Vietnam: Applying value-added tax rate of 0% to branches providing management services of intern workers for working abroad under employment contracts?
- What are the regulations on details of Vietnamese guest worker service?
- Applying value added tax rate of 0% to branches providing management services of intern workers for working abroad under employment contracts?
- If the exported service does not meet the conditions for bank transfer, can input VAT be deducted or refunded?
What are the regulations on details of Vietnamese guest worker service?
According to Article 9 of the 2020 Law on Vietnamese Guest Workers stipulating as follows:
Details of Vietnamese guest worker service
1. Signing and executing contracts and agreements related to provision of Vietnamese guest workers.
2. Searching and developing overseas labor market; providing information, advertisement and advice regarding overseas employment opportunity.
3. Preparing workforce and recruiting workers.
4. Organizing craft improvement, foreign languages and orientation education for workers before working abroad.
5. Managing workers; protecting rights and legal benefits of guest workers.
6. Executing policies for guest workers.
7. Liquidating contracts for Vietnamese guest worker service provision.
8. Providing employment for repatriating workers.
Thus, the details of Vietnamese guest worker service shall comply with the above provisions.
At the same time, Article 17 of the 2020 Law on Vietnamese Guest Workers stipulates as follows:
Assigned branches in provision of Vietnamese guest worker service
1. A service enterprise may assign their branches to implement several activities regarding provision of Vietnamese guest workers and be responsible for branches’ operation. Branches are established and functional according to Law on Enterprises.
2. A branch may provide Vietnamese guest worker service if:
a) The branch is assigned by a service enterprise;
b) Head of the branch meets eligibility specified under Point c Clause 1 Article 10 of this Law;
c) The branch has adequate number of professional staff to implement specific tasks;
d) The branch has adequate facilities or is hired to implement specific orientation education tasks.
3. A branch assigned to provide Vietnamese guest worker service must not:
a) sign or liquidate labor supply contracts, broker agreements and Vietnamese guest worker agreements;
b) collect service fee and deposit payments of workers.
Thus, the above is the regulation on the branch assigned to provide Vietnamese guest worker service.
Vietnam: Applying value added tax rate of 0% to branches providing management services of intern workers for working abroad under employment contracts? (Image from the Internet)
Applying value added tax rate of 0% to branches providing management services of intern workers for working abroad under employment contracts?
Pursuant to Point b, Clause 2, Article 9 of Circular No. 219/2013/TT-BTC stipulating the tax rate of 0% as follows:
Tax rate of 0%
1. 0% VAT is applied to exported goods and services; construction and installation overseas and in free trade zones; international transport; exported goods and services that are not subject to VAT, except for the cases in Clause 3 of this Article, in which 0% VAT is not applied.
Exported goods and services are those that are sold to overseas organizations and individuals and are consumed outside Vietnam, sold to the entities in free trade zones, or sold to foreign customers as prescribed by law.
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b) Exported services include the services directly provided for overseas organizations and individuals and are consumed overseas; the services provided for the entities in free trade zones and consumed within the free trade zones.
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2. Condition for application of 0% tax:
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b) The documents below are compulsory for exported services:
- A contract to provide services for an organization or individual in another country or in a free trade zone;
- Bank receipts for payment for exported services and other documents prescribed by law;
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Official Dispatch No. 7593/CTTPHCM-TTHT in 2022 guides as follows:
Pursuant to the above provisions, in case a branch provides intern management services to work abroad (services provided to foreign organizations), if the signing of a contract with a foreign organization is in accordance with the provisions of law, branches that satisfy the conditions specified at Point b, Clause 2, Article 9 of Circular No. 219/2013/TT-BTC may apply the tax rate of 0% for exported services as prescribed.
If the exported service does not meet the conditions for bank transfer, can input VAT be deducted or refunded?
According to Point e, Clause 4, Article 17 of Circular No. 219/2013/TT-BTC stipulating the conditions for deduction and refund of input VAT in some cases of deemed export as follows:
Conditions for deduction and refund of input VAT in some cases of deemed export
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4. When goods and supplies are sold by one Vietnamese company to another to execute a construction overseas and are received overseas, the Vietnamese company must provide the following documents to deduct or receive refund of VAT on exported goods:
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e) VAT invoices for the goods.
If the holder of exported goods or goods deemed exports according to Article 16 and Article 17 of this Circular has obtained a certification from the customs authority but does not have one of the other documents, output VAT shall not be incurred but input VAT shall not be deducted. If any of the compulsory documents for forwarded processed goods and domestic exports is missing, VAT shall be paid as if they are sold domestically. If the regulations on bank transfer are not complied with or the payments are not considered bank transfer, the taxpayer shall not be eligible for 0% VAT, shall not incur output VAT, but must not deduct input VAT.
In Official Dispatch No. 7593/CTTPHCM-TTHT in 2022, Ho Chi Minh City Tax Department guides as follows:
In case of exported services, if the regulations on bank transfer are not complied with or the payments are not considered bank transfer, the taxpayer shall not be eligible for 0% VAT, shall not incur output VAT, but must not deduct input VAT.
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