Circular No. 62/2004/TT-BTC guides the implementation of value-added tax (VAT) rates according to the List of Import Tariff Preferences.

CIRCULAR

Guidelines for implementing the value-added tax rate according to

The Tariff of Preferential Import Tax Rates

Pursuant to the Law on Value-Added Tax (VAT) No. 02/1997/QH9 dated May 10, 1997;

Pursuant to the Law Amending and Supplementing Certain Provisions of the Law on VAT No. 07/2003/QH11 dated June 17, 2003;

Pursuant to Decree No. 158/2003/NĐ-CP dated December 10, 2003 of the Government detailing the implementation of the Law on VAT and the Law Amending and Supplementing Certain Provisions of the Law on VAT;

To facilitate the declaration and payment of VAT, the Ministry of Finance provides guidelines for implementing the VAT rate according to the Tariff of Preferential Import Tax Rates as follows:

1. The list of goods and VAT rates (hereinafter referred to as the VAT Tariff List) issued together with this Circular is based on the list of goods of the Tariff of Preferential Import Tax Rates issued together with Decision No. 110/2003/QĐ-BTC dated July 25, 2003 of the Minister of Finance. The classification of goods in the VAT Tariff List is carried out in accordance with the classification of goods in the Tariff of Preferential Import Tax Rates stipulated in Circular No. 85/2003/TT-BTC dated August 29, 2003 of the Ministry of Finance.

2. The VAT Tariff List provides detailed names of goods as in the current Tariff of Preferential Import Tax Rates, guiding the VAT rate to subcategories of eight digits and adding some specific items under "Special". The application of the VAT Tariff List is implemented as follows:

2.1. In the VAT Tariff List, in addition to guiding the VAT rate for groups of four digits or subcategories of six or eight digits, it also details the VAT rate corresponding to the "Special" item for groups of four digits or subcategories of six or eight digits, accordingly:

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

- The VAT rate specified for each group or subcategory of six or eight digits applies to goods within those groups or subcategories, except for goods listed in the "Special" item.

Example 1: Group 0210, the VAT rate is detailed for subcategories of eight digits as 5% or 10%, and the "Special" item: Smoked meat and edible offal after slaughter; Fine or coarse meal from meat or edible offal after slaughter belonging to group 0210" has a VAT rate of 10%. Therefore, goods listed in the "Special" item and belonging to subcategories of eight digits within group 0210 apply a VAT rate of 10%. Other goods not listed in the "Special" item apply the detailed VAT rate for each subcategory of eight digits. For example, smoked beef belongs to subcategory 0210.20.00 applies a VAT rate of 10%, but other types of beef in this subcategory apply a VAT rate of 5%.

Example 2: Subcategory 6 digits 0507.90, the VAT rate is detailed for subcategories of eight digits within this subcategory as 5% and the "Special" item:Powder from turtle shells, whale baleen (upper jaw horn), whale teeth, deer antlers, claws, bird beaks belonging to subcategory 0507.90" includes has a VAT rate of 10%. Therefore, goods listed in the "Special" item and belonging to subcategories of eight digits within subcategory 0507.90 apply a VAT rate of 10%. Other goods not listed in the "Special" item apply the detailed VAT rate for each subcategory of eight digits within subcategory 0507.90. For example, "Powder from turtle shells" belongs to subcategory 8 digits 0507.90.20 applies a VAT rate of 10%, other goods in this subcategory apply a VAT rate of 5%.: Subcategory 8 digits 8483.90.15, has a VAT rate of 5% and the "Special" item:Type belonging to subcategory 8483.90.15 for bicycles"

Example 3has a VAT rate of 10%. Accordingly, goods listed in the "Special" item belonging to subcategory 8483.90.15 apply a VAT rate of 10%, other goods in this subcategory apply a VAT rate of 5%. The VAT Tariff List only records one VAT rate in the VAT rate column. In cases where imported goods fall under the specific VAT rate at Point 2, Point 3, Section II, Part B or do not fall under the taxable objects of VAT as stipulated in Section II, Part A of Circular No. 120/2003/TT-BTC dated December 12, 2003 of the Ministry of Finance, they shall apply the VAT rate as prescribed in Circular No. 120/2003/TT-BTC. In the VAT Tariff List, the VAT rate for subcategory 9020.00.10 "Respiratory support equipment" is 10%. Accordingly, all goods in this subcategory apply a VAT rate of 10%, but in cases where equipment in subcategory 9020.00.10 is determined to be medical equipment according to Point 2.3, Section II, Part B of Circular No. 120/2003/TT-BTC of the Ministry of Finance, they are subject to VAT with a rate of 5%.

2.2. In the VAT Tariff List, the VAT rate for subcategory 8524.32.90 "Discs used in laser systems solely for reproducing sound" is 5%. Accordingly, discs in subcategory 8524.32.90 apply a VAT rate of 5%, but in cases where enterprises import discs containing programs such as documentaries, news reports, scientific... and meet the conditions stipulated in Point 10, Section II, Part A of Circular No. 120/2003/TT-BTC of the Ministry of Finance mentioned above, they do not fall under the taxable objects of VAT.

