According to the Circular No. 293/2016/TT-BTC dated November 15, 2016 of the Ministry of Finance, the part of the road use fee deducted to be left to the Center is 1.2%. Do I have to pay value added tax (VAT)?

The Tax Department of Nam Dinh province responded to this problem as follows:

Pursuant to Article 5 of the Law on VAT, the objects not subject to VAT do not include: Revenues from fees are left to the collection organization.

Pursuant to Clauses 2 and 4, Article 8 of Circular No. 293/2016/TT-BTC dated November 15, 2016 of the Ministry of Finance stipulating the collection rate and regime of collection, payment, exemption, management and use of road user fees:

"2. For the registration unit

a) The toll-collecting unit is entitled to leave one point two percent (1.2%) of the actually collected toll amount to pay for the following:

... 4. The amount of money that is left to be spent on the collection organization: In case the fee-collecting organization does the accounting according to the corporate financial mechanism, the remaining fee amount is the revenue of the unit; In case the fee-collecting organization is an administrative unit or a non-business unit, the remaining fee shall be incorporated into the unit's funding source and managed and used in accordance with the Law on State Budget.

Pursuant to Clause 4, Article 8 of Circular No. 70/2021/TT-BTC dated August 12, 2021 of the Ministry of Finance stipulating the collection rates and regimes for collection, payment, exemption, management and use of road user fees, effective from October 1, 2021 (replacing Circular No. 293/2016/TT-BTC):

"4. The amount of the fee that is left to be spent by the toll collector: In case the toll collection organization applies the corporate finance mechanism, the remaining fee amount is the unit's revenue and tax declaration and payment shall be made (VAT, corporate income tax) in accordance with the tax law; in case the toll collection organization is an administrative agency or a non-business unit, the fee amount is left to manage and use according to regulations.

Pursuant to the above provisions, in case the fee-collecting organization does the accounting according to the corporate finance mechanism, the remaining fee collected is the revenue of the unit and is subject to VAT declaration and payment according to regulations.

Nam Dinh Tax Department answers for the unit to know and implement.