Tax considerations regarding sales through bonded warehouses
2025/08/25
- Nguyen Thi Thuy Duyen
Introduction
As Vietnam advances its participation in the international economy, the use of bonded warehouses as a business method is increasing. However, when conducting transactions through bonded warehouses, it is essential to have a thorough understanding of the transaction conditions, related documents, and applicable tax systems.
This article summarizes the key points to be noted in order to properly comply with the tax and customs laws related to the use of bonded warehouses.
1. Definition of Bonded Warehouses and Cases of Sales Through Bonded Warehouses
1.1 Definition of Bonded Warehouses
A bonded warehouse refers to a warehouse established within an area separated from the outside, where goods brought in from abroad or domestically are temporarily stored and managed under the supervision of customs based on a bonded warehouse contract concluded between the bonded warehouse operator and the owner of the goods, with various services provided as needed.
1.2 Goods That Can Be Brought into a Bonded Warehouse
In a bonded warehouse, various services are provided for the following types of goods.
– Goods of foreign companies that have not yet concluded a sales contract with a domestic company in Vietnam
– Products imported by Vietnamese companies from overseas, awaiting release into the domestic market or export to a third country
– Products brought into bonded warehouses from overseas, scheduled for export to a third country
– Products for which customs procedures have been completed and are scheduled for export
– Products whose temporary import period has ended and are scheduled for re-export
2.Tax policy related to sales through bonded warehouses
2.1 Foreign Contractor Tax (FCT)
The Foreign Contractor Tax (FCT) is a withholding tax imposed on income earned by foreign organizations or individuals providing services to individuals or organizations (regardless of whether they are residents or non-residents) within Vietnam.
According to Circular No. 103/2014/TT-BTC, if the place of delivery of goods is within the territory of Vietnam, or if the foreign contractor bears the transportation costs from the bonded warehouse to the delivery destination within Vietnam, the transaction is subject to FCT.
Under the current tax authorities’ viewpoint, bonded warehouses are considered to be within the territory of Vietnam. Therefore, in transactions where the seller is a foreign company outside Vietnam and the buyer is a Vietnamese company (EPE or Non-EPE), if the goods are delivered at a bonded warehouse, they are subject to Foreign Contractor Tax (FCT).
The method of taxing FCT on goods imported via bonded warehouses is as follows.
– Value Added Tax (VAT): No tax is imposed (in principle, it has already been paid at the time of import).
– Corporate Income Tax (CIT): The taxable sales amount is the product price, and the tax rate is 1%.
However, the above tax calculation method applies to ordinary product sales transactions and does not apply to sales transactions involving services conducted within Vietnam, such as installation services or transportation services. In practice, cases involving services in sales transactions through bonded warehouses are extremely rare, so this article omits the details of tax calculation for such cases.
2.2 Value-Added Tax (VAT) and Import Tax
Based on the Tax Department’s Official Letter No. 951/TCT-CS dated March 13, 2024, and No. 2575/TCT-CS dated July 26, 2011, the treatment of the seller’s VAT and the buyer’s (importer’s) import tax and VAT in transactions conducted through bonded warehouses is as follows.
a) Value-Added Tax (VAT) applicable to the seller
According to the official letter, since ownership of the goods transfers within the bonded warehouse and the transaction is completed within a tax-exempt area, VAT is not subject to taxation in any of the following cases.
– When the seller is a foreign company or a Vietnamese company
– When the buyer is an export processing enterprise (EPE) or a general enterprise (Non-EPE)
According to Article 23 of Decree No. 181/2025/ND-CP, enterprises can only deduct input VAT for business activities subject to VAT. If the input VAT cannot be individually distinguished in transactions through a bonded warehouse, it is necessary to allocate it monthly or quarterly according to the following formula.
Deductible Purchase VAT = (VAT-taxable Sales ÷ Total Sales) × Total Purchase VAT (for the relevant tax period)
b) Import duties and value-added tax (VAT) at the time of import by the purchaser (importer)
No import duties are incurred while goods are stored in a bonded warehouse, but import duties and VAT are incurred when the goods are moved out of the warehouse. (Except for special cases)
– When the purchaser is a Vietnamese company (Non-EPE)
It is necessary to pay import duties and VAT at the time of import. The applicable tax rate varies depending on the item.
– In case the purchaser is an Export Processing Enterprise (EPE)
This transaction is considered a transfer within the non-tariff area, therefore import tax and VAT are exempted.
2.3 Handling of invoices
a) When the seller is a domestic company in Vietnam (outside the non-tariff area)
– In cases where VAT is declared under the direct method: Use “Sales Invoice (hóa đơn bán hàng)” based on Article 8, Clause 2 of Decree No. 123/2020/ND-CP.
– In cases where VAT is declared under the credit method: Use “VAT Invoice (hóa đơn GTGT)” based on Article 8, Clause 1 of Decree No. 123/2020/ND-CP.
b) In the case where the seller is a domestic Vietnamese company such as an export processing enterprise (within the non-tariff zone)
– When selling self-produced goods: Use a “Sales Invoice (hóa đơn bán hàng)” based on Article 8, Clause 2 of Decree No. 123/2020/NĐ-CP.
– In the case of wholesale, retail, or other sales: Use a “VAT Invoice (hóa đơn GTGT)” based on Decree No. 70/2025/NĐ-CP, Decree No. 123/2020/NĐ-CP, and Official Letter No. 18195/BTC-TCHQ.
It should be noted that when using a “VAT invoice,” it is necessary to clearly state that the product is exempt from VAT, and the columns for the tax rate and VAT amount should be erased with a line.
In conclusion
The transfer of ownership through bonded warehouses has been increasing in recent years due to its convenience. In this article, based on regulations, practices related to transactions through bonded warehouses, and guidance from the General Department of Taxation, the main points to note were organized. For actual transactions, we recommend using the contents of this section as a reference and consulting with experts such as forwarders or customs authorities in advance if necessary.
References:
– Value Added Tax Law No. 48/2024/QH15 issued by the National Assembly on November 26, 2024 (effective from July 1, 2025)
– Government Decree No. 181/2025/NĐ-CP dated July 1, 2025 (effective from July 1, 2025)
– Ministry of Finance Notification No. 69/2025/TT-BTC dated July 1, 2025 (effective from July 1, 2025)
– Government-issued decree No. 70/2025/ND-CP dated March 20, 2025
– Customs Law No. 54/2014/QH13 issued by the National Assembly dated June 23, 2014
– Notification No. 38/2015/TT-BTC issued by the Ministry of Finance dated March 25, 2015
– Import and Export Tax Law No. 107/2016/QH13 issued by the National Assembly dated April 6, 2016
– Government-issued decree No. 08/2015/ND-CP dated May 21, 2015
– Notification No. 103/2014/TT-BTC issued by the Ministry of Finance dated August 6, 2014
This article was translated by Yarakuzen.
