Shall imports sent via express delivery services under 1,000,000 VND be subject to VAT in Vietnam?

Shall imports sent via express delivery services under 1,000,000 VND be subject to VAT in Vietnam?

According to Decision 78/2010/QD-TTg of 2010 of the Prime Minister of the Government of Vietnam, which provides guidance on the value threshold for imports sent via express delivery services that are exempt from VAT, goods imported via express delivery under 1,000,000 VND are exempt from import tax and input VAT (at the import stage).

However, the Ministry of Finance recently submitted a proposal to the Prime Minister of the Government of Vietnam regarding a Draft Decision to repeal Decision 78/2010/QD-TTg of 2010. Once the repeal decision takes effect, it is expected that goods imported via express delivery under 1,000,000 VND will begin to be subject to VAT.

Download the Submission to the Prime Minister of the Government of Vietnam regarding the Draft Decision to repeal Decision 78/2010/QD-TTg of 2010 and the Draft Decision to repeal Decision 78/2010/QD-TTg of 2010 by the Ministry of Finance.

Shall imports sent via express delivery services under 1,000,000 VND be subject to VAT in Vietnam? (Image from the Internet)

When shall imports be taxable in Vietnam?

Pursuant to Article 2 of Circular 219/2013/TT-BTC which stipulates the subjects liable for VAT as follows:

Subjects Liable to Tax

Subjects liable to value-added tax (VAT) are goods and services used for production, business, and consumption in Vietnam (including goods and services purchased from foreign organizations and individuals), except for the subjects not liable to VAT as guided in Article 4 of this Circular.

Simultaneously, in accordance with the stipulations in Article 4 of Circular 219/2013/TT-BTC, as amended and supplemented by clauses 1, 2, 3 of Article 1 Circular 26/2015/TT-BTC, and further amended by points a, b of clause 1, Article 1 Circular 130/2016/TT-BTC, Article 1 Circular 25/2018/TT-BTC prescribing the objects not subject to VAT.

Thus, imports incurring VAT are goods used for production, business, and consumption in Vietnam (including goods and services purchased from foreign organizations and individuals), excluding the objects not subject to VAT as prescribed in Article 4 of Circular 219/2013/TT-BTC, specifically including the following objects:

- Breeding animals and plant varieties are not subject to VAT if imported by commercial enterprises with business licenses issued by state management agencies.

- Newspapers, journals, specialized bulletins, political books, textbooks, instructional materials, legal documents, and science-technical books, including those printed in ethnic scripts and propaganda posters, including those in tape or disc format, recorded sound, recorded image, electronic data; money, money printing.

- imports not yet domestically produced:

+ Machinery, equipment, spare parts, and materials imported for direct use in scientific research and technology development;

+ Machinery, equipment, spare parts, specialized vehicles and materials necessary for exploration, development of oil and gas fields;

+ Aircraft (including aircraft engines), rigs, and ships not yet domestically produced imported for the purpose of forming fixed assets of businesses or leased from abroad for use in production, business, leasing, or subleasing.

- Weapons, training equipment (including materials, machinery, equipment, and spare parts) specialized for national defense and security purposes that are exempt from import tax under the Export and Import Tax Law or imported according to annual quotas approved by the Prime Minister of the Government of Vietnam.

- Goods provided as humanitarian aid, non-refundable aid, and must be confirmed by the Ministry of Finance or Department of Finance.

- Goods imported as gifts to governmental agencies, political organizations, political-socio organizations, political socio-professional organizations, social organizations, social-professional organizations, and armed forces units as prescribed by the gift and donation law.

- Goods imported as gifts and donations to individuals in Vietnam according to the provisions of the law on gifts and donations.

- Goods imported as personal belongings of foreign organizations and individuals subject to diplomatic privileges under the laws on diplomatic privileges.

- Goods imported as personal belongings of overseas Vietnamese returning to the homeland.

- Goods imported in the form of exempted luggage under duty-free standards;

- Goods sold to foreign organizations or individuals, or international organizations for humanitarian aid, non-refundable aid to Vietnam.

- Goods temporarily imported for re-export; goods temporarily exported for re-import; imported raw materials and materials for producing and processing goods for export under production contracts and processing export contracts signed with foreign parties.

- Raw materials, materials imported for producing and processing goods for export under production contracts and processing export contracts signed with foreign parties.

- Gold in the form of bars, ingots not yet processed into fine art products, jewelry or other items.

How is the VAT calculated for imports in Vietnam?

According to clause 2, Article 7 of Circular 219/2013/TT-BTC, the VAT calculation price for imports is determined using the following formula:

VAT calculation price for imports = CIF price at the border gate + Import duty (if any) + Special consumption tax (if any) + Environmental protection tax (if any)

Additionally, in the event that imports are exempted or subject to reduced import duty, the formula is:

VAT calculation price for imports = Import price + Import duty calculated at the amount payable after exemption or reduction.