Official Letter 825/TCT-CS 2025 on Value Added Tax Policy.

To: Tax Department of Kon Tum Province

The General Department of Taxation has received Official Letter No. 1082/CTKTU-TTHT dated July 2, 2024, from the Tax Department of Kon Tum Province regarding Value Added Tax (VAT). On this matter, after consulting with the Ministry of Construction and the Ministry of Public Security, the General Department of Taxation provides the following opinions:

• Pursuant to Clause 12, Article 5 and Clause 3, Article 8 of the VAT Law No. 13/2008/QH12 dated June 3, 2008, of the National Assembly, which regulates exempt items and the 10% tax rate;

• Pursuant to Clause 12, Article 4 and Article 11 of Circular No. 219/2013/TT-BTC dated December 31, 2013, of the Ministry of Finance, guiding the implementation of the VAT Law and Decree No. 209/2013/ND-CP dated December 18, 2013, of the Government, detailing and guiding the implementation of some provisions of the VAT Law regarding exempt items and the 10% tax rate;

• Pursuant to Decree No. 06/2021/ND-CP dated January 26, 2021, of the Government, detailing some contents on quality management, construction, and maintenance of construction works;

Regarding the issue raised by the Tax Department of Kon Tum Province, the General Department of Taxation had sent Official Letter No. 4663/TCT-CS dated October 18, 2024, to the Ministry of Construction for opinions, and Official Letter No. 6287/TCT-CS dated December 26, 2024, to the Ministry of Public Security for opinions (attached copy).

The Ministry of Construction has responded with Official Letter No. 6018/BXD-GD dated October 25, 2024, to Official Letter No. 4663/TCT-CS dated October 18, 2024, and the Ministry of Public Security has responded with Official Letter No. 331/H02-P2 dated January 24, 2025, to Official Letter No. 6287/TCT-CS dated December 26, 2024, from the General Department of Taxation (attached copy).

Based on the above provisions and the opinions from the Ministry of Public Security, the Tax Department of Kon Tum Province is requested to study and guide the Kon Tum Provincial Police to comply with the legal provisions of VAT law.

The General Department of Taxation has provided this response for the Tax Department of Kon Tum Province to be informed.

To: The General Department of Taxation

The Ministry of Construction has received Official Letter No. 4663/TCT-CS dated October 18, 2024, from the General Department of Taxation regarding the VAT policy, in which it "requests the Ministry of Construction to provide an opinion on whether the construction works funded by social welfare sources mentioned in the letter from the Tax Department of Kon Tum Province are considered public works as defined in Decree No. 06/2021/ND-CP." Based on the construction laws regarding the classification of construction works, the Ministry of Construction provides the following opinion:

1. According to Clause 1, Article 3 of Decree No. 06/2021/ND-CP, the classification of construction works is based on the structure and functional use of the works. Classification does not depend on the source of funding for the construction of the works.

2. According to Section VI, Appendix I of Decree No. 06/2021/ND-CP, works serving national defense and security are those with a structural form like buildings or other structures used for facilities, utilities, or structures that serve national defense and security purposes. The Ministry of National Defense and the Ministry of Public Security provide detailed regulations on the types of works for national defense and security.

This is the opinion of the Ministry of Construction. The General Department of Taxation is requested to study and consult with the Ministry of Public Security for further guidance.

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⁽¹⁾ Based on the 2014 Construction Law, the 2020 Amendments to the Construction Law, Decree No. 06/2021/ND-CP dated January 26, 2021, from the Government, detailing some contents on quality management, construction, and maintenance of construction works, and Decree No. 35/2023/ND-CP dated June 20, 2023, from the Government, amending and supplementing some provisions of Decrees within the scope of the Ministry of Construction's state management.

To: The Ministry of Construction

The General Department of Taxation has received the official letters from the Kon Tum Police Department and the Kon Tum Tax Department regarding VAT policy (copies attached). Regarding this issue, the General Department of Taxation would like to discuss the following points with your esteemed Ministry:

• According to Clause 12, Article 5 of the VAT Law No. 13/2008/QH12 dated June 3, 2008, the objects not subject to VAT include:

  “Maintenance, repair, and construction funded by public contributions or humanitarian aid for cultural, artistic, public service, infrastructure works, and housing for policy beneficiaries.”

• According to Clause 12, Article 4 of Circular No. 219/2013/TT-BTC dated December 31, 2013, of the Ministry of Finance, guiding VAT exemptions:

  “Article 4. Objects not subject to VAT

  ....

  12. Maintenance, repair, and construction funded by public contributions (including contributions and donations from organizations or individuals), or humanitarian aid for cultural, artistic, public service works, infrastructure, and housing for policy beneficiaries.

  If other funds are used aside from public contributions or humanitarian aid, and if these other funds do not exceed 50% of the total funding for the work, the entire value of the work is exempt from VAT.

  If other funds are used and exceed 50% of the total funding, the entire value of the work is subject to VAT.

