Which services apply the VAT rate of 0% in international transportation services in Vietnam? What are the conditions for international multimodal transport business in Vietnam?

Which services apply the VAT rate of 0% in international transportation services in Vietnam?

Based on point c, clause 1, Article 9 of Circular 219/2013/TT-BTC, there are regulations on international transportation services that apply the 0% VAT rate as follows:

0% Tax Rate

1. The 0% tax rate applies to exported goods and services; construction activities, installation projects overseas 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, provided to organizations and individuals abroad and consumed outside Vietnam; sold, provided to organizations and individuals in non-tariff zones; goods and services provided to foreign customers as regulated by law.

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c) International transportation as defined in this clause includes the transportation of passengers, luggage, and goods on international routes from Vietnam abroad or from abroad to Vietnam, or from one foreign country to another, regardless of whether the transportation means are directly used or not. In the case where the international transportation contract includes domestic transportation legs, international transportation includes the domestic leg.

Example 47: Transport company X in Vietnam has an international shipping vessel. The company transports goods from Singapore to South Korea. The revenue from transporting goods from Singapore to South Korea is considered international transportation revenue.

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Therefore, international transportation services that apply the 0% VAT rate include the transportation of passengers, luggage, and goods on international routes from Vietnam abroad or from abroad to Vietnam, or from one foreign point to another, irrespective of whether transportation means are directly used or not.

In cases where the international transportation contract includes a domestic transportation leg, international transportation covers the domestic leg as well.

Which services apply the VAT rate of 0% in international transportation services in Vietnam? (Image from the Internet)

What are conditions for applying the 0% VAT rate to international transportation services in Vietnam?

Based on point c, clause 2, Article 9 of Circular 219/2013/TT-BTC, the conditions for applying the 0% tax rate to international transportation are as follows:

- A contract for transporting passengers, luggage, and goods between the transporter and the hirer must be according to international routes from Vietnam abroad, or from abroad to Vietnam, or from one foreign location to another as appropriate under legal regulations.

For passenger transportation, the contract is the ticket. The business entity providing international transportation services must comply with legal regulations on transportation.

- There must be documents proving payment through banks or other forms considered as bank payment. For individuals in passenger transportation, there must be proof of direct payment.

What are the conditions for international multimodal transport business in Vietnam?

Based on Article 5 of Decree 87/2009/ND-CP (as amended by clause 2, Article 1 of Decree 144/2018/ND-CP), the conditions for conducting an international multimodal transport business are as follows:

Conditions for conducting an international multimodal transport business

1. Vietnamese enterprises, cooperatives, foreign-invested enterprises in Vietnam are only allowed to conduct an international multimodal transport business after obtaining an International Multimodal Transport Business License based on meeting all the following conditions:

a) Maintain assets at a minimum equivalent to 80,000 SDR or have equivalent guarantees or alternative financial plans as per legal regulations;

b) Have professional indemnity insurance for multimodal transport or equivalent guarantees.

2. Enterprises from countries that are members of the ASEAN Framework Agreement on Multimodal Transport or enterprises of countries that have signed international agreements with Vietnam on multimodal transport are only allowed to operate international multimodal transport business after obtaining the International Multimodal Transport Business License of Vietnam based on meeting all the following conditions:

a) Have a Certificate of Registration for International Multimodal Transport or equivalent documents issued by the competent authority of that country;

b) Have professional indemnity insurance for multimodal transport or equivalent guarantees.

3. The Ministry of Transport organizes the management and issuance of the International Multimodal Transport Business License.

Therefore, an international multimodal transport business enterprise must meet the following conditions:

- Have an International Multimodal Transport Business License;

- Maintain assets at a minimum equivalent to 80,000 SDR or have equivalent guarantees or an alternative financial plan as regulated by law;

- Have professional indemnity insurance for multimodal transport or equivalent guarantees.