Viet Nam - A Guide for Business and Investment - asean-korea centre

A tax reduction of 50% is available when a foreign investor’scapital is transferred to an enterprise which isestablished under Vietnamese laws.refund are: input VAT is larger than output VAT in 3consecutive months; exporters; input VAT on fixed assetsacquired, etc.Value Added Tax (“VAT”)Import DutyVAT applies to goods and services consumed in VietNam (including goods and services purchased fromabroad) and are collected during production, trading,provision of services and import stages. When supplyinggoods and/or services subject to VAT, the businessmust charge VAT on the value of goods or servicessupplied. The importer must pay import VAT to the customsoffice at the same time they pay import duties.The Viet Nam VAT system has three rate categories:0%, 5%, and 10% (the standard rate). The 0% rate appliesto exported goods and exported services (withsome exceptions). Exported goods are goods sold tooverseas or to export processing zones/export processingenterprises. Exported services are servicesprovided to and being consumed overseas. The 5%rate applies to areas of the economy concerned withthe provision of essential goods and services. The standardcommon 10% rate applies to other activities andgoods not specified as subject to the 5% rate. Additionally,there are 29 categories of goods and services thatare VAT exempt.The Vietnamese VAT system is also characterised bytwo types of VAT payers: deduction method VAT payersand direct method VAT payers. All companies andbusiness organisations are deduction method VAT payers.They will issue VAT invoices, charge output VAT tocustomers and claim input VAT through conventionalVAT returns.The direct method generally applies to small businesshouseholds which do not keep proper accounting recordsand foreign contractors (foreign companiesperforming business in Vietnam/having contracts withVietnamese customers without establishing alegal entity in Viet Nam) who do not want to maintainVietnamese accounting records. For these businesses,VAT is calculated at a deemed rate on gross turnover.VAT refund is eligible. Some of the examples for VATGenerally, all goods crossing Vietnamese borders aresubject to import/export duties. Import duty rates areclassified into three categories: ordinary rates, preferentialrates and special preferential rates.Preferential rates are applicable to imported goodsfrom countries that enjoy most-favoured-nation status(“MFN”) with Viet Nam. Currently, 89 countries enjoyMFN with Viet Nam. Special preferential rates are applicableto imported goods from countries that havespecial agreement with Viet Nam (such as ASEAN countries).Viet Nam joined ASEAN Free Trade Area (AFTA)in 1996. Under the AFTA Common Effective PreferentialTariff (CEPT) Scheme, Viet Nam has committed togradually eliminate all import tariffs in its Inclusion List.The ordinary rates are generally imposed at 150% ofthe preferential rates.Export DutyThe export of goods is encouraged by the Governmentof Viet Nam. Thus, export duties are only charged on afew items, basically natural resources such as mineralsand forest products but also on rice, seafood and scrapmetal. Export rates range from 0% - 45%.Customs PostViet Nam - A Guide for Business and Investment 37PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT