What is the VAT rate for goods transported to the export-processing zone in Vietnam?

What is the VAT rate for goods transported to the export-processing zone in Vietnam?

Based on Article 11 of Circular 219/2013/TT-BTC which stipulates as follows:

10% Tax Rate

The 10% tax rate applies to goods and services not stipulated in Articles 4, 9, and 10 of this Circular.

The VAT rates mentioned in Article 10, Article 11 are uniformly applied to each type of goods and services at the stages of importation, production, processing, or commercial business.

Example 50: If clothing is subject to a 10% tax rate, this item will be taxed at 10% at the stages of importation, production, processing, or commercial trade.

Scrap and recycled materials sold are subject to the VAT rate applicable to the sold scrap and recycled materials.

Business establishments dealing with various goods and services with different VAT rates must declare VAT according to each rate specified for each type of goods and service; if the business establishment does not determine each rate, it must calculate and pay tax at the highest rate among the goods and services that the business manufactures or trades.

During implementation, if there is a case where the VAT rate at the Preferential Import Tariff Schedule does not match the guidance in this Circular, follow the guidance in this Circular. In the case where the VAT rate is inconsistently applied for the same type of imported and domestically produced goods, local tax authorities and local customs authorities report to the Ministry of Finance for prompt unified guidance on implementation.

Additionally, according to Clause 2, Article 9 of Circular 219/2013/TT-BTC, it is stipulated as follows:

0% Tax Rate

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2. Conditions for applying the 0% tax rate:

a) For exported goods:

- There must be a contract for the sale, processing of exported goods; entrusted export contract;

- There must be documentation of payment for exported goods via bank and other documents as stipulated by law;

- There must be a customs declaration as stipulated in Clause 2, Article 16 of this Circular.

Specifically, for cases where goods are sold with delivery and receipt points outside Vietnam, the business establishment (the seller) must provide documentation proving the delivery and receipt of goods outside Vietnam, such as: a purchase contract signed with a supplier overseas; a sales contract signed with the buyer; documents proving goods are delivered and received outside Vietnam, such as a commercial invoice per international practices, bill of lading, packing list, certificate of origin…; payment documents via bank including: bank documents of the business establishment paying the overseas goods seller; bank payment documents of the buyer paying the business establishment.

Example 48: Company A and Company B (both are Vietnamese enterprises) sign a contract to buy and sell lubricant oil. Company A purchases lubricant oil from companies in Singapore and sells it to Company B at Singapore's seaport. If Company A has: A purchasing contract signed with companies in Singapore, a sales contract between Company A and Company B; documentation proving the goods were delivered to Company B at Singapore's seaport, payment documents via bank by Company A to companies selling lubricant oil in Singapore, and payment documents via bank by Company B paying Company A, then the revenue received by Company A from selling lubricant oil to Company B is subject to a 0% VAT rate.

b) For exported services:

- There must be a service provision contract with an organization or individual abroad or in a non-tariff zone;

- There must be documentation of payment for exported services via bank and other documents as stipulated by law;

For services such as aircraft or ship repair provided to foreign organizations or individuals, to apply a 0% VAT rate, besides the contract and payment documents mentioned above, the aircraft or ships brought into Vietnam must complete import procedures, and upon repair completion, must complete export procedures.

c) For international transportation:

- There must be a transportation contract for passengers, luggage, or cargo between the carrier and the transport hirer covering international routes from Vietnam abroad or from abroad to Vietnam or both departure and destination points are abroad, in forms suitable with legal regulations. For passenger transport, the transportation contract is the ticket. International transport businesses operate according to the legal regulations on transportation.

- There must be bank payment documentation or equivalent forms of payment regarded as bank payment. For passenger transport cases involving individuals, direct payment documents are required.

d) For aviation and maritime services:

d.1) Aviation services applying a 0% tax rate must be provided within the area of international airports, air cargo terminals, and meet the following conditions:

- There must be a service provision contract with an overseas organization, foreign airline, or a service provision request from an overseas organization, foreign airline;

- There must be documentation of service payment via bank or other equivalent forms of bank payment. In cases where services are provided to overseas organizations or foreign airlines infrequently, not scheduled, and without contracts, direct payment documentation from overseas organizations or foreign airlines is required.

