Decree No. 113/2011/ND-CP Amending the Decree 26/2009/ND-CP guiding the Special Consumption Tax Law

DECREE

Amending and supplementing certain articles of Decree No. 26/2009/NĐ-CP

dated March 16, 2009 of the Government detailing the implementation of

certain provisions of the Special Consumption Tax Law

_______________

THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Special Consumption Tax Law dated November 14, 2008;

Considering the proposal of the Minister of Finance,

DECREE

Article 1. Amending and supplementing certain articles of Decree No. 26/2009/NĐ-CP dated March 16, 2009 of the Government detailing the implementation of certain provisions of the Special Consumption Tax Law as follows:

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

“b. For various types of gasoline, naphtha, reformate components, and other products including condensate used to blend gasoline as specified in point g Clause 1 Article 2 of the Special Consumption Tax Law, excluding naphtha, condensate, reformate components, and other products used as raw materials for production (except for gasoline production) directly imported by businesses or purchased directly from producers for sale.

The Ministry of Finance shall guide the documents and procedures for identifying the objects not subject to tax as stipulated herein.”

2. Clause 4 of Article 3 is amended and supplemented as follows:

“4. For vehicles specified in Clause 4 Article 3 of the Special Consumption Tax Law, they are types of vehicles designed by manufacturers for use as ambulances, prisoner transport vehicles, funeral vehicles; vehicles designed with both seating and standing space capable of carrying 24 people or more; vehicles operating in amusement parks, sports venues without registration for circulation and participation in traffic, and specialized vehicles, vehicles not registered for circulation and not participating in traffic, which shall be specifically defined by the Ministry of Finance in coordination with relevant ministries and agencies.”

4. Clause 2 of Article 5 is amended and supplemented as follows:

Article 4. Taxable Value

1. For domestically produced goods, the taxable value of special consumption tax is determined as follows:

a) In cases where the production establishment or import establishment subject to special consumption tax sells goods through subordinate establishments that are dependent accounting units, the price serving as the basis for calculating the special consumption tax is the selling price of the dependent accounting unit. If the production establishment or import establishment sells goods through agents at the prices set by the production establishment or import establishment and only receives commission, the selling price serving as the basis for determining the special consumption tax base price is the price set by the production establishment or import establishment before deducting the commission.

a) In cases where the producer of goods subject to special consumption tax sells through affiliated entities under dependent accounting, the basis for calculating the special consumption tax is the selling price of the affiliated entity under dependent accounting. If the producer sells through agents at the price set by the producer and only receives commission, the basis for determining the taxable value is the selling price set by the producer before deducting the commission.

b) In cases where the producer of goods subject to special consumption tax sells through commercial trading entities, the basis for calculating the special consumption tax is the selling price of the producer but it must not be lower than 10% compared to the average selling price of commercial trading entities. For automobiles, the average selling price of commercial trading entities for comparison purposes is the selling price of automobiles excluding additional equipment and parts installed according to customer requirements.

If the selling price of the producer is lower than 10% compared to the selling price of commercial trading entities, the taxable value will be determined by the tax authority.

2. For imported goods, the taxable value of special consumption tax is determined as follows:

Taxable price for special consumption tax = Import tax value + Import tax.

The taxable import value is determined according to the regulations on export and import taxes. In cases where imported goods are exempted or reduced from import taxes, the taxable value does not include the amount of import tax exempted or reduced.

3. For goods subject to special consumption tax, the taxable price does not exclude the value of packaging.

For bottled beer, if there is a deposit on the bottle, quarterly settlement between the producer and customers of the deposit on bottles must be conducted, and the corresponding deposit amount that cannot be recovered must be included in the revenue for calculating the special consumption tax.

4. For processed goods subject to special consumption tax, the special consumption tax base value is the selling price of the goods sold by the processing entity or the selling price of similar or equivalent goods at the time of sale.

5. For goods produced under joint business operations between the producer and the user or owner of the brand (trademark) of the goods, the technology of production, the taxable value of special consumption tax is the selling price of the user or owner of the brand (trademark) of the goods, production technology. In cases where the producer produces goods according to a franchise license and transfers them to branches or representatives of foreign companies in Vietnam for sales, the taxable value of special consumption tax is the selling price of the branch or representative of the foreign company in Vietnam.

