Exported goods as unprocessed natural resources and minerals not subject to VAT

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New regulations on VAT

Specifically, Decree No. 146/2017/ND-CP amending regulations on entities which are not subject to value added tax for the case where exported goods are natural resources and minerals which have not been processed into other products

Besides, entities not subject to VAT are also exported products which are directly processed from main materials as natural resources. Of which, the total value plus energy costs account for more than 51 % of production costs, except the following cases:

Exported products that are processed from natural resources and minerals which are directly exploited and processed by business establishments, or processed by other establishments to be new products, and that are then processed into exported products (circle process or establishment of workshops and processing plants in each stage). These exported products shall be subject to the VAT rate of 0% if they meet the conditions prescribed in point C, Clause 2, Article 12 of the VAT Law.

Exported products processed from main raw materials which are not natural resources or minerals (natural resources which have been processed into different products), which are purchased or processed by business establishments. The export products shall be subject to the VAT rate of 0% if they meet the conditions specified at Point C, Clause 2, Article 12 of the VAT Law.

Amending regulation on VAT refund

Besides, Decree No. 146/2017/ND-CP also amends and supplements regulations on VAT refund.

Specifically, if in a month (for case of monthly declaration), in a quarter (for case of quarterly declaration), a business establishment has exported goods or services including the following cases: imported goods which are then exported to non-tariff areas; and imported goods which are then exported to overseas with the input VAT of VND 300 million or more which have been not deducted, it shall be entitled to a monthly or quarterly VAT refund. If the input VAT in a month or a quarter is less than VND 300 million, the VAT shall be deducted in the next month or quarter. If a business establishment has both goods and services for export and goods and services for domestic consumption, after balancing with the tax payables, the input VAT which has been not deducted is VND 300 million or more, the business establishment shall be entitled to tax refund.

Business establishments shall separately account the input VAT amount used for the production and business of exported goods and services. In cases where the input VAT amount is not accounted separately, it will be determined in accordance with the ratio of turnover from exported goods and services out of total turnover from goods and services of the VAT declaration periods which are determined from the tax declaration period followed by the previous tax refund period to the current tax refund period.

Business establishments are not entitled to VAT refund for cases where imported goods are then exported but not exported at Customs areas in accordance with the provisions of the Customs law; and exported goods are not exported at Customs areas in accordance with the provisions of the Customs law.

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The tax authority shall carry out the tax refund first and inspect later for taxpayers who produce exported goods and are not handled for acts of smuggling or illegal cross-border transport of goods, or not engaged in tax evasion or fraud and trade frauds for two consecutive years; and taxpayers who are not subject to high risks under the provisions of the Law on Tax Administration and the guiding documents thereof.