GOODS AND SERVICES THAT ARE NOT SUBJECT TO VAT

Create at: 16/11/2020 15:01

Goods, which products are the objects that are not subject to VAT? This is a common question asked by many people when starting their own businesses. Selecting items that are not subject to VAT can help you save a lot of money in taxes and increase profits. Here is an article about items that are exempt from VAT:

Legal basic:

According to Article 4 of Circular 219/2013/TT-BTC (adjusted and supplemented according to Article 1 of Circular 26/2015/TT-BTC, Article 8 of Circular 151/2014/TT-BTC, Article 1 of Circular 130 /2016/TT-BTC, Article 1 of Circular 25/2018/TT-BTC)

The objects that are not subject to VAT

1. Products from farming (including agroforestry products), breeding, and aquaculture, caught that are not processed into other products or have only been preprocessed by organizations and individuals that self-produce, fish, sell, and import.

Preprocess products are those that have only been cleaned, dried, husked, milled, threshed, split, cut, salted, put in cold storage (cooled or frozen), preserved with sulfur dioxide, or chemical to avoid rotting, immersion in sulfur solution, and other common means of preservation.

2. Products are breeds of livestock, plant varieties, including breeding eggs, breeds, seeds, stems, tubers, semen, embryos, genetic materials that are raised, imported, and commercial business.

Breeds of livestock and plant varieties that are not subject to VAT are the products of the importers and traders that have the certificates of registration of animal breed or plant variety trading issued by regulatory bodies. The animal breeds and plant varieties that apply quality standards of the state must satisfy the requirements imposed by the state.

3. Irrigation services, plowing services, dredging channels, dredging in-field trenches serving agricultural production; agricultural product harvesting services.

4. Salt derived from seawater, natural rock salt, pure salt, iodized salt composed primarily of sodium chloride (NaCl).

5. State-owned houses sold to tenants.

6. Transfer of right to use land

7. Life insurance, health insurance, learner’s insurance, other insurance services related to humans; insurance for livestock, plants, and other agriculture insurance services; insurance for ships, boats, equipment, and other necessary tools in direct service of fishing; reinsurance.

8. The finance, banking, and securities services below:

a) Credit granting services include the following forms::

Loan;
Discounted, rediscounted transfer of negotiable instruments and other valuable papers;
Bank guarantee;
Finance lease;
Issuance of credit cards.

⭕In case a credit institution collects fees for issuance of credit cards, the fees collected from the clients are classified as revenues from credit extension(card issuance fee), according to the credit institution's lending regulations for customers such as fee for early repayment, penalties for late repayments, fee for debt restructuring, fee for loan management, and other fees classified as revenues from credit extension are not subject to VAT.

⭕ The fees related to card transactions that are not part of the credit granting process such as credit card pin re-issuance fees, transaction invoice copy delivery fees, card chargeback fees, theft notification fees, lost credit card, credit card cancellation fee, credit card conversion fee and other fees subject to VAT

⭕ Domestic and international factoring for the banks authorized to process international payments;

⭕ Sale of loan security assets by a credit institution or judgment enforcement agency or by the borrower selling the security by themselves under the authorization of the lender to repay the secured loan, specifically:

The sold loan security assets are the asset in the secured transaction that has been registered with the competent authority in accordance with the law on the registration of secured transactions.
The handling of loan security assets shall comply with the provisions of the law on secured transactions.

⭕ The service of providing information signals provided by units and organizations of the State Bank to credit institutions for use in credit extension activities under the Law on the State Bank.

b) Separate loans that are not business activities, regular supply given by taxpayers that do not credit institutions.

c) Securities business include: brokerage, proprietary trading, issuance guarantee, investment consultancy, depository,...activities of providing information, organizing auctions of shares of issuers, providing technical support for online securities trading of the Stock Exchange.

d) Capital transfer includes the transfer of part of or the whole capital invested in another business organization securities transfer, transfer of the right to contribute capital and other forms of capital transfer prescribed by law.

dd) Selling debts;

e) Foreign currency trading;

g) Derivative financial services include: Interest rate swap, forward contracts, futures contracts, call options, put option, other derivative financial services prescribed by law;

h) Selling collateral put up by the organizations 100% charter capital of which is owned by the state to settle bad debts of Vietnamese credit institutions.

