VAT RATES IN VIETNAM AND SPECIAL CASE FOR INVOICES FROM SHIPPING LINES

VAT applies to goods and services used for production, trading, and consumption in Vietnam (including goods and services purchased from non-residents), with certain exemptions. Depending on the category of goods or services, the VAT rates are as follows:

* A 0% rate applies to exported goods/services, including goods/services sold to overseas/non-tariff areas and consumed outside Vietnam/in the non-tariff areas, goods processed for export or in-country export (subject to conditions), goods sold to duty free shops, certain exported services, construction and installation carried out for export processing enterprises, aviation, marine, and international transportation services.

* A 5% rate applies generally to areas of the economy concerned with the provision of essential goods and services. These include clean water, teaching aids, books, unprocessed foodstuffs, medicine and medical equipment, husbandry feed, various agricultural products and services, technical/scientific services, rubber latex, sugar and its by-products, social housing, and certain cultural, artistic, and sport services/products.

* The 10% ‘standard’ rate applies to activities not specified as not subject to VAT, exempt, or subject to the 0% or 5% rate.

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As for the invoice of shipping lines, this is a special case, because foreign shipping lines operate in Vietnam through the company in Vietnam as an agent, the company only stands to collect revenue for the foreign shipping line, not the Company’s revenue. Invoices are issued to customers as follows:

The company’s agent clearly states on the invoice that it is the money collected on behalf of the foreign shipping company, the cash flow of the goods, the value of the payment service for the foreign carrier, excluding VAT, the VAT rate line is not written and crossed out, VAT amount is stated as the same VAT amount that the company must deduct and pay on behalf of foreign shipping lines.