  Policy beneficiaries include: individuals with merit under the law on people with merit; social welfare beneficiaries receiving state subsidies; poor households, near-poor households, and other cases according to legal provisions."

• According to Clause 2, Section I of Appendix I of Decree No. 06/2021/ND-CP dated January 26, 2021, on classification of public works:

  “I. CIVIL WORKS (CIVIL CONSTRUCTION)

  Civil works are structures in the form of buildings or other structures (which can be a standalone structure or a complex of works) serving human activities and needs such as housing, learning, teaching, working, business, sports training and competitions, large gatherings, eating, leisure, entertainment, sightseeing, enjoying arts, performances, sports events, communications, medical services, religious and spiritual activities, and other public services, including:

  ....

  2. Public Works:

  ...

  g) Service works:

  • Hotels, guesthouses, inns; resorts; villas, apartments, and other lodging facilities;
  • Freestanding billboards; post offices, postal service facilities, and other telecommunication services.

  h) Offices, working spaces:

  • Buildings used as offices and working spaces for government agencies and political organizations;
  • Buildings used as offices for social-professional organizations, enterprises, and other entities;
  • Buildings used as office-cum-lodging spaces."

• According to Clause 3, Article 8 of the VAT Law No. 13/2008/QH12 dated June 3, 2008:

  “A tax rate of 10% applies to goods and services not specified in Clauses 1 and 2 of this Article.”

• According to Article 11 of Circular No. 219/2013/TT-BTC dated December 31, 2013, of the Ministry of Finance, on the 10% VAT rate:

  “Article 11. 10% Tax Rate

  A 10% tax rate applies to goods and services not specified in Articles 4, 9, and 10 of this Circular.”

Based on the VAT Law and related regulations, construction of cultural, artistic, public service works, infrastructure, and housing for policy beneficiaries using public contributions (50% or more of the total funding for the work) or humanitarian aid is exempt from VAT.

The General Department of Taxation finds that VAT law and related regulations do not have specific provisions on public service works; Decree No. 06/2021/ND-CP dated January 26, 2021, from the Government on quality management, construction, and maintenance of construction works only regulates public works. Additionally, according to the report of the Kon Tum Police Department on page 2 of Official Letter No. 2595/CAT-PH10 (attached), the content states: “Implementing Resolution No. 12/NQ-TW dated March 16, 2022, of the Politburo on strengthening the building of a truly clean, strong, regular, elite, and modern People's Police force to meet new requirements and tasks” and Resolution No. 12-NQ/DUCA dated July 25, 2022, of the Party Committee of the Ministry of Public Security on the continued construction of commune-level police forces to meet the new situation's requirements.” This is to ensure stable working and living conditions for police officers in remote areas, enhancing their ability to maintain security and order while supporting local socio-economic development. Therefore, the construction of police headquarters as housing for the police force funded by social welfare sources can be considered a public service work.

To provide guidance for applying VAT policy, the General Department of Taxation respectfully requests the Ministry of Construction to clarify whether the construction of works from social welfare sources, as mentioned in the letter from the Kon Tum Tax Department, is considered a public service work under Decree No. 06/2021/ND-CP.

Your Ministry's response is requested by October 21, 2024, and should be sent to the General Department of Taxation at No. 1A Nguyen Cong Tru, Hai Ba Trung District, Hanoi. For direct contact, please reach Specialist Nguyen Thi Minh Tam at phone: 0819797889 or email: ntmtam02@gdt.gov.vn.

The General Department of Taxation appreciates your cooperation.

To: The General Department of Taxation

On December 30, 2024, the Ministry of Public Security received Document No. 6287/TCT-CS dated December 26, 2024, from the General Department of Taxation regarding VAT policy. After reviewing the content, the Construction and Barracks Management Department of the Ministry of Public Security has the following comments:

According to Clause 1, Article 3 of Decree No. 06/2021/ND-CP dated January 26, 2021, detailing some contents on quality management, construction, and maintenance of construction works:

“1. Based on the structure and purpose of use, construction works are classified as follows:

a) According to the structural type, construction works are classified into types such as: buildings (houses); bridges, roads, tunnels, ports; pillars, towers, reservoirs, silos, retaining walls, dikes, dams, embankments; pipeline structures; other structures;

b) According to the purpose of use, construction works are classified into types such as: works for civil purposes, works for industrial production purposes; works providing infrastructure facilities and utilities; works serving transportation; works for agricultural production and rural development; works for national defense and security purposes…”

Therefore, the classification of construction works is based on the structural type and the intended use of the works, and not based on the investment source. The police headquarters and barracks housing for commune-level police are buildings with a house-like structure, serving the purpose of ensuring security.

At the same time, according to Article 78 of the 2024 Land Law, regarding land recovery for national defense and security purposes, there are no provisions for land recovery for public service works.

Based on the above information, the construction of police headquarters and barracks housing for commune-level police still falls under the category subject to VAT.

The Construction and Barracks Management Department of the Ministry of Public Security shares the above content for the General Department of Taxation’s awareness and implementation.