VAT policy for on-the-spot imports

Officers of Nhon Trach Customs Branch, Dong Nai Customs Department instruct procedures for enterprises. Photo: N.H

The General Department of Vietnam Customs cites Point c, Clause 1, Article 35 of Decree 08/2015/ND-CP as saying that “On-the-spot exports and imports shall include goods traded under the sale or purchase contract between Vietnamese enterprises and overseas organizations or individuals that have no representative in Vietnam, and delivered or received under the designation arrangement between foreign merchants with other enterprises in Vietnam”.

Article 3 of the 2008 Law on VAT stipulates “Goods and services used for production, trading or consumption in Vietnam are subject to Value-added tax, except those specified in Article 5 of this Law”.

Clause 1, Article 5 of the Law on VAT provides “Cultivation and husbandry products, and reared and fished aquatic products which have not yet been processed into other products or have been just preliminarily processed and sold by producing and fishing organizations and individuals, and products at the stage of importation” are not subject to VAT.

Clause 3, Article 8 provides that “the tax rate of 10% applies to goods and services not listed in Clauses 1 and 2 of this Article.

Clause 1, Article 3 of Decree 209/2013/ND-CP amended and supplemented in Clause 1, Article 1 of Decree 100/2016/ND-CP stipulates subjects not subject to VAT. Accordingly, products that have undergone insufficient working or processing specified in Clause 1 Article 5 of the Law on Value-added tax amended in Clause 1 Article 1 of the Law on amendment of the Law on Value-added tax, the Law on special excise duty and the Law on Tax administration are products that have only been cleaned, dried, shelled, deseeded, cut, salted, cooled or otherwise preserved with common methods.”

Clause 1, Article 1 of Circular 26/2015/TT-BTC of the Ministry of Finance amending and supplementing Clause 1, Article 4 of Circular 219/2013/TT-BTC stipulates subjects not subject to VAT as saying that “Products from farming (including agro-forestry products), breeding, and aquaculture that are produced, caught, sold, or imported and are not processed into other products or have only been preprocessed.

Preprocessed products are those that have only been cleaned, dried, husked, grinded, milled, threshed, split, cut, salted, put in cold storage (cooled or frozen), preserved with sulfur dioxide, sulfur solution, or other solutions, and other common means of preservation”.

According to the General Department of Vietnam Customs, if Dong Nai Food Industry Corporation imports tobacco materials under type A12 from foreign traders without a presence in Vietnam and is designated to receive products from Dong Viet Thanh Joint Stock Company, it will carry out on-the-spot import-export procedures under the provisions of Article 35 of Decree 08/2015/ND-CP and will be applied the VAT policy for on-spot imported tobacco leaves separated from stems as follows:

If the tobacco materials have not been processed into other products or have only preprocessed, they will be not subject to VAT. If the tobacco materials have been processed, they will be subject to 10% VAT rate.