EXCISE TAX

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 CONTENT

1 OVERVIEW OF EXCISE TAX

MAIN CONTENT OF EXCISE TAX

2 IN VIETNAM
 1. OVERVIEW OF EXCISE TAX

 Definition
Excise Tax levies on special goods and
services that are on prescribed list on
Excise tax law.
 DEFINITION

 What are special goods and services?

 Luxury goods and services

 Goods and services that are limited in

consumption by the government

 Their demand normally changes

according to changes in income; rarely
changes according to price changes.
 CHARACTERISTICS

 Indirect tax

 Often regresive in comparison with income

 Levies only 1 time on production or import

stage.

 The tax rates are normally high.

 The list of special goods and services includes

a small number of items and often changes.
2. MAIN CONTENT OF EXCISE TAX LAW IN
VIETNAM

2.1. SCOPE OF APPLICATION

2.2. TAX CALCULATION BASIS

2.3. TAX DECLARATION & SUBMISSION

2.4. TAX REDUCTION & REFUND

 2.1. SCOPE OF APPLICATION

 Taxable objects

 Non-taxable objects

 Taxpayers
 a. Taxable objects

GOODS SERVICES

1. Cigarettes, cigars and other

1. Dance halls
tobacco preparations
2. Massage parlors and karaoke
2. Liquor
bars
3. Beer
3. Casino
4. Under 24-seat cars
4. Betting business
5. Motorcycle with cylinder of
5. Golf business
over 125 cm3
6. Lottery business
6. Aircraft & yacht
7. Gasoline, naphtha…
8. Air-conditioners of 90.000BTU
or less
9. Playing cards
10.Votive gilt papers and votive
objects
Excise tax?
Excise tax?
Which are subjectable to Excise tax?
Which are subjectable to Excise tax?
Which are subjectable to Excise tax?
Which are excise taxable?
 b. Non-taxable objects

1. Goods directly exported by producers

or processors or sold or entrusted to other
business establishments for export.
2. Imported goods in the following cases:
- Humanitarian and non-refundable aid,
gifts and donations
- Goods transited or transported through
Vietnam’s border.
- Goods temporarily imported
- Goods temporarily imported for duty-free
sale at duty-free shops under law.
- Import wine then sold to the domestic:
(1)Import (importer) AT CUSTOM:
Excise tax of imported goods:
(import price + import tax) x E.T rate = A
(2) SELL TO DOMESTIC: AT TAX OFFICE
Excise tax for sales: quantity of sales x (VAT
excl. price / 1+ e.t rate) x E.T rate = B
Excise tax payable = B – A
 b. Non-taxable objects

3. Goods imported from abroad into non-

tariff areas; goods sold from inland Vietnam
into non-tariff areas; and goods traded
between non-tariff areas; except under 24-
seat cars.

4. Aircarft and yachts used for commerical

cargo or passenger transportation or
tourism business
 b. Non-taxable objects

5. Cars designed by manufacturers to be

used as ambulances, prison vans or
hearses;
- Cars designed with both seats and
standing places for transporting 24 or
more people;
- Cars operating within recreation,
entertainment and sport centers.
 b. Taxable objects

6. Naphtha, condensate, reformade

components and other components used
as production raw materials (except
gasoline production) imported directly by
production establishments.

7. Air-conditioners of a capacity of 90.000

BTU or less which are designed by
manufactures only to be fitted on means of
transport, including cars, train carriages,
ships, boats or aircraft.
 c. Taxpayers

Organizations &
individuals

Produce goods
and provide Import goods that
services that subject to Excise
subject to Excise tax
tax
 Who are taxpayer?

1. Producers sold beers to a restaurant. The

restaurant sold beers to customers.
2. ABC Co imported France liquor and then
sold them to a retail. The retail store
continually sold imported liquor to
customers.
3. Manufactures sold 4-seater-car to a free
trade zone.
4. Manufactures sold 24 seater-car to a free
trade zone
 Who are tax payer?

