Circular No. 84/2003/TT-BTC dated August 28, 2003 of the Ministry of Finance guiding the application of value added tax rates according to the list of imports

CIRCULAR

PROVIDING GUIDELINES FOR APPLICATION OF RATES OF VALUE ADDED TAX PURSUANT TO THE LIST OF IMPORTS

Pursuant to the Law on Value Added Tax 02-1997-QH9 dated 10 May 1997; Decree 79-2000-ND-CP dated 29 December 2000 and Decree 76-2002-ND-CP dated 13 September 2002 of the Government; Circular 122-2000-TT-BTC dated 29 December 2000 and Circular 82-2002-TT-BTC dated 18 September 2002 of the Ministry of Finance providing guidelines for implementation of Decree 79-2000-ND-CP dated 29 December 2000 and Decree 76-2002-ND-CP dated 13 September 2002 of the Government providing detailed regulations on the implementation of the Law on Value Added Tax;

Pursuant to the Preferential Import Duty Tariff issued with Decision 110-2003-QD-BTC of the Minister of Finance dated 25 July 2003; 

To create favourable conditions for the declaration, calculation and payment of value added tax, the Ministry of Finance systematizes and issues with this Circular a list of goods and their rates of value added tax pursuant to the list of goods of the preferential import duty tariff and provides the following guidelines for the implementation thereof:

1. As the list of goods and their rates of value added tax (hereinafter referred to as the List) is prepared pursuant to the list of goods of the preferential import duty tariff issued with Decision 110-2003-QD-BTC of the Minister of Finance dated 25 July 2003, in principle the classification of goods in this List shall be implemented in the same method as classification of goods in the list of goods of the preferential import duty tariff issued with Decision 110-2003-QD-BTC of the Minister of Finance dated 25 July 2003.

2. Unlike the preferential import duty tariff current in force, all names of goods are not be listed in the List, names and VAT rates are listed under respective chapters or (4-digit) headings or (6 or 8-digit)

2.1 Where only the name and the tax rate for a chapter are listed in the List without listing headings or subheadings of such chapter, headings and subheadings of such chapter shall be subject to the rate of VAT provided for such chapter. 

Example: In chapter 34, the VAT rate stated in the "tax rate" column of the List corresponding to the heading of the chapter is 10%

2.2 Where in addition to the name and tax rate for a chapter, the name and the tax rate for a section "Particular" of a chapter are stated, all goods in the "particular" section shall be subject to the VAT rate specified in such "particular" section, other items of goods under the remaining 4-digit headings or 6-digit and 8-digit subheadings of the chapter shall be subject to the VAT rate provided for such chapter.

Example: In chapter 11 "Products of the Milling Industry; Malt; Starches; Inulin; Wheat Gluten", the VAT rate stated in the "tax rate" column of the List corresponding to the name of the chapter or to the section "Particular: from rice, maize, sweet potato, cassava or wheat flour" is 10% or 5%, respectively, it means that all goods under 4-digit headings or 6-digit and 8-digit subheadings (except for products made from rice, maize, sweet potato, cassava or wheat flour) shall be subject to the VAT rate of 10%.  Goods in "particular" section, including products from rice, maize, sweet potato, cassava or wheat flour shall be subject to VAT rate of 5%.

2.3 Where the name of and tax rate for a 4-digit heading are listed in the List, the VAT rate for the 4-digit headings shall be applicable to all 6-digit and 8-digit subheadings of such 4-digit heading.

Example: the VAT rate for heading No.3707 stated in the "VAT rate" column 10%, it means that all items of goods under 6-digit and 8-digit subheadings of heading No.3707 shall be subject to the VAT rate of 10%.

2.4 Where the List specifies the name of a 4-digit heading, the tax rate for such 4-digit heading; the "particular" section and the tax rate for such "particular" section, the item of goods whose name and tax rate for the "particular" section are specified, shall be subject to the VAT rate for such item of goods.  Items of goods under remaining 4-digit headings or 6-digit and 8-digit subheadings of the heading shall be subject to the VAT rate applicable to such heading.

Example: with respect to heading No.8524, the VAT rate provided for the heading is 5% and with respect to the section "Particular: cards incorporating a magnetic stripe with the code of 8524.60.00, the VAT rate of 10% is applicable, it means that except for the item of goods being cards incorporating a magnetic stripe with the code of 8524.60.00 which are subject to the VAT rate of 10%, all remaining items of goods under heading No.8524 shall be subject to the VAT rate of 5%.

2.5 Where, in addition to the name of a 4-digit heading, the List also specifies details of and VAT rates for

• The item of goods whose name is specified in "particular" section shall be subject to the VAT rate provided for such item of goods in such "particular" section.

• The VAT rate provided for the 8-digit subheading shall be applicable to all items of goods under such 8-digit subheading, except for items of goods listed in the "particular" section.

