Decree No. 102/1998/ND-CP amends and supplements some articles of Decree No. 28/1998/ND-CP on value added tax, including adding non-taxable objects, amending regulations on credit services, and cases eligible for input tax deduction. At the same time, this decree also stipulates the reduction of value added tax for businesses facing difficulties and guides its implementation from January 1, 1999.
Scope of application
Production and business establishments subject to value added tax; Ministry of Finance; ministers, heads of ministerial-level agencies, and agencies under the Government; Chairmen of provincial People's Committees and municipal People's Committees directly under the central government.
Key points
- Production and processing establishments purchasing unprocessed agricultural, forestry, and aquatic products from producers without a value added tax invoice may deduct input tax at a rate of 5% or 3%.
- Credit services include lending forms (including lending in guarantee cases), financial leasing by credit organizations, investment funds, and capital transfer activities.
- Businesses subject to tax under the tax deduction method are eligible for tax refund if the input tax exceeds the output tax for three consecutive months.
- For certain products, goods, and services in production and business facing difficulties, the tax rate calculated based on the sales price is reduced by 50%.
- State-owned enterprises engaged in production and business of goods and services with high income must pay corporate income tax and additional corporate income tax.
🌐 Social impact of this document
- Positive impact: Reducing the tax burden for businesses facing difficulties, creating favorable conditions for exporting goods.
- Negative impact: Increasing costs for state-owned enterprises with high income that must pay additional corporate income tax.
❓ Frequently asked questions
What percentage can production and processing establishments purchasing unprocessed agricultural products be deducted for input tax?
According to the Decree, production and processing establishments purchasing unprocessed agricultural products from producers without a value added tax invoice may deduct input tax at a rate of (%) calculated on the value of purchased goods as follows: 5% for rubber trees, resin trees, oil trees, sugarcane, fresh tea leaves, rice, corn, cassava; livestock, poultry, fish, shrimp, and other aquatic products; 3% for agricultural and forest products not specified in the group deductible at 5%.
What forms does credit service include?
According to the Decree, credit services include lending forms (including lending in guarantee cases), financial leasing by credit organizations, investment funds, and capital transfer activities.
When are businesses eligible for a value added tax refund?
According to the Decree, businesses subject to tax under the tax deduction method are eligible for a tax refund if the input tax exceeds the output tax for three consecutive months.
Which products are eligible for a 50% reduction in the tax rate based on the sales price?
According to the Decree, products eligible for a 50% reduction in the tax rate based on the sales price of goods and services include coal; tractors, traction engines, water pumps, utility machines, power units; sodium hydroxide (NaOH), sodium hypochlorite (NaOC1), calcium hypochlorite (Ca(OCl)2), aluminum hydroxide (Al(OH)3), hydrochloric acid (HCl), liquid and gas chlorine (Cl2); sodium silicate (Na2SiO3); goods subject to special consumption tax at the trading stage taxed under the tax deduction method; hotels, tourism, catering.
What must state-owned enterprises engaged in production and business with high income do?
According to the Decree, state-owned enterprises engaged in production and business of goods and services with high income must pay corporate income tax and additional corporate income tax according to the Corporate Income Tax Law. If the remaining income after substituting VAT for revenue tax is still large, they must continue to pay into the state budget at least 70% of the remaining income. The Ministry of Finance will specify the appropriate additional adjustment rates for each type of enterprise.
Full text
DECREE OF THE GOVERNMENT
Amending and supplementing some articles of Decree No.28/1998/NĐ-CP dated May 11, 1998 of the Government.
detailing the implementation of the Value Added Tax Law
THE GOVERNMENT
Pursuant to the Government Organization Law dated September 30, 1992;
Pursuant to the Value Added Tax Law No. 02/1997/QH9 dated May 10, 1997;
Pursuant to Point 2, Section IV of Resolution No. 18/1998/QH10 dated November 25, 1998 of the National Assembly on the state budget estimate for 1999;
At the proposal of the Minister of Finance,
DECREE:
Article 1.Amending and supplementing some articles of Decree No. 28/1998/NĐ-CP dated May 11, 1998 of the Government detailing the implementation of the Law on Value Added Tax as follows:
1.Supplementing the objects not subject to value added tax into the beginning of Clause 4, Article 4 as follows:
"Foreign-leased aircraft, drilling rigs, ships, types that have not yet been produced domestically, used for production and business."
