NATIONAL ASSEMBLY SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness No. 07-2003-QH11
LAW ON
AMENDMENT OF AND ADDITION TO A NUMBER OF ARTICLES OF THE
LAW ON VALUE ADDED TAX
Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam as amended by Resolution 51-2001-QH10 of Legislature X of the National Assembly at its 10th session on 25 December 2001;
This Law amends and adds to a number of articles of the Law on Value Added Tax dated 10 May 1997.
Article 1
To amend and add to a number of articles of the Law on Value Added Tax:
1. Article 4 shall be amended and added to as follows:
"Article 4 Objects Not Subject To Value Added Tax
The following goods and services shall not be subject to value added tax:
1. Products of cultivation, husbandry, aquaculture or seafood which have not yet been processed into other products or which have only been semi-processed by organizations or individuals producing and selling such products;
2. Products being species of plants and animals;
3. Salt products;
4. Specialized machinery, equipment or means of transportation which form part of a technological process or construction materials which are not yet able to be produced domestically and are required to be imported to form the fixed assets of enterprises;
machinery, equipment or means of transportation which are not yet
be used directly in scientific research and technological development; aircraft, drilling platforms or watercraft leased from foreign parties which are not yet able to be produced domestically used for production or business; equipment, machinery, replacement parts, specialized means of transportation and supplies which are required to be imported in service of prospecting, exploration and development of petroleum fields and which are not yet able to be produced domestically;
5. Sales of State owned houses by the State to existing tenants;
6. Transfers of land use rights;
7. Credit services, investment funds and securities trading activities;
8. Life insurance; student insurance; insurance of animals and plants and non-profit-making insurance activities;
9. Medical services;
10. Non-profit-making cultural, exhibition and sports activities; artistic performances, film production; import, publication and screening of film footage and documentary videos;
11. Education and vocational training;
12. Radio and television broadcasting according to programmes funded by the State Budget;
13. Printing, publication, import and distribution of newspapers, magazines, specialized newsletters, political books, textbooks, teaching materials, books on legislation, scientific and technical books, books printed in languages of ethnic minorities, propaganda pictures, photos and posters; printing of money;
14. Public services of cleaning and water drainage in urban areas and residential areas, maintenance of zoos, flower gardens, parks, trees in streets, public lighting systems and funeral services;
15. Repair, renovation and construction of cultural and artistic works, public works, infrastructure and welfare housing funded by public contribution and humanitarian aid;
16. Public passenger transportation by bus;
17. Geological surveys, exploration, measuring and formulation of maps, which can be characterized as basic surveys of the State;
18. Water supply and drainage serving agricultural production; clean water produced by organizations and individuals for consumption in rural, mountainous and island areas and remote and distant regions;
19. Specialized arms and weaponry required for national defence and security;
20. Imported goods in the following cases: humanitarian aid, non- refundable aid; gifts to State bodies, political organizations, socio- political organizations, social organizations, socio-professional organizations; units of the people's armed forces; donations and gifts to individuals in Vietnam within the limits stipulated by the Government, personal effects of foreign organizations and individuals under diplomatic immunity regulations; hand luggage within duty-free limits;
Goods to be sold to international organizations and foreign individuals for humanitarian and non-refundable aid to Vietnam;
21. Goods in transit or transhipment or crossing Vietnamese borders;
goods temporarily imported and re-exported and goods temporarily exported and re-imported;
22. International transportation, goods and services provided directly for international transportation, and services being re-insurance outside Vietnam;
23. Technology transfers and computer software;
24. Postal and telecommunication services and popularization of Internet under the Government's program;
25. Gold imported in bars and foils which are not yet processed into fine art articles, jewellery or other products;
26. Exported unprocessed minerals to be stipulated in detail by the Government;
27. Products being artificial limbs; crutches, wheelchairs and other specialized appliances for the disabled;
28. Goods and services of business individuals having low income levels. Low income levels shall be as stipulated by the Government.
No tax credit or refund shall be made in respect of the input value added
subject to value added tax, except in the cases subject to the tax rate of zero (0) per cent stipulated in article 8.1 of this Law."
