VAT policy for educational activities

Many businesses operating in the fields of education and training are wondering about the tax policies applicable to their units, whether there are corporate income tax incentives or not? Or is VAT deductible? This is an issue that many accountants are interested in. In the following article, Smart Solutions For Business Company Limited (S4B Vietnam) would like to share with you about VAT policy for educational activities.

1. Preferential tax rates for educational activities

Preferential tax rate of 10% throughout the operating period is applied to: Enterprise income from socialization activities in the fields of education – vocational training, health, culture, sports and environment. school (called the field of socialization).In the list of types, scale criteria and standards of enterprises implementing socialization are implemented according to the list decided by the Prime Minister.

Tax exemption for 4 years, 50% reduction of tax payable within the next 5 years on business income from implementing new investment projects in the field of socialization implemented in the area that is not on the list of localities. Tables with difficult socio-economic conditions or extremely difficult conditions prescribed by the state.

VAT on Education: implications, exemptions and penalties

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2. VAT on educational activities

Vocational teaching according to the provisions of law including teaching foreign languages, information technology, teaching dance and singing, painting, and professional knowledge: This is an object not subject to VAT.

Input VAT deductible:

  • Goods and services used for production, business, and services subject to VAT are fully deductible, including input VAT without compensation for lost VATable goods.
    And input VAT on goods and services (including fixed assets) used simultaneously for the production and sale of goods and services used for the production and sale of goods and services subject to VAT.

If the company has teaching and vocational activities according to the provisions of law, this activity is not subject to VAT. The company is only allowed to deduct input VAT on goods and services used for the production and sale of goods and services subject to VAT.

3. Things to note when doing accounting in the education sector

First: When receiving tuition fees from students, issue an invoice.
Second: Enterprises are not subject to VAT, accountants still declare VAT monthly.
Third: In case personal income tax (PIT) arises, make a monthly or quarterly personal income tax report. If there is no Personal Income Tax, then at the end of the year, finalize Personal Income Tax and pay it.

Value Added Tax (VAT) in Vietnam

4. Accounting for educational companies

4.1. Duties of educational company accountants

Education company accountants are responsible for completing the following tasks:

  • Check documents and records accurately. Update the system and store documents to facilitate data retrieval when needed;
  • Analyze, reflect, propose solutions, or solutions if there are errors in documents;
  • Calculate and reflect properly the arising operations of the business, report costs such as: Cost of machinery and equipment, cost of learning tools, training costs, management costs… .;
  • Calculate product cost, cost price, selling price, revenue and profit. Prepare reports and reflect revenue and determine correct business results;
  • Monitor and manage financial revenues and expenditures, collection obligations and debt payments. Manage and inspect the use of assets, detect and prevent violations of financial and accounting laws;
  • Tax declaration and bookkeeping. Financial statements;
  • Prepare short, medium and long-term accounting and financial plans;
  • Arrange accounting information in an orderly and systematic manner. Preserve and store records and documents related to accounting and finance according to the provisions of law.

To fulfill responsibilities and successfully complete tasks, education company accountants need to clearly understand how to account in detail for the following operations:

  • Accounting for money and supplies;
  • Accounting for tools and fixed assets;
  • Accounting for salaries and insurance;
  • Accounting for revenues and funding sources;
  • Accounting for expenses;
  • Transferring operations, preparing books and financial reports.

4.2 Some errors in performing accounting work at educational companies

In the process of performing accounting work, accountants of educational companies need to pay attention to avoid making the following errors:

  • Issue an invoice when receiving tuition with the tax rate crossed out and not fully recorded according to the service provided by the company;
  • Self-determine tax incentive conditions, preferential tax rates, tax exemption period, tax reduction, loss amount to be deducted (-) from taxable income to declare and settle taxes with tax authorities;
  • Not subject to VAT, but still declare VAT;
  • Failure to declare personal income tax according to regulations.

Note: The company collects a lot of individual tuition money into the company account, but if you do not issue an output invoice, you will be heavily fined and have taxes collected.

Above, Smart Solutions For Business Company Limited(S4B Vietnam) has informed you about the latest VAT policy for educational activities. Thank you for reading!

S4B Vietnam

  • Address: Unit 602A, Tower A, Handi Resco Office Building. 521 Kim Ma Street, Ba Dinh District, Hanoi
  • Tel: + 84 24 3974 4181
  • Email: service@s4b.com.vn

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