April 26, 2019 21:16

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Proposing amendments to many contents of Value Added Tax

14:03 | 29/03/2019

VCN - Discovering many shortcomings and problems in implementing tax regulations, Ho Chi Minh City Customs Department has contributed many ideas to the project of the Decree amending and supplementing the Decree on Value Added Tax. (VAT).

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Fertilizers are not subject to VAT. Photo: Thu Hoa.

Avoid abusing goods temporarily imported for re-export

Under the provisions of Clause 20, Article 5 of the VAT Law, goods temporarily imported for re-export are not subject to VAT.

In fact, some enterprises take advantage of the above provisions to temporarily import machinery and equipment to use for a long time and do not re-export upon the report deadline and sell to the domestic market. When selling to the domestic market, the declared value is often much lower than the original imported goods, even zero (if the depreciation period expires). Thus, enterprises only pay an insignificant amount of VAT or do not have to pay VAT (if the taxable value is zero) when changing the purpose of use. Compared with enterprises importing machinery to create fixed assets subject to VAT at the import stage, this case is unfair in applying tax policies among enterprises.

For import duties, according to Point a, Clause 9, Article 16 of the Law on Export Tax and Import Duties No. 107/2016 / QH13 stipulating cases of tax exemption, excludes cases of goods temporarily imported for re-export being machinery, equipment and tools of organizations and individuals permitted to temporarily import and re-export to carry out investment projects, construction, installation and production. However, the VAT policy for goods temporarily imported and re-exported does not exclude these cases.

In order to ensure the fairness in the application of VAT policy, to avoid enterprises taking advantage of the provisions to evade VAT at the import stage, Ho Chi Minh City Customs Department proposes that this revised Decree guides the implementation of Clause 20, Article 5 of the VAT Law as below: eliminating the policy of VAT exemption for temporary imports for re-export of machinery, equipment and tools of organizations and individuals permitted to temporarily import and re-export for investment projects, construction, installation and production, which is similar to the import tax policy prescribed at Point a, Clause 9, Article 16 of the Law on Export Tax and Import Duties.

In addition, according to the provisions of Point d, Clause 1, Article 6 and Point c, Clause 2, Article 9 of Decree No. 209/2013 / ND-CP, for exported goods, in order to apply the tax rate of 0%, they must meet conditions such as: Having a contract for sale and processing of exported goods and a payment receipt, etc. In fact, there was a problem arising in the implementation, that is the customs dossier submitted at the time of declaration registration in accordance with the current regulations for exported goods does not require a sales contract for processing of exported goods, and payment documents. Therefore, according to the above provisions, there are insufficient conditions for customs authority to determine the 0% VAT rate for exported goods when carrying out customs procedures.

In order to limit obstacles, Ho Chi Minh City Customs Department proposes: Amending and supplementing the Decree regulating export goods which are applied the tax rate of 0%, if at the time of carrying out export procedures and customs dossiers for exported goods are in accordance with the regulations of the Ministry of Finance. When deducting input VAT, the Tax Authority will check the dossiers and will deduct tax if the dossiers meet conditions of all required documents.

Proposing amendments to VAT policy

For fertilizers, Clause 1, Article 3 of Law No. 71/2014 / QH13 dated November 26, 2014 of the National Assembly stipulates that "fertilizers" are not subject to VAT. Clause 2 Article 1 Circular 26/2015 / TT-BTC guides that "fertilizers that are organic fertilizers and inorganic fertilizers such as phosphate fertilizers, nitrogen fertilizers, NPK fertilizers, ... micro-organic fertilizers and other fertilizers" are not subject to VAT. Ho Chi Minh City Customs Department said that it is necessary to amend the Decree regulating fertilizers that are not subject to VAT under the List issued by the Ministry of Finance and Ministry of Agriculture and Rural Development, which specifies name and HS code of goods in accordance with Vietnam's List of import and export goods for uniform implementation.

Feeds for livestock, poultry, aquatic animals and other animals as prescribed in Clause 1, Article 3 of Decree No. 12/2015 / ND-CP dated May 12, 2015 are subject to VAT, which was guided by the Ministry of Finance in Clause 2, Article 1 of Circular 26/2015 / TT-BTC, including: "... other feeds for livestock, poultry, aquatic animals and other animals”. Actually, there have been problems in importing feeds for livestock, poultry, aquatic animals and other animals, including feeds that can be used as food for humans such as grain, soybean. ... or feed additives that can also be used for other purposes. At the import stage, the Customs office cannot check the purpose of use, so it is difficult to determine whether those feeds are subject to VAT or not.

From the above inadequacies, Ho Chi Minh City Customs Department proposed to amend the Decree stipulating feeds for livestock, poultry, aquatic animals and other animal according to the List issued by the Ministry of Finance and the Ministry of Agriculture and Rural Development, which specific HS codes for uniform implementation.

The tax exemption authority is Customs Branch where the import procedures are carried out

In Clause 1, Article 5 of the Prime Minister's Decision No. 31/2015 / QD-TTg of August 4, 2015, stipulating baggage, movable assets, gifts, donations, sample goods subject to tax exemption, considered for tax exemption: Tax-free gifts and donations specified in this Article are goods out of the list of goods banned from import, export or temporarily suspended from import and export and out of the list of goods subject to Special Consumption Tax (except gifts and donations for national security and defense purposes) in accordance with the law.

Besides, according to the provisions of Point b.1, Clause 4, Article 107, Article 110 of Circular 38/2015 / TT-BTC: Imported goods as gifts, donations, sample goods of foreign organizations and individuals for Vietnamese organizations and individuals or vice versa, shall be considered for tax exemption under the Prime Minister's regulations. Goods as gifts or donations with a value exceeding the tax-free quotas must pay tax on the excess. The tax exemption authority is the Customs Branch where the import procedures are carried out.

By Le Thu/ Huyen Trang