Are value-added tax invoices issued for indirect exports for a tax refund in Vietnam?

What goods are included in the indirect exports in Vietnam?

Based on the provisions of Clause 1, Article 86 of Circular 38/2015/TT-BTC, indirect export include:

- Processed products; leased or borrowed machinery and equipment; excess materials and supplies; scraps and waste products under processing contracts as stipulated in Clause 3, Article 32 of Decree 187/2013/ND-CP (however, this clause has expired and was replaced by Clause 3, Article 42 of Decree 69/2018/ND-CP);

- Goods traded between domestic enterprises and export processing enterprises, enterprises in non-tariff zones;

- Goods traded between Vietnamese enterprises and foreign organizations or individuals without presence in Vietnam, designated for delivery and receipt with other enterprises in Vietnam by foreign traders.

Are value-added tax invoices issued for indirect exports for a tax refund in Vietnam?

According to the provisions in Clause 2, Article 17 of Circular 219/2013/TT-BTC regarding the conditions for input VAT refund for indirect export under the law as follows:

Conditions for deducting and refunding input VAT for certain goods considered as exports

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2. Indirect export as stipulated by law:

a) Sales contract or processing contract specifying delivery in Vietnam;

b) Customs declaration for on-the-spot export-import goods that have completed customs procedures;

c) Value-added tax invoice or export invoice clearly stating the foreign buyer's name, name of the enterprise receiving goods, and delivery location in Vietnam;

d) Goods sold to foreign traders but delivered in Vietnam must be paid through the bank in freely convertible foreign currency. Bank payment documents following the guidance in Clause 3, Article 16 of this Circular. If the on-the-spot importer is authorized by the foreign side to pay the on-the-spot exporter, then the payment currency is according to the regulations of the foreign exchange law.

dd) indirect export of enterprises with foreign investment must comply with the regulations in the investment license.

Thus, indirect export by law must issue a value-added tax invoice clearly stating the foreign buyer's name, the name of the enterprise receiving goods, and the delivery location in Vietnam to be eligible for input VAT refund.

Note:

- For business establishments with indirect export confirmed by Customs authorities (for export goods) but lacking complete procedures and documents for each specific case, no output VAT needs to be calculated but input VAT cannot be deducted.

- Especially for indirect export, if any required procedure or document is missing, VAT must be calculated and paid as for domestically consumed goods.

- For business establishments providing export services that do not meet conditions for bank payment or are considered equivalent to bank payment, the 0% VAT rate cannot be applied, output VAT does not need to be calculated but input VAT cannot be deducted.

Are value-added tax invoices issued for indirect exports for a tax refund in Vietnam? (Image from the Internet)

Shall 0% VAT rate be applied to indirect export in Vietnam?

Based on the provisions in Point a, Clause 1, Article 9 of Circular 219/2013/TT-BTC regarding the 0% tax rate as follows:

0% Tax Rate

1. The 0% tax rate: is applied to exported goods and services; construction and installation activities abroad and in non-tariff zones; international transportation; goods and services not subject to VAT when exported, except for cases not applying the 0% tax rate as guided in Clause 3 of this Article.

Exported goods and services are those sold and provided to organizations and individuals overseas and consumed outside Vietnam; sold and provided to organizations and individuals in non-tariff zones; goods and services supplied to foreign customers according to legal regulations.

a) Export goods include:

- Goods exported abroad, including consigned exports;

- Goods sold into non-tariff zones as per regulations by the Government of Vietnam; goods sold to duty-free shops;

- Goods sold with the point of delivery and receipt outside Vietnam;

- Spare parts and materials used for repair and maintenance of vehicles, machinery, and equipment for foreign parties and consumed outside Vietnam;

- Cases considered as exports under the law:

+ Goods processed and transferred under commercial law regarding activities of buying and selling goods internationally and agency activities related to buying, selling, and processing goods with foreign countries.

+ indirect export under legal provisions.

+ Goods exported for sale at fairs and exhibitions abroad.

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Thus, indirect export as stipulated by law can be applied the 0% VAT rate.