Circular No. 06/2005/TT-BTC guides the application of a 0% VAT tax rate and refund of import tax for goods and services exported to Cambodia and received in freely convertible foreign currency cash.

CIRCULAR

Guidelines on the application of a 0% VAT rate and refund of import tax for goods and services exported to Cambodia receiving freely convertible foreign currency in cash

 in accordance with current Tax Laws and Tax Ordinances;

Based on the guidance of the Prime Minister's Office in Circular No. 4434/VPCP-KTTH dated September 11, 2003;

WHEREAS After consultation and agreement with the State Bank, the Ministry of Finance provides guidelines on the application of a 0% VAT rate and refund of import tax for goods and services exported to Cambodia receiving freely convertible foreign currency in cash (including US dollars, Euros, British Pounds, Japanese Yen) as follows:

Production and business establishments exporting goods to Cambodia, paying VAT under the deduction method, and permitted by the State Bank of Vietnam or its branch in the province or city where the establishment is located to collect payment for goods and services in freely convertible foreign currency in cash shall apply a 0% VAT rate; deduct and be refunded input VAT, and be eligible for import tax refund.

II. CONDITIONS AND PROCEDURES FOR DOCUMENTATION:

I. APPLICABLE OBJECTS:

1. VAT: implemented according to the guidelines at point 1.2.d, section III, part B of Circular No. 120/2003/TT-BTC dated December 12, 2003 issued by the Ministry of Finance.

2. Import tax: implemented according to the guidelines at section I, part E of Circular No. 87/2004/TT-BTC dated August 31, 2004 issued by the Ministry of Finance.

In cases where production and business establishments are permitted by the State Bank of Vietnam or its branch in the province or city where the establishment is located to collect payment for goods and services in freely convertible foreign currency in cash, the conditions and procedures for deduction and refund must be strictly followed, except that the conditions and procedures for bank transactions are replaced by:

- Export contracts signed with buyers in Cambodia must specify payment in freely convertible foreign currency in cash.

- A permit to collect freely convertible foreign currency in cash from exports to Cambodia issued by the State Bank or its branch in the province or city where the establishment is located.

- Customs declaration forms confirmed by customs authorities regarding the amount of freely convertible foreign currency in cash imported from sales to buyers in Cambodia. - Proof of depositing foreign currency cash received from exports into a foreign currency account at a bank in Vietnam.

This Circular takes effect 15 days after its publication in the Official Gazette. For cases arising from the effective date of Decision No. 17/2004/QĐ-NHNN dated January 5, 2004 of the Governor of the State Bank of Vietnam, if permitted by the State Bank to collect freely convertible foreign currency in cash and meeting the conditions and documentation requirements set out in this Circular, they will also apply a 0% VAT rate and be refunded import tax (for raw materials and components imported for export production). For goods and services exported to Cambodia using other payment methods, the handling of VAT and import tax shall follow the guidelines in Circular No. 120/2003/TT-BTC dated December 12, 2003; Circular No. 87/2004/TT-BTC dated August 31, 2004 of the Ministry of Finance.

During implementation, if there are any difficulties, units are requested to report to the Ministry of Finance for study and resolution./.

III. IMPLEMENTATION:

This Circular shall take effect fifteen days after its publication in the Official Gazette. For cases arising from the date on which Decision No. 17/2004/QĐ-NHNN of January 5, 2004, of the Governor of the State Bank of Vietnam took effect, if the State Bank permits the conversion of foreign currency to cash and meets the conditions and procedures specified in this Circular, they shall also be subject to a 0% VAT rate and a refund of import tax (for raw materials and imported components for export production). For goods and services exported to Cambodia with other payment forms, the handling of VAT and import tax shall be carried out in accordance with the guidelines set forth in Circular No. 120/2003/TT-BTC dated December 12, 2003; and Circular No. 87/2004/TT-BTC dated August 31, 2004, of the Ministry of Finance.

In the course of implementation, if there are any difficulties, units are requested to report them to the Ministry of Finance for study and resolution./.