9. Medical services, veterinary services, including:

✅ Examination, treatment, and prevention of diseases service for humans and animals, birth control services, convalescence services, and rehabilitation services for patients, care services for the elderly and people with disabilities.

✅ Patient transport services, a sickbed, and sickroom rental services; testing, radiography services; blood and blood products for patients.

✅ Care services for the elderly and people with disabilities, including medical care, nutrition, and organization of cultural, sports, entertainment, physical therapy, and rehabilitation activities for the elderly, people with disabilities.

10. Public postal and telecommunications services, and Internet services provided by the government, postal and telecommunications services from abroad to Viet Nam.

11. Maintenance of zoos, flower gardens, parks, street greeneries, public lighting, funeral services. The services mentioned in this Clause do not depend on the source of payment.

12. Maintenance, repairs, and construction funded by the people (including contributions and sponsorships from organizations and individuals), humanitarian aid for cultural and artistic works, public works, infrastructure, and housing for beneficiaries of social policies.

13. Education and vocational training as prescribed by law (including teaching dance and singing, foreign languages, informatics, painting, musicals, circus, physical training and sports, child-rearing, and other professions.)

14. Audio and video broadcasting funded by government budget.

15. Publishing, importing newspapers, magazines, specialist newsletters, political books, textbooks, law books, scientific and technical books, books using languages of ethnic minorities, propagation pictures, posters including those in the form of audio and video discs/tapes, electronic data.

16. Public transport by bus and tram within a province, in urban areas, or the routes adjacent outside the province as prescribed by the Ministry of Transport.

17. Goods that cannot be domestically produced and must be imported in the following cases:

⭐ Imported machinery, equipment, parts, and supplies serving scientific research and technological development;

⭐ Imported machinery, equipment, parts, specialized vehicles, and supplies serving petroleum prospecting exploration and extraction;

⭐ Aircraft (including engines), oil rigs, and ships that cannot be manufactured in Vietnam and are imported as fixed assets for enterprises or leased from a foreign party to serve manufacturing, trading, or sublease.

18. Weapons and specialized vehicles serving national defense and security.

19. Imported goods, goods/services sold to other organizations and individuals as humanitarian aid or non-refundable aid.

20. The goods forwarded through Vietnam’s territory:

⚡ Goods temporarily imported for re-export;

⚡ Goods temporarily exported for re-imported;

⚡ Raw materials imported and supplies for manufacturing or export processing under contracts with foreign partners

⚡ The goods and services are traded between a foreign party and a free trade zone, or among free trade zones.

21. Technology transfers under the Law on Technology Transfers; intellectual property right transfers according to the Law on Intellectual property.

22. Imported gold in the form of bullions, pieces, and other types of gold that have not been processed into fine art products, jewelry, or other products.

23. Exported natural resources and minerals that are not processed into other products.

24. Artificial products are used to replace the patient's body parts including those permanently implanted into the human body; crutches, wheelchairs, and other specialized tools for the disabled.

25. Goods/services of business households or businessperson that earns annual revenue of ≤ 100 million VND.

26. The goods and services :

🍁 Duty-free goods at duty-free shops prescribed by the Prime Minister.

🍁 Goods in national reserve sold by national reserve authorities.

🍁 Charged activities of the state according to the laws on fees and charges.

🍁 Bomb and mine clearance carried out by the army at the constructions funded by government budget.

✨An article above about goods and services that are not subject to VAT. We hope the information above can help businesses in the process of business. If you have questions that need to be answered, please contact TASCO Tax Agent in the ways below for free consultation and use of tax and accounting services at TASCO Tax Agent.