List of goods and services not subject to VAT and goods and services subject to 0% VAT in Vietnam

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See more: List of goods and services subject to VAT 5%, 10%

1. Goods and services that are not subject to VAT in Vietnam

According to Article 4 of Circular 219/2013/TT-BTC, goods and services that are not subject to VAT in Vietnam include:

(1) Products from farming (including agro-forestry products), breeding, and aquaculture that are produced, caught, sold, or imported and are not processed into other products (hereinafter referred to as unprocessed) or have only been preprocessed.

(2) Breeds of livestock, plant varieties, including eggs, breeds, seeds, stems, tubers, semen, embryos, genetic materials that are raised, imported, and traded. The breeds of livestock and plant varieties that are not subject to VAT are the products of the importers and traders that have the certificates of registration of animal breed or plant variety trading issued by regulatory bodies. The animal breeds and plant varieties that apply quality standards of the state must satisfy the requirements imposed by the state.

(3) Irrigation services, plowing services, dredging channels, dredging in-field trenches serving agricultural production; harvesting services.

(4) Salt derived from seawater, rock salt, pure salt, refined salt, iodized salt composed primarily of sodium chloride (NaCl).

(5) State-owned houses sold to tenants.

(6) Transfer of right to use land (hereinafter referred to as land tenure).

(7) Life insurance, health insurance, learner’s insurance, other insurance services related to humans; insurance for livestock, plants and other agriculture insurance services; insurance for ships and instruments for fishing; reinsurance.

(8) The finance, banking, and securities services below:

- Credit extension includes: Loan; Discounted transfer of negotiable instruments and other valuable papers; Bank guarantee; Finance lease; Issuance of credit cards. Domestic and international factoring for the banks allow to process international payments; Revenue from liquidation of collateral by a credit institution or law enforcement authority in accordance with the laws on handling collateral. Information provision services provided by the units and organizations affiliated to the State bank for credit institutions to use for credit extension in accordance with the Law on the State bank; Other forms of credit extension prescribed by law.

- Separate loans that are not a business and irregularly given by taxpayers that are not credit institutions.

- Securities services include: brokerage, proprietary trading, issuance guarantee, investment consultancy, depository, securities investment fund management, securities company management, securities investment portfolio management, market organization services of Stock Exchanges or Securities trading centers, services related to the securities registered and deposited at Vietnam Securities Depository, granting loans for margin trading, advance payment for securities and other types of securities trading prescribed by securities laws.

Information provision, auctions of shares of issuers, technical support for online transactions of Stock Exchanges.

- Capital transfer includes the transfer of part of or the whole capital invested in another business organization (regardless of the creation of a new legal entity), securities transfer, transfer of the right to contribute capital, and other forms of capital transfer prescribed by law, including business acquisition in which the acquirer inherits all rights and obligations of the acquired company.

- Selling debts;

- Foreign currency trading;

- Derivative financial services include: forward contracts, futures contracts, call option, put option, other derivative financial services prescribed by law;

- Selling collateral put up by the organizations 100% charter capital of which is owned by the government to settle bad debts of Vietnamese credit institutions.

(9)

Medical services, veterinary services, including examination, treatment, and prevention of diseases for human and animals, birth control services, convalescence and rehabilitation services for patients, patient transport services, sickbed and sickroom rental services; testing, radiography services; blood and blood products for patients.

If medicines are included in the service package (according to regulations of the Ministry of Health), the revenue from medicines in the package is also not subject to VAT.

(10) Public postal and telecommunications services, and public Internet services provided by the government, postal and telecommunications services from abroad (inbound).

(11) Maintenance of zoos, flower gardens, parks, street greeneries, public lighting, funeral services. The services mentioned in this Clause do not depend on the source of payment. In particular:

- Maintenance of zoos, flower gardens, parks, street greeneries, and state-owned forests include management, tree planting and cultivation, protection of animals in the parks, zoos, public areas, national forests and national parks;

- Public lighting includes lighting on the streets, in alleys, neighborhoods, flower gardens, and parks. Revenue from public lighting is not taxable;

- Funeral services provided by the business establishments licensed to provide funeral services include funeral parlor and car rental service, burial service, cremation service, grave move service, and grave care service.

(12) Maintenance, repairs, and construction funded by the people (including contributions and sponsorships), humanitarian aid for cultural and artistic works, public works, infrastructure, and housing for beneficiaries of incentive policies.

(13) Education and vocational training as prescribed by law, including foreign language training, artistic training, sports training, nursing, children’s nursing, and training of other professions in order to raise extend education, improve professional knowledge and skills.

(14) Audio and video broadcasting funded by government budget.

(15) Publishing, importing newspapers, magazines, specialist newsletters, political books, textbooks, teaching materials, law books, scientific books, books using languages of ethnic minorities, propagation pictures, including those in the form of audio and video discs/tapes, electronic data; money and money printing.

(16) Public transport by bus and tram within a province, a city or the routes adjacent to the city as prescribed by the Ministry of Transport.

(17) Goods that cannot be manufactured in Vietnam and must be imported, including:

- Imported machinery, equipment, parts, and supplies serving scientific research and technological development;

- Imported machinery, equipment, parts, specialized vehicles and supplies serving petroleum exploration and extraction;

- Airplanes (including engines), oil rigs, and ships that cannot be manufactured in Vietnam and are imported as fixed assets or leased from a foreign party to serve manufacturing, trading, or to sublease.

(18)  Weapons and specialized vehicles serving national defense and security.

- The weapons and specialized vehicles serving national defense and security enumerated in the list compiled by the Ministry of Finance in cooperation with the Ministry of National Defense and the Ministry of Public Security.

