Is the tax for insurance brokerage businesses subject to value added tax for insurance services that are not subject to value added tax?

The concept of value-added tax under Vietnamese law?

According to the provisions of Article 2 of the Law on Value-Added Tax 2008, value-added tax is a tax calculated on the added value of goods and services. arising in the process from production, circulation to consumption.

Which type of insurance is not subject to value added tax?

Clause 1 Article 4 Circular 09/2011/TT-BTC regulates subjects not subject to value added tax as follows:

– Life insurance, health insurance, child accident insurance people in life insurance packages; learner insurance; Accident insurance for sailors and seafarers; Personal accident insurance (including accident and life insurance, combined with hospitalization); passenger accident insurance; traveler insurance; Accident insurance for driver, assistant and passengers; maternity insurance; Surgical hospitalization insurance; personal life insurance; electricity user insurance; workers’ compensation insurance, health insurance and other insurance related to people and human health care;

– Livestock insurance, crop insurance and other agricultural insurance services;

– Reinsurance;

– Training insurance agents;

– Insurance for oil and gas projects, equipment, and oil tankers of foreign nationality hired by foreign oil and gas contractors or subcontractors to operate in Vietnam’s exclusive economic waters, overlapping sea areas that Vietnam and countries with adjacent or opposite coastlines have agreed to place under a joint exploitation regime.

In which cases do businesses not have to declare and calculate and pay value added tax? increase?

Article 5 of Circular 219/2013/TT-BTC stipulates as follows:

“Article 5. Cases where VAT declaration and payment are not required

1. Organizations and individuals receive monetary compensation (including compensation for land and assets on land when land is recovered according to the decision of a competent state authority), bonuses; support money, emission rights transfer money and other financial revenues.

When business establishments receive compensation money, bonuses, support money received, emission right transfer money and other financial revenues, they must prepare revenue documents according to regulations. For business establishments that spend money, based on the purpose of payment, prepare payment vouchers.

…

In case a business establishment receives money from an organization or individual to perform services for the organization or individual such as repair, warranty, promotion, advertising, it must declare and pay taxes according to regulations. regulations.

…

Example 15: ABC Dairy Joint Stock Company spends money on distributors (business organizations and individuals) to carry out promotional programs (in accordance with the law on trade promotion activities), marketing, and displaying products for the Company (distributors receive this money to perform services for the Company), then when receiving money, the distributor is the payer. VAT according to the deduction method creates a VAT invoice and calculates VAT at the tax rate of 10%, in case the distributor is a person paying VAT according to the direct method, use the sales invoice and determine the tax amount payable according to the ratio (%) on revenue according to regulations.

…

7. Other cases:

Business establishments do not have to declare and pay taxes in the following cases:

…d) Revenue from goods and services sold by agents and commission revenue from agency activities selling at the prescribed price of the principal to receive commissions of services: postal, telecommunications, selling lottery tickets, plane tickets, cars, trains, ships; international shipping agent; agents of aviation and maritime services that are subject to the 0% VAT rate; insurance sales agent.

Pursuant to the above regulations, in case an insurance company signs insurance agency contracts with organizations (hereinafter collectively referred to as “insurance agents”), the monetary support insurance agents receive from the company to perform services for the company (such as advertising, marketing and sales…) is subject to value-added tax. Insurance agents must issue value-added invoices, declare and pay value-added tax at the tax rate of 10% according to regulations.

In cases where insurance agents receive support from Companies without directly providing the above services to the Company, the amount of money received by insurance agents is not required to declare and pay value added tax. Insurance agents base on the amount received to prepare collection documents according to regulations.

Do insurance brokerage businesses that are not subject to tax have to issue value-added invoices?

According to the provisions of Point i, Clause 2, Article 9 of Circular 09/2011/TT-BTC, regulations on invoices and documents for purchase and sale of goods and services are as follows:

For insurance service brokerage businesses insurance whose insurance services are not subject to value-added tax, insurance agents are organizations that receive insurance agent commissions, they must issue a value-added invoice, on the invoice clearly stating the brokerage amount, the amount of commission received, the tax rate line, and value-added tax not written or crossed out.

Accordingly, an insurance brokerage enterprise whose insurance is not subject to tax will also not be subject to tax on insurance agency commissions, and will issue invoices with tax rates without lines or crosses. As for insurance brokerage businesses that are not subject to tax, they still have to pay tax on commissions as usual.