Machinery only used for agriculture not subject to VAT

Tax sector prevents fraud from VAT refund

Illustrative photo. Source: Internet

Anh Kiet One Member Limited Company recently askedquestions related to the VAT policy applicable to machinery lines for fertiliser production.

According to the General Department of Vietnam Customs (GDVC), per Article 3 of Law No.71/2014/QH13 dated November 26, 2014; Clause 1, Article 3 of Government Decree 12/2015/ND-CP dated February 12, 2015; Clause 2, Article 1 of Circular 26/2015/TT-BTC dated February 27, 2015 of the Ministry of Finance, machinery and equipment that is used for agricultural production and certified specific technical structure is not subject to VAT.

Also according to the instructions in Point 2 of Official Letter 1677/BTC-TCT dated January 29, 2016 of the Ministry of Finance, the Ministry of Agriculture and Rural Development or the provincial and municipal Agriculture and Rural Development Departments willcertify the machinery andequipment used for agricultural production that isnot guided in Clause 2, Article 1 of Circular 26/2015/TT-BTC dated February 27, 2015 of the Ministry of Finance, and Point 1 Official Letter 12848/BTC-CST dated September 15, 2015 and Point 1 of this Official Letter under the principle that machines, equipment and components assembled into specialised machinery and equipment used in agriculture and not used for other purposes are not subject to VAT as prescribed in Clause 1 Article 3 of Law No.71/2014/QH13 dated November 16, 2014 amending and supplementing a number of articles of the Tax Law.

Based on the above provisions, the GDVC said if the products imported by the company are certified by the provincial and municipal Agriculture and Rural Development Department as machienry orequipment only used for agricultural production and not used for other purposes, and the technical structure of products is certified, the products are not subject to VAT.