In 2023, are goods temporarily imported for re-export not subject to VAT 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 temporary import of goods 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 locating 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.
- On the other hand, temporary export of goods for re-import means the bringing of goods overseas or into special zones in the Vietnamese territory which are regarded as exclusive customs zones according to the provisions of law, with the completion of procedures for exporting such goods out of Vietnam, then procedures for importing the same goods back into 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:
Goods and services that are not subject to VAT
...
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 Decisions of the Prime Minister. The transactions between a free trade zone and an external party are considered export/import.
The procedures and documents for considering VAT exemption must comply with instructions of the Ministry of Finance on customs procedure, customs supervision and inspection, export tax, and import tax.
Thus, goods temporarily imported for re-export in Vietnam are not subject to VAT under the above regulations.
According to Article 13 of Decree 69/2018/ND-CP on temporary import of goods for re-export as follows:
- A Vietnamese trader is entitled to do temporary import of goods for re-export regardless of its lines of business that are registered, in particular:
+ The trader must meet conditions if the goods to be temporarily imported must qualify certain conditions.
+ The trader must obtain a license to trade in temporary import of goods for re-export issued by the Ministry of Industry and Trade if the goods to be temporarily imported are included in the list of prohibited or suspended exports and imports, goods are not freely sold and used in Vietnam; goods subject to export and import quotas, tariff-rate quotas or requiring export or import licenses, except for automatic export or import license.
Required documents and procedures for licensing application are provided in Article 19, Article 20 of Decree 69/2018/ND-CP.
+ The trader will only carry out the procedures for temporary import of goods for re-export at the customs authority if the goods are not mentioned in Point a or Point b of Article 13 of Decree 69/2018/ND-CP.
- Foreign-invested business entities may only do temporary import of goods for re-export as prescribed in Article 15 of Decree 69/2018/ND-CP and are not allowed to do other types of temporary import of goods for re-export.
- Goods temporarily imported for re-export shall be subject to the inspection and supervision of the customs authority from the importation until they are re-exported out of Vietnam.
Avoid subdividing goods transported by containers during the course of transportation of goods from the temporary import checkpoint to the area subject to customs supervision, the re-export place at the checkpoint, and the border crossings as prescribed.
If, subject to transport requirements, goods to be transported by containers must be changed or subdivided for re-export as regulated by customs authority.
- The goods temporarily imported for re-export may stay at Vietnam within 60 days from the date on which the customs procedures for temporary import of goods for re-export are completed. A trader, seeking for extension, may submit an application for extension to the Sub-department of Customs of the district where the procedures for temporary import are processed; each extension period may not exceed 30 days and each shipment temporarily imported for re-export is only extended up to twice.
Upon expiry of such time limit, the trader must re-export the goods out of Vietnam or destroy them. If the goods then are imported in Vietnam, the trader must comply with regulations on the management of import and taxation.
- The temporary import of goods for re-export shall be undertaken in reliance on two separate contracts: The export contract and import contract signed with the trader of exporting country and importing country. The export contract may be signed either before or after the import contract.
- The payment, under temporary import of goods for re-export, must comply with regulations on foreign exchange and guidelines of the State Bank of Vietnam.
Are goods temporarily imported for re-export not subject to VAT in Vietnam?
- According to the above regulations, in case the Company has goods temporarily imported for re-export, these goods are not subject to VAT according to the provisions of Clause 20, Article 4 of Circular 219/2013/ TT-BTC.
- 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.
- Hanoi Tax Department proposes to the Company, based on the actual situation and compare with the provisions of law, to implement.
- 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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