IV.

EXCISE TAX LAW

GOVERNING LEGISLATION 1. Law on excise tax 2008 2. Decree No. 26/2009/ND-CP 3. Decree No. 113/2011/ND-CP 3. Circular No. 05/2012/TT-BTC

IV. EXCISE TAX LAW

1. 2. 3. 4. 5. 6. Definition Role of Excise Tax Law Taxable Objects Non-taxable Objects Tax-payers Tax bases

3. Taxable Objects
Goods: a/ Cigarettes, cigars and other tobacco preparations used for smoking, inhaling, chewing, sniffing or keeping in mouth b/ Liquor; c/ Beer; d/ Under-24 seat cars, including cars for both passenger and cargo transportation with two or more rows of seats and fixed partitions between passenger holds and cargo holds; e/ Two- and three-wheeled motorcycles of a cylinder capacity of over 125 cm3; f/ Aircraft and yachts (for civil use) g/ Gasoline of all kinds, naphtha, reformade components and other components for mixing gasoline (including condensate) h/ Air-conditioners of 90,000 BTU or less; i/ Playing cards; j/ Votive gilt papers and votive objects (excluding those which are childrens toys, teaching aids and decorative objects)

3. Taxable Objects
Services: a/ Dance halls; b/ Massage parlors and karaoke bars; c/ Casinos; prize-winning video games, including jackpot and slot games and games on similar machines; d/ Betting (covering betting for sports and entertainment activities and other forms of betting as prescribed by law) e/ Golf business, including the sale of membership cards and golf playing tickets; f/ Lottery business.

3. Non-Taxable Objects
1. Goods which are directly exported by producers or processors, or which are sold or entrusted by these producers or processors to other business establishments for export; 2. Imported goods, including: + Goods as humanitarian aid or non-refundable aid; gifts for state agencies, political organizations, sociopolitical organizations, socio-political professional organizations, social organizations, socio-professional organizations or peoples armed forces units; and donations or gifts for individuals in Vietnam within the quotas prescribed by the Government

3. Non-Taxable Objects
+ Goods transited or transported via Vietnamese border gates or borders, and goods transported to and from border gates under the Governments regulations; + Goods temporarily imported for re-export and temporarily exported for re-import which are not subject to import duty or export duty within the time limit specified in the law on import duty and export duty; + Personal effects of foreign organizations and individuals within diplomatic immunity quotas; personal belongings within duty-free luggage quotas; and goods imported for duty-free sale under law;

3. Non-Taxable Objects
3. Aircraft and yachts used for commercial transportation of cargos, passengers and tourists; 4. Ambulances; prison vans; hearses; cars designed with both seats and standing places for transporting 24 or more people; cars running in recreation, entertainment and sports areas which neither are registered for circulation nor move on roads; 5. Goods imported from abroad into non-tariff areas, goods sold from the inland into non-tariff areas for use only in non-tariff areas, and goods traded between non-tariff areas, except under-24 seat cars.

4. Tax payers
Business organizations established and registering business under the Law on Enterprises, the Law on State Enterprises (now the Law on Enterprises) or the Law on Cooperatives; Economic organizations of political organizations, sociopolitical organizations, social organizations, socio-professional organizations, peoples armed forces units, non-business organizations and other organizations; Foreign-invested enterprises and foreign parties to business cooperation contracts under the Law on Foreign Investment in Vietnam (now the Law on Investment); foreign organizations and individuals conducting business activities in Vietnam without establishing legal entities in Vietnam; Individuals, households, independent groups of business people and other business entities conducting in production, business or import activities.

4. Tax payers
Note: Exporters that purchase excise tax-liable goods from producers for export and do not export but sell them domestically shall pay excise tax.

5. Tax bases

The payable excise tax amount = the excise taxed price x the excise tax rate

5.1. Taxable price

Principle of determining taxable price:

5.1. Taxable price

For domestically produced goods:
VAT- exclusive - Environmental sales price Protection Tax (if any)

Excise - liable price =

1 + Excise Tax rate

5.1. Taxable price

For domestically produced goods: + Dependent cost-accounting establishments: VAT- exclusive sale price set by such establishments + Agents that sell goods at prices set by the producer for commissions only: commission-inclusive selling price set by that producer + Trading establishments: selling price set by that producer, which must not be 10% lower than the average selling price set by such trading establishments

5.1. Taxable price

For imported goods: Excise tax calculation price = Import-liable calculation price + Import tax For excise tax-liable processed goods: selling price set by the processing-ordering establishment or the selling price of products of the same or similar kind at the time of goods sale.

5.1. Taxable price

For goods and services used for barter, internal consumption, donation or sales promotion: Excise tax calculation price is the taxed price of goods or services of the same or similar kind at the time of barter, internal consumption donation or sales promotion.

5.1. Taxable price

+ For goods produced in the form of business cooperation between a producer and an user or owner of goods trademarks (brands) or production technologies: the selling price set by that user or owner + For goods sold on installment or deferred payment: the one-off selling price of such goods, exclusive of the installment or deferred payment interest.

5.1. Taxable price

For services: the excise tax calculation price is the service charge set by the service provider. + For golf business: VAT -exclusive sales of membership cards or golf-playing tickets, including golf playing charges, ground maintenance, buggy and caddy hire, deposit (if any) and other revenues paid by golf players or members to golf businesses.

5.1. Taxable price

+ For casino or prized video game business: Turnover the prizes paid to customers + For betting business: Turnover from the sale of betting tickets - the paid prizes + For dance hall, massage parlor and karaoke bar business: Turnover from such business, inclusive of turnover from catering and other associated services + For lottery business: Turnover from the sale of tickets of licensed lotteries under law

5.2. Tax rates

- Tax rates: 10-70% + 60% -70%: Luxuries; products not encouraged to consume; unhealthy products + 25% - 50%: Aimed to reasonably regulate consumers income + 10% -20%: Applied to goods that considered as necessities to industry

6. TAX REFUND, DEDUCTION AND REDUCTION

6.1. TAX REFUND a/ Goods temporarily imported for re-export; b/ Goods which are raw materials imported for export production and processing; c/ Finalization of overpaid tax amounts upon merger, consolidation, separation, split-up, dissolution, bankruptcy, ownership change, enterprise transformation or operation termination; d/ Upon issuance of tax refund decisions by competent agencies under law, and cases of excise tax refund under treaties to which the Socialist Republic of Vietnam is a contracting party.

6. TAX REFUND, DEDUCTION AND REDUCTION

6.2. TAX REDUCTION Taxpayers that produce excise taxable goods and face difficulties caused by natural disasters or unexpected accidents are entitled to tax reduction. The tax reduction level shall be determined based on the actual extent of damage caused by natural disasters or unexpected accidents but must neither exceed 30% of the payable tax amount in the year the damage occurs nor exceed the balance between the value of damaged assets and the received compensation (if any)