Circular No. 06/2005/TT-BTC dated January 14, 2005 of the Ministry of Finance guiding the application of the Value Added Tax rate of 0% and the import duty refund on goods and services exported to Cambodia for the collection of freely convertible foreign currencies in cash

CIRCULAR

GUIDING THE APPLICATION OF THE VALUE ADDED TAX RATE OF 0% AND THE IMPORT DUTY REFUND ON GOODS AND SERVICES EXPORTED TO CAMBODIA FOR THE COLLECTION OF FREELY CONVERTIBLE FOREIGN CURRENCIES IN CASH

Pursuant to the current tax laws and ordinances;

Based on the Prime Minister's directions in the Government Office's Official Letter No. 4434/VPCP-KTTH of September 11, 2003;

After reaching agreement with the State Bank, the Ministry of Finance hereby guides the application of the value added tax (VAT) rate of 0% and the import duty refund on goods and services exported to Cambodia for the collection of freely convertible foreign currencies in cash (namely USD, Euro, GBP and JPY) as follows:

I. SUBJECTS OF APPLICATION: Production/business establishments that have goods exported to Cambodia, paying VAT by credit method and being permitted to collect proceeds from the sale of goods and services in freely convertible foreign currencies in cash by the Vietnam State Bank or its branches in provinces or cities where the establishments are headquartered, shall enjoy the VAT rate of 0%, being the input VAT refunded, and being considered for import duty refund.

II. CONDITIONS AND PROCEDURES ON DOSSIERS:

1. VAT: to comply with the guidance at Point 1.2.d, Section III, Part B of the Finance Ministry's Circular No. 120/2003/TT-BTC of December 12, 2003.

2. Import duty: to comply with the guidance in Section I, Part E of the Finance Ministry's Circular No. 87/2004/TT-BTC of August 31, 2004.

Where production/business establishments are permitted to collect proceeds from the sale of goods and services in cash in freely convertible foreign currencies by the Vietnam State Bank or its branches in provinces or cities where the establishments are headquartered, the conditions and procedures for VAT credit  or refund shall strictly comply with regulations; particularly, the via-bank payment conditions and procedures shall be replaced with:

- Goods/service export contracts signed with Cambodian purchasers, which must stipulate that payment is made in cash in freely convertible foreign currencies.

- Permits for the collection of freely convertible foreign currencies in cash from exports to Cambodia, granted by the Vietnam State Bank or its branches in provinces or cities where the establishments are headquartered.

- Customs declarations with border-gate customs' certification on the amounts of imported freely convertible foreign currencies in cash collected from the sale of goods and/or services to Cambodian purchasers.

- Documents on payment into the establishments' foreign-currency deposit accounts at Vietnam-based banks of the amounts of freely convertible foreign currencies collected in cash from the export of goods and/or services.

III. ORGANIZATION OF IMPLEMENTATION:

This Circular takes effect 15 days after its publication in "CONG BAO." For cases arising as from the effective date of the Vietnam State Bank Governor's Decision No. 17/2004/QD-NHNN of January 5, 2004, if the State Bank permits the collection of freely convertible foreign currencies in cash and where the conditions, procedures and dossiers provided for in this Circular are fully met, the VAT rate of 0% shall also apply and the import duty shall be refunded (for materials and supplies imported for the production of export goods). For goods and services exported to Cambodia in other forms of payment, VAT and import duty shall be comply with the guidance in the Finance Ministry's Circular No. 120/2003/TT-BTC of December 12, 2003, and Circular No. 87/2004/TT-BTC of August 31, 2004.

Should any problems arise in the course of implementation, units are requested to report them to the Ministry of Finance for study and settlement.