Laws of Vietnam

Pursuant to the Law on Organization of the Government of September 30, 1992;

Pursuant to the Law on Value Added Tax No.02/1997/QH9 of May 10, 1997;

Pursuant to Point 2, Section IV of Resolution No.18/1998/QH10 of November 25, 1998 of the National Assembly on the 1999 State budget estimate;

At the proposal of the Minister of Finance,

DECREES:

Article 1.- To amend and supplement a number of Articles of Decree No.28/1998/ND-CP of May 11, 1998 of the Government detailing the implementation of the Law on Value Added Tax, as follows:

1. To add objects not subject to value added tax to the first paragraph of Clause 4, Article 4 as follows:

"Airplanes, drilling platforms and ships chartered from foreign countries, which are of the types being unable to be manufactured in the country, and used in service of production and/or business activities".

2. To amend Clause 7, Article 4 as follows:

"Credit services which include lending forms (including lending in cases of guarantee), financial leasing by credit institutions, investment funds and capital transfer activities".

3. To amend and supplement Point d, Clause 1, Article 9 as follows:

"d) Cases entitled to the input tax deduction at the following rates:

Production and/or processing establishments that purchase unprocessed agricultural, forest or aquatic products from producers without added value invoices shall be entitled to input tax deduction at rates (%) calculated on the value of the purchased goods, as follows:

- The rate of 5% shall be applicable to cultivation products from trees planted for sap, resin or oil, sugar cane, raw bud tea, paddy, maize, potatoes, manioc; such husbandry products as cattle, poultry, fish, shrimp and other aquatic products;

- The rate of 3% shall be applicable to agricultural and forest products other than those entitled to the 5% deduction rate above.

Other cases shall be entitled to input tax deduction at rates (%) calculated on the value of purchased goods, as follows:

- The rate of 5% shall be applicable to iron and steel scraps which are purchased by production establishments to be used as raw materials for iron and steel production; marine products purchased by the production and processing establishments from fishermen; indemnities paid from insurance business activities;

- The rate of 3% shall be applicable to goods subject to special consumption tax purchased for sale by trade organizations or enterprises from establishments producing goods subject to special consumption tax.

The Ministry of Finance shall base itself on prices and situation of production and trading of each goods item to propose the Government to readjust the list of products and the input tax deduction rates as prescribed in this Article.

The input tax deduction or reimbursement prescribed above shall not apply to cases where such products are used as raw materials for production or processing of export goods or purchased for export".

4. To amend Clause 1, Article 15 as follows:

"1. A business establishment that pays tax by the method of tax deduction shall be considered for tax reimbursement if its deductible input tax amount of three months in a row is larger than such months’ output tax amount. Business establishments that seasonally or periodically export goods in large quantities, and have the amounts of input value added tax on their export goods larger than their output tax amounts, shall be considered for value added tax reimbursement for each period."

5. To amend and supplement Clauses 1 and 2, Article 20 as follows:

"1. For production, construction, transport, trade, tourist, service or food catering establishments which, during the first years of application of the Law on Value Added Tax, suffer from losses due to the fact that the payable value added tax amounts are larger than the tax amounts they previously paid according to the turnover tax rate, they shall be considered for reduction of payable value added tax amounts. The value added tax amount to be reduced for each business establishment shall be equal to the loss it has suffered due to the above-said reason, but shall not exceed the value added tax amount that must be paid by the business establishment in the tax reduction year.

2. The following products, goods and/or services, the production or trading of which currently meets with difficulties, shall be entitled to a 50% tax rate reduction calculated on the selling prices of such goods or services:

- Pit coal;

- Plows, tractors, water pumps, machine tools, force machines;

- Goods subject to special consumption tax at the trading stage, which is paid by the method of tax deduction;

- Hotels, tourism, food catering".

6. To add the following to the end of Article 21:

"State enterprises that produce and/or trade in such goods and/or services as: lottery, electricity, cement, post and telecommunications and some other goods and services, and have high incomes due to the fact that their paid value added tax amounts are smaller than the turnover tax amounts previously paid, shall have to pay enterprise income tax and additional enterprises income tax under the Law on Enterprise Income Tax. If such income amounts remain large, they shall have to remit at least 70% of such remaining income amounts into the State budget. The Ministry of Finance shall specify the levels of additional remittance suitable to each type of enterprises.

The Ministry of Finance shall be assigned to consider and settle at the Government’s request the matters related to value added tax on such reserve goods as: fertilizer, pesticide,... which have been left in stock by December 31, 1998 at enterprises, provided that the reserve level has affected the enterprises’ business results".

The Minister of Finance shall guide the implementation of this Decree.

The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government and the presidents of the People’s Committees of the provinces and centrally-run cities shall have to implement this Decree.

On behalf of the Government
For the Prime Minister
Deputy Prime Minister
NGUYEN TAN DUNG