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Latex traders seek VAT clarifications
Sunday, March 9, 2014
Rubber trading companies have asked the Ministry of Finance to issue clearer guidance regarding payment of the value added tax (VAT) on pre-processed latex.
According to officials at the Viet Rubber Association (VRA), there is a need to clarify regulations stated in Article 10 and Article 5 in Circular 219/2013/TT-BTC dated 31 December 2013 guiding the Law on Value Added Tax and the Amended Law on Value Added Tax, as well as to amend provisions in the Law on Value Added Tax.
Clause 6, Article 10 says the VAT for pre-processed latex is 5 per cent. However, Clause 5, Article 5 states that several non-processed or pre-processed agro-products are not charged the VAT.
One of VRA's arguments, as they seek clarification, is that there are discrepancies in current regulations, such as which party is responsible for paying the VAT if both seller and buyer of pre-processed latex register for tax deduction payments.
Many latex trading companies in HCM City are uncertain about the VAT declaration when they purchase latex from other companies in neighbouring provinces, said Nguyen Hoang Vinh, director of Hoang Dung Trading Co Ltd, as quoted by Thoi Bao Kinh Te Viet Nam (Vietnam Economics Times).
In the first two months of 2014, the departments of tax in the southern provinces of Binh Duong and Binh Phuoc declared that pre-processed latex traded between companies must be charged a VAT with an invoice.
However, according to Tran Thi Le Nga, Deputy Head of HCM City's Department of Tax, as cited by Thoi Bao Kinh Te Viet Nam, pre-processed latex sold by a company that registers for tax deduction payments would not charge the VAT, regardless of whether buyers receive tax deductions. In cases where these products are not subject to the tax, companies would receive refunds or deductions in the next term of tax payments.
Nga also said in such cases the HCM City Department of Tax would send an enquiry to the Ministry of Finance about VAT questions so they might receive guidance in explaining these regulations to businesses.
Additionally, the Viet Nam Rubber Association asked the ministry for more specific definitions of pre-processed latex, to make it easier for businesses to declare the VAT.
Tax solutions play an important role in supporting and helping rubber companies to overcome difficulties. By the end of last year, the Ministry of Finance (MOF) issued a circular reducing export tax rates on both natural and synthetic rubber exports, which went into effect on December 26, 2013. Accordingly, the export tariff on all rubber exports is now fixed at 1 per cent, instead of the previous 3-5 per cent.
The ministry's move followed pressure from the rubber industry, which was experiencing large amounts of unsold stocks during a period of falling selling prices. Last year, the production and export of rubber faced difficulties, resulting in a sharp fall in prices.
In the first two months of this year, Viet Nam's total rubber exports were estimated at 104,000 tonnes, valued at US$215 million, which was down 25.4 per cent in volume and 43.3 per cent in value from the same period last year, according to the Ministry of Agriculture and Rural Development (MARD).
Also, the country's rubber imports in January-February were estimated at 43,000 tonnes with a value of $92 million, down 12.2 percent in volume and 24.6 percent in value from the same period last year. Thus, Viet Nam's rubber sector enjoyed a trade surplus of $123 million in the first two months of this year.
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Economy, News
According to officials at the Viet Rubber Association (VRA), there is a need to clarify regulations stated in Article 10 and Article 5 in Circular 219/2013/TT-BTC dated 31 December 2013 guiding the Law on Value Added Tax and the Amended Law on Value Added Tax, as well as to amend provisions in the Law on Value Added Tax.
A woman works at a rubber plantation in Duc Co District in Gia Lai Province. — VNA/VNS Photo Trong Duc
Clause 6, Article 10 says the VAT for pre-processed latex is 5 per cent. However, Clause 5, Article 5 states that several non-processed or pre-processed agro-products are not charged the VAT.
One of VRA's arguments, as they seek clarification, is that there are discrepancies in current regulations, such as which party is responsible for paying the VAT if both seller and buyer of pre-processed latex register for tax deduction payments.
Many latex trading companies in HCM City are uncertain about the VAT declaration when they purchase latex from other companies in neighbouring provinces, said Nguyen Hoang Vinh, director of Hoang Dung Trading Co Ltd, as quoted by Thoi Bao Kinh Te Viet Nam (Vietnam Economics Times).
In the first two months of 2014, the departments of tax in the southern provinces of Binh Duong and Binh Phuoc declared that pre-processed latex traded between companies must be charged a VAT with an invoice.
However, according to Tran Thi Le Nga, Deputy Head of HCM City's Department of Tax, as cited by Thoi Bao Kinh Te Viet Nam, pre-processed latex sold by a company that registers for tax deduction payments would not charge the VAT, regardless of whether buyers receive tax deductions. In cases where these products are not subject to the tax, companies would receive refunds or deductions in the next term of tax payments.
Nga also said in such cases the HCM City Department of Tax would send an enquiry to the Ministry of Finance about VAT questions so they might receive guidance in explaining these regulations to businesses.
Additionally, the Viet Nam Rubber Association asked the ministry for more specific definitions of pre-processed latex, to make it easier for businesses to declare the VAT.
Tax solutions play an important role in supporting and helping rubber companies to overcome difficulties. By the end of last year, the Ministry of Finance (MOF) issued a circular reducing export tax rates on both natural and synthetic rubber exports, which went into effect on December 26, 2013. Accordingly, the export tariff on all rubber exports is now fixed at 1 per cent, instead of the previous 3-5 per cent.
The ministry's move followed pressure from the rubber industry, which was experiencing large amounts of unsold stocks during a period of falling selling prices. Last year, the production and export of rubber faced difficulties, resulting in a sharp fall in prices.
In the first two months of this year, Viet Nam's total rubber exports were estimated at 104,000 tonnes, valued at US$215 million, which was down 25.4 per cent in volume and 43.3 per cent in value from the same period last year, according to the Ministry of Agriculture and Rural Development (MARD).
Also, the country's rubber imports in January-February were estimated at 43,000 tonnes with a value of $92 million, down 12.2 percent in volume and 24.6 percent in value from the same period last year. Thus, Viet Nam's rubber sector enjoyed a trade surplus of $123 million in the first two months of this year.
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