Is the provision of insurance services for imported goods subject to VAT in Vietnam?

Is the provision of insurance services for imported goods subject to VAT in Vietnam?

Pursuant to the provisions of Article 9 of Circular 219/2013/TT-BTC regarding the 0% tax rate applicable to goods and services as follows:

0% Tax Rate

1. The 0% tax rate applies to exported goods and services; construction and installation activities of projects overseas and in non-tariff areas; international transportation; goods and services not subject to VAT upon export, except for cases where the 0% tax rate does not apply as guided in Clause 3 of this Article.

Exported goods and services are those sold and provided to organizations and individuals abroad and consumed outside Vietnam; sold and provided to organizations and individuals in non-tariff zones; goods and services provided to foreign customers in accordance with the law.

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b) Export services include services provided directly to organizations and individuals abroad and consumed outside Vietnam; provided directly to organizations and individuals in non-tariff zones and consumed in non-tariff zones.

Individuals abroad are foreigners not residing in Vietnam, Vietnamese nationals residing abroad and outside Vietnam during the provision of the service. Organizations and individuals in non-tariff zones are those with business registration and other cases as stipulated by the Prime Minister.

In cases where services are provided and the provision occurs both in Vietnam and abroad, but the service contract is signed between two taxpayers in Vietnam or with a permanent establishment in Vietnam, the 0% tax rate only applies to the value of the services performed abroad, except in cases where insurance services for imported goods are provided, the entire contract value is subject to a 0% tax rate. If the contract does not separately determine the value of the service performed in Vietnam, the taxable value is determined based on the percentage (%) of costs incurred in Vietnam over total costs.

The business providing the service being a taxpayer in Vietnam must have documents proving the service performed abroad.

Example 45: Company B enters into a contract with Company C for advisory, survey, and design services for an investment project in Cambodia by Company C (Company B and Company C are Vietnamese enterprises). The contract incurs services performed in Vietnam and services performed in Cambodia, the value of services performed in Cambodia is subject to a 0% VAT rate; for the service revenue realized in Vietnam, Company B must declare and calculate VAT as stipulated.

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Therefore, the provision of insurance services for imported goods is subject to a 0% tax rate on the entire contract value.

Provision of insurance services for imported goods in Vietnam (Image from the Internet)

What is the basis for calculating VAT on the provision of insurance services for imported goods in Vietnam?

Pursuant to the provisions of Article 6 of Circular 219/2013/TT-BTC, the basis for calculating VAT on the provision of insurance services for imported goods is the taxable value and the tax rate.

When is the time to determine VAT on the provision of insurance services for imported goods in Vietnam?

Pursuant to the provisions of Article 8 of Circular 219/2013/TT-BTC regarding the time to determine VAT as follows:

Time to Determine VAT

1. For the sale of goods, it is the time of transfer of ownership or usage rights of goods to the buyer, irrespective of whether payment has been received or not.

2. For the provision of services, it is the time of completion of the service provision or the time of issuance of the service provision invoice, irrespective of whether payment has been received or not.

For telecommunications services, it is the time of finalizing connection service charges according to the business contract between telecommunications service providers, but not exceeding 2 months from the month the connection service charges arise.

3. For electricity and water supply activities, it is the time of reading consumption indicators on meters to record on billing invoices.

4. For real estate activities, infrastructure construction, and housing construction for sale, transfer, or lease, it is the time of payment collection according to project implementation progress or payment schedule in the contract. The business bases on the amount collected to declare output VAT arising during the period.

5. For construction and installation, including shipbuilding, it is the time of acceptance and handover of works, project items, completed volume of construction and installation, irrespective of whether payment has been received or not.

6. For imported goods, it is the time of customs declaration registration.

Thus, the time to determine VAT on the provision of insurance services for imported goods is the time of completion of the service provision or the time of issuance of the service provision invoice, irrespective of whether payment has been received or not.