CIRCULAR

Guidelines for implementing the value-added tax rate

according to the List of Imported Goods

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Pursuant to the Law on Value-Added Tax No. 02/1997/QH9 dated May 10, 1997; Decree No. 79/2000/NĐ-CP dated December 29, 2000 and Decree No. 76/2002/NĐ-CP dated September 13, 2002 of the Government; Circular No. 122/2000/TT-BTC dated December 29, 2000 and Circular No. 82/2002/TT-BTC dated September 18, 2002 of the Ministry of Finance guiding the implementation of Decree No. 79/2000/NĐ-CP dated December 29, 2000 and Decree No. 76/2002/NĐ-CP dated September 13, 2002 of the Government detailing the implementation of the Law on Value-Added Tax;

Pursuant to the List of Preferential Import Tariff Schedule issued together with Decision No. 110/2003/QĐ-BTC dated July 25, 2003 of the Minister of Finance;

In order to facilitate the declaration and payment of value-added tax, the Ministry of Finance has systematized and promulgates along with this Circular the List of Goods and Rates of Value-Added Tax according to the List of Goods of the Preferential Import Tariff Schedule and provides guidance for its implementation as follows:

1. The List of Goods and Rates of Value-Added Tax (hereinafter referred to as the List) is established based on the List of Goods of the Preferential Import Tariff Schedule issued together with Decision No. 110/2003/QĐ-BTC dated July 25, 2003 of the Minister of Finance, therefore, in principle, the classification of goods in this List shall be carried out in accordance with the classification method of the List of Goods of the Preferential Import Tariff Schedule issued together with Decision No. 110/2003/QĐ-BTC dated July 25, 2003 of the Minister of Finance.

2. The List does not record the full name of all goods as in the current Preferential Import Tariff Schedule but records the name and rate of value-added tax according to chapter or group (4 digits) or sub-group (6-digit code, 8-digit code) and/or section “Specific”. The application is carried out as follows:

2.1 - In cases where the List specifies the name and rate for a chapter without listing groups or sub-groups within that chapter, all groups and sub-groups within that chapter shall apply the rate of value-added tax recorded for that chapter.

Example: For Chapter 34, the rate of value-added tax recorded corresponding to the chapter name in the rate column of the List is 10%, which means all items belonging to the 4-digit group, 6-digit sub-group, and 8-digit code within Chapter 34 shall apply the rate of value-added tax of 10%.

2.2 - In cases where the List specifies the name and rate for a chapter and also specifies the name and rate for the section “Specific” of that chapter, items belonging to the section “Specific” shall apply the specific rate of value-added tax recorded in the section “Specific”, while all other items belonging to the 4-digit group, 6-digit sub-group, and 8-digit code within that chapter shall apply the rate of value-added tax recorded for that chapter.

ExampleFor Chapter 11 “Milled Products; Malt; Starch; Inulin; Wheat Gluten”, the rate of value-added tax recorded corresponding to the chapter name in the rate column of the List is 10% and for the section “Specific: From rice, corn, potatoes, cassava, wheat flour”, the rate of value-added tax recorded in the rate column of the List is 5%, which means all items within the chapter belonging to the 4-digit group, 6-digit sub-group, and 8-digit code (excluding products from rice, corn, potatoes, cassava, and wheat flour) shall apply the rate of value-added tax of 10%. Items belonging to the section “Specific” include products from rice, corn, potatoes, cassava, and wheat flour shall apply the rate of value-added tax of 5%.

2.3 - In cases where the List specifies the name of a 4-digit group and the rate for each 4-digit group, the rate of value-added tax for the 4-digit group shall apply to all 6-digit and 8-digit codes within that 4-digit group.

Example: The rate of value-added tax for Group 3707 is recorded as 10%, which means all items belonging to the 6-digit and 8-digit sub-groups within Group 3707 shall apply the rate of value-added tax of 10%.

2.4 - In cases where the List specifies the name of a 4-digit group, the rate for the 4-digit group; the section “Specific” of the group and the rate for the section “Specific”, except for items specifically named and the rate applied to them, all other items belonging to the 6-digit and 8-digit codes within the group shall apply the rate of value-added tax of the group.

Example: For Group 8524, the rate of value-added tax recorded for the group is 5% and for the section “Specific: Magnetic cards with magnetic stripe under code number 8524.60.00”, the rate of value-added tax recorded is 10%, which means except for the item: Magnetic cards with magnetic stripe under code number 8524.60.00 applying the rate of value-added tax of 10%, all other items within Group 8524 shall apply the rate of value-added tax of 5%.

2.5 - In cases where the List specifies the name of a 4-digit group and further details and records the rate of value-added tax for 8-digit codes and the section “Specific”, then:

- Items specifically named in the section "Specific" shall apply the rate of value-added tax recorded for those items in the section “Specific”;

- The rate of value-added tax recorded for the 8-digit code shall apply to all items within that 8-digit code, except for items listed in the section “Specific”.

