I. Regulation to be applied:
– Article 9 Circular 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the implementation of the Law on Value-Added Tax (VAT) and the Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government on detailing and guiding implementation of several articles of Law on VAT.
– Various official letters/rulings issued by the local tax authorities to the taxpayers related to the discussed matter.
II. VNC Consulting’s summary:
In order to apply the 0% VAT rate, the so-called export services must satisfy the following conditions:
(i) The services have to be directly provided for the overseas customer (whether that is organizations or individuals);
(ii) The services are consumed outside Vietnam territory;
(iii) Having a contract on service provision with the overseas customers;
(iv) Having bank-receipts for payment of the exported services and other documents prescribed by law.
Amongst these conditions, the criticals are (i) and (ii), in which condition (ii) is the most controversial one as the term “consumed outside Vietnam territory” is not defined and thus can be widely interpreted. In practice, services are usually challenged by the local tax offices as it is very difficult for the taxpayer to prove the consumption point of the whole services is outside of Vietnam.