The National Assembly has just approved an amended law on value added tax, special sales tax and tax administration. The new law will come into effect on 1 July 2016.

Key changes include:

1. Value Added Tax

• Minor changes are made to the list of supplies exempt from VAT and those not subject to output VAT, including:
– exported goods which are processed from natural resources where the natural resources and energy costs comprise at least 51 % of the cost of the goods shall be exempted from VAT;
– elderly/disabled people care services shall be exempted from VAT;
– sales of certain un-processed or semi-processed products relating to cultivation, aquaculture, etc. are in some cases not subject to output VAT;

VAT refunds will no longer be allowed where taxpayers have accumulated input VAT outstanding for 12 months or more. Taxpayers have to carry forward the input VAT instead.

• For input VAT incurred on investment projects, VAT refunds shall not be granted in the following circumstances:

– projects whose registered charter capital has not been fully contributed or investment projects in conditional sectors (see previous PwC Legal NewsBriefs on this issue) which do not satisfy the regulated conditions;
– projects licensed after 1 July 2016 for exploring natural resources and in the manufacturing sector whose natural resources and energy costs
account for at least 51% of the cost of the goods sold.

• For exported, the “VAT refund first, tax audit later” scheme will only be applied to taxpayers which have not violated any tax and customs regulations for 2 consecutive years and are not classified as “high tax risk” entities.

Please click PwC Vietnam Newsbrief_Amended Tax Law_EN for more information.

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