The conditions regarding contracts and payment documentation mentioned above do not apply to services for passengers on international flights from Vietnamese airports (passenger service charges).

d.2) Maritime services applying a 0% tax rate must be performed at ports and meet the following conditions:

- There must be a service provision contract with an overseas organization, shipping agent, or a service provision request from an overseas organization or shipping agent;

- There must be documentation of service payment via bank from an overseas organization or documentation of service payment via bank from the shipping agent to the service provider or other equivalent forms of bank payment.

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Thus, Based on the above regulations, if the client's company is an export processing enterprise, the aforementioned services consumed within the non-tariff zone meet the conditions stipulated in Clause 2, Article 9 of Circular 219/2013/TT-BTC and also have a service provision contract with an organization or individual in the non-tariff zone; with documentation of export service payment via bank and other documents as stipulated by law), then they are subject to a 0% VAT rate.

- If the aforementioned services are consumed outside the non-tariff zone, they are subject to a 10% VAT rate.

What is the VAT rate for goods transported to the export-processing zone in Vietnam? (Image from the Internet)

When is the time to issue a VAT invoice when selling goods in Vietnam?

According to regulations in Article 9 of Decree 123/2020/ND-CP, the time to issue a VAT invoice is clearly stipulated as follows:

* Time to issue a VAT invoice when selling goods

The time to issue an invoice for selling goods (including selling state assets, confiscated assets, auctioned assets, and national reserve goods) is the time of transferring ownership or usage rights of goods to the buyer, regardless of whether payment has been received or not.

* Time to issue an invoice when providing services

- The time to issue an invoice for providing services is the time of completion of service provision regardless of whether payment has been received or not.

- In the case where the service provider receives payment before or during service provision, the time to issue an invoice is at the moment of receiving payment (excluding cases of receiving deposit or advance payment to ensure the execution of service contracts: Accounting, auditing, financial consulting, taxation; value appraisal; supervision consultancy; survey, technical design; investment project formulation).

Note: In the case of multiple deliveries or handovers of service stages or stages, an invoice must be issued for each delivery or handover equivalent to the delivered volume or value of goods or services.

Thus, the time to issue a VAT invoice when selling goods is the time of transferring ownership or usage rights of goods to the buyer, regardless of whether payment has been received or not.

What is the format of the electronic VAT invoice in Vietnam?

Based on Article 12 of Decree 123/2020/ND-CP which stipulates the electronic invoice format in general as follows:

- The electronic invoice format is a technical standard that defines the data type, data length of information fields used for transmitting, storing, and displaying electronic invoices. The electronic invoice format uses the document markup language XML (XML stands for "eXtensible Markup Language" created for the purpose of sharing electronic data between information technology systems).

- The electronic invoice format includes two components: a component containing electronic invoice business data and a component containing digital signature data. For electronic invoices with tax authority codes, there is an additional component containing data relating to the tax authority code.

- The General Department of Taxation builds and publishes the components containing electronic invoice business data, digital signature data, and provides tools for displaying electronic invoice contents as stipulated by this Decree.

- Organizations, businesses selling goods, providing services when transferring electronic invoice data to the tax authority directly must meet the following requirements:

+ Connect with the General Department of Taxation through a private channel or MPLS VPN Layer 3 channel, including 1 main transmission channel and 1 backup transmission channel. Each transmission channel has a minimum bandwidth of 5 Mbps.

+ Use Web Service or Message Queue (MQ) with encryption as a connection method.

+ Use the SOAP protocol for packing and transmitting data.

- Electronic invoices must be displayed fully and accurately to ensure no misleading interpretations so that the buyer can read them through electronic means.

Thus, the electronic VAT invoice format is in XML format (XML stands for "eXtensible Markup Language" created for the purpose of sharing electronic data between information technology systems).