Special Consumption Tax in Vietnam
Oct. 8 – Special Consumption Tax (SCT) is a type of excise tax that applies to the production or importation of specific goods and the provision of certain services.
The current SCT Law was promulgated on November 14, 2008, by the National Assembly, and came into effect on April 1, 2009 (except for alcohol and beer, which was applicable starting January 1, 2010). According to the SCT Law, SCT is levied on the production and importation of 11 categories of products and 6 types of services that are considered to be luxurious or non-essential (listed in the table below).
Generally, goods and services that are subject to the SCT charges are also subject to VAT charges. The basis of VAT calculation is the selling price plus the SCT. For imported products, VAT is imposed on the dutiable value plus import duties plus SCT.
The following goods are exempt from SCT:
- Goods manufactured and directly exported or sold to authorized agents for export;
- Imported goods including humanitarian aid, non-refundable aid goods; personal belongings of foreign organizations and individuals under diplomatic immunity or duty-free personal belongings; goods which are transshipped, transited or transported through Vietnam’s border; goods temporarily imported for re-export, or temporarily exported for re-import during the tax-free period; and goods imported for duty-free sale under the prescribed regulations;
- Airplanes and yachts for sale and transport of passenger and goods;
- Ambulances, hearses and automobiles with more than 24 seats; and
- Goods imported to non-duty areas, or domestic goods sold to non-duty areas (exclusive of automobiles with fewer than 24 seats).
SCT is levied on each item only once, and SCT refunds are available for exported goods upon request by the taxpayers in certain cases (e.g., goods temporarily imported for re-export).
In the event that items subject to SCT are produced from materials for which the relevant SCT amount was already paid, then the SCT amount already paid will be deducted when calculating the SCT amount for their production.
Portions of this article was was taken from Vietnam Briefing’s Doing Business in Vietnam technical guide. This guide aims to assist foreign investors in understanding the business environment of Vietnam, including reasons to invest and the challenges for which to prepare for. This publication is available as a PDF download in the Asia Briefing Bookstore.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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