VietnameseOfficial Dispatch No. 1641/TCT-PCCS of May 08, 2006, On VAT on goods entrusted for export processing
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Official Dispatch No. 1641/TCT-PCCS of May 08, 2006, On VAT on goods entrusted for export processing
| Issuing body: | General Department of Taxation | Effective date: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Official number: | 1641/TCT-PCCS | Signer: | Pham Duy Khuong |
| Type: | Official Dispatch | Expiry date: | Updating |
| Issuing date: | 08/05/2006 | Effect status: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Fields: | Tax - Fee - Charge |
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Effect status: Known
THE MINISTRY OF FINANCE THE GENERAL DEPARTMENT OF TAXATION ------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom – Happiness --------- |
No. 1641/TCT-PCCS On VAT on goods entrusted for export processing | Hanoi, May 08, 2006 |
To: KB Vietnam Limited Liability Company
In response to Official Letter No. 05/2006/CV-KB.VN dated February 10, 2006 of KB Vietnam Limited Liability Company, inquiring about procedures for application of the VAT rate of 0% to goods entrusted for export processing, the General Department of Taxation gives the following opinions:
1. Point 3, Section II, Part B of Circular No. 84/2004/TT-BTC of August 18, 2004, amending and supplementing the Finance Ministry's Circular No. 120/2003/TT-BTC of December 12, 2003, stipulates: "Goods entrusted for export processing: In this case, an establishment signs a processing contract directly with a foreign party but later subcontracts the processing to another establishment. The establishment signing the processing contract directly with the foreign party shall enjoy only a commission on the processing remuneration," and such a commission shall enjoy the VAT rate of 0%. According to this guidance, if KB Vietnam Limited Liability Company undertook to process a lot of kimono dresses for a foreign party, then entrusted the processing to other domestic establishments and it enjoys. It enjoyed only a commission on processed products, then such entrusted processing of export will be liable to, the VAT rate of 0%.
2. The issuance of invoices by the establishments undertaking the export processing entrusted by KB Vietnam Limited Liability Company (the unit signing the processing contract directly with the foreign party) with the VAT rate of 0% is compliant with current regulations.
3. For an establishment undertaking the entrusted export processing to enjoy VAT credit/refund for the already exported goods lot, the following papers are required:
- The export processing contract directly signed by KB Vietnam Limited Liability Company with its foreign partner;
- The export processing entrustment contract between KB Vietnam Limited Liability Company and the domestic processing establishment;
- The written minutes on liquidation of the export processing entrustment contract (where the contract has been completed) or the written minutes on periodical liabilities comparison between KB Vietnam Limited Liability Company and its foreign partner and between KB Vietnam Limited Liability Company and the establishment undertaking the entrusted processing (under Point d.2, Section II, Part B of the Finance Ministry's Circular No. 120/2003/TT-BTC of December 12, 2003);
- Vouchers for via-bank payment between KB Vietnam Limited Liability Company and its foreign partner (under the guidance at Point d.3, Section II, Part B of the Finance Ministry's Circular No. 120/2003/TT-BTC of December 12, 2003);
- Value-added invoices issued by the establishment undertaking the entrusted processing to KB Vietnam Limited Liability Company, with the tax rate of 0%.
Above is the General Department of Taxation's reply to KB Vietnam Limited Liability Company's inquiry, for the latter's knowledge and compliance.
FOR THE GENERAL DIRECTOR OF TAXATION DEPUTY GENERAL DIRECTOR Pham Duy Khuong |
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