Công văn 3307/TCT-CS

To: Provincial tax offices

The General Department of Taxation has received several tax departments’ official letters inquiring about VAT on goods supplied to foreign organizations and individuals for provision of non-refundable or humanitarian aid. Regarding this matter, the General Department of Taxation gives the following opinions:

Pursuant to Point 1, Section II, Part A; Section I, Part D of the Finance Ministry’s Circular No. 32/2007/TT-BTC of April 9, 2007, guiding the implementation of the Government’s Decree No. 158/2003/ND-CP of December 10, 2003, Decree No. 148/2004/ND-CP of July 23, 2004, and Decree No. 156/2005/ND-CP of December 15, 2005, detailing the implementation of the VAT Law and the Law Amending and Supplementing a Number of Articles of VAT Law:

- In case Vietnamese organizations use humanitarian aid or non-refundable aid of foreign organizations or individuals to purchase goods or value of constructions works in Vietnam for execution of aid projects, they will be refunded VAT amounts paid upon the purchase of goods or value of construction works as indicated on VAT invoices.

- In case foreign organizations or individuals directly conclude goods and service purchase contracts with Vietnam-based business establishments for execution of aid projects, they shall not be subject to VAT. At the same time, the Vietnam-based business establishments that make declarations and pay VAT according to the deduction method, and supply VAT-liable goods and services to foreign organizations and individuals at VAT-exclusive prices, will enjoy credit and refund of input VAT amounts of supplied goods and services.

The General Department of Taxation gives about guidance to Provincial Tax Offices for information.