5. XYZ Co imported air- conditioners of

90.000 BTU
6. XYZ Co imported air- conditioners of
120.000 BTU
7. Producers sold tobacco to An import-
export trading and service ICC Company
based on export contract. Then ICC Co just
exported half of package and sold the rest to
the domestic customers.
 2.2. TAX CALCULATING BASIS

Excise tax
Excise tax Excise tax
calculation
payable rate
price
 Excise tax calculation price

Rule: Excise tax calculation price is

Excise tax-exclusive price
 Excise tax calculation price

Domestic produced goods and services

Selling
price Environment
exclusive protection tax
of VAT (if any)
Excise tax
cal. price

1 + Excise
tax rate
 Eg.1

A beer producer sell its beer for 30,000

VND/litre (VAT exclusive); the excise
tax rate of beer is 50%.
Calculate the Excise tax calculation
price of 1 litre of beer.
 Domestically produced goods

 If a producer sells goods via its dependent cost-

accounting establishments => the taxed price is
the selling price exclusive of VAT and
environment protection tax.

 If goods is sold via traders => the taxed price is

the producer’s selling price exclusive of VAT and
env protection tax; which must not be 7% lower
than the average selling price applied by the
traders.
 Imported 24.000 liters of fresh beer but 4.000
liters were completely loss in the process of
customs procedure and supervision, Import
price: 18.000 VND/ liter.
 The remaining 10.000 liters of import fresh beer
were sold to the dometic customers, VAT
exclusive price: 50.000 VND/ liter
 Given that: Import tax rate of fresh beer: 30%;
Export tax rate of bottle beer: 3%; Excise tax rate
of any beer: 50%, VAT rate: 10%. All goods are
on legitmate invoices and bank transfer. The
company applies credit invoice method for VAT.
 Excise tax calculation price

Imported goods

Excise
Import Import
tax cal.
price tax
price
 Some special cases

DOMESTICALLY PROCESSED goods

The taxed price is that of sold goods set by

processing-ordering establishment or the
selling price of products of the same or
similar kind at the time of goods sale;
exclusive of VAT, environment protection
tax (if any) and excise tax.
 Eg. Processed goods 1

A business entity X signs contract with

company B to process 2,000 cigarette
cartons with the process price of 30,000
dong per carton (exclusive of VAT & Excise
tax). At the end of tax period, the processor
has delivered 2,000 cartons to X. X has sold
2.000 carton in Vietnam with the price of
132,000 dong per carton (VAT exclusive).
Calculate the payable VAT (10%) and
Excise tax (65%) of the business entity.
 Eg. Processed goods 2

A business entity signs contract with company

B to process 2,000 cigarette cartons with the
process price of 72,000 dong per carton
(exclusive of VAT & inclusive of Excise tax).
At the end of tax period, the processor has
delivered 2,000 cartons to X. X has sold 2.000
carton in Vietnam with the price of 132,000
dong/ea (VAT exclusive)
Calculate the payable VAT (10%) and Excise
tax (65%) of the business entity.
 Some special cases

Goods sold on installment or deferred

payment

The excise tax calculation price is the one-

off selling price of such goods; exclusive of
VAT, environmental protection tax (if any),
excise tax and the installment or deferred
payment interest.
 Some special cases

Excise tax-liable goods which an

exporter purchases from producers for
export then does not export

The taxed price is the selling price

exclusive of excise tax, environmental
protection tax (if any) and VAT.
 Eg. 2

 An exporter B purchases 25,000 cigarette

cartons from producer A for export.
However, the exporter has only exported
20,000 carton with the export price of
65,000 dong/carton.
 5.000 cartons left, B sold in domestic
market with the VAT-exclusive price of
82,500 dong/carton.
 Calculate the excise tax calculation price of
5,000 cartons of cigarette sold
domestically
 Some special cases

Golf business

The taxed price is VAT-exclusive sales of

membership cards or golf-playing tickets,
inclusive of procedds from the sale of golf-
training tickets, collection of ground
maintenance fees, buggy and caddy hire,
deposits and other golf-related revenues
paid by golf players to a golf business.
 Some special cases

Casino

The excise tax calculation price is turnover

from the business minus prizes paid to
customers (exclusive of VAT).
 Some special cases

Betting business

The excise tax calculation price is the sales

of betting tickets minus prizes paid to
customer (exclusive of VAT); exclusive of
sales of entry tickets to entertainment
events associated with betting business.
 Some special cases

