Official letter No. 5584/TCHQ-TXNK dated August 30th, 2019 of the General Department of Vietnam Customs regarding value added tax (VAT) on imported industrial sewing machines.
According to Clause 2 Article 7 of Circular No. 219/2013/TT-BTCstatus2 , with regard to imports not subject to special excise tax and environmental protection tax, VATable price shall equal import price plus (+) import tax (if any).
Accordingly, in case a company imports machinery entitled to import duty exemption, VATable price is the import price.
However, if the company re-purposes the imported machinery which is exempt from duty, it has to open a new customs declaration, retroactively pay import duty, fines (if any) and additionally VAT (calculated based on the retroactively – paid import duty).
If import duty rate applicable to the re-purposed machinery is 0%, resulting in the import duty to be retroactively paid equaling 0 dong, the VAT to be additionally paid shall be equal 0 dong.
The VAT to be additionally paid (if any) when re-purposing duty – exempt machinery shall be still deducted (not be refunded) if the conditions as prescribed are met.