2. To add clause 8 to article 7 as follows:
"8. Prices used for calculation of value added tax in respect of goods and services subject to special sales tax at the stage of production and trading within Vietnam shall be sale prices, including special sales tax but excluding value added tax; prices used for calculation of value added tax in respect of imported goods shall be imported prices at port plus import duties (if any) plus special sales tax."
3. Article 8 shall be amended and added to as follows:
"Article 8 Tax Rates
Value added tax rates are provided for as follows:
1. Tax rate of zero (0) per cent for export goods and services, including export goods and services not subject to value added tax on export; except for the following: international transportation;
goods and services provided directly to international transportation;
services being re-insurance outside Vietnam; credit services, finance investment and securities trading overseas and exported unprocessed minerals to be stipulated in detail by the Government.
2. Tax rate of five (5) per cent for the following goods and services:
(a) Clean water used for production and living consumption;
except in the cases provided for in article 4.18 of this Law;
(b) Fertilizers, ores used for production of fertilizers; pesticides and growth stimulants for animals and plants;
(c) Medical equipment and instruments; medical sanitary cotton and bandages; preventive and curative medicines;
pharmaceutical chemical products, medicine materials used to produce preventive and curative medicines;
(d) Teaching and study aids;
(dd) Printing of products referred to in article 4.13 of this Law, except printing of money;
(e) Children's toys; books of all types, except for books referred to in article 4.13 of this Law; magnetic tapes, disks whether or not they are programmed;
(g) Products of cultivation, husbandry, aquaculture or seafood which have not yet been processed, except for the items referred to in article 4.1 of this Law;
(h) Fresh foodstuffs and unprocessed forestry products, except wood, bamboo shoots and the items referred to in article 4.1 of this Law;
(i) Sugar and by-products during sugar production, including sugar sediment and residue;
(k) Products made from jute, sedge, bamboo and thatch;
(l) Semi-processed cotton made from domestically grown cotton;
(m) Feed for cattle, poultry and other domesticated animals;
(n) Technical and scientific services;
(o) Services directly serving agricultural production;
(p) Fossil coal, soil, stone, sand and gravel;
(q) Basic chemicals; mechanical products being production materials; moulds of all types; explosives; grindstones;
newsprint; pressurized spray canisters; rubber latex in semi- processed form; colophony in semi-processed form; artificial hard boards; industrial concrete products being concrete bridges and house frames, concrete pillars. concrete high- tension poles, concrete culvert pipeline, concrete boxes of all types, panel and non-standardized prefabricated building components, concrete products; tyres and sets of tyres and tubes of size 900-20 or more; neutral glass tubes; net, rope and fibre for weaving fishing net;
(r) Products from metallurgy, rolling and drawing of ferrous, non-ferrous or precious metals, except for imported gold referred to in article 4.25 of this Law;
(s) Automatic data processing machines and their parts and components;
(t) Maintenance, repair and restoration of historical or cultural relics, museums, except for activities referred to in article 4.15 of this Law;
(u) Transportation, loading or unloading; dredging of channels, waterways, river ports and seaports; recovery of sunken property and salvage;
(v) Distribution and screening of video films, except for documentary video films referred to in article 4.10 of this Law.
3. Tax rate of ten (10) per cent for the following goods and services:
(a) Petroleum, gas, ore and other minerals;
(b) Commercial electricity;
(c) Electronic, electrical equipment;
(d) Cosmetics;
(e) Fibres, cloth, garments and embroidery products;
(f) Paper and paper products, except for newsprint paper referred to in clause 2(q) of this article;
(g) Sugar, milk, candy, beverages and other processed foodstuffs;
(h) Porcelain, terracotta, glass, rubber, plastic, wood products and wooden products; cement, bricks, tiles and other construction materials;
(i) Postal and telecommunication services, except for postal and telecommunication services and popularization of Internet under the Government's program;
(k) Leasing houses, warehouses, yards, factory buildings, machinery, equipment and means of transportation;
(l) Legal consultancy services;
(m) Taking, printing and enlarging photos; recording, duplicating and hiring tapes; recording, duplicating and showing videos;
(n) Hotels, tourism, restaurants;
(o) Other goods and services which are subject to special sales tax;
(p) Construction and installation;
(q) Gold, silver and gemstone, except for imported gold referred to in article 4.25 of this Law;
(r) Shipping agencies;
(s) Brokerage services;
(t) Other goods and services, apart from those provided for in clause 1 and clause 2 of this article."
