Are goods sold to special economic zones subject to export duty in Vietnam?
Are goods sold to special economic zones subject to VAT in Vietnam?
Pursuant to the provisions in Clause 20, Article 4 of Circular 219/2013/TT-BTC regarding goods not subject to VAT as follows:
Objects not subject to VAT
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20. Transshipped goods, goods in transit through Vietnamese territory; temporarily imported goods for re-export; temporarily exported goods for re-import; imported materials and supplies for the production and processing of goods for export under manufacturing and processing contracts with foreign parties.
Goods and services purchased and sold between foreign countries and non-tariff zones and amongst non-tariff zones.
Non-tariff zones include: export processing zones, export processing enterprises, bonded warehouses, tax-protected zones, customs warehouses, special economic zones, commercial-industrial zones, and other economic areas established and entitled to tax incentives as non-tariff zones pursuant to the Prime Minister's Decision. Sales and exchanges of goods between these zones and the outside are considered export-import activities.
Documents and procedures for determining and handling exemptions from VAT in these cases are guided by the Ministry of Finance regarding customs procedures; customs inspection and supervision; export tax, import tax, and tax management for export and import goods.
Therefore, a special economic zone is regarded as a non-tariff zone, so goods sold to these zones are not subject to VAT.
However, according to Clause 1, Article 9 of Circular 219/2013/TT-BTC:
VAT Rate of 0%
1. The 0% VAT rate applies to exported goods and services; construction and installation activities foreign countries and in non-tariff zones; international transport; goods and services not subject to VAT when exported, except for cases where the 0% VAT rate does not apply as guided in Clause 3 of this Article.
Exported goods and services are goods and services sold, provided to organizations and individuals abroad and consumed outside of Vietnam; sold and provided to organizations and individuals in non-tariff zones; goods and services supplied to foreign customers as per legal regulations.
a) Exported goods include:
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- Goods sold to non-tariff zones as stipulated by the Prime Minister; goods sold to duty-free shops;
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As a result, goods sold to special economic zones are considered exported goods and are eligible for the 0% VAT rate (provided they do not fall into exceptions that do not apply the 0% VAT rate as regulated in Clause 3, Article 9 of Circular 219/2013/TT-BTC, amended by Clause 5, Article 1 of Circular 26/2015/TT-BTC and further amended by Clause 2, Article 1 of Circular 130/2016/TT-BTC).
What are the conditions to apply the 0% VAT rate for goods sold to special economic zones in Vietnam?
For goods sold to special economic zones, the following conditions at Clause 2, Article 9 of Circular 219/2013/TT-BTC must be met to apply the 0% VAT rate:
- There is a contract for the sale or processing of exported goods or commission-based export;
- There are documents evidencing the payment for exported goods through bank transfer and other documents as required by law;
- A customs declaration must be available as stipulated in Clause 2, Article 16 of this Circular.
In cases where goods are sold with a delivery and receipt location outside of Vietnam, the business entity (seller) must have documentation proving the delivery and receipt of goods outside of Vietnam, such as:
+ A purchase contract signed with an overseas seller;
+ A sales contract signed with the buyer;
+ Documents proving the delivery and receipt of goods outside of Vietnam, such as an international commercial invoice, bill of lading, packing list, certificate of origin, etc.;
+ Bank payment documents including bank transfer documents of the business entity paying the overseas seller;
+ Bank payment documents of the buyer paying the business entity.
Are goods sold to special economic zones subject to export duty in Vietnam? (Image from the Internet)
Are goods sold to special economic zones subject to export duty in Vietnam?
Based on Article 2 of the Law on Export and Import Duties 2016, the objects subject to export and import duties are as follows:
Objects Subject to Duties
- Goods exported or imported through Vietnamese customs ports and borders.
- Goods exported from the domestic market into non-tariff zones and goods imported from non-tariff zones into the domestic market.
- Goods exported, imported on the spot, and goods exported, imported by enterprises exercising export, import rights, and distribution rights.
- Export and import duty subjects do not apply to the following cases:
a) Goods in transit, transshipment, and intermediary transportation;
b) Humanitarian aid goods and non-refundable aid goods;
c) Goods exported from non-tariff zones abroad; goods imported from abroad into non-tariff zones and only used within the non-tariff zones; goods transferred from one non-tariff zone to another;
d) Oil used to remit resource tax to the state upon export.
- the Government of Vietnam provides detailed regulations for this Article.
Therefore, goods sold to special economic zones are subject to export duties as per legal regulations.
