What is the payable excise tax rate?

Although the excise tax rates of goods and services are different, the payable excise tax amount is defined in accordance with the common method, the payable excise tax amount is the excise taxed price multiplied by the excise tax rate.

Pursuant to Article 5, Law on Excise Tax 2008, excise tax bases include the taxed price of taxable goods or service and the tax rate.

The payable excise tax amount (excise tax rate) is calculated as follows:

The payable excise tax amount  = The excise taxed price x The excise tax rate

Therefore, it is necessary to know (1) The excise taxed price and (2) The excise tax rate to get the payable excise tax amount.

(1) The excise taxed price

Pursuant to Clauses 2, 3, 6, 7, 8, 9, Article 4, Decree No. 108/2015/ND-CP and Clauses 1, 2, Decree No. 100/0016/ND-CP, the excise taxed price is defined for goods and services as follows:

* For domestically produced goods or imported goods

The excise taxed price is the selling price of the producer or importer.

In case the selling price of the producer or importer does not match the ordinary market price, the tax agency shall assess tax in accordance with the Tax Administration Law. The price for excise tax calculation shall be determined as follows:

Within that, the selling price exclusive of value-added tax shall be determined in accordance with the law on value-added tax in case the producer or importer of excise tax-liable goods sells goods via its dependent cost-accounting establishments, the price serving as a basis for excise tax calculation is the selling price set by such establishments.

In case the producer or importer sells goods via its agents that sell goods at prices set by the producer or importer for commissions only, the selling price serving as a basis for determining the price for excise tax calculation is the commission-inclusive price set by that producer or importer;

In case excise tax-liable goods are sold to trading establishments which have the parent company-subsidiary relation with, or are subsidiary companies of same parent company of, the producer or importer, or to trading establishments being those having partnership relations, the selling price serving as a basis for determining the price for excise tax calculation must not be 7% lower than the average selling price set by trading establishments directly purchasing goods from the producer or importer.

In case the producer or importer establishes various intermediary trading establishments having the parent company subsidiary relation with, or being subsidiaries of the same parent company or having partnership relation, the selling price serving as a basis for determining the price for excise tax calculation must not be 7% lower than the average selling price of these trading establishments applicable to trading establishments having no parent company subsidiary relation or no relation of subsidiary companies of the same parent company of, or having the partnership relation with, the producer or importer.

Particularly for autos, the average selling price of trading establishments for comparison is the auto selling price exclusive of options for equipment and parts additionally installed by trading establishments at the request of customers.

The producer or importer and a trading establishment are regarded to have the partnership relation when:  One directly or indirectly holds at least 20% of the investment capital of the other’s owner.

In case the selling price serving as a basis for determining the price for excise tax calculation of the producer or importer of excise tax-liable goods is 7% lower than the average selling price of trading establishments, the price for excise tax calculation shall be assessed by the tax agency in accordance with the law on tax administration.

* For imported goods

The excise tax calculation price at the stage of import shall be determined as follows:

Excise tax calculation price = Import-duty calculation price + Import duty

The import-duty calculation price shall be determined under the law on import duty and export duty.  For imported goods eligible for import duty exemption or reduction, their taxed price is exclusive of the exempted or reduced import duty amount.

Note:

- For excise tax-liable goods, their taxed price is inclusive of the tare value.

For bottled beer, if a deposit is made for bottles, producers and customers shall make quarterly finalization of such deposit and include the deposit sum equivalent to the value of irrecoverable bottles in the excise tax calculation turnover.

- For excise tax-liable processed goods, the taxed price is the selling price set by the processing-ordering establishment or the selling price of products of the same or similar kind at the time of goods sale.

In case the processing-ordering establishment sells goods to trading establishments that have the parent company-subsidiary relation with, or are subsidiaries of the same parent company of, the producer or importer, or are establishments with partnership relation, the taxed price shall be determined in accordance with Point b, Clause 1 of this Article.

For goods produced in the form of business cooperation between the producer and a user or an owner of goods trademarks (brands) or production technologies, the price for excise tax calculation is the selling price set by that user or owner.

In case an establishment produces goods under a franchise license and transfers goods to Vietnam-based branches or representatives of foreign companies for sale, the price for excise tax calculation is the selling price set by those branches or representatives.

In case the processing-ordering establishment sells goods to trading establishments which have the parent company-subsidiary relation with, or are subsidiaries of the same parent company of, the producer or importer, or are establishments with partnership relation, the taxed price shall be determined in accordance with Point b, Clause 1 of this Article.

- For goods sold on installment or deferred payment, their excise taxed price is the one-off selling price of such goods, exclusive of the installment or deferred payment interest.

- For services, their excise tax calculation price is the service charge set by the service provider.

• For golf business, the taxed price is the value-added tax-exclusive sales of membership cards or golf-playing tickets, including golf playing charges, ground maintenance, buggy and caddy hire, deposit (if any) and other charges paid by golf players or members to golf businesses. In case golf businesses trade in other goods or services not liable to excise tax:  Hotel, catering, goods sale or game services, such goods or services are not liable to excise tax.
• For a casino or prized video game business, the taxed price is the turnover from such business minus (-) the prizes paid to customers.
• For betting business, the taxed price is the turnover from the sale of betting tickets minus the paid prizes;
• For dance hall, massage parlor and karaoke bar business, the taxed price is the turnover from such business, inclusive of turnover from catering and other associated services;
• For lottery business, the taxed price is the turnover from the sale of tickets of licensed lotteries in accordance with law.

- For goods and services used for barter, internal consumption, donation or sales promotion, their excise tax calculation price is the taxed price of goods or services of the same or similar kind at the time of barter, internal consumption, donation or sales promotion.

- Excise tax calculation prices of goods and services specified in this Article are inclusive of revenues in addition to goods selling prices or service charges (if any) enjoyed by production and business establishments.  Particularly for tobacco commodities, their excise tax calculation prices are inclusive of compulsory contributions and support amounts specified in the Law on Prevention and Control of Tobacco Harms.

For goods, the time of turnover generation is the time of transfer of the right to own or use the goods to the purchaser, regardless of whether or not money has been collected; for services, the time of turnover generation is the time of completing service provision or the time of making a service provision invoice, regardless of whether or not money has been collected.

(2) Excise tax rate

Cigarettes, cigars and other tobacco preparations 75%

- Beer; 65%

See details in: The excise tax rate

Conclusion: It is compulsory to define the excise taxed price and the excise tax rate to know the payable excise tax rate.