Amendments to Law on value added tax, Law on exercise tax, Law on personal income tax, Law on corporate tax and law on resource royalty

At the meeting held on August 08, 2017, the Deputy Prime Minister Vuong Dinh Hue, in the response to the report of the Minister of Finance and opinions of attendees, concluded that five tax laws namely Law on value added tax, Law on exercise tax, Law on personal income tax, Law on corporate tax and Law on resource royalty will be amended.

To be specific:

1. Law on value added tax

- Value added tax (VAT) on agricultural products will be exempted when they are sold on the market.

-  Fertilizers, special-purpose machinery and equipment for agricultural production and offshore fishing boats will be subject to VAT;

- An enterprise producing goods or providing services subject to 5% VAT will be entitled to VAT refund if its input VAT is not completely offset after 12 months or 4 quarters;

- Exports that are derived from natural resources or minerals where the total value of natural resources or minerals plus energy costs makes up at least 51% of the prime cost will be subject to VAT;

- Natural resource extraction projects or mineral extraction projects licensed from July 01, 2016 or projects on investment in goods production where the total value of natural resources or minerals plus energy costs makes up at least 51% of the prime cost will be entitled to VAT refund;

- Input VAT will be deductible if there is proof of non-cash payment or the payment for each purchase is below VND 10 million (previous below VND 20 million).

- There will be fewer goods and services not subject to VAT and fewer goods and services subject to 5%VAT

- VAT rate will be increased from 10% to 12 %.

2. Law on exercise tax

- The exercise tax rate imposed on cigarettes will be increased from 70% to 75% in 2019,

- A fixed exercise tax of 1,000 VND/a pack of cigarettes containing 20 cigarettes and 1,500 VND/a cigar will be added from January 01, 2020.

- The tax rate imposed on pick-up trucks will be 60% of those imposed on automobiles having up to 9 seats with same cylinder capacity.

- The taxable price of automobiles having up to 9 seats will be the price that equals (=) selling price minus (-) domestic value.

- 10% exercise tax will be imposed on soft drink from 2019.

3. Law on corporate income tax

- Microenterprises (enterprises whose annual turnover is less than 3 billion dong) will be eligible for 15% corporate income tax (CIT).

- Small and medium-sized enterprises (enterprises whose quantity of employees is not more than 200 and annual turnover is from 3 to 50 billion dong) will be eligible for 17% CIT.

- There will be a more convenient method of payment of VAT and CIT for microenterprises;

- Rates of taxes incurred by foreign contractors will be adjusted;

- Revenues from the transfer of real estate will be offset against loss on business operation when determining the taxable income.

4. Law on personal income tax

- Changes in progressive personal income tax rates:

Tax grade	Applicable		Proposed
	Assessable income per month (million dong)	Tax rate	Assessable income per month (million dong)	Tax rate
1	Not exceeding 5	5%	Not exceeding 10	5%
2	Exceeding 5 but not exceeding 10	10%	Exceeding 10 but not exceeding 30	10%
3	Exceeding 10 but not exceeding 18	15%	Exceeding 30 but not exceeding 50	20%
4	Exceeding 18 but not exceeding 32	20%	Exceeding 50 but not exceeding 80	28%
5	Exceeding 32 but not exceeding 52	25%	Exceeding 80	35%
6	Exceeding 52 but not exceeding 80	30%
7	Exceeding 80	35%

- Incomes generated from benefits of members of agricultural cooperatives and farmers who sign contracts with enterprises to join the “Cánh đồng lớn” project will be exempted from personal income tax;

- Certain entities will be exempted from personal income tax to ensure the consistency0}

- Hi-tech employees who work in technology and information, agriculture and agricultural product processing will be entitled to reduction of personal income tax.

- The current personal income tax rate on transfer of capital made by individuals, which is 1% of the transfer price, will be adjusted according to the rate of corporate income tax on revenues to form transfer of capital made by foreign organizations).

- Tax rates imposed on income from won prizes will be adjusted.

- Income from copyright including income from transfer of rights to use Internet resources in accordance with regulations of the Law on Telecommunications will be subject to personal income tax.

5. Law on resource royalty

- Regulations on taxpayers in case of small-scale extraction will be amended to ensure the practicality and conformity with Law on Minerals;

- Regulations on taxable output of natural water (except for water used for hydroelectricity) will be amended;

- Regulations on taxable price of natural water used for hydroelectricity and taxable price of natural resources extracted for export will be amended to ensure the conformity with other regulations of law.

The Law on amendments to Law on value added tax, Law on exercise tax, Law on personal income tax, Law on corporate tax and Law on resource royalty will be updated as soon as possible.  

Reading in Vietnamese: Luật sửa đổi 5 Luật về thuế GTGT, TTĐB, TNCN, TNDN và tài nguyên