List of goods and services subject to 0% VAT in Vietnam

Pursuant to Article 9 of Circular 219/2013/TT-BTC and Clause 2, Article 1 of Circular 130/2016/TT-BTC, 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:

Exported goods subject to 0% VAT in Vietnam

- 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.

List of goods and services subject to 0% VAT in Vietnam (Internet image)

Export services are subject to 0% VAT

- Services directly provided for overseas organizations and individuals and are consumed overseas;

- 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.

International transport subject to 0% VAT in Vietnam

- 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.

Aviation services and maritime services directly provided to overseas organizations or via agents subject to 0% VAT in Vietnam

- 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,

Other goods and services subject to 0% VAT in Vietnam

- 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 Clause 3 of this Article, in which 0% tax is not applied;

- Repairs to foreign aircraft and ship vessels.

Cases where 0% tax is not applied in Vietnam

- Overseas reinsurance; technology transfer, overseas transfer of intellectual property; capital transfer, granting of credit, outward securities investment; financial derivatives services; outbound postal and telecommunications services (including those provided for the entities in free trade zones; provision of sale of prepaid phone cards abroad or in free trade zones); exports that are or originate from natural resources and minerals as per Section 23, Article 4 of Circular 219/2013/TT-BTC; tobacco and alcoholic beverages imported then re-exported; goods and services provided for individuals who have not registered any business in free trade zones, except circumstances that the Prime Minister defines;

Tobacco and alcoholic beverages imported then re-exported shall not incur the output VAT upon re-exportation though on which input VAT must not be deducted.

- Petroleum supplied domestically to motor vehicles of the businesses that operate in free trade zones;

- Motor vehicles sold to the entities that operate in free trade zones;

- Services provided by business organizations provide for organizations and individuals in free trade zones, such as: leasing of houses, conference rooms, offices, hotels, warehouses; transportation of workers; food and beverage (except the industrial catering service and food and beverage service rendered in free trade zones);

- The tax rate of 0% is not applicable to the following services provided in Vietnam for overseas organizations and individuals:

+ Sports competition, art performances, cultural events, entertainment, conference, hotel, education, advertisement and tourism;

+ Online payment services;

+ Services in connection with the sale, distribution and consumption of goods in Vietnam.

Mai Thanh Loi

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