Conditions for application of 0% tax in Vietnam

Conditions for application of 0% tax in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Conditions for application of 0% tax in Vietnam 2024

Conditions for application of 0% tax according to Clause 2, Article 9 of Circular 219/2013/TT-BTC are as follows:

* The documents below are compulsory for exported goods:

- A sale contract, export processing contract, or export entrustment contract;

- Bank receipts for payment for exported goods and other documents prescribed by law;

- A customs declaration prescribed in Clause 2 Article 16 of Circular 219/2013/TT-BTC.

If goods are delivered to a recipient outside Vietnam, the seller must provide documents proving the delivery of goods outside Vietnam such as: a contract to buy goods signed with an overseas buyer, a contract to sell goods signed with the buyer, documents proving that goods are received outside Vietnam such as commercial invoices, bills of lading, packaging notes, Certificates of Origin, etc.; bank receipt for the payment to the overseas seller by the taxpayer, bank receipt for the payment to the taxpayer by the buyer.

Example 48. Company A and company B signs a contract to buy grease (both of them are Vietnamese companies). Company A buys grease from several companies in Singapore, then sell it to company B at a port of Singapore. If company A has contracts to buy grease signed with the companies in Singapore, the contract to sell grease to company B, documents proving that goods have been delivered to company B at a port in Singapore, bank receipts for the payments to grease companies in Singapore, and a bank receipt for the payment to company A by company B, 0% tax may be applied to the revenue earned by company A from selling grease to company B.

* The documents below are compulsory for exported services:

- A contract to provide services for an organization or individual in another country or in a free trade zone;

- Bank receipts for payment for exported services and other documents prescribed by law;

Apart from presenting the aforesaid documents, providers of repair services for foreign aircraft and sea vessels must follow the procedure for importing the aircraft or vessel to Vietnam, and follow the procedure for exporting them after they are repaired in order to be eligible for 0% tax.

* The documents below are compulsory for international transport:

- A international passenger transport or freight transport contract between the service provider and the service buyer. For passenger transport, the contract may be substituted with tickets. Providers of international transport services must comply with transport laws.

- Documents proving that payment is made by bank transfer or another method considered bank transfers. Receipts for direct payment are compulsory for passenger transport.

* For aviation services and maritime services:

** 0% tax shall be applied to the services provided within the international airports and cargo terminals, provided the following documents are presented:

- A service contract with an overseas organization or airline, or a written request for services by an overseas organization or airline;

- Receitps for bank transfers or other payments considered bank transfer. If services are provided for an overseas organization or airline on an irregular, unscheduled basis without any contract, a receipt for direct payment made by the overseas organization or airline is compulsory.

The aforesaid documents are not compulsory for passenger service charges.

** 0% tax shall be applied to the maritime services provided within the port area, provided the following documents are presented:

- A service contract with an overseas organization or a shipping agent, or a written request for services by an overseas organization or shipping agent;

- Documents proving that the overseas organization or shipping agent makes payment to the service provider is made by bank transfer or another method considered bank transfer.

2. Regulations on the tax rate of 10% in Vietnam

Regulations on the tax rate of 10% according to Article 10 of Circular 219/2013/TT-BTC are as follows:

- 10% tax shall be levied on the goods and services that are not mentioned in Article 4, Article 9 and Article 10 of Circular 219/2013/TT-BTC.

The rates of VAT mentioned in Article 10 and Article 11 of Circular 219/2013/TT-BTC shall be uniformly applied to the each type of goods and services, whether they are imported, manufactured, processed, or traded.

Example 50: 10% tax is levied on apparel. That means the tax rate is always 10% whether such apparel is imported manufactured, processed, or traded.

VAT on the products made of recycled wastes and scrap is the same as VAT on the wastes and scrap when they are sold.

If a taxpayer sells various goods and services that are subject to various rates of VAT, they must be sorted by VAT rates. Otherwise, the highest rate of VAT among which shall apply.

If the rate of VAT in the preferential import tariff schedule is found not conformable with Circular 219/2013/TT-BTC, Circular 219/2013/TT-BTC shall apply. If different rates of VAT are applied to the same kind of goods that are imported or manufactured in Vietnam, the local tax authority and customs authority must send a report to the Ministry of Finance for guidance.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE