Vietnam Customs Proposing Changes to VAT Requirements
Vietnam's Ho Chi Minh City Customs Department is proposing several amendments to its value-added tax requirements, including eliminating VAT exemptions for temporary imports and the re-exports of certain goods, according to a report on the Vietnam Customs Department's CustomsNews website. The change would eliminate VAT exemptions for the temporary import and re-export of machinery and equipment used in “investment projects, construction, installation and production,” the report said. Another proposed change would amend a decree for regulating export goods by requiring exporters to provide proof of a “contract for sale” or a “payment receipt” on their customs paperwork, according to the report.
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The proposed changes are attempts to close a loophole being used by Vietnamese exports, the report said, in which companies take advantage of the reduced VAT rate on goods that are temporarily imported for re-exportation. Some companies “temporarily import machinery and equipment to use for a long time and do not re-export upon the report deadline,” the report said, eventually selling the products domestically after paying low or no VAT rates.
The second amendment would make changes to information that is required on customs documents. In order to qualify for a “tax rate of 0%,” exporters must prove their goods are being permanently exported by providing a “contract for sale” or a receipt, the report said. Under current laws, the “customs dossier” submitted during “declaration registration … does not require a sales contract for processing of exported goods and payment documents. Therefore, according to the above provisions, there are insufficient conditions for customs authority to determine the 0% VAT rate for exported goods when carrying out customs procedures.” If the change is made, officials will be able to check customs documents and “deduct tax if the dossiers meet conditions.”
Ho Chi Minh City Customs proposed additional changes to its VAT policy that would regulate fertilizers that are not subject to VAT, including “organic fertilizers and inorganic fertilizers such as phosphate fertilizers, nitrogen fertilizers, NPK fertilizers, ... micro-organic fertilizers.” Customs also proposed to “amend the Decree stipulating feeds for livestock, poultry, aquatic animals and other animal according to the List issued by the Ministry of Finance and the Ministry of Agriculture and Rural Development.”