Circular No. 131/2008/TT-BTC guiding the implementation of value-added tax (VAT) according to the List of Goods in the Tariff Schedule for Preferential Import Duties.

CIRCULAR

Guidelines for Implementing Value Added Tax (VAT) According to the List of Goods in the Preferential Import Tariff Schedule

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Pursuant to the Law on Value Added Tax No. 13/2008/QH12 dated June 3, 2008;

Pursuant to Decree No. 123/2008/NĐ-CP dated December 8, 2008 of the Government detailing and guiding the implementation of certain provisions of the Law on Value Added Tax;

The Ministry of Finance issues guidelines for implementing VAT according to the List of Goods in the Preferential Import Tariff Schedule as follows:

1. The VAT tariff schedule issued together with this Circular is established based on the List of Goods in the Preferential Import Tariff Schedule issued together with Decision No. 106/2007/QĐ-BTC dated December 20, 2007 and subsequent Decisions amending and supplementing it by the Minister of Finance, applicable to goods at the import stage, production, business, and consumption in Vietnam.

2. In cases where goods are specifically defined as falling within the scope of non-VAT taxable objects or subject to a VAT rate of 5% or 10% as provided for in the Law on Value Added Tax, Decree No. 123/2008/NĐ-CP dated December 8, 2008 of the Government, and the Circular of the Ministry of Finance guiding the implementation of the Law on Value Added Tax and Decree No. 123/2008/NĐ-CP, such provisions shall be followed.

Example 1: In the VAT tariff schedule, the VAT rate for group 9011 "Compound optical microscopes, including those for viewing microfilm or microprojection" is 10%. Accordingly, all items under this code apply a VAT rate of 10%. However, if compound microscopes under group 9011 are determined to be specialized equipment, tools for teaching, research, and scientific experiments as stipulated in Point m, Clause 2, Article 8 of the Law on Value Added Tax, they will be subject to VAT at a rate of 5%.

Example 2: In the VAT tariff schedule, the VAT rate for code 8526.10.90.00 "Other" in the subheading "Radar" is 10%. Therefore, radar under code 8526.10.90.00 applies a VAT rate of 10%, excluding types specifically used for national defense and security as stipulated in Clause 18, Article 5 of the Law on Value Added Tax, which are exempt from VAT.

3. The detailed VAT tariff schedule includes full names of goods as in the List of Goods in the Preferential Import Tariff Schedule, guiding VAT down to the 10-digit code level and adding some additional "Special" items. The application of the VAT tariff schedule is carried out as follows:

3.1. In the VAT tariff schedule, in addition to guiding VAT for the 10-digit code, it also details the VAT rate corresponding to the "Special" item for the 4-digit group or 6-digit, 8-digit, or 10-digit subheadings, accordingly:

- Goods specifically named in the "Special" item apply the VAT rate specified for that item in the "Special" section.

- The VAT rate indicated for each 6-digit, 8-digit, or 10-digit subheading applies to goods within that group, subheading, or code, except for goods listed in the "Special" section.

Example 1: For group 9017, the VAT rate for the 10-digit code is 10%, and the "Special: Teaching and learning aids in group 9017 have a VAT rate of 5%". Thus, goods listed in the "Special" section under the 10-digit codes in group 9017 apply a VAT rate of 5%. Other goods not listed in the "Special" section apply the detailed VAT rate for each 10-digit code. For example, rulers under code 9017.20.10.00 apply a VAT rate of 10%, but rulers used for teaching and learning under this code apply a VAT rate of 5%.

Example 2: Group 9021 is exempt from VAT, and the "Special: Strips, bands (excluding bands implanted in the human body), orthopedic devices in group 9021" have a VAT rate of 5%. Therefore, goods listed in the "Special" section under group 9021 apply a VAT rate of 5%, while other goods in this group are exempt from VAT.

3.2. Goods that are exempt from VAT are marked with an asterisk (*) in the VAT rate column of the VAT tariff schedule.

Example: Imported motor vehicles for disabled persons under group 8713, codes 8713.10.00.00, 8713.90.00.00 are exempt from VAT.

3.3. In cases where an asterisk (*) and the number 5 are marked next to each other in the VAT rate column (*, 5), agricultural products, livestock, aquaculture, and fishing products that have not been processed into other products or only undergone simple processing are exempt from VAT when produced, sold, or imported by organizations and individuals but must be subject to VAT at a rate of 5% at the trading stage.

Example: Live pigs under group 0103 are exempt from VAT when produced and sold or imported by organizations and individuals but must be subject to VAT at a rate of 5% at the trading stage.

3.4. In cases where an asterisk (*) and the number 10 are marked next to each other in the VAT rate column (*, 10), imported gold in bar or ingot form that has not been crafted into artistic products, jewelry, or other products are exempt from VAT at the import stage but must be subject to VAT at a rate of 10% at the trading stage.

This Circular takes effect from January 1, 2009. Circular No. 62/2004/TT-BTC dated June 24, 2004 of the Ministry of Finance guiding the implementation of VAT rates according to the List of Goods in the Preferential Import Tariff Schedule is hereby abolished.

In cases where VAT is inconsistently applied to the same type of imported goods and domestically produced, traded, and consumed goods, tax authorities and local customs offices shall report to the Ministry of Finance to promptly provide unified guidance./.