How to record the tax rate entry in invoices for goods temporarily imported for re-export in Vietnam?
- What is the definition of the tax rate in Vietnam? In 2023, how many VAT rates applied in Vietnam are there?
- What is the definition of goods temporarily imported for re-export? Are goods temporarily imported for re-export in Vietnam subject to VAT?
- How to record the tax rate entry in invoices for goods temporarily imported for re-export in Vietnam?
On April 25, 2023, Hanoi Tax Department issued Official Dispatch 27085/CTHN-TTHT of 2023 on issuing VAT invoices for goods temporarily imported for re-export in Vietnam.
What is the definition of the tax rate in Vietnam? In 2023, how many VAT rates applied in Vietnam are there?
- Tax is a compulsory payment that organizations or individuals must pay to the State when certain conditions are met. Most countries have a tax system to pay for national, general, or agreed demands and government functions.
Some countries levy a fixed percentage tax on an individual's annual income, but most taxes are based on the amount of annual income. Most countries levy a personal income tax as well as a corporate income tax. Countries or sub-units also often impose a property tax, inheritance tax, estate tax, gift tax, sales tax, payroll tax, or tariff.
- Tax rate is the basis of calculating tax payable per unit to determine the value of the tax payable for a type of taxable subject, the tax rate is expressed as a percentage depending on each type of subject and related conditions, the applicable tax rate will be different.
- Thus, based on Article 9, Article 10, and Article 11 of Circular 219/2013/TT-BTC, in 2023, there are currently 03 VAT rates of 0%, 5%, and 10% in Vietnam.
*Classification of tax rates: Tax rates include two types: proportional tax rate and fixed tax rate.
- The proportional tax rate determines the amount of tax receivable as a percentage of the taxable subject. For example, VAT rates of 5%, 10%, 0% are calculated in cash.
- A fixed tax rate determines the amount of tax receivable according to a specific amount of revenue. For example, the tax collection rate of individual and household businesses, is applied by one specific rate annually, monthly or quarterly.
* 6 Common tax rates in Vietnam
- Personal income tax rate
- Corporate income tax rate
- Value-added tax rate
- Environmental protection tax rate
- Excise tax rate
- Import and export duties rates
* VAT rate.
- VAT specified in Article 2 of the Law on Value Added Tax 2008, VAT is a tax imposed on the added value of goods or services arising in the process from production, circulation to consumption.
What is the definition of goods temporarily imported for re-export? Are goods temporarily imported for re-export in Vietnam subject to VAT?
* Temporary import of goods for re-export
Pursuant to Article 29 of the 2005 Commercial Law on temporary import for re-export and temporary export for re-import of goods as follows:
- Temporary import of goods for re-export means the bringing of goods into Vietnam from foreign countries or special zones located in the Vietnamese territory, which are regarded as exclusive customs zones according to the provisions of law, with the completion of the procedures for importing such goods into Vietnam, then procedures for exporting the same goods out of Vietnam.
Pursuant to Clause 20 Article 4 of Circular 219/2013/TT-BTC on goods and services that are not subject to VAT in Vietnam as follows:
-The goods forwarded through Vietnam’s territory; goods temporarily imported or temporarily exported, raw materials imported for manufacturing or export processing under contracts with foreign partners
- The goods and services traded between a foreign party and a free trade zone, or among free trade zones.
- Free trade zones include export-processing zones, export-processing companies, tax-suspension warehouses, bonded warehouses, special economic zones, commercial-industrial zones, and other economic zones established and provided with similar tax incentives as free trade zones according to the Decisions of the Prime Minister. The transactions between a free trade zone and an external party are considered export/import.
- Thus, according to the above provisions, goods temporarily imported for re-export in Vietnam are not subject to tax as prescribed in Clause 20 Article 4 of Circular 219/2013 / TT-BTC.
How to record the tax rate entry in invoices for goods temporarily imported for re-export in Vietnam?
- According to Official Dispatch 27085/CTHN-TTHT of 2023, the Company issue invoices according to the instructions in Article 10 of Decree 123/2020/ND-CP, on VAT invoices at the Item "tax rate" ", the Company must specify “Not subject to VAT” according to the guidance in Decision 1450/QD-TCT 2021.
- In case there are problems with tax policy, the Company has goods temporarily imported for re-export, the Company can refer to the guiding documents of the Hanoi Tax Department posted on the website http://hanoi.gdt.gov.vn or contact the Tax Inspection Department No. 2 for assistance in solving.
See details of the Official Dispatch: here
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