Công văn 3055/BTC-TCT

To: Provincial-level Tax Departments

The Ministry of Finance has received requests from units of the Vietnam Forwarders Association and provincial-level Tax Departments for guidance on value-added tax on international transport. Regarding this matter, the Finance Minister gives the following opinions:

Point 1, Article 8 of the Value-Added Tax Law stipulates, “The tax rate of 0% applies to exported goods and services, international transportation and goods and services not liable to value-added tax specified in Article 5 of this Law upon exportation.......”

Item d, Clause 1, Article 6 of Decree No. 123/2008/ND-CP of December 8, 2008, stipulates: “International transportation mentioned in this Clause covers transportation of passengers, luggage and cargoes along international routes from Vietnam to abroad or vice versa. In case an international transportation contract covers also a domestic stage, international transportation covers also domestic routes.”

- Point 1.1, Section II, Part B of the Finance Minister’s Circular No. 129/2008/TT-BTC of December 26, 2008, on value-added tax, guides: the tax rate of 0% is applicable to:

“- International transportation covering transportation of passengers, luggage and cargoes along international routes from Vietnam to abroad or vice versa. In case an international transportation contract covers also a domestic stage, international transportation covers also domestic routes;”

- Article 1 of the Finance Ministry’s Circular No. 112/2009/TT-BTC of June 2, 2009, on value-added tax guides:

“To be eligible for the tax rate of 0%, international transportation must satisfy the following conditions:

- Having a contract on transportation of passengers, luggage and cargo between the carrier and the shipper along international routes from Vietnam to aboard or vice versa in the forms in accordance with regulations by law. In the case of transportation of passengers, the transportation contract is the ticket. In case an international transportation contract covers also a domestic stage, international transportation covers also domestic routes. International transportation business establishments shall comply with regulations on transportation.

- Having documents on via-bank payment or other modes of payment regarded as via-bank payment. Having documents of direct payment in the case of transportation of individual passengers.”

Point 1.13, Section I, Part B of Circular No. 129/2008/TT-BTC on value-added tax calculation prices, guides: “For transportation, loading and unloading, taxable prices are VAT-exclusive freight or loading and unloading charge rates, regardless of whether the establishments directly undertake the transportation, loading and unloading or hire such service.”

Clause 2, Article 2 of Decree No. 87/2009/ND-CP of October 19th 2009, on multimodal transportation, stipulates: “International multimodal transportation” means multimodal transportation from a place in Vietnam where the goods are taken by the multimodal transportation operator to a place designated for goods delivery in another country and vice versa.”

Under the above provisions, in case a business establishment has signed an international transportation contract with customers (regardless of whether the establisment directly has means of transport or not), based on bills of lading and satisfaction of the conditions specified in Article 1 of the Finance Ministry’s Circular No. 112/2009/TT-BTC of June 2, 2009, on value-added tax, its international transportation activities are eligible for the VAT rate of 0%.

Eexportation, aviation and maritime services which satisfy the conditions specified in the Finance Ministry’s Circular No. 129/2008/TT-BTC and Circular No. 112/2009/TT-BTC will be eligible for the VAT rate of 0%; other services are eligible for the VAT rates specified in current legal documents on VAT.

This Official Letter replaces the Finance Ministry’s Official Letter No. 15448/BTC-TCT of November 2, 2009.

Above is the Ministry of Finance’s guidance for provincial-level Tax Departments. Any problems arising in the course of implementation should be promptly reported to the Ministry of Finance for timely guidance.-