NEW TAX POLICY TAKES EFFECT FROM AUGUST 2021

Tax policies that will take effect from August 1, 2021 include:

1. Conditions for some medical instruments and equipment to apply the VAT rate of 5%

On June 11, 2021, the Minister of Finance issued Circular 43/2021/TT-BTC amending and supplementing Circular 219/2013/TT-BTC guiding the Law on Value-Added Tax; effective from 01/08/2021. In particular, there are amendments to the subjects subject to VAT at 5% are medical instruments and equipment.

Currently, some tools and equipment have been listed as pumps, needles; contraceptive tools, etc. other specialized medical tools and equipment as confirmed by the Ministry of Health shall be subject to a VAT rate of 5%. As of August 1, 2021, in addition to some equipment and tools listed; criteria for medical instruments and equipment to apply the VAT rate of 5% have been specified as having one of the following papers:

- Import permit;

- Certificate of circulation registration;

- The application for announcement of standards according to medical law standards or according to the list of medical equipment under the specialized management of the Ministry of Health is determined the goods code according to the list of Vietnamese imports and exports promulgated together with Circular 14/2018 /TT-BYT of the Ministry of Health.

2. Sales on e-commerce platform applications will be tax deductible as prescribed

This content is stated in Circular 40/2021/TT-BTC of the Ministry of Finance guiding VAT, personal income tax and tax administration with business households and individuals. Accordingly, at Point dd, Clause 1, Article 8 of this Circular stipulates:

"d) Organizations being owners of e-commerce trading floors shall make tax declarations on behalf of individuals according to the roadmap of tax agencies...".

Thus, when the Tax Agency announces the implementation roadmap, e-commerce floor owners such as Tiki and Shopee will base on revenue and other revenues received by individuals doing business on the floor to make tax returns on behalf of. This also means that individuals doing business on e-commerce floors with a turnover of over VND 100 million/ year will have to pay taxes.

3. Mechanism for prior agreement on taxable assessment methods with enterprises with associated transactions

The mechanism for prior agreement on determining the taxable price method is referred to as APA and the contents of application of this mechanism to enterprises with associated transactions guided in Circular 45/2021 / TT-BTC will take effect from August 3, 2021. Accordingly, the transaction proposed to apply APA must meet the following conditions simultaneously:

- Actual transactions that have arisen in the production and business activities of taxpayers and will continue to take place during the period of application of APA;

- The transaction has a basis for determining the nature of the transaction to decide on tax obligations and has a basis for analyzing, comparing and selecting independent comparison objects as prescribed in Article 6 and Article 7 of Decree No. 132/2020/ND-CP based on the information and data complying with the provisions of Point b, Clause 6, Article 42 of the Law on Tax Administration 2019;

- Transactions other than in case of tax disputes or complaints;

- Transactions are conducted transparently, not for the purpose of tax evasion or taking advantage of tax agreements.

For detailed advice and timely support, please contact:
Gattaca Law Firm
Address: 32 Nguyen Dinh Hoan, Nghia Do, Cau Giay, Ha Noi
Hotline: 0243.204.1777 – 090.17.63.379
Website: gattacalaw.vn