Characteristics of value added tax under current law

CHARACTERISTICS OF VALUE ADDED TAX
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Legal basis

Law on Value Added Tax 2008, amended and supplemented in 2013
Advisory content: characteristics of value added tax

1. The concept of value added tax
     According to the provisions of the Law on Value Added Tax in 2008 in Article 2: "Value added tax is the tax on the value added of goods and services arising in the process of production, circulation and consumption. "

     Value added tax is essentially an indirect tax. That is, manufacturers, traders and service providers are taxpayers, but actually consumers are taxable people through the price of goods and services. Value-added tax can affect the purchasing power of the public as it is constituted in the selling price of goods and services to consumers. Implementing value added tax can affect consumption issues, inflation levels.

     Value-added tax is a consumer tax that encourages a portion of the taxpayer's income to buy goods or receive services. Because the value added tax constitutes the selling price, the consumption of the public depends on the relationship between income and the price of goods and services. The higher the taxpayer's price and income, the less the opportunity for public consumption. In terms of tariffs with price indices, there is of course a certain relevance. The amount of value added tax in the sale price changes the price index, inflation in periods of tax change. Determining the relationship between this tax and the price index makes it meaningful for legislators to make reasonable tax policies in certain periods to ensure value added tax enforcement. The increase does not cause major disturbances in the population.
2. Characteristics of Value Added Tax
2.1. Objects subject to value added tax
     It can be seen that all objects living in society, whether organizations or individuals, people with money or people without money ... must pay their own income to enjoy the results produced business. for the social economy. That means that all subjects in society are subject to tax, the real subject to pay part of the income due to his consumption behavior. This characteristic is important for the impact of the law on value added tax for economic and social life.

     The taxation of all objects in the territory clearly reflects the equality of taxes and expressed the attitude of the State to the types of social consumption. In cases where it is necessary to encourage consumption or limit to the maximum extent of tax payments from their meager income due to consumption behavior, the State will not tax or levy at a low tax rate. Best. The reverse is applicable to the case of restriction of consumption.

2.2. Value added tax is calculated only on the added value of goods and services

     Taxation is only on the added value, not on the total value of the goods or services, for the amount of value added tax applied at each stage of the process of transportation without causing price fluctuations. for consumers. This characteristic of the value added tax also requires that the law be adjusted to find appropriate and feasible methods and methods to accurately determine the added value as a basis for tax calculation.

2.3. Based on the final purchase price of the goods or services, the amount of value added tax payable shall not be subject to different periods of circulation.

     Taxes at all stages of the process of domestic production and circulation, importation and circulation of imported goods, but the basis for determination of the payable tax amount is only the added value of the following stage Compared with the previous stage, if the payment price is calculated until the consumers enjoy the goods and services have been pre-determined and unchanged, the value of goods and services is divided and taxed, the total The value added tax paid through the main steps is the final tax amount calculated on the total value of goods and services consumed by the consumer. This is a unique feature of Vietnam's value added tax compared to the normal goods and services tax that Vietnam and many other countries have applied in the past.