The Sale of Goods between Free Trade Zones: Is it Subject to VAT?

At Clause 20, Article 5 of the Value-Added Tax Law 2008, it is stipulated that the non-taxable subjects include: Transshipped goods, goods in transit through Vietnamese territory; temporary imported goods for re-export; temporary exported goods for re-import; imported raw materials for the production and processing of exported goods according to production contracts; processing contracts signed with foreign parties; goods and services traded between foreign countries and non-tariff zones and among non-tariff zones themselves.

Clause 20, Article 4 of Circular 219/2013/TT-BTC states that non-tariff zones include: export processing zones, export processing enterprises, bonded warehouses, tax-suspension warehouses, bonded areas, special economic and commercial zones, commercial-industrial zones, and other economic areas established and enjoying tax preferences as non-tariff zones according to the Decision of the Prime Minister of the Government of Vietnam. The trading relationships of goods between these zones and external parties are considered export-import relationships.

=> Thus, export processing enterprises are regarded as non-tariff zones, so goods traded among export processing enterprises will not be subject to value-added tax.

The above is the support content.

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