Updated at 20/08/2023 - 06:01 pm
Software services in accordance with the law are not subject to VAT
Software-related services (also called software services in terms of words) that do not conform to regulations are subject to 10% VAT.
Export software services with 0% VAT
What is a software service? #
Pursuant to the Government's Decree No. 71/2007/ND-CP dated May 3, 5 detailing and guiding the implementation of a number of articles of the Law on Information Technology on the information technology industry:
+ In Clause 10, Article 3 on the interpretation of words:
"ten. Software service means activities that directly support and serve the production, installation, exploitation, use, upgrade, warranty, maintenance of software and other similar activities related to software. .
+ In Clause 3, Article 9 on software industry activities:
“3. Types of software services include:
a) Administration, warranty and maintenance services of software and information systems;
b) Software quality consulting, assessment and appraisal services;
c) Consulting services, software project development;
d) Software pricing consulting services;
dd) Software technology transfer services;
e) System integration services;
g) Safety and security assurance services for software products and information systems;
h) Software product distribution and supply services;
i) Other software services”.
How do tax regulations apply to software services? #
Regulations on value-added tax for software services #
Pursuant to Circular No. 219/2013/TT-BTC dated December 31, 12 of the Ministry of Finance guiding on VAT (effective from January 2013, 01):
+ In Clause 1, Article 4, subjects not subject to VAT:
"...
Computer software includes software products and software services as prescribed by law”.
+ In Clause 1, Article 9, the tax rate of 0%:
“0% tax rate: applied to exported goods and services; construction and installation activities abroad and in non-tariff zones; international transport; goods and services are not subject to VAT upon export, except for cases where the 0% tax rate guided in Clause 3 of this Article is not applied.
...
b) Export services include services provided directly to organizations and individuals abroad and consumed outside of Vietnam; direct supply to organizations and individuals in non-tariff zones and consumption in non-tariff zones.
... "
+ In Clause 2b, Article 9 stipulates the conditions for applying the 0% tax rate:
“For export services:
- Having a service supply contract with an organization or individual abroad or in a non-tariff zone;
- Having documents of payment for export services via banks and other documents as prescribed by law;
... "
+ In Article 11 stipulates:
“The tax rate of 10% applies to goods and services not specified in Articles 4, 9 and 10 of this Circular.
... ".
Application of value-added tax on software services #
Not subject to VAT:
In case an enterprise provides software products and software services according to the provisions of Articles 3 and 9 of Decree No. 71/2007/ND-CP dated May 3, 5 of the Government, it shall be subject to refusal from the Government. VAT according to the provisions of Article 2007 of Circular No. 4/219/TT-BTC dated December 2013, 31 of the Ministry of Finance.
10% VAT rate:
In case an enterprise provides products and services that are not specified in Clause 3, Article 9 of Decree No. 71/2007/ND-CP dated May 3, 5 of the Government, they are subject to VAT at the rate of VAT. VAT is 2007% as prescribed in Article 10 of Circular No. 11/219/TT-BTC dated December 2013, 31 of the Ministry of Finance.
Export VAT rate 0%:
In case an enterprise provides software consulting services to an overseas company and consumption outside Vietnam if the conditions specified in Clause 2.b, Article 9 of Circular No. 219/2013/TT-BTC are satisfied, the VAT rate of 0% shall be applied.
FAQ - Frequently Asked Questions - Special Cases #
Is software rental subject to VAT?
Software rental is computer software copyright rental is not a specified software service, therefore this activity is subject to subject to VAT at the rate of 10%.
Refer to Official Dispatch 10684/CT-TTHT
GENERAL TAXES | SOCIAL REPUBLIC OF VIETNAM |
Number: 10684/CT-TTHT | Hanoi, date 20 month 03 year 2018 |
Dear: CMC Technology Group Joint Stock Company
(Address: 17th Floor, CMC Tower, 11 Duy Tan Street, Dich Vong Hau Ward, Cau Giay District, Hanoi City – MST: 0100244112)
Responding to Official Dispatch No. 33/CV-CMC dated March 08, 3 of CMC Technology Group Joint Stock Company (hereinafter referred to as the Company) asking about tax policy, Hanoi Tax Department has the following comments: :
– Pursuant to Decree 71/2007/ND-CP dated May 03, 5 of the Government detailing and guiding the implementation of a number of articles of the Law on Information Technology on the information technology industry:
Article 3 provides the following:
“Article 3. Interpretation of terms
In this Decree, the terms below are construed as follows:
1. Software product is software and accompanying documents produced and displayed or stored in any physical form, which can be bought, sold or transferred to another object for exploitation and use. .
…
10. Software service means activities that directly support and serve the production, installation, exploitation, use, upgrade, warranty, maintenance of software and other similar activities related to software. soft.
… '
+ Article 9 provides for the following types of software products and software services:
"2. Types of software products include:
a) System software;
b) Application software;
c) Utility software;
d) Tool software.
d) Other software.
3. Types of software services include:
a) Administration, warranty and maintenance services of software and information systems;
b) Software quality consulting, assessment and appraisal services;
e) Consulting services, building software projects;
d) Software pricing consulting services;
dd) Software technology transfer services;
e) System integration services;
g) Safety and security assurance services for software products and information systems;
h) Software product distribution and supply services;
i) Other software services.”
