Law Amending and Supplementing Certain Provisions of the Value Added Tax Law, Special Consumption Tax Law, and Tax Administration Law No. 106/2016/QH13

LAW

AMENDMENTS AND SUPPLEMENTS TO CERTAIN ARTICLES OF THE VALUE ADDED TAX LAW, THE SPECIAL CONSUMPTION TAX LAW, AND THE TAX MANAGEMENT LAW

On the basis of the Constitution of the Socialist Republic of Vietnam;

The National Assembly promulgates this Law to amend and supplement certain Articles of the Value Added Tax Law No. 13/2008/QH12 which has been amended and supplemented by Law No. 31/2013/QH13, the Special Consumption Tax Law No. 27/2008/QH12 which has been amended and supplemented by Law No. 70/2014/QH13, and the Tax Management Law No. 78/2006/QH11 which has been amended and supplemented by Laws No. 21/2012/QH13 and No. 71/2014/QH13.

Article 1

Amendments and supplements to certain Articles of the Value Added Tax Law No. 13/2008/QH12 which has been amended and supplemented by Law No. 31/2013/QH13:

1. Clauses 1, 9, and 23 of Article 5 are amended and supplemented as follows:

"1. Agricultural products, livestock, aquaculture, and fishing products that have not been processed into other products or only undergone simple processing by organizations and individuals for sale and at the import stage."

Enterprises and cooperatives purchasing agricultural products, livestock, aquaculture, and fishing products that have not been processed into other products or only undergone simple processing from enterprises and cooperatives shall not declare and pay value added tax but can deduct input value added tax."

"9. Medical services, veterinary services, including services for diagnosis, treatment, and prevention of diseases for humans and animals; services for elderly care and disabled persons."

"23. Export products are raw materials and minerals that have not been processed into other products; export products are goods processed from raw materials and minerals where the total value of raw materials and minerals plus energy costs account for 51% or more of the product cost."

2. Point g Clause 1 Article 8 shall be amended and supplemented as follows:

“g) Export products as defined in Clause 23 of Article 5 of this Law.

Export goods and services are goods and services consumed outside Vietnam, within non-tariff zones; goods and services provided to foreign customers as prescribed by the Government..”

3Clause 1 and Clause 2 of Article 13 are amended and supplemented as follows:

"1. Business entities subject to value added tax under the deduction method may deduct the remaining input value added tax that was not deducted in the month or quarter in the following period.

In case a business entity registered to pay value added tax under the deduction method has a new investment project in the investment phase with input value added tax on goods and services purchased for investment that has not been deducted and the remaining tax amounting to three hundred million dong or more, it shall be refunded the value added tax.

Business entities shall not be entitled to a refund of value added tax but may carry forward the undeducted tax of the investment project according to the Investment Law to the next period in the following cases:

a) Investment projects of business entities that have not contributed sufficient charter capital as registered; engaging in industries or businesses requiring conditions when not meeting the required business conditions as stipulated by the Investment Law or failing to maintain such conditions during operation;

b) Investment projects exploiting natural resources and minerals permitted from July 1, 2016 or production projects producing goods where the total value of natural resources and minerals plus energy costs account for 51% or more of the product cost according to the investment project.

The Government shall provide detailed regulations for this Clause.

2. Business entities in the month or quarter with exported goods and services if the undeducted input value added tax amounts to three hundred million dong or more shall be refunded the value added tax monthly or quarterly, except for imported goods intended for export and exported goods not carried out at customs areas as prescribed by the Customs Law." Advance refund and subsequent inspection shall be implemented for taxpayers producing exported goods without violating tax and customs laws for two consecutive years; taxpayers who are not high-risk subjects as prescribed by the Tax Management Law.

Article 2

Amendments and supplements to certain Articles of the Special Consumption Tax Law No. 27/2008/QH12 which has been amended and supplemented by Law No. 70/2014/QH13:

1. Clause 1 and Clause 2 of Article 6 shall be amended and supplemented as follows:

"1. For domestically produced goods and imported goods, the price is the selling price of the production unit or the importing unit.

In case special consumption tax liable goods are sold to commercial trading units that have parent-subsidiary relationships or affiliated subsidiaries with the production unit or the importing unit or commercial trading units that have associated relationships, the taxable price of special consumption tax shall not be lower than the percentage compared to the average price of commercial trading units purchasing directly from the production unit or the importing unit as prescribed by the Government;

2. For imported goods at the import stage, the taxable price is the sum of the import duty and the import tax. In case imported goods are exempted or reduced from import tax, the taxable price does not include the exempted or reduced import tax. Goods subject to special consumption tax imported can deduct the special consumption tax paid at the import stage when determining the special consumption tax payable upon resale;"

2. Clause 4 Section I Special Consumption Tax Tariff as prescribed in Article 7 is amended and supplemented as follows:

Article 3

Amending and supplementing some Articles of the Law on Tax Administration No. 78/2006/QH11 which has been amended and supplemented by some Articles according to Law No. 21/2012/QH13 and Law No. 71/2014/QH13:

1. Article 61 shall be amended and supplemented as follows:

“Article 61. Exemption, reduction of tax

The tax administration agency shall implement tax exemption and reduction for cases eligible for tax exemption and reduction as prescribed in legal documents on taxation and tax exemption for households and individuals whose annual land fund tax payable is fifty thousand dong or less.

2. Clause 4, Article 92 shall be amended and supplemented as follows:

“4. Not implementing compulsory tax measures against cases where taxpayers are allowed by the tax administration agency to pay off tax arrears gradually within a period not exceeding twelve months from the start of the compulsory tax enforcement period. Gradual payment of tax arrears will be considered based on the taxpayer's proposal and must be guaranteed by a financial institution. Taxpayers must pay late payment interest at a rate of 0.03% per day calculated on the amount of tax arrears.

3. Clause 1, Article 106 is amended and supplemented as follows:

"1. If a taxpayer fails to pay taxes within the prescribed deadline, the extended payment deadline, the deadline stated in the notice issued by the tax administration agency, or the deadline set forth in the decision of the tax administration agency, they must pay the full amount of tax and late payment interest at a rate of 0.03% per day calculated on the amount of tax arrears.

For tax arrears arising before July 1, 2016 that have not been paid into the state budget, including tax arrears resulting from tax recovery through inspection and audit results by competent authorities, the rate of late payment interest will be applied as prescribed in this Clause from July 1, 2016.

In cases where taxpayers supply goods or services paid for by state budget funds but have not yet received payment, thus failing to timely pay taxes leading to tax arrears, they are exempt from paying late payment interest on the outstanding tax amount, but such exemption shall not exceed the amount of state budget funds not yet paid out during the period when the state budget has not made the payment. Clause where there is tax arrears leading to tax debt, no late payment interest shall be paid on the outstanding tax amount, but such amount shall not exceed the state budget funds that have not been settled during the period when the state budget has not been settled.

4. Abolish Clause 3, Article 42.

Article 4

1.

This Law takes effect from July 1, 2016, except for the provisions in Clause 2 of this Article.

2. Clause 4, Article 3 of this Law takes effect from September 1, 2016.

3. The Government shall provide detailed regulations for the Articles and Clauses assigned in this Law.

This Law was adopted by the National Assembly of the Socialist Republic of Vietnam, the 13th term, 11th session, on April 6, 2016.3cm The Socialist Republic of Vietnam, the XIIIth National Assembly, the eleventh session adopted on April 6, 2016.