2.Amending Clause 7, Article 4 as follows:
"Credit services include lending forms (including lending in cases of guarantee), financial leasing of credit organizations, investment funds and capital transfer activities."
3.Amending and supplementing Point d Clause 1, Article 9 as follows:
"d) The following cases are eligible for input tax deduction at the following rates:
Production bases purchasing agricultural, forestry, and aquatic products directly from producers without a value-added tax invoice shall be eligible for input tax deduction at a rate (%) calculated based on the purchase value as follows:
A rate of 5% for plantation products belonging to rubber, resin, oil-bearing trees, sugarcane, fresh tea leaves, rice, corn, sweet potatoes; livestock, poultry, fish, shrimp, and other aquatic products;
A rate of 3% for agricultural and forestry products not included in the above group eligible for a 5% deduction.
Other cases are eligible for input tax deduction at a rate (%) calculated based on the purchase value as follows:
A rate of 5% for scrap steel purchased by production bases as raw material for steel production; seafood purchased by production bases from fishermen; insurance compensation income;
A rate of 3% for goods subject to special consumption tax purchased by trading organizations from production bases producing such goods for sale.
The Ministry of Finance shall base on price levels and production and business activities of each product to propose the Government to adjust the list of products and input tax deduction rates stipulated herein.
The calculation of input tax deduction or refund specified above does not apply to cases where these products are used as raw materials for export production or purchased for export."
4.Amending Clause 1, Article 15 as follows:
"1. Business entities subject to the tax deduction method shall be eligible for tax refund if the input tax deducted over three consecutive months exceeds the output tax. Business entities exporting seasonal or periodic goods in large quantities, if they incur a significant amount of input VAT on exported goods compared to output tax, shall be eligible for periodic VAT refunds."
5.Amending and supplementing Clause 1, 2 of Article 20 as follows:
"1. For production, construction, transportation, trade, tourism, service, and catering businesses in the initial years of applying value added tax, if losses occur due to the VAT payable being higher than the previous turnover tax, they may be eligible for reduced VAT payment. The reduction in VAT payable for each business entity corresponds to the loss caused by this reason, but the maximum reduction shall not exceed the VAT payable of the year under consideration.
2. For certain products, goods, and services facing difficulties, the tax rate on sales shall be reduced by 50%:
Coal;
Tractors, tractors, water pumps, public utility machines, power units;
Sodium hydroxide (NaOH), sodium hypochlorite (NaOC1), calcium hypochlorite (Ca(OCl)2), aluminum hydroxide (Al(OH)3), hydrochloric acid (HCl), liquid and gaseous chlorine (Cl(C12); sodium silicate (Na2≥ 44%, Al3);
Goods subject to special consumption tax at the trading stage shall pay tax according to the tax deduction method;
Hotels, tourism, catering."
6.Supplementing the end of Article 21 as follows:
"For state-owned enterprises engaged in the production and business of goods and services: lottery, electricity, cement, postal and telecommunications services, and other goods and services with high revenue due to lower VAT than previous turnover tax, they must pay corporate income tax and additional corporate income tax according to the Corporate Income Tax Law. If the remaining income from lower VAT payments still exceeds the previous turnover tax, they must continue to pay at least 70% of the remaining income into the state budget. The Ministry of Finance will specify the additional adjustment level suitable for each type of enterprise.
Entrusting the Ministry of Finance to examine and resolve the value added tax issue for reserve items as required by the Government, such as fertilizers, pesticides... still in stock at enterprises as of December 31, 1998, if the reserve level affects the business results of the enterprise."
Article 2.This Decree takes effect from January 1, 1999.
The Minister of Finance shall provide guidance on the implementation of this Decree.
Ministers, Heads of ministerial-level agencies, agency under the Government, Chairmen of Provincial People's Committees, centrally-affiliated city People's Committees are responsible for implementing this Decree./.
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