Excise tax is a tax imposed on a specific good or activity and is commonly levied on cigarettes, alcoholic beverages, soda, and gasoline. So, what is the excise tax? What are excise tax-liable goods and services?
1. What is the excise tax?
The excise tax is the indirect tax imposed on a specific good or service. Excise taxes are commonly levied on luxury goods and services in order to regulate the production, import, and consumption of society. At the same time, excise tax also makes up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections.
Accordingly, excise taxpayers include:
- Producers and importers of goods and providers of services are subject to excise tax.
- Exporters that purchase excise tax-liable goods from producers for export and do not export but sell them domestically shall pay excise tax.
2. Objectives of excise tax
Pursuant to Clause 1, Article 2 of the Law on Excise Tax 2008, amended and supplemented in 2014 and Article 2, Decree No. 108/2015/ND-CP, excise tax-liable goods are:
- Cigarettes, cigars, and other tobacco preparations used for smoking, inhaling, chewing, sniffing, or keeping in the mouth;
- Under-24 seat cars, including cars for both passenger and cargo transportation with two or more rows of seats and fixed partitions between passenger, holds and cargo holds;
- Two- and three-wheeled motorcycles with a cylinder capacity of over 125 cm3;
- Aircraft and yachts;
- Gasoline of all kinds.
- Air-conditioners of 90,000 BTU or less;
- Playing cards;
- Votive gilt papers and votive objects.
Note: Excise tax-liable goods are complete commodities, excluding component sets used for assembling these commodities.
Pursuant to Clause 2, Article 2, Law on Excise Tax 2008, excise tax-liable goods include:
- Dance halls;
- Massage parlors and karaoke bars;
- Casinos; prize-winning video games, including jackpot and slot games and games on similar machines.
- Betting: Covers betting for sports and entertainment activities and other forms of betting as prescribed by law.
- Golf business, including the sale of membership cards and golf playing tickets;
- Lottery business.
3. Non-taxable objects
Pursuant to the Law on Excise Tax 2008 and Article 3, Decree No. 108/2015/ND-CP, goods specified in Clause 1, Article 2 of this Law are not subject to excise tax in the following cases:
Goods that are directly exported by producers or processors, or which are sold or entrusted by these producers or processors to other business establishments for export;
- Imported goods, including:
+ Goods such as humanitarian aid or non-refundable aid; gifts for state agencies, political organizations, socio-political organizations, socio-political professional organizations, social organizations, socio-professional organizations, or people’s armed forces units; and donations or gifts for individuals in Vietnam within the quotas prescribed by the Government.
+ Goods imported as humanitarian aid or non-refundable aid, including also goods imported with non-refundable aid as approved by competent agencies; goods provided as humanitarian assistance or emergency relief for overcoming consequences of wars, natural disasters or epidemics;
+ Overseas organizations or individuals’ gifts for state agencies, political organizations, socio-political organizations, socio-political professional organizations, social organizations, socio-professional organizations or people’s armed forces units.
+ Donations or gifts for individuals in Vietnam within the law prescribed quotas.
Goods transited or transported via Vietnamese border gates or borders and goods transported to/from border gates.
+ Goods transported from exporting countries to importing countries via Vietnamese border gates without going through procedures for their import into and export from Vietnam;
+ Goods transported from exporting countries to importing countries via Vietnamese border gates and brought into bonded warehouses without going through procedures for their import into and export from Vietnam;
+ Goods transited or transported via Vietnamese border gates or borders under agreements signed between the Vietnamese Government and foreign governments or between agencies or representatives authorized by the Vietnamese Government and foreign governments;
+ Goods transported from exporting countries to importing countries not via Vietnamese border gates.
Goods temporarily imported for re-export and temporarily exported for re-import which are not subject to import duty or export duty within the time limit specified in the law on import duty and export duty;
Personal effects of foreign organizations and individuals within diplomatic immunity quotas; personal belongings within duty-free luggage quotas; and goods imported for duty-free sale under the law;
- Aircraft and yachts are used for commercial transportation of cargos, passengers, and tourists; for the purposes of pesticide spraying, firefighting, film-making, photography, survey and mapping activities, security, and national defense.
- Ambulances; prison vans; hearses; cars designed with both seats and standing places for transporting 24 or more people; cars running in recreation, entertainment, and sports areas that neither are registered for circulation nor move on roads;
Goods imported from abroad into non-tariff areas, goods sold from the inland into non-tariff areas for use only in non-tariff areas, and goods traded between non-tariff areas, except under-24 seat cars.
Air-conditioners are those of a capacity of 90,000 BTU or less which, according to manufacturer standards, are designed only to be fitted aboard means of transport, such as cars, train carriages, ships, boats, or aircraft.
Here is the article on what is the excise tax, and excise tax-liable goods and services.