Dance hall, massage parlor and karaoke

bar business

Excise tax calculating price is the turnover

(exclusive of VAT) from such business;
inclusive of the turnover from catering
services and other associated services.
 Notes about invoices

 When selling or delivering goods to their

branches, dependent establishments or
agents; producers shall issue invoices.
 In case of delivering goods to branches or
shops in the same province or centrally run
city or when consigning goods from one to
another warehouse, producer may use the
ex-warehousing-cum-internal
transportation bill, enclosed with the
internal transfer order.
 EXCISE TAX RATE

Different tax rates ranging from 10% - 70%

for different types of goods and services.
 Excise tax rate
No. Goods & services Tax rate (%)

A Goods
1 Cigarettes, cigars and other tobacco preparations
- from 1/1/2016 – 31/12/2018 70
- from 1/1/2019 75
2 Liquor
a) Of 200 proof or higher
- from 01/01/2017 - 31/12/2017 60
- from 1/1/2018 65
b) Below 200 proof
- from 1/1/2016 - 31/12/2017 30
- from 1/1/2018 35

3 Beer
- from 01/01/2017 - 31/12/2017 60
- from 1/1/2018 65
 Excise tax rate
No. Goods & Services Tax rate(%)
4 Under 24-seat cars
a) Passenger cars of 9 seats or fewer
- Cylinder capacity of 2000 cm3 or less 45
- Cylinder capacity of 2000 – 3000 cm3 50
- Cylinder capacity of 3000 cm3 or more 60
b) Passenger cars of 10-16 seats 30
c) Passenger cars of 16 to less than 24 seats 15
d) Cars for both passenger and cargo transportation 15
e) Cars running on gasoline in combination with electricity or Equal 70% tax rate
of equivalent
bio-fuel, with gasoline accounting for not more than 70% of the goods
used fuel
g) Cars running on bio-fuel Equal 50% tax rate
of equivalent
goods

h) Ellectrically-operated cars 25
- Passenger cars of 9 seats or less 15
- Passenger cars of 10 to less than 16 seats 10
- Passenger cars of 16 to less than 24 seats 10
- Cars for both passenger and cargo transportation
 Excise tax rate
No. Goods & Services Tax rate (%)
5 Two- and three-wheeled motorcycles of a cylinder capacity 20
of over 125 cm3
6 Aircrafts & yachts 30
8 Gasoline of all kinds, naphtha, reformade components and 10
other components for mixing gasoline
9 Air conditioners of 90,000 BTU or less 10
10 Playing cards 40
11 Votive gilt papers and votive objects 70
B Services
1 Dance halls 40
2 Massage parlors and karaoke bars 30
3 Casinos and prize-winning video games 35
4 Betting 30
5 Golf business 20
6 Lottery business 15
 2.3. TAX COMPUTATION METHOD

Tax deduction
 The excise tax amount already paid on
excise tax-liable raw materials, which are
used to produce excise tax-liable goods,
can be deducted.

Excise tax amount

Excise tax
already paid upon buying
payable for
Excise tax raw materials equivalent
taxable goods
payable to the volume of goods
for sale in the
ex-warehoused for sale in
period
the period
 Eg of tax deduction

 In June 2012, Company A imported 20,000 litter of

fresh beer:
- The Excise tax payable for imported beer: 60 mil
VND
- The VAT payable for imported beer : 24 mill VND
 Company A has produced 40,000 beer bottles using
this amount of fresh beer.
 In this month, the company has sold 10,000 beer
bottles:
- VAT-exclusive price: 8.700 dong/bottle
- Excise tax rate for beer: 50%
Calculate the Excise tax, VAT payable in this
period.
 2.3. TAX METHOD

 If an exporter purchase excise tax-liable

goods from producers for export then
does not export but sells them
domestically; the exporter must declare
and submit Excise tax instead of the
producers.
 Eg. 3

 Company B is an exporter. In June 2012, B bought

10,000 cartons of cigarette from manufacturer C
for export. The buying price is 89,000 dong/carton
(exclusive of VAT).
 B has exported 7,000 cartons with the FOB price
of 165,000 dong/carton.
 The rest of the cigarettes, B sold in domestic
market with the price (VAT-exclusive) of 132,000
dong/carton.
 Excise tax rate for cigarettes is 65%.
Calculate the Excise tax payable that B must
submit.
 2.3 TAX METHOD