4. To amend and add to clauses 1 and 2 of article 10 as follows:
"1. Business establishments paying value added tax by the tax credit method are permitted to credit input value added tax (hereinafter referred to as input tax) as follows:
(a) Input tax on goods and services used for production or trading of goods and services which are subject to value added tax shall be credited fully;
(b) Where goods or services are used for production or trading of both goods and services which are subject to value added tax and goods and services which are not subject to value added tax, only input tax on goods and services used for production and trading of goods and services which are subject to value added tax shall be credited;
(c) Upon determination of the tax payable for a month, input tax arising during such month shall be declared and credited; the time-limit for tax declaration shall be no later than three months after the time-limit of tax declaration of the arising month; in respect of fixed assets requiring credit of large amounts of input tax, such input tax may be credited gradually or may be refunded pursuant to regulations issued by the Government;
(d) Export goods and services subject to credit of input tax shall present documentation from the customs office proving actual exportation; and there must be a contract for sale of goods or processing of goods and supplying of services for foreign parties, and an invoice for the sales of goods and services for foreign parties; payment must be made via a bank, except for clearing payment between exported and imported goods and services, payment of the State's debt and other special payments. Procedures and conditions for exported goods and services subject to credit of input tax shall be provided for by the Government;
(dd) The Government shall provide for the credit of input tax in special cases.
2. Input tax to be credited shall be determined on the following bases:
the amount of value added tax recorded in added value statements in respect of purchased goods and services or value added tax payment receipts in respect of imported goods; where goods or services are purchased without added value statements or where statements are not as stipulated by law, no tax shall be credited."
5. To add clause 4 to article 11 as follows:
"4. Business establishments which print, issue and use invoices not in accordance with law in order to avoid tax and to make a fraudulent tax credit or tax refund shall, in addition to being compelled to pay the amount of tax payable and repay the tax refunded, be subject to administrative tax penalty or shall be prosecuted for criminal liability as stipulated by law."
6. Clause 1 of article 14 shall be amended and added to as follows
"1. Business establishments shall be responsible to pay value added tax in full and in a timely manner into the State Budget. The time-limit for monthly tax payment shall be no later than the twenty fifth day of the following month."
7. To add clause 5 to article 14 as follows:
"5. The Government shall provide detailed regulations on procedures for declaration and payment of tax in conformity with the reform of administrative procedures; raise the sense of responsibility before the law of business establishments; and at the same time strengthen activities of inspection, supervision and deal with offences by tax offices to ensure close and effective tax collection."
8. Clause 3 of article 16 shall be amended and added to as follows:
"3. Tax refund shall be made pursuant to a decision of the competent tax office in accordance with law and pursuant to international treaties which Vietnam has signed or to which Vietnam has acceded."
9. Clause 2 of article 17 shall be amended and added to as follows:
"2. To issue notices to business establishments with respect to the amounts of tax payable in accordance with Government regulations, and to activate business establishments to pay tax in a timely manner; where a business establishment fails to pay tax after
the time-limit stipulated in the notice, to issue further notices of the amount of tax and fine payable for delayed payment in accordance with clause 2 of article 19 of this Law. Where the business establishment fails to pay in full the tax and fine stipulated in any such notice, the tax office may take action as provided for in clause 4 of article 19 of this Law in order to recover the tax and fines in full. Where the business establishment still fails to pay in full the tax and fine after such action has been taken, the tax office shall forward the relevant documents to the authorized State body for resolution in accordance with law;"
Article 2
This Law shall be of full force and effect as of 1 January 2004.
Article 3
The Government shall provide detailed regulations and guidelines for implementation of this Law.
This Law was passed by Legislature XI of the National Assembly of the Socialist Republic of Vietnam at its 3rd session on 17 June 2003.
Chairman of the National Assembly NGUYEN VAN AN
