New guidelines on tax policies

SATurday - 20/08/2022 03:31    

The Law on amendments and supplements of some articles of the Law on Value Added Tax, the Law on Special Consumption Tax, and the Law on Tax Management will come into force from July 1, 2016.

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The amendments made to the Law targets to resolve difficulties and spur production, especially for agro and fishery products; restrict exportation of minerals and raw materials; and encourage the processing of goods with comparative contents.

The adjustments of special consumption tax imposed on auxiliary products aim to support enterprises to improve competitiveness in response to extensive economic integration.

In addition, the new law also targets to facilitate taxpayers' access to simple and transparent payment; speed up the administrative reform; modernize tax management in conformity with the innovative trend in the tax system.

New regulations on VAT refunds

It supplements a regulation saying services for the elderly are exempt from value added tax. The move targets to enable domestic and foreign investors to take care of old and vulnerable people in society.

VAT refunds will no longer be allowed where taxpayers have accumulated input VAT outstanding for 12 months (4 quarters) or more. Taxpayers have to carry forward the input VAT instead.  

Enterprises and cooperatives buying farming, breeding, aquaculture produces that have not been processed into other products or have only been semi- processed and selling them to other enterprises or cooperatives are not required to declare and pay VAT but may deduct input VAT;

For input VAT incurred on investment projects, the VAT that has not been deducted shall not be refunded and instead be carried forward to the next period in the following cases: (1) the investment project does not have adequate charter capital as registered; engages in conditional business lines while the corresponding conditions have not been fully satisfied as prescribed by the Law on Investment or the fulfillment of such conditions is not maintained throughout its operation; (2) the project is a natural resource extraction project or mineral extraction project licensed from July 01, 2016 or a manufacture project where the total value of natural resources or minerals plus energy costs makes up at least 51% of the product price.

Special consumption tax on automobiles

The regulation on special consumption tax on imports will be calculated by importers with a view to ensuring equality among imports and domestically-made products in the context of international integration.  

Accordingly, the special consumption tax for imported cars with 24 seats and below would be based on the importer's price, but the price must not be lower than 105% of the cost of an auto, which includes the car's import price, import tax and special consumption tax at the importing point. If it is lower than this level, the tax will be fixed by a tax agency following regulations on tax management.

The new law also regulates a roadmap on special consumption tax cut for under 9-seat cars with less than 2,000 cu.m of engine displacement. However, higher tax consumption rates will be imposed on cars with more than 3,000 cu.m for fear of high exposal of exhaust fumes, low personnel income levels, and poor transport infrastructure conditions.

Less tax on non-agricultural land

The fresh law stipulates tax exemption for households and individuals who pay less than VND 50,000 (over US$2) in non-agricultural land tax. The regulation aims to support low-income families, especially those from mountainous and far-reaching areas.

Interest on late tax payment shall be decreased to 0.03%/day (approximately 11% per annum). For overdue tax, including overdue tax recaptured in tax audits, related to periods prior to  July 1, 2016 but not yet settled as at July 1, 2016, the interest shall be calculated by applying the new rate from July 1, 2016 onwards only./.