VALUE-ADDED TAX 0%

Goods and services subject to VAT or taxable goods and services are those used for production, trading, and consumption in Vietnam including those purchased from overseas organizations and individuals, except for those not subject to VAT. 

Time for calculating VAT for goods sale, VAT shall be calculated when the ownership or the right to use goods is transferred to the buyer, whether the payment is made or not. Time for calculating VAT for service provision, VAT shall be calculated when service provision is completed or when the invoice for service provision is made, whether the payment is made or not.

GOODS AND SERVICES SUBJECT TO TAX RATE OF 0% 

1. 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, except for the cases in which 0% VAT is not applied.
2. Exported goods and services that are sold to overseas organizations or individuals and are consumed outside Vietnam, sold to entities in free trade zones, or sold to foreign customers as prescribed by law. 

EXPORTED GOODS SUBJECT TO VAT RATE OF 0% INCLUDE:

1. The goods exported to other countries, including those under entrustment contracts;
2. The goods sold to free trade zones as prescribed by the Prime Minister; the goods sold to duty-free shops;
3. The goods that are delivered to the recipients outside Vietnam;
4. Parts and supplies for repairing, maintaining vehicles, machinery, and equipment of foreign entities, and those that are used outside Vietnam;
5. 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 are to be sold at overseas fairs or exhibitions.

Condition for application of 0% tax for exported goods:

1. A sale contract, export processing contract, or export entrustment contract;
2. Bank receipts for payment for exported goods and other documents prescribed by law;
3. A customs declaration.
4. The company must be issued with lawful business licenses, have a legal seal, keep accounting records in accordance with accounting laws, and have deposit accounts at banks according to the taxpayer’s TIN.

 

EXPORTED SERVICES SUBJECT TO VAT RATE OF 0% INCLUDE 

1. The services directly provided for overseas organizations and individuals and are consumed overseas; the services provided for entities in free trade zones and consumed within the free trade zones.
2. 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. Entities in free trade zones that have registered their business.
3. 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.
4. The service provider that is a taxpayer in Vietnam must provide documents proving that the services are provided outside Vietnam.

Condition for application of 0% tax for exported Services:

1. A contract to provide services for an organization or individual in another country or in a free trade zone;
2. Bank receipts for payment for exported services and other documents prescribed by law;
3. 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. 
4. The company must be issued with lawful business licenses, have a legal seal, keep accounting records in accordance with accounting laws, and have deposit accounts at banks according to the taxpayer’s TIN.

INTERNATIONAL TRANSPORT SUBJECT TO VAT RATE OF 0% INCLUDES 

1. Passenger transport and freight transport along international routes to other countries and vice versa, or from one foreign country to another, regardless of the availability of vehicles. 
2. If the international contract includes a domestic segment, the segment is also considered international transport.

AVIATION SERVICES AND MARITIME SERVICES SUBJECT TO VAT RATE OF 0%

Services directly provided to overseas organizations or via agents, including:

1. 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.
2. Maritime services: ship towing; pilotage; sea rescue; wharves; freight handling; moorings; hatch control; hull cleaning; freight checking; registration.

OTHER GOODS AND SERVICES SUBJECT TO VAT RATE OF 0%

1. Construction or installation overseas or in free trade zones;
2. The goods and services that are not subject to VAT when being exported, except for the cases in in which 0% tax is not applied;
3. Repairs to foreign aircraft and ship vessels.

GOODS AND SERVICES ARE NOT APPLIED TO VAT RATE OF 0%

1. Overseas reinsurance; technology transfer, transfer of intellectual property right to abroad; capital transfer, credit extension, overseas securities investment; derivative financial services; outbound postal and telecommunications services (including those provided for entities in free trade zones; prepaid cards sold overseas or in free trade zones); exported natural resources that are not processed into other products; the goods and services provided for the individuals that do not register to do business in free trade zones; 
2. Oil and gas purchased from domestic market by a taxpayer and sold to automobiles in the free trade zone;
3. The automobiles sold to entitles in free trade zones;
4. Services provided for the entities in free trade zones include: leases on houses, meeting halls, offices, hotels, warehouses, yards; employee transport; food and drink services provided in the free trade zones by external providers (except for catering, food and drink services provided by those in the same free trade zone); 
5. 0% tax is not applied to the following services that are provided in Vietnam for overseas entities:
   • Sports competitions, art performances, entertainments, conventions, hotel, training, advertising, traveling and tourism;
   • Online payment services;
   • Services attached to sale, distribution, consumption of goods in Vietnam.

As the company paid VAT in advance on purchased goods and services (purchasing invoices), if input VAT is not completely deducted in the month (if tax is declared monthly) or in the quarter (if tax is declared quarterly), thanks to 0% tax applied (the selling invoices), the company that pays VAT using credit-invoice method may deduct it from the tax incurred in the next period. If input VAT is not completely deducted after 12 months or 4 quarters from the first month or quarter input VAT is incurred, the taxpayer shall receive a refund.

 

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