Legal News

[Taxation] Non-application of 0% VAT on domestic delivery of imports and exports to foreign trading companies in Vietnam

2024/12/26

The General Department of Taxation issued Official Letter No. 6007/TCT-CS dated December 17, 2024, providing guidance on VAT policy as follows. This clarifies the application of VAT in domestic delivery imports and exports, particularly the treatment of foreign traders operating in Vietnam.

1. Cases where VAT 0% does not apply
Transactions where a Vietnamese domestic company exports goods to a foreign trading company operating in Vietnam, and the foreign trading company designates a delivery location within Vietnam, do not fall under the definition of domestic delivery exports and imports as specified in Article 35, Paragraph 1, Item c of Decree No. 08/2015/ND-CP, and are therefore not eligible for VAT 0% application.

2. Cases where the 0% VAT rate applies
When a Vietnamese domestic company delivers goods to an export processing enterprise (EPE) in Vietnam in accordance with the instructions of a foreign trade company, the application of the 0% VAT rate is recognized upon verification of the contract and bank payment documents.

Note that Official Letter No. 558/TCT-CS dated February 20, 2024, states that if the declaration form for domestic delivery imports and exports is not submitted in accordance with the provisions of the decree, VAT refunds will not be granted. The applicability of the 0% VAT rate for domestic delivery exports and imports is an important issue for companies. When conducting transactions related to domestic delivery exports and imports, it is important to accurately understand the location of foreign trading companies within Vietnam and the specific legal requirements, and to implement appropriate procedures.

References:
• Article 35, Paragraph 1, Item c of Decree No. 08/2015/ND-CP dated January 21, 2015
• Official Letter No. 558/TCT-CS issued by the General Department of Taxation on February 20, 2022
• Official Letter No. 6007/TCT-CS issued by the General Department of Taxation on December 17, 2024