- Imported weapons, and specialized vehicles (including supplies, machinery, equipment, parts) serving national defense and security that are exempt from import tax according to the Law on Export and import tax, or imported within annual quota imposed by the Prime Minister.

(19) Imported goods, goods/services sold to other organizations and individuals as humanitarian aid or non-refundable aid in the following cases:

- Goods imported as humanitarian aid or non-refundable aid must be certified by the Ministry of Finance or Services of Finance;

- Gifts for regulatory bodies, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations, and the army prescribed by the laws on gifts;

- Gifts for individuals in Vietnam prescribed by the laws on gifts;

- Belongings of foreign entities provided with diplomatic immunity prescribed by the laws on diplomatic immunity; belongings brought to Vietnam by Vietnamese people residing abroad;

- Belongings in luggage within tax-free allowance;

- Goods and the goods/services sold to other organizations and individuals as humanitarian aid or non-refundable aid for Vietnam.

(20) 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

(21) Technology transfers according to the Law on Technology transfers; intellectual property right transfers according to the Law on Intellectual property. If a contract of technology transfer or intellectual property right transfer is associated with a transfer of machinery/equipment, only the value of transferred technology or intellectual property right is not subject to VAT. If such value cannot be separated, VAT shall be imposed on the total value of the transferred technology or intellectual property right and machinery/equipment.

Computer software including software products and software services as prescribed by law.

(22) Imported gold in the form of bullions, pieces, and other forms that are not fashioned into jewelry or other items.

(23) Exported natural resources that are not processed into other products.

(24) Prosthetic body parts, including those permanently implanted into the human body; crutches, wheelchairs, and other special instruments serving the disabled.

(25) Goods/services provided by any business household or businessperson that earns an annual revenue of ≤ 100 million VND.

(26) The goods and services below:

- Duty-free goods at duty-free shops prescribed by the Prime Minister.

- Goods in national reserve sold by national reserve authorities.

- Charged activities of the state according to the laws on fees and charged.

- Bomb and mine clearance carried out by the army at the constructions funded by government budget.

2. Goods and services subject to 0% VAT in Vietnam

Circular 219/2013/TT-BTC stipulates a tax rate of 0% applicable to goods and services. 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;

(1) Exported goods include:

- The goods exported to other countries, including those under entrustment contracts;

- The goods sold to free trade zones as prescribed by the Prime Minister; the goods sold to duty-free shops;

- The goods that are delivered to the recipients outside Vietnam;

- Parts and supplies for repairing, maintaining vehicles, machinery, and equipment of foreign entities, and those that are used outside Vietnam;

- Cases of deemed exportation:

+ Forwarded processed goods under trade laws on international goods trade and export processing.

+ Exported goods delivered to a domestic recipient appointed by the importer (hereinafter referred to as domestic exports).

+ The goods exported to be sold at overseas fairs or exhibitions.

(2) 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.

In there:

- Overseas individuals are the foreigners that do not reside in Vietnam, the Vietnamese people that reside overseas and are not present in Vietnam when the services are provided.

The entities in free trade zones are the entities that have registered their business and other cases prescribed by the Prime Minister.

- If services are provided both in Vietnam and overseas, but the service contract is signed between two taxpayers in Vietnam or two taxpayer that have permanent establishments in Vietnam, 0% tax is only applied to the services provided overseas, except for the case of insurance for imported goods, in which 0% tax is applied to the whole contract value.

If the contract does not separate the services provided in Vietnam, taxable price shall be determined according to the ratio of expense incurred in Vietnam to the total expense.

- The service provider that is a taxpayer in Vietnam must provide documents proving that the services are provided outside Vietnam.

(3) International transport includes

- Passenger transport and freight transport along international routes from to other countries and vice versa, or from one foreign country to another, regardless of the availability of vehicles.

- If the international contract includes a domestic segment, the segment is also considered international transport.

(4) Aviation services and maritime services directly provided to overseas organizations or via agents, including:

- 0% tax shall be applied to the following aviation services:

+ Catering, takeoff and landing, aircraft parking, aircraft security;

+ Security scanning;

+ Luggage conveyance at terminals; terrestrial technical services; aircraft protection; aircraft towing; aircraft guiding;

+ Passenger boarding bridges; air controlling; flight crew and passenger transport in the airport apron; freight handling and checking; passenger services on international flights from Vietnamese airports.

- 0% tax shall be applied to the following maritime services: ship towing; pilotage; sea rescue; wharves; freight handling; moorings; hatch control; hull cleaning; freight checking; registration,

(5) Other goods and services:

- Construction or installation overseas or in free trade zones;

- The goods and services that are not subject to VAT when being exported, except for the cases in which 0% tax is not applied;

- Repairs to foreign aircraft and ship vessels.

Note, 0% tax is not applied to:

- Overseas reinsurance; technology transfer, transfer of intellectual property right to abroad; capital transfer, credit extension, overseas securities investment; derivative financial services; outbound postal and telecommunications services (including those provided for the entities in free trade zones; prepaid cards sold overseas or in free trade zones); exported natural resources that are not processed into other products; the goods and services provided for the individuals that do not register to do business in free trade zones, except for the cases defined by the Prime Minister;

- Oil and gas purchased from domestic market by a taxpayer and sold to automobiles in the free trade zone;

- The automobiles sold to the entitles in free trade zones;

- Services provided for the entities in free trade zones include: leases on houses, meeting halls, offices, hotels, warehouses, yards; employee transport; food and drink services provided in the free trade zones by external providers (except for catering, food and drink services provided by those in the same free trade zone);

- 0% tax is not applied to the following services that are provided in Vietnam for overseas entities:

+ Sports competitions, art performances, entertainments, conventions, hotel, training, advertising, traveling and tourism;

+ Online payment services;

+ Services attached to sale, distribution, consumption of goods in Vietnam.

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