Regulations on some articles of the Law on value added tax

Question: What are the special guidelines as stipulated in Circular 130?

Answer:  

Care services for elderly people are not subject to VAT

Circular 130 added some objects not subject to VAT with respect to health and veterinary services. Accordingly, as from 01/07/2016, care services for elderly, disabled people, including health care, nutrition and organization of cultural activities, sports, entertainment, physiotherapy, rehabilitation for the elderly and disabled people are not subject to VAT as before.

Circular 130 expands the export product group as resources and minerals that are not subject to VAT. Rather than limiting this group to exploited resources and minerals that have yet to be processed into other products, Circular 130 allows for the exploited resources and minerals that have been processed into other products; provided that the total value of resources and minerals plus energy costs accounts for 51% upwards of the production cost of their products that are made from the resources and minerals. Resources and minerals are those that have originated in water including metallic minerals, non-metallic minerals, crude oil, natural gas and coal seam gas.

VAT refund for investment projects

According to Circular 130, operating business establishments subject to VAT payment under the deduction method has investment projects underway (except for cases of VAT non-refunds and investment projects on housing construction for sale or lease without constituting fixed assets) in the same province or city, such business establishments must make separate declarations for investment projects and carry forward their input VAT to be offset against the declared VAT amounts for production and business activities.

The maximum carried forward VAT amount of any investment project is equivalent to the VAT amount payable for production and business activities by the business establishment in the accounting period. Where business establishments have new investment projects that are still in the investment stage and not yet in operation, unregistered for business and tax payment in the centralized province and cities different from those where they are headquartered, they must file separate tax returns for investment projects and must carry forward the input VAT of investments to be offset against declared VAT amounts of the underway production and business activities.

According to the law on investment, despite being ineligible for VAT reimbursement, business establishments may carry forward the nondeductible tax amounts of investment projects to the next period. 

Exemption for non-agricultural land use taxes for households and individuals subject to a payable tax amount of VND50,000 or less

Also according to Circular 130, households and individuals are subject to an annual payable tax amount of VND50,000 or less with regard to nonagricultural land use taxes (after subtracting the exempted or reduced tax amount) will be exempted from non-agricultural land use tax. Where households or individuals have multiple plots of land within centralized provinces and cities, the exemption of non-agricultural land use taxes under this Article will be calculated on the payable total taxes of all land plots.

For households and individuals having paid taxes into the state budget despite their eligibility for exemption of non-agricultural land use taxes, the tax authorities will carry out a refund under the Law on Tax Administration and written guidelines. Circular 130 takes effect as from 01/07/2016. The said regulations on exemption of nonagricultural land use taxes will apply from the taxation period in 2016.