 Imported goods then sold them in the

domestic
Excise tax payers shall be entitled to deduct
excise tax amounts already paid at the import
stage when determining Excise tax amounts
to be sold domestically. The deductible
excise tax input corresponding to the excise
tax amount of imported goods subject to
excise tax
 2.4. TAX REFUND

1. Goods temporarily imported for re-export

2. Goods which are raw materials imported

for export production and processing

3. Other cases
 Eg. 3

In Sept 2013, a beer producer occurred the following activities:

 Purchased 50,000 litre of fresh beer from another producer
with the price (VAT-exclusive) of 15,000 dong/litre
 Ex-warehoused 40,000 litre of fresh beer to produce bottled
beer with the consumption norm of 0.5litre/bottle.
 Sold 80,000 beer bottles produced, including: sold in domestic
market 50,000 bottles (VAT-exclusive price of 24,000
dong/bottle); entrusted export of 20,000 bottles; sold to a
exporter for export according to exporting contract 10,000
bottles (VAT-exclusive price of 21,000 dong/bottle)
 Sold the 10,000 litre of fresh beer left to another beer producer
with the price (VAT-exclusive) of 27,000 dong/litre.
Determine the Excise tax payable that the producer must pay
The excise tax rate of beer is 50%
 State True/False and explain briefly for each statement
as follow

1. Goods and services are imposed Excise tax at one stage -

at retail (trading) stage in a business cycle.
2. Excise tax payers are only either producer or importer in
every situation.
3. Excise tax levies on ordinary goods and services without
taxation purposes.
4. Government could use Excise tax as a mean to increase
fairness in income re-distribution in the society.
5. Excise taxable goods used as free gifts in the sales
promotion are not required to declare tax
6. Like VAT, Excise tax allowed to deduct total input tax,
regardless of usage status.
7. In any processing activity, a processor company is liable to
declare and pay excise tax on a behalf of a local company
 Exercise 3 in document (Excise tax)

A cigarette producing company has the following activities:

 Purchased 1000 kg of fibred tobacco from a domestic producer to produce
cigarette. The purchase priced written on the VAT invoice is 33,000 VND/kg (VAT-
exclusive).
 Ex-warehoused 500 kg of fibred tobacco to produce cigarette packs with production
norm of 0.025 kg fibred tobacco/pack. 1 carton of cigarette comprises of 10 packs.
 Sold 1,000 cartons of cigarette with the selling price (VAT exclusive) of 82,500
VND/carton.
 Used VAT invoice to ex-warehouse 500 to the company’s agent. In the tax period,
the agent has sold 300 units with the VAT-exclusive price of 82,500 VND/carton.
Commission received from this activity is 2% of revenue.
 Sold 100 kg of fibred tobacco to another producer with the VAT-exclusive price of
35,000 VND/kg.
 The remaining of fibred tobacco is not yet sold.
 Calculate the Excise tax payable and VAT payable in the tax period. Given:
 Excise tax rate of tobacco is 65%.
 The company has no opening stock; All of the transactions have legitimate invoices
and documents.
 Exercise 4 in document (Excise tax)

Enterprise C in the current tax period has the following activities:

 Imported fibred tobacco to produce cigarette. The import value is 8,000 mil VND.
The company used 50% of the material to produce 300,000 cartons of cigarette.
 Sold 150,000 cartons domestically with the VAT-exclusive price of 85,800
VND/carton.
 Sold 50,000 cartons to a import-export company to export according to contracts
signed with foreign companies; the VAT-exclusive price is 80,000 VND/carton. In
the tax period, the import-export company has exported 30,000 cartons.
 The remaining cigarette cartons are exported to USA. The price sold at warehouse
is 78,000 VND/carton. The delivery expenses from the warehouse to the export
port is 4 mil VND (VAT-exclusive).
 Determine the consumption tax payable of the enterprise in the tax period.
Given: Input VAT of other expenses is 5 mil VND.
 Excise tax rate of tobacco is 65%.
 Import tax rate of imported fibred tobacco is 30%.
 Export tax rate of exported cigarette cartons is 2%.
 VAT rate of tobacco is 10%. All transactions of the enterprise are paid via bank
transfer. The enterprise has no opening stock.
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