6. For goods sold on installment or deferred payment terms, the taxable value of special consumption tax is the selling price of goods sold in a lump sum payment, excluding interest on installments or deferred payments.

7. For services, the taxable price for special consumption tax is the service supply price of the service business.

a) For golf business, it is the turnover excluding VAT from the sale of membership cards, golf tickets, including money from golf practice tickets, greenkeeping fees, rental car services (buggies) and service of helpers during golf play (caddies), deposits (if any), and other income paid by golf players or members to the golf business. In cases where the golf business also operates other goods or services not subject to special consumption tax such as hotels, catering, retail sales, or games, these goods or services are not subject to special consumption tax.

b) For casino and electronic game businesses with prizes, the taxable value of special consumption tax is the turnover from casino and electronic game businesses minus the prize money paid to customers.

c) For betting business, the taxable value of special consumption tax is the turnover from ticket sales for betting after deducting the prize money.

d) For nightclub, massage, and karaoke business, the taxable value of special consumption tax is the turnover from activities in nightclubs, massage centers, and karaoke bars including turnover from food and beverage services and other accompanying services.

đ) For lottery businesses, the taxable price for special consumption tax is the revenue from selling lottery tickets permitted by law.

8. For goods and services used for exchange, internal consumption, gifts, donations, promotions, the taxable value of special consumption tax is the taxable value of similar goods or services at the time of occurrence of the exchange, internal consumption, gift-giving, or promotional activities.

9. The taxable value of special consumption tax for goods and services specified in this Article includes additional charges outside the selling price of goods and service provision prices (if any) that the producer or trader enjoys.

a) The tax base value shall be calculated in Vietnamese dong. In cases where the taxpayer's revenue is in foreign currency, such foreign currency must be converted to Vietnamese dong at the average transaction rate on the inter-bank foreign exchange market published by the State Bank of Vietnam at the time of revenue generation to determine the tax base value.

b) The time of revenue generation for goods is the moment when ownership or usage rights of the goods are transferred to the buyer, regardless of whether payment has been received or not; for services, it is the moment when the service provision is completed or the invoice for service provision is issued, regardless of whether payment has been received or not.”

4. Article 5 is amended and supplemented as follows:

Article 5. Tax Rate

The special consumption tax rate shall be implemented according to the Special Consumption Tax Tariff stipulated in Article 7 of the Law on Special Consumption Tax.

1. For passenger-cargo vehicles as defined in Points 4d and 4g of the Special Consumption Tax Tariff, these are vehicles with two or more rows of seats, designed with a fixed partition between the passenger compartment and the cargo area in accordance with national standards prescribed by the Ministry of Science and Technology.

2. Vehicles running on gasoline combined with biofuel or electricity as defined in Point 4đ of the Special Consumption Tax Tariff are those designed according to the manufacturer's standards with a gasoline blending ratio not exceeding 70% of the total fuel used, and hybrid vehicles combining electric motors with gasoline engines where the gasoline usage ratio according to the manufacturer's standards does not exceed 70% of the energy used compared to the most fuel-efficient gasoline vehicle, having the same seating capacity and engine displacement available in the Vietnamese market.

3. Vehicles running entirely on biofuel or electricity as defined in Points 4e and 4g of the Special Consumption Tax Tariff are those designed according to the manufacturer's standards to run solely on biofuel or electricity.”

Clause 1 of Article 7 is amended and supplemented as follows:

“1. Taxpayers producing taxable goods using raw materials subject to special consumption tax may deduct the special consumption tax already paid on imported raw materials or paid for directly purchased raw materials from domestic production units when determining the amount of special consumption tax payable. The deductible tax corresponds to the special consumption tax on the raw materials used to produce the goods sold.

The Ministry of Finance shall provide detailed guidance on the deduction of special consumption tax paid on directly purchased raw materials from domestic production units as stipulated herein.”

Article 2. Effective Date

1. This Decree takes effect from February 1, 2012.

2. The Ministry of Finance shall provide guidance on the implementation of this Decree.

3. Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of provincial People's Committees directly under the Central Government are responsible for implementing this Decree./.