Circular No. 43/1999/TT-BTC guides the implementation of the Value Added Tax Law (VAT) for diplomatic missions, consular offices, and international organizations' representative offices in Vietnam.

CIRCULAR

Guidelines for implementing the Value Added Tax Law (VAT)

concerning diplomatic missions and consular offices

(with value-added tax refunds):

To facilitate and meet the work and living needs of entities entitled to tax exemption and immunity under Vietnamese laws and in accordance with international conventions to which Vietnam is a party;

Pursuant to Decree No. 28/CP dated May 11, 1998 of the Government detailing the implementation of the Value Added Tax Law;

Pursuant to Decree No. 73/CP dated July 30, 1994 of the Government detailing the implementation of the Ordinance on privileges and immunities granted to diplomatic missions, consular offices of foreign countries, and representative offices of international organizations in Vietnam;

Pursuant to Decision No. 205/1998/QĐ-TTg dated October 9, 1998 of the Prime Minister promulgating the Regulations on duty-free shops;
After reaching consensus with the Ministry of Foreign Affairs, the Ministry of Trade, and the General Department of Customs, the Ministry of Finance provides guidelines for tax exemptions and immunities regarding VAT as follows:

I. TAX EXEMPTIONS AND IMMUNITIES REGARDING VAT RELATED TO HEADQUARTERS, OFFICES OF DIPLOMATIC MISSIONS, CONSULAR OFFICES, AND REPRESENTATIVE OFFICES OF INTERNATIONAL ORGANIZATIONS IN VIETNAM AND THE DWELLINGS OF THE HEADS OF DIPLOMATIC MISSIONS AND CONSULAR OFFICES

1- Diplomatic missions, consular offices of foreign countries, and United Nations system organizations located in Vietnam are entitled to tax exemptions and immunities regarding VAT related to headquarters and office premises.

2- The heads of diplomatic missions and consular offices are entitled to tax exemptions and immunities regarding VAT related to their dwellings in Vietnam.

3- Representative offices of other international organizations in Vietnam are entitled to tax exemptions and immunities regarding VAT according to treaties to which Vietnam is a party.

4- Entities and individuals mentioned in Points 1, 2, and 3 above are not required to pay VAT when settling payments for goods and services related to construction projects for headquarters, office premises, or rental payments for such premises and dwellings for these entities.

5- Vietnamese or foreign organizations and individuals permitted to operate businesses in Vietnam, who implement VAT deduction methods, may deduct input VAT on goods and services used for producing and trading taxable goods and services related to construction projects or renting headquarters, office premises, and dwellings for entities mentioned in Points 1, 2, and 3 above, but must provide documentation proving the actual supply of goods and services to entities entitled to VAT exemptions and immunities, specifically as follows:

- Certificate of entitlement to VAT exemption issued by the Protocol Department of the Ministry of Foreign Affairs (original or certified copy bearing the stamp and signature of an authorized official of the entity entitled to diplomatic immunity).

- Contracts for supplying goods and services signed with entities entitled to VAT exemptions and/or:

- VAT invoices for supplying goods and services to entities entitled to VAT exemptions and immunities.

- Completion acceptance records for construction projects (if applicable).

When issuing VAT invoices to entities entitled to VAT exemptions and immunities, business establishments must use VAT invoices and clearly indicate in the VAT section of the invoice that the recipient is entitled to VAT exemptions and immunities.

6- Goods and materials imported for constructing headquarters, office premises, or dwellings for entities mentioned in Points 1, 2, and 3 above are exempt from VAT at the import stage if they have a certificate from the Protocol Department of the Ministry of Foreign Affairs confirming the entitlement to tax exemptions and immunities and the purpose of importing such goods and materials.

II. VAT EXEMPTIONS FOR IMPORTED GOODS OR PURCHASED DOMESTICALLY BY ENTITIES ENTITLED TO DIPLOMATIC PRIVILEGES

OF THE SUBJECTS ELIGIBLE FOR DUTY AND TAX EXEMPTIONS AND INCENTIVES ON FOREIGN TRADE

1- Diplomatic missions, consular offices, diplomatic officials, consular officials, administrative and technical staff, and representative offices of international organizations entitled to VAT exemptions and immunities under international treaties to which Vietnam is a party are exempt from VAT on imported goods or domestically purchased goods within the quantities specified in Circular No. 04/TTLB dated February 12, 1996 of the Joint Ministry of Trade - Foreign Affairs - Finance - General Department of Customs and certain essential goods sold at duty-free shops.

2- For imported goods of these entities, customs authorities shall implement import duty exemptions as detailed in Circular No. 04/TTLB, and simultaneously refrain from collecting VAT on these imported goods.

3- For domestically purchased goods at locations permitted by the Vietnamese State to sell duty-free goods, the quantity purchased as specified in Point II.1 above is exempt from VAT.

Duty-free shops are exempt from VAT on imported goods intended for sale at duty-free shops.

4- Goods produced in Vietnam and sold at duty-free shops are considered exported goods and subject to a 0% VAT rate.

5- Cases where property transfers, including houses, cars, and motorcycles, between diplomatic missions, consular offices, and members thereof are exempt from VAT.

III. EFFECTIVE DATE OF IMPLEMENTATION

These provisions of this Circular apply to entities enjoying diplomatic privileges on a reciprocal basis.

This Circular takes effect fifteen days from the date of issuance. Other tax regulations applicable to entities entitled to tax exemptions and immunities, not covered in this Circular, shall be implemented in accordance with current tax laws and the provisions of Circular No. 04/TTLB dated February 12, 1996 of the Joint Ministry of Trade - Foreign Affairs - Finance - General Department of Customs.