Example 1: Goods not subject to VAT are marked with an asterisk (*) in the VAT rate column in the VAT Tariff List.Banknote paper (paper money) imported under group 4907, subcategory 4907.00.20 does not fall under the taxable objects of VAT.: Salt under group 2501 does not fall under the taxable objects of VAT.

Example 2: : Seed rice under group 1006, subcategory 1006.10.10 does not fall under the taxable objects of VAT. Other"belongs to the group of items"Laser reading system discs, solely for sound reproduction"is 5%. Accordingly, discs belonging to subheading 8524.32.90 are subject to a VAT rate of 5%, but if the enterprise imports discs that have recorded programs such as documentary films, newsreels, scientific... and meet the conditions stipulated in Point 10, Section II, Part A of Circular No. 120/2003/TT-BTC of the Ministry of Finance mentioned above, they are not subject to VAT."

2.3. Goods not subject to VAT are marked with an asterisk (*) in the VAT rate column in the VAT Tax List.

Example 1: Banknote paper (paper money) imported under heading 4907, subheading 4907.00.20 is not subject to VAT.

Example 2: Salt under heading 2501 is not subject to VAT.

Example 3: Seed rice under heading 1006, subheading 1006.10.10 is not subject to VAT.

3. For livestock and plant seeds such as breeding eggs, seedlings, plant seedlings, seeds, semen, embryos, genetic materials: within groups and subgroups under Chapters 1 to 12, some items not detailed specifically for use as seeds but classified together with general items and listed in the VAT rate table with a common rate of 5%. In cases where items within these groups and subgroups are determined according to standards for use as seeds and meet all conditions stipulated in Point 2, Section II, Part A of Circular No. 120/2003/TT-BTC of the Ministry of Finance, they are not subject to VAT.

ExampleSubgroup 0301.99.30 “ Other marine fish”, is detailed with a VAT rate of 5%, meaning that items in this group apply a VAT rate of 5%. In cases where marine fish in subgroup 0301.99.30 are determined to be fish for breeding purposes and meet all conditions stipulated in Point 2, Section II, Part A of Circular No. 120/2003/TT-BTC of the Ministry of Finance, they are not subject to VAT.

4. Imported tires in the form of tire-wheel assemblies apply the corresponding VAT rate specified in the column for tires. If the importer imports individual parts separately (tires, rims), each part applies the VAT rate prescribed for each item.

5. Nets, ropes, and threads for fishing nets include various types of fishing nets and threads specifically used for making fishing nets, regardless of production material, apply a VAT rate of 5%.

6. Goods are basic chemicals; the list of medicinal herbs used as raw materials for producing medicines for treatment and prevention, which have been detailed in Appendix 1 and Appendix 2 issued along with Circular No. 120/2003/TT-BTC of the Ministry of Finance, apply a VAT rate of 5%. Other items not listed in Appendices 1 and 2 mentioned above apply the VAT rate specified in the VAT rate table.

7. Goods meeting the conditions to be determined as specialized weapons and equipment for national defense and security are exempt from VAT according to the provisions in Point 19, Section II, Part A of Circular No. 120/2003/TT-BTC of the Ministry of Finance.

8. Goods belonging to groups and subgroups of parts and accessories of machinery and equipment under Chapters 84 to 90 (excluding parts and accessories of automatic data processing machines specified in Point 2.35, Section II, Part B, Circular No. 120/2003/TT-BTC) with a rate of 5% apply only to parts and accessories made of metal materials. Parts and accessories in these groups and subgroups not made of metal materials apply a VAT rate of 10%.

9. Goods are complete and incomplete sets of mechanical-electrical-electronic products:

- Complete sets of spare parts apply the same VAT rate as the finished product.

- Incomplete sets of spare parts apply the VAT rate according to each spare part and accessory.

- Incomplete sets of spare parts imported and applying preferential import tax rates based on the level of domestic content for the entire detailed list of imported spare parts apply the VAT rate according to the finished product.

- Incomplete sets of automobile spare parts in the form of CKD, IKD apply a VAT rate of 5%.

10. The VAT rate detailed in the VAT rate table applies uniformly from the import stage to the domestic consumption stage for imported goods and is used to determine the VAT rate for domestically produced and traded goods.

This circular takes effect 15 days after its publication in the Official Gazette and applies to all customs declarations for imported goods submitted to customs authorities from the date the circular becomes effective.

During implementation, if the VAT rate guidance in the VAT rate table does not align with the provisions of Circular No. 120/2003/TT-BTC or if the VAT rate applied is inconsistent for the same type of imported and domestically produced goods, local tax authorities and customs authorities will still collect VAT at the announced rate while compiling reports to the Ministry of Finance. The Ministry of Finance will base its guidance on the provisions of Decree No. 158/2003/NĐ-CP dated December 10, 2003, of the Government to ensure uniform application.