DECREE

SUPPLEMENTING AND AMENDING THE GOVERNMENT’S DECREE NO. 102/1998/ND-CP OF DECEMBER 21, 1998 WHICH AMENDED AND SUPPLEMENTED A NUMBER OF ARTICLES OF THE GOVERNMENT’S DECREE NO. 28/1998/ND-CP OF MAY 11, 1998 DETAILING THE IMPLEMENTATION OF THE VAT LAW

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;
Pursuant to the Value Added Tax Law No. 02/1997/QH9 of May 10, 1997;
Pursuant to Point 2, Section IV of the National Assembly’s Resolution No. 18/1998/QH10 of November 25, 1998 on the draft 1999 Stage Budget,

DECREES:

Article 1.- To amend, supplement a number of clauses of Article 1 of the Government’s Decree No. 102/1998/ND-CP of December 21, 1998 on the amendments, supplements to a number of Articles of the Government’s Decree No. 28/1998/ND-CP of May 11, 1998 detailing the implementation of the VAT Law as follows:

1. Clause 1 shall be supplemented and amended as follows:

"1. To amend, supplement a number of clauses of Articles 4 of the Government’s Decree No. 28/1998/ND-CP of May 11, 1998 on the subjects which are not liable to VAT:

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- To amend, supplement Clause 13 as follows: printing, publishing, importing and distribution: newspapers, magazines, specialized news bulletins, political books, textbooks, coursebooks, books of legal documents, books printed in ethnic minority languages; propaganda and agitation posters, pictures and photographs; money printing".

2. Clause 3 shall be supplemented and amended as follows:

"d) For cases eligible for input tax deduction at the following rate:

- Production, processing and/or trade establishments paying value added tax by deduction method, which buy unprocessed agricultural products, forest products and/or sea products directly from the producers and/or exploiters without receipts but with lists thereof or from dealers with sale invoices, shall be eligible for input tax deduction at rates (%) calculated on the value of purchase goods according to the lists or invoices as follows:

+ The rate of 5% for cultivation products of trees which yield resins, latex or oil, cotton plants, sugar canes, fresh bud tea, paddy, rice, corn, potatoes, manioc; for husbandry products being cattle, poultry, fish, shrimp and other aquatic products.

+ The rate of 3% for all kinds of agricultural and/or forest products not defined in the group of products eligible for 5% deduction mentioned above.

- Production and/or processing establishments paying value added tax by deduction method, which buy assorted discarded materials directly from discarded materials collectors without receipts but with lists thereof, or from dealers with sale invoices shall be eligible for input tax deduction at rates (%) calculated on the value of purchase goods according to the lists or invoices as follows:

+ The rate of 5% for discarded iron or steel materials;

+ The rate of 3% for other kinds of discarded materials.

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+ The rate of 5% for indemnities from insurance business activities.

+ The rate of 4% for goods subject to special consumption tax of trading establishments which bought them from production establishments for sale;

+ The rate of 3% for soil, rock, sand, gravel, which production and/or construction establishments bought directly from exploiters without receipts but with lists thereof or from dealers with sale invoices;

+ The rate of 3% for all other kinds of goods bought from businessmen with sale invoices.

The calculation of tax deduction or input tax reimbursement stipulated above shall not apply to cases where these products are used as raw materials for production or processing of export goods or bought for export.

- In cases where the Vietnamese party signs a contract with a foreign contractor and pays VAT instead of the latter, the former shall be eligible for deduction of the input tax already paid".

3. Point 2, Clause 5, shall be amended and supplemented as follows:

"2. A number of following products, goods and/or services confronted with difficulties in their production and/or business shall be eligible for the 50% tax reduction:

- Mechanical products (except for consumer mechanical products);

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- Moulds of all types;

- Coal, coke;

- Computers;

- Basic chemicals products;

- Explosive materials;

- Car tyres of from 900-20 upwards;

- Products which are raw materials for production of curative and preventive medicines liable to VAT in the 10% tax rate group;

- Artificial limbs, crutches, wheelchairs for disabled people;

- Goods liable to special consumption tax at the trading stage with tax paid according to tax deduction method;

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- Construction, installation;

- Dredging narrow passages, canals, river ports, seaports.

- All kinds of books liable to VAT in the 10% tax rate group;

- Transportation, goods loading and unloading;

- Hotels, tourism, restaurants;

- Video film distribution and screening".

Article 2.- This Decree takes effect as from September 1, 1999.

Article 3.- The Minister of Finance guides 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.

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ON BEHALF OF THE GOVERNMENT
FOR THE PRIME MINISTER
DEPUTY PRIME MINISTER




Nguyen Tan Dung