Example: For code number 8421.23.21 “Oil Filters” used for vehicles with engines under Chapter 87, the rate of value-added tax is recorded as 5%, while at the end of Group 8421, there is a section “Specific: Oil filters or gasoline filters for vehicles under Group 8711” with a value-added tax rate of 10%, which means except for Oil Filters used for vehicles under Group 8711 applying the rate of value-added tax of 10%, all other Oil Filters under code number 8421.23.21 shall apply the rate of value-added tax of 5%.

2.6 - In some cases, due to differences in criteria for distinguishing between the List of Preferential Import Tariff Schedule and taxable goods subject to value-added tax, or because it is not yet possible to accurately determine whether a particular item falls under the scope of special consumption tax, the rate of value-added tax is temporarily recorded in the rate column of the List. If the entity can present documentation proving the applicable rate or that the item does not fall under the scope of value-added tax as stipulated in Section II, Part A and Point 2 of Section II, Part B of Circular No. 122/2000/TT-BTC dated December 29, 2000 of the Ministry of Finance, then the value-added tax shall be applied according to this regulation.

Example 1: Goods belonging to Group 2206 are subject to a unified VAT rate of 10%. If imported goods within Group 2206 are determined to be alcohol, they are not subject to VAT but are subject to special consumption tax.

Example 2: The VAT rate recorded corresponding to the name of Group 8524 "Phonograph records, tapes, and other discs and tapes already recorded with sound or similar phenomena..." is 5%, and for the item "Specifically: Magnetic cards under code 8524.60.00" is 10%. which means All pre-recorded tapes and discs are subject to a VAT rate of 5%. In cases where enterprises import pre-recorded tapes and discs classified as documentary films, news reports, scientific programs, etc., and meet the conditions stipulated in Point 10, Section II, Part A of Circular No. 122/2000/TT-BTC of the Ministry of Finance mentioned above, they are not subject to VAT.

Example 3: Group 9020 "Breathing apparatus and other gas masks...", the VAT rate recorded corresponding to the tariff column of the Combined List is 10%. which means All goods within this group are subject to a VAT rate of 10%. In cases where equipment within Group 9020 is determined to be medical-specific equipment according to Point 2.19, Section II, Part B of Circular No. 122/2000/TT-BTC of the Ministry of Finance mentioned above, it is subject to VAT at a rate of 5%.

2.7- Goods that are subject to special consumption tax or goods not subject to VAT are marked with an asterisk (*) in the VAT rate column of this Combined List.

Example 1: Imported paper money (group 4907, code 4907.00.20) does not fall under the category subject to VAT.

Example 2: Imported beer belonging to Group 2203 is subject to special consumption tax, thus it is not subject to VAT.

Example 3Air conditioning units designed for human use, installed in motor vehicles (code 8415.20.00), marked with an asterisk (*) next to the 5% VAT rate, means:

+ If the product has a capacity exceeding 90,000 BTU/h, it is subject to VAT at a rate of 5%.

+ If the product has a capacity of 90,000 BTU/h or less, it is subject to special consumption tax and is not subject to VAT.

3. In cases of importing items such as tires, computers in the form of tires with rims, covers; computers with built-in power storage units, tires, computers, and power storage units are subject to the VAT rate recorded in the tariff column. If the importer separately imports individual parts (rims, covers, power storage units), these parts must be taxed according to the VAT rates specified for each item.

4. Fishing net twines and threads include specialized fishing net twines and threads regardless of production materials, subject to a VAT rate of 5%.

5. Basic chemicals and medicinal herbs used as raw materials for producing medicines, as specified in Appendixes 1 and 2 attached to Circular No. 122/2000/TT/BTC, are subject to a VAT rate of 5%.

6. Items that meet the conditions to be considered specifically for national security and defense are not subject to VAT according to Point 19, Section II, Part A of Circular No. 122/2000/TT/BTC.

7. The VAT rate in the Combined List serves as the basis for determining the VAT rate for domestically produced goods. In cases where the VAT rate in the Combined List differs from the specific VAT rates for certain goods as detailed in Circular No. 122/2000/TT/BTC dated December 29, 2000, issued by the Ministry of Finance to guide the implementation of Decree No. 79/2000/NĐ-CP dated December 29, 2000, issued by the Government detailing the implementation of the Value Added Tax Law, the VAT rate in the Combined List shall not be used for declaration and calculation of tax but the rate specified in Circular No. 122/2000/TT/BTC dated December 29, 2000, must be applied.

This Circular takes effect and applies to all customs declarations for imported goods submitted to customs authorities fifteen days after its publication in the Official Gazette, replacing Appendix 4 "Combined List of VAT Rates for Imported Goods" issued together with Circular No. 122/2000/TT-BTC dated December 29, 2000, issued by the Ministry of Finance to guide the implementation of Decree No. 79/2000/NĐ-CP dated December 29, 2000, issued by the Government detailing the implementation of the Value Added Tax Law.

During the application process, if the VAT rate for a good is not clearly specified or is inappropriate, relevant agencies and units should report to the Ministry of Finance (General Department of Taxation) for research, supplementation, and adjustment.