Some new content on VAT, Corporate Income Tax

(Baonghean) - On June 19, 2013, the National Assembly continued to pass the Law amending and supplementing a number of articles of the Law on Corporate Income Tax and the Law amending and supplementing a number of articles of the Law on Value Added Tax. Accordingly, a number of new contents on VAT and Corporate Income Tax will take effect from July 1, 2013 as follows:

a) Apply a value added tax rate of 5% to contracts for sale, lease, and hire-purchase of social housing according to the provisions of the Housing Law from July 1, 2013;

b) Implement a 50% reduction in value added tax rate from July 1, 2013 to June 30, 2014 for the sale, lease, and hire-purchase of commercial housing that is a completed apartment with a floor area of ​​less than 70 square meters and a selling price of less than VND 15 million/square meter.

c) From July 1, 2013, the corporate income tax rate of 20% shall be applied to enterprises, including cooperatives, with total annual revenue not exceeding VND 20 billion. The revenue used as the basis for determining enterprises eligible for the 20% tax rate shall be the total revenue of the previous year.

The 20% tax rate does not apply to the following income:

- Income from capital transfer, transfer of capital contribution rights; income from real estate transfer (except income from investment - business of social housing for sale, lease, lease-purchase), income from transfer of investment projects, transfer of rights to participate in investment projects, transfer of rights to explore and exploit minerals; income received from production and business activities outside Vietnam;

- Income from activities of searching, exploring and exploiting oil, gas, other rare resources and income from mineral exploitation activities;

- Income from service business is subject to special consumption tax according to the provisions of the Law on Special Consumption Tax.

d) Apply a corporate income tax rate of 10% to the enterprise's income from selling, leasing, and hire-purchasing social housing arising from July 1, 2013.

Social housing is housing invested in and built by the State or organizations and individuals of all economic sectors and meeting the criteria on housing, house selling price, rental price, hire-purchase price, subjects and conditions for buying, renting, and hire-purchasing social housing according to the provisions of the law on housing.

Duong Minh Duc (Nghe An Tax Department)