THE MINISTRY OF FINANCE
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No. 111/2005/TT-BTC
Hanoi, December 13, 2005
 
CIRCULAR
GUIDING VALUE ADDED TAX AND ENTERPRISE INCOME TAX FOR INSURANCE BUSINESS
Pursuant to Value Added Tax (VAT) Law No. 02/1997/QH9 of May 10, 1997 and Law No. 07/2003/QH11 of June 17, 2003, amending and supplementing a number of articles of the VAT Law, and their guiding documents;
Pursuant to Enterprise Income Tax (EIT) Law No. 09/2003/QH11 of June 17, 2003 and its guiding documents;
Pursuant to Insurance Business Law No. 24/2000/QH10 of December 9, 2000 and its guiding documents;
Pursuant to the Government’s Decree No. 77/2003/ND-CP of July 1, 2003 defining the functions, tasks, powers and organizational structure of the Finance Ministry;
The Finance Ministry hereby provides guidance on VAT and EIT for insurance business as follows:
I. SUBJECTS OF REGULATION
Subjects of regulation are organizations and individuals engaged in insurance business and governed by the VAT Law, the EIT Law and the Ordinance on Income Tax on High-Income Earners under the guidance in this Circular, including:
- Insurance enterprises, insurance brokerage enterprises, reinsurance enterprises operating under the Insurance Business Law (including both domestic and foreign-invested enterprises licensed to operate in Vietnam);
- Organizations and individuals operating as insurance agents that meet the conditions stipulated in the Insurance Business Law.
II. ON VAT
1. VAT-liable objects
Insurance services and other goods and services used for production, business and/or consumption in Vietnam (except for services not liable to VAT specified at Point 2 of this Circular) shall all be liable to VAT, including:
- Non-life insurance services (except those specified at Point 2 below);
- Expertise, indemnity consideration, third party’s refund-claiming agency services;
- Other goods and services liable to VAT under the provisions of the VAT law.
2. Objects not liable to VAT
The following insurance services shall not be liable to VAT:
- Life insurance; pupil insurance and human insurance services such as insurance for seafarer, crewmember and human accidents (covering also accident insurance, life-cum-hospitalization insurance), passenger accident insurance, tourist insurance, insurance for drivers, assistant drivers and people onboard vehicles, insurance for persons on sterilization, post-operation hospitalization insurance, personal life insurance and other human-related insurance.
- Insurance for domestic animals, plants and other agricultural insurance services;
- Social, health, labor and unemployment insurance;
- Insurance services provided for means of international transport such as for ship hulls or fuselages, for civil liabilities of ship owners or for general civil liabilities for airplanes.
A means of international transport is the one whose international transport turnover represents over 50% of its total turnover in a year; if it is an airplane, the number of international flight hours of such plane must represent over 50% of its total flight hours in a year.
- Insurance for petroleum works and equipment (including oil tankers bearing foreign nationalities), which are hired by oil and gas contractors or sub-contractors for operation in Vietnam’s exclusive economic sea areas (including contiguous areas subject to the common exploitation regime already agreed between Vietnam and foreign countries with adjacent or opposite seashores);
- Insurance for exports transported by land, sea, river, railway or air; crude oil sold to foreign countries;
- Reinsurance overseas;
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