Ministry of Finance: There is no regulation on VAT exemption for electricity and water in rural areas.

Recently, voters in Lang Son and Hai Duong requested competent authorities to consider and research policies to exempt value-added tax (VAT) on electricity for lighting for people living in rural areas and exempt VAT on tap water prices for people.

Regarding this issue, the Ministry of Finance said that VAT on goods and services is regulated in the Law on VAT. At the same time, VAT is collected on goods and services, regardless of the purpose, subject and area of consumption. The Law also does not have regulations on VAT exemption or reduction.

The Ministry of Finance does not have regulations on tax exemption for electricity and water supply in rural areas, picture 1. — The Tax Law does not provide for exemption from electricity and water taxes in rural areas. (Photo: EVN)

According to the Ministry of Finance, according to the current VAT Law, electricity (regardless of purpose, user, consumption area in rural or urban areas) is subject to a VAT rate of 10% and clean water for production and daily life is subject to a VAT rate of 5% (a preferential tax rate compared to the normal tax rate of 10%).

The Ministry of Finance said that the proposal to prescribe different tax rates according to the purpose of use, the subject of use, and the location of use of goods and services for the same type of goods or services would be very difficult for policy implementation as well as tax collection management. Therefore, it is recommended that voters comply with current regulations.

The Ministry of Finance said that citing the Electricity Law and documents guiding the Electricity Law, to minimize the impact of electricity price increases on social security, the State has had appropriate support policies for beneficiaries who are households using less than 50 kWh/month to enjoy a selling price equal to 92% of the average electricity price.

Poor households and social policy households are supported with electricity bills equivalent to the cost of using 30 kWh calculated according to the current retail price of household electricity level 1.

Source