Example: Filters used for motor vehicles with the code of 8421.23.21 in chapter 87 is subject to the VAT rate of 5% and at the end of Heading No.8421 there is a section "particular: oil or petrol-filters used for vehicles under Heading No.8711" which is subject to the VAT rate of 10%, it means that except for filters used for  vehicles under Heading No.8711 which are subject to the VAT rate of 10%, all of other filters with the code of 8421.23.21 shall be subject to the VAT rate of 5%.

2.6 In a number of cases because criteria for distinguishing between the preferential import duty tariff and headings of goods subject to VAT are not identical, or an item of goods has not been determined exactly whether or not such item is subject to special sale tax, a fixed VAT rate is temporarily provided for in the VAT rate column of this List.   If the business produces a document evidencing the applicable tax rate or that [such item of goods] is not subject to VAT in accordance with the provisions of Section II of Part A and clause 2 of Section II of Party B of Circular 122-2000-TT-BTC of the Ministry of Finance dated 29 December 2000, VAT shall be applicable in accordance with this provision.

Example 1: all items of goods under Heading No.2206 are subject to a VAT rate of 10%.  Where an item of imports under Heading No.2206 is classified as alcohol, such item shall not be subject to VAT, but shall be subject to special sales tax.

Example 2: the VAT rate for Heading No.8524 "Records, tapes and other recorded media for sound or other similarly recorded phenomena etc." and for the section "Particular: Cards incorporating a magnetic stripe with the code of 8524.60.00" is 5% and 10%, respectively, it means that all programmed tapes and disks shall be subject to the VAT rate of 5%.  Where an enterprise imports programmed documentary, news feature or scientific film tapes or disks which satisfy all conditions set out in clause 10 of Section II of Part A of Circular 122-2000-TT-BTC of the Ministry of Finance mentioned above, [such tapes and disks] shall not be subject to VAT.

Example 3: The VAT rate stated in the "tax rate" column of the List in respect of heading No.9020 "Other breathing appliances and gas masks etc." is 10%. It means that all items of goods under this heading shall be subject to the VAT rate of 10%.  Where any equipment under heading No.9020 are considered as specialized medical equipment as stipulated in clause 2.19 of Section II of Part B of Circular 122-2000-TT-BTC of the Ministry of Finance mentioned above, [such equipment] shall be subject to the VAT rate of 5%.

2.7 Items of goods which are subject to special sales tax or are not subject to value added tax shall be marked with a sign (*) in the VAT rate column of the List.

Example 1: Imported banknotes (under heading No.4907 with the code of 4907.00.20) are not subject to VAT.

Example 2:  As imported beer under heading No. 2203 is subject to special sales tax, so it is not subject to VAT.

Example 3:  Air-conditioning machines which are used for persons and installed in motor vehicles (with the code of 8415.20.00) and which are marked with the sign (*) are subject to the VAT rate of 5%.  It is construed that:

+ Machines with a capacity of more than 90,000BTU/h shall be subject to the VAT rate of 5%.

+ Machines with a capacity of 90,000 or less BTU/h shall be subject to special sales tax and shall not be subject to VAT.

3. In the case of import of goods such as tyres or computers in the form of tyres accompanied by tubes and ***; or computers accompanied by an uninterruptible power supply, the relevant rate of VAT stated in the tax rate column shall apply. 

4. Chenille or yarn used for knitting fishing nets including special yarn and chenille for knitting fishing nets regardless of their materials shall be subject to the VAT rate of 5%.

5. Items of goods being basic chemicals and pharmaceutical materials used for production of medicines for treatment or prevention of diseases provided for in Appendices 1 and 2 to Circular 122-2000-TT-BTC shall be subject to the VAT rate of 5%.

6. Any items of goods satisfying all conditions for considering that they are used for national security and defence shall not be subject to value added tax as stipulated in paragraph 19 of Section II of Part

7. VAT rates in the List shall be used as a basis for application of VAT rates to domestically produced or traded goods.  Where a VAT rate in the List is different with the VAT rate for an item of goods specified in Circular 122-2000-TT-BTC of the Ministry of Finance dated 29 December 2000 providing guidelines for implementation of Decree 79-2000-ND-CP of the Government dated 29 December 2000 providing detailed regulations on implementation of the Law on Value Added Tax, the VAT rate in the List shall not be used for declaration and tax calculation, but the tax rate provided for in Circular 122-2000-TT-BTC dated 29 December 2000 shall be applicable.

This Circular shall be of full force and effect and applicable to all declarations of imported goods submitted to customs offices fifteen (15) days from the date of publication in the Official Gazette and shall replace Appendix 4 "Value added tax tariff pursuant to the List of Imports" issued with Circular 122--2000-TT-BTC of the Ministry of Finance dated 29 December 2000 providing guidelines for implementation of Decree 79-2000-ND-CP of the Government dated 29 December 2000 providing detailed regulations on implementation of the Law on Value Added Tax.

During the implementation, bodies and entities are requested to report any items of goods whose VAT rate is unspecific or unreasonable to the Ministry of Finance (General Department of Taxation) for consideration and adjustment.