Delegation of Goods Export: Accounting Essentials

First, regarding invoices and documents

According to the provisions at Point 2.3 of Appendix IV issued together with Circular 39/2014/TT-BTC which regulates invoices in some cases as follows:

"2.3. When exporting goods for transportation to borders or to places for export procedures, the establishment uses the Internal Transport and Warehouse Outbound Voucher along with an Internal Dispatch Order as prescribed to serve as documents for the circulation of goods in the market.

In the case of entrusting the export of goods, when exporting goods delivered to the entrusted organization, the establishment with goods entrusted for export uses the Internal Transport and Warehouse Outbound Voucher along with an Internal Dispatch Order. When the goods have been actually exported with confirmation from the customs authority, based on the comparison documents, confirming the quantity and value of actually exported goods from the entrusted organization, the establishment with goods entrusted for export issues a Value Added Tax (VAT) invoice for declaring and paying taxes, or a sales invoice. The entrusted export organization uses the VAT invoice or sales invoice to issue to foreign customers."

Thus, when entrusting the export of goods, the exporting enterprise and the entrusted enterprise must note the following issues:

For the exporting enterprise

- When exporting goods delivered to the entrusted export organization, the enterprise uses the Internal Transport and Warehouse Outbound Voucher along with an Internal Dispatch Order;

- When the entrusted enterprise notifies the actual exported goods, the enterprise issues a VAT invoice or sales invoice to the entrusted export organization.

For the entrusted export enterprise

- When receiving entrusted export goods, the enterprise inspects the received goods based on the Internal Transport and Warehouse Outbound Voucher from the trustee;

- Upon completing export procedures, the entrusted enterprise uses an invoice or commercial invoice to issue and deliver to the foreign customer (as per Circular 119/2014/TT-BTC which abolished the export invoice).

Second, regarding Value Added Tax for enterprises with goods entrusted for export (exporting enterprises)

As stipulated in Article 9 of Circular 219/2013/TT-BTC which regulates cases applying a 0% tax rate as follows:

"0% tax rate: applicable for exported goods and services...

a) Exported goods include:

- Goods exported abroad, including entrusted exports;"

Thus, when applying the form of entrusted export, a 0% VAT rate shall be enjoyed. However, to apply a 0% tax rate, conditions stipulated at Clause 2, Article 9 must be met. To be specific:

- There must be a contract for selling or processing exported goods; a contract for entrusted export;

- There must be documents evidencing the payment for exported goods through the bank and other documents as stipulated by law;

- There must be a customs declaration as stipulated in Clause 2, Article 16 of Circular 219/2013/TT-BTC.

Regarding the deduction and refund of input Value Added Tax for exported goods:

According to Article 16 of Circular 219/2013/TT-BTC, the conditions for VAT deduction and refund of input tax for exported goods must meet the conditions and procedures stated in Clause 2, Article 9 and Clause 1, Article 15 of this Circular. To be specific:

1. A contract for selling goods to foreign organizations or individuals.

For entrusted export cases, there must be an entrusted export contract and a liquidation report upon the conclusion of the entrusted export contract or a periodic debt reconciliation report between the trustee and the entrusted entity clearly recording: quantity, type of products, value of entrusted goods exported; number, date of the export contract signed by the trustee with foreign parties; number, date, and amount written on payment documents through the bank with foreign parties from the trustee; number, date, and amount written on payment documents of the trustee paying the entrustor; number, date of the customs declaration of exported goods by the trustee.

2. A customs declaration for exported goods that has completed customs procedures as guided by the Ministry of Finance on customs procedures; inspection, customs supervision; export tax, import tax, and tax management for exported and imported goods.

3. Exported goods must be paid through the bank.

Payment through the bank is the transfer of money from the importer's account to the exporter's account opened at a bank according to the payment forms agreed upon in the contract and the bank's regulations.

In the case of entrusted export, there must be payment documents through the bank from the foreign party to the trustee, and the trustee must pay the export goods via bank to the entrustor. If the foreign party pays directly to the entrustor, the entrustor must have payment documents through the bank, and this payment method must be stipulated in the contract.

4. Commercial invoice. The date of determining export revenue for tax calculation is the date of confirming the completion of customs procedures on the customs declaration (amended by Clause 7, Article 3 of Circular 119/2014/TT-BTC).

Third, regarding Value Added Tax for enterprises entrusted to export goods

According to Point b, Clause 3, Article 1 of Circular 119/2014/TT-BTC which stipulates:

"Taxpayers who are entrusted to export or import goods are not required to declare VAT for entrusted imported or exported goods (if the entrusted contract does not include content of performing VAT obligations on behalf of the entrusting entity), but must declare VAT on the entrusted commission earned."

At the same time, the entrusted entity issues a VAT invoice, with the tax rate as prescribed, to the entity having entrusted the exported goods for the commission earned.

Anh Tu

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