VAT RATE 0%

VAT RATE 0%

Pursuant to Article 9 of Circular 219/2013/TT-BTC and Clause 2, Article 1 of Circular 130/2016/TT-BTC, the tax rate of 0% applies to exported goods and services; Construction and installation activities overseas and in non-tariff zones; international transportation; Goods and services are not subject to VAT when exported; specifically:

1. Exported goods and services applies VAT rate of 0%

(1) Exported goods include:

- Goods exported abroad, including those exported under entrustment contracts; 

- Goods sold into non-tariff zones under the Prime Minister's regulations; goods sold to duty-free shops;

- Goods sold where the delivery and received is outside Vietnam;

- Spare parts used for repair and maintenance of vehicles, machinery and equipment for foreign parties and for consumption outside of Vietnam;

- Cases regarded as exportation under law:

+ Intermediary processed goods under the commercial law regarding international goods trading and goods trading, processing agency with foreign parties.

+ On spot exports as prescribed by law.

+ Exported goods for sale at overseas fairs and exhibitions.

(2) Export services include:

- Services provided directly to overseas organizations and individuals and consumed outside Vietnam;

- Provide directly to organizations and individuals in non-tariff zones and consumed in non-tariff zones.

In there:

- Overseas individuals are foreigners who do not reside in Vietnam, Vietnamese residing overseas and outside Vietnam during the provision of services.

Organizations and individuals in the non-tariff zone are those with business registration and other cases as specified by the Prime Minister.

- In case services are provided both inside and outside Vietnam but the service contracts are signed between two taxpayers in Vietnam or have resident establishments in Vietnam, the 0% tax rate applies only to the value of services provided outside Vietnam (except in the case of providing insurance services for imported goods in which the 0% tax rate applies to the whole contractual value).

In case the contract impossible to determine the value of services provided in Vietnam, the taxed price shall be determined base on the percentage (%) of expenses arising in Vietnam to the total expenses.

- Services providers being taxpayers in Vietnam must have documents proving that services are provided outside Vietnam.

(3) International transportation includes:

- Transporting of passengers, luggage, and cargo on international routes from Vietnam to overseas or from overseas to Vietnam, or both departure and arrival overseas, regardless of whether means of transport are available.

- In case an international transportation contract covers domestic routes, international transportation also covers such domestic routes.

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

- Aviation services eligible:

+ Provision of in-flight meals; takeoff and landing; aircraft parking services; aircraft security and protection;

+ Security screening of passengers, luggage and cargo;

+ Luggage conveyor in airport terminals; ground technical and commercial services; aircraft protection; aircraft pushback and towing; aircraft piloting;

+ Aerobridge lease; flight operations; transportation of flight crews, stewards and passengers within aprons; cargo loading and tally; Services for passengers taking international flights from Vietnamese airports (passenger service charges).

- Maritime services eligible: Seagoing ship towing; maritime piloting; maritime salvage; piers and floating wharves; Loading and un loading; mooring and unmooring; opening and closing of cargo hatch covers; cargo hold cleaning; tally and forwarding; and registration.

(5) Other goods and services:

- Construction and installation of works overseas or in non-tariff zones;

- Goods and services are not subject to VAT upon exportation (except for cases where the 0% tax rate does not apply as prescribed);

- Repair of aircraft and seagoing ships for foreign organizations and individuals.

Note: case ineligible for the 0% tax rate:

- Offshore reinsurance; offshore transfer of technologies or intellectual property rights; transferring capital, granting credit, investing in securities abroad; derivative financial services; Postal and telecommunications services going abroad (including postal and telecommunications services provided to organizations and individuals in non-tariff zones; providing mobile phone scratch cards with codes and numbers price sent abroad or brought into a non-tariff zone); Exported products are natural resources and minerals guided in Clause 23, Article 4 of Circular 219/2013/TT-BTC; cigarettes, alcohol, and beer imported and then exported; goods and services provided to individuals not registered for business in the non-tariff zone, except in other cases as prescribed by the Prime Minister.

Cigarettes, alcohol, and beer that are imported and then exported do not have to calculate output VAT when exported, but cannot deduct input VAT.

- Gasoline and oil sold for cars of business establishments in the non-tariff zone purchased domestically;

- Cars sold to organizations and individuals in the non-tariff zone;

- Services provided by business establishments to organizations and individuals in the non-tariff zone include: renting houses, halls, offices, hotels, warehouses; transportation services to pick up and drop off workers; Catering services (except for industrial catering services and catering services in non-tariff areas);

- Services provided in Vietnam to organizations and individuals abroad that are not subject to the 0% tax rate include:

+ Sports competitions, performing arts, culture, entertainment, conferences, hotels, training, advertising, travel and tourism;

+ Online payment service;

+ Services provided associated with the sale, distribution, and consumption of products and goods in Vietnam.

2. Conditions for applying the 0% VAT rate

(1) For exported goods:

- Have a contract to sell and process exported goods; entrusted export contract;

- Have proof of payment for exported goods via bank and other documents as prescribed by law;

- Have a customs declaration as prescribed in Clause 2, Article 16 of Circular 219/2013/TT-BTC.

Particularly in the case of goods sold where the delivery and receipt point is outside Vietnam, the business establishment (seller) must have documents proving the delivery and receipt of goods outside Vietnam such as: purchase contract. signed with the seller of goods abroad; goods sales contract signed with the buyer; Documents proving that goods were delivered or received outside Vietnam such as: commercial invoice according to international practices, bill of lading, packing slip, certificate of origin...; Bank payment documents include: bank documents of the business establishment making payment to the seller of goods abroad; Payment documents via bank from the buyer of goods to pay the business establishment.

(2) For export services:

- Have a service supply contract with an organization or individual abroad or in a non-tariff zone;

- Have proof of payment for export services via bank and other documents as prescribed by law;

Particularly for aircraft and ship repair services provided to foreign organizations and individuals, the tax rate of 0% will apply, in addition to the contract conditions and payment documents mentioned above. Ships brought into Vietnam must go through import procedures. Once repaired, they must go through export procedures.

(3) For international transportation:

- There is a contract to transport passengers, luggage, and goods between the carrier and the charterer on an international route from Vietnam to a foreign country or from a foreign country to Vietnam or both a departure point and a destination abroad. in forms consistent with the provisions of law. For passenger transportation, the contract of carriage is the ticket. International transport business establishments comply with the provisions of law on transport.

- There are documents of payment via bank or other forms of payment that are considered payment via bank. In case of transporting individual passengers, there is a direct payment document.

(4) For aviation and maritime services:

- Aviation industry services applying the 0% tax rate are performed in international airports, airports, and international air cargo terminals and meet the following conditions:

+ There is a service supply contract with a foreign organization or foreign airline or a request to provide services from a foreign organization or foreign airline;

+ Have proof of service payment via bank or other forms of payment considered as payment via bank. In case the services provided to foreign organizations or foreign airlines arise irregularly, not according to schedule and without a contract, there must be direct payment documents from the foreign organization or airline. not foreign.

The above contract conditions and payment documents do not apply to passenger service charges on international flights from Vietnamese airports (passenger service charges).

- Maritime industry services applying 0% tax rate are performed in port areas and meet the following conditions:

+ There is a service supply contract with a foreign organization or shipping agent or a request to provide services from a foreign organization or shipping agent;

+ Have proof of payment for services via a bank from an organization abroad or have proof of payment for services through a bank from a shipping agent to a service provider or other forms of payment considered is payment via bank.