which trade in goods or provide services liable to enterprise income tax and can determine the turnover from but cannot determine the costs of and incomes from these business activities, they shall declare and pay enterprise income tax at the following percentage of the turnover from the sale of goods or services, specifically as follows:

 + For services (including interests from deposits and loans): 5%; Particularly, education, health and art performance activities: 2%.

+ For goods trading: 1%;

+ For other activities: 2%..”

Pursuant to Article 1 of the Circular No. 96/2015 / TT-BTC regulating the payment of CIT according to declaration:

“Điều 1. Amendment and supplementation of Clause 1, Article 3 of the Circular No. 78/2014/TT-BTC dated June 18, 2014 of the Ministry of Finance on providing guidance on implementation of the Decree No. 218/2013/NDCP dated December 26, 2013 of the Government on providing guidance of implementation of the Law on Corporate income (hereinafter referred to as Circular No. 78/2014/TT-BTC) is amended as follows::

“1. Corporate income tax (CIT) payable in the period equals (=) assessable income minus (-) the amount transferred to science and technology fund (if any) and multiplied by (x) corporate income tax rate…”.

Pursuant to Item 1, Article 11 of the Circular No. 78/2014 / TT-BTC dated June 18, 2014 of the Ministry of Finance guiding the implementation of the Law on CIT:

“Điều 11. Enterprise income tax rates

1. From January 1, 2014, the enterprise income tax rate is 22%, except the cases specified in Clauses 2 and 3 of this Article and cases eligible for preferential tax rates”…

Pursuant to Article 11 of the Circular No. 156/2013 / TT-BTC dated November 6, 2013 of the Ministry of Finance guiding the implementation of a number of articles of the Law on Tax Administration; The Law amending and supplementing a number of articles of the Law on Tax Administration and the Decree No. 83/2013 / ND-CP dated July 22, 2013 of the Government guiding VAT declaration.

Pursuant to Article 16 of the Circular No. 151/2014 / TT-BTC dated October 10, 2014 of the Ministry of Finance guiding the declaration of CIT.

Based on the above provisions, in the case of Mr. Tan's hospital, he signed a lease contract with outside units so that outside units can provide canteens and car keeping services; and renting a taxi parking lot:

The hospital shall declare and pay VAT and CIT for the income from the above ground lease as follows:

- In case the hospital registers to pay VAT by the direct method:

Regarding VAT: Applying the rate of 5% VAT calculation on received revenue.

Regarding corporate income tax: The hospital declares and pays CIT at the rate of 5% of the revenue received from the above ground lease activities.

- In case the hospital registers to pay VAT by deduction method:

Regarding VAT: For the above leasing activities, it is subject to 10% VAT.

Regarding CIT: Since January 1, 2016, the taxable income from the above-mentioned activities of the hospital applies the CIT rate of 20%.

The declaration of VAT and CIT is carried out in accordance with Article 11 of the Circular No. 156/2013 / TT-BTC and Article 16 of the Circular No. 151/2014 / TT-BTC.

- Organizations and individuals renting hospital premises to provide canteens and car keeping services are responsible for declaring and paying taxes at the local tax authorities as prescribed.