Perfecting VAT regulations for public transport

Currently, Clause 16, Article 5 of the Law on Value Added Tax stipulates: “Public passenger transport by bus, tram, inland waterway vehicle” is not subject to value added tax. However, the concept and scope of specific application for each type of transport are not yet clearly defined, leading to inconsistent understanding and implementation in practice.

According to the Ministry of Finance, in Clause 16, Article 3 of the draft Decree guiding the Law on Value Added Tax, the proposed clarification is: "Public passenger transport by bus, tram, inland waterway vehicles carried out within the province, in urban areas and on neighboring routes outside the province with stops to pick up and drop off passengers".

This regulation inherits the understanding in Decision No. 13/2015/QD-TTg of the Prime Minister on developing public passenger transport by bus, and at the same time extends its application to other modes of transport such as trams and inland waterway vehicles.

In the Draft Submission of the Decree detailing the implementation of a number of articles of the Law on Value Added Tax sent to the Government, the Ministry of Finance affirmed that the issuance of detailed regulations is necessary to properly implement the contents assigned by the National Assembly in the Law, and at the same time "overcome difficulties arising in the process of implementing the law on value added tax in the past; remove inadequacies and overlaps in the legal system and ensure consistency and synchronization with related laws".

The Ministry of Finance also emphasized that the new regulation does not create administrative procedures or compliance costs for taxpayers, ensuring stability, transparency and efficiency in policy implementation. This is especially important in the context of the Government's efforts to reform administrative procedures, promote electronic tax management and create favorable conditions for businesses to operate in accordance with the law and pay taxes fully and promptly.

Not only having legal and technical significance, the completion of the value-added tax policy for public transport is also considered a tool to support the development of sustainable transport infrastructure, reduce pressure on urban traffic, promote green travel models and contribute to improving the quality of the living environment.

Legally, this content is within the scope assigned by the Government to the Ministry of Finance to preside over the development according to Decision No. 1610/QD-TTg dated December 19, 2024. The draft Decree is drafted in the spirit of inheriting the regulations that are operating stably, while updating necessary changes to conform to international practices and practices.

In the submission, the Ministry of Finance also stated: “The detailed regulations are a solution in line with the authority assigned by the National Assembly and are necessary to ensure transparency and feasibility in practice. This is a concrete step, contributing to perfecting the legal framework on value-added tax, promoting the development of public passenger transport, contributing to improving the quality of life of people and protecting the urban environment.”

Source: https://nhandan.vn/hoan-thien-quy-dinh-thue-gia-tri-gia-tang-voi-van-tai-cong-cong-post872336.html