– Pursuant to Circular 219/2013/TT-BTC dated March 31, 3 of the Ministry of Finance guiding the implementation of the Law on Value-Added Tax and Decree No. 2013/209/ND-CP dated December 2013, 18 of the Ministry of Finance. The Government details and guides the implementation of a number of articles of the Law on Value Added Tax:
+ In Clause 21, Article 4, non-taxable subjects include:
"...
Computer software includes software products and software services as prescribed by law.
+ In Article 11 the VAT rate of 10% is as follows:
“Article 11. Tax rate of 10%
The 10% tax rate applies to goods and services not specified in Articles 4, 9 and 10 of this Circular.
... "
Based on the above provisions, because the unit did not provide specific documents, the Hanoi Tax Department replied in principle as follows:
– In case the Company sells software products and software services according to the provisions of Articles 3 and 9 of Decree 71/2007/ND-CP dated May 03, 5 of the Government above, if the products software and software services that are computer software according to law are not subject to VAT.
– In case the company leases the copyright of computer software that is not a software service as prescribed in Clause 3, Article 9 of Decree 71/2007/ND-CP dated May 03, 5 of the Government, this activity subject to VAT at the rate of 2007%.
The Company is requested to base on the actual situation at the unit, compare with the provisions of Decree 71/2007/ND-CP dated May 03, 5 of the Government to comply with the provisions of law. If you still have problems, please contact Tax Inspection Department No. 2007 - Hanoi Tax Department for answers.
The Hanoi Tax Department replied that the company was known to implement./.
| KT. DIRECTOR |
Are software maintenance services subject to VAT?
Question:
(Chinhphu.vn) – Mr. Dong Van Hoan's company (Hanoi) has 100% state capital, conducts competitive bidding online for the package of non-consulting services for software maintenance services. When bidding, the contractor is letting the value added tax (VAT) be 10%, the bid price is smaller than the approved bidding package estimate.
Reply:
However, according to the provisions of the current tax law, software maintenance services are not subject to VAT. The expert group when evaluating has two different opinions as follows:
– Contractor meets the E-HSMT and is invited to negotiate. During the negotiation process, the bid solicitor negotiates with the contractor on compliance with the current tax law, which is 0% VAT. The winning bid price will deduct 10% VAT;
– Request the contractor to clarify the VAT in the bid price; if the contractor confirms the 10% VAT offer, it will adjust the VAT from 10% to 0% to continue the assessment.
Mr. Hoan asked, is it right or wrong to evaluate as an expert group in the two cases above?
The Ministry of Finance responded to this issue as follows:
READ MORE Are professional skills training services subject to VAT?
How to calculate VAT on construction consulting services
Life insurance is not subject to VAT
Pursuant to the Government's Decree No. 71/2007/ND-CP dated May 3, 5 detailing and guiding the implementation of a number of articles of the Law on Information Technology on the information technology industry:
+ In Clause 10, Article 3 on the interpretation of words:
"ten. Software service means activities that directly support and serve the production, installation, exploitation, use, upgrade, warranty, maintenance of software and other similar activities related to software. .
+ In Clause 3, Article 9 on software industry activities:
“3. Types of software services include:
a) Administration, warranty and maintenance services of software and information systems;
b) Software quality consulting, assessment and appraisal services;
c) Consulting services, software project development;
d) Software pricing consulting services;
dd) Software technology transfer services;
e) System integration services;
g) Safety and security assurance services for software products and information systems;
h) Software product distribution and supply services;
i) Other software services”.
Pursuant to Circular No. 219/2013/TT-BTC dated December 31, 12 of the Ministry of Finance guiding the implementation of the Law on VAT and Decree No. 2013/209/ND-CP dated December 2013, 18 of the Government on detailing and guiding the implementation of a number of articles of the Law on VAT:
+ In Article 4, guidance on subjects not subject to VAT:
“21… Computer software includes software products and software services as prescribed by law”.
+ In Article 9 guidance on 0% tax rate.
+ In Article 11 guiding the 10% tax rate: "The 10% tax rate applies to goods and services not specified in Articles 4, 9 and 10 of this Circular".
Pursuant to the above provisions, the case of Mr. Hoan's company providing software products and software services as prescribed in Articles 3 and 9 of Decree No. 71/2007/ND-CP dated May 3 /5 of the Government, they are not subject to VAT according to the provisions of Article 2007 of Circular No. 4/219/TT-BTC dated December 2013, 31 of the Ministry of Finance.
In case the company provides products and services that are not specified in Clause 3, Article 9 of Decree No. 71/2007/ND-CP dated May 3, 5 of the Government, they are subject to VAT at the rate of VAT. VAT is 2007% as prescribed in Article 10 of Circular No. 11/219/TT-BTC dated December 2013, 31 of the Ministry of Finance.
Hoan suggested that based on the actual situation, compare legal documents to comply with regulations. During the implementation process, if you still have problems, please provide documents related to the problem and contact the tax authority directly managing it for specific instructions.
Is software produced and leased by the company taxable?
Software rental do Company that produces or buys out If it is not a software service as prescribed in Clause 3, Article 9 of Decree 71/2007/ND-CP dated May 03, 5 of the Government, then this activity is subject to VAT at the rate of 2007%.
Original article: Is software produced and leased by a company taxable?
Complying with regulations and following the right process not only helps you avoid legal risks, but also contributes to the transparency and financial health of your business.
Doing the above is not easy for businesses, the effective solution is to use a professional service: Cooperate with a financial, accounting and tax expert to ensure you follow the correct process and comply with the regulations. legislation.
See detailed information about our services in the article