Sea transport services between foreign ports: VAT is deductible

Recently, the Ministry of Finance submitted to the Prime Minister to allow shipping businesses to deduct VAT on goods and services purchased and used for transportation between foreign ports from January 1. 2011 comes before March 1, 2012


Previously, the Ministry of Finance has received written recommendations on VAT policies for sea transport services between foreign ports of some shipping companies.

According to enterprises, due to the impact of the global economic crisis as well as of Vietnam, the ship operation is very difficult. Therefore, businesses have many difficulties when searching on the international market to exploit goods running between foreign ports. Enterprises believe that sea transport between foreign ports is international transport because sea transport between foreign ports does not have a domestic leg, so it cannot be domestic transport. Transport contracts between foreign ports are signed with foreign organizations and individuals, not signed with Vietnamese organizations or individuals, and foreign currency sources are collected for the country.

 

 

Enterprises also affirmed that, unlike in the fields of commerce and other services that could suspend their business operations, shipping companies had to invest a lot of capital to buy and rent vehicles, most of which were borrowed from banks. , take high risks. The non-credit of input VAT creates more difficulties for shipping companies. Shipping companies propose to allow shipping companies to deduct VAT on goods and services purchased and used for transportation between foreign ports from January 1, 2011 to before January 1. / 3/2012.



Handling direction of the Ministry of Finance

In response to the proposals of enterprises, the Ministry of Finance bases on regulations on international transport: At Point d, Clause 1, Article 6 of Decree No. 123/2008 / ND-CP of the Government has regulations on international transport. The tax rate of 0% is applied as follows: “International transportation specified in this Clause includes the transport of passengers, luggage and goods on international routes from Vietnam to abroad or from abroad to Vietnam. In case, an international transport contract includes the domestic sector, international transport includes the domestic sector ”. Pursuant to the above provisions, sea transportation activities between foreign ports not yet included in international traffic are subject to the 0% tax rate.

 

 

Regarding the scope of adjustment, in Article 3 of the Law on VAT, there are provisions on the taxable subjects "Goods and services used for production, business and consumption in Vietnam are subject to value added tax, except goods and services not subject to tax specified in Article 5 of the law ”. Therefore, shipping activities between foreign ports are not subject to VAT, although not included in the non-taxable group in Article 5.


With regard to export services, the tax rate of 0% is applied, at Point b, Clause 1, Article 6 of Decree No. 123/2008 / ND-CP on export services, the tax rate of 0% applies: “For export services Imports include services provided directly to organizations and individuals overseas or in non-tariff zones. Overseas organizations are organizations that do not have permanent establishments in Vietnam and are not VAT payers in Vietnam. Overseas individuals are foreigners who do not reside in Vietnam, Vietnamese people residing overseas and outside Vietnam during the time of service provision. Organizations and individuals in the free trade zone are those having business registration and other cases as stipulated by the Prime Minister ”. Therefore, if the transport activities from a foreign port to a foreign port satisfy two conditions: having a contract with a foreign organization or individual and having vouchers of via-bank payment is subject to VAT rate. 0%.

From the above legal bases, the Ministry of Finance submits to the Prime Minister to allow shipping companies to deduct VAT on goods and services purchased and used for transport activities between ports. from January 1, 2011 to before March 1, 2012.