Official Dispatch No. 2250/CTHPH-TTHT dated 05/08/2022 of the Tax Department of Hai Phong City guiding VAT tax policy for manufacturing enterprises carrying out processing and repair activities for domestic enterprises
In case the Company (being a EPE) carrying out processing of goods, repairing molds for domestic enterprises,:
- VAT and invoices for processing activities:
In case domestic enterprises supply main materials for processing, but these processing activities are not related to goods trading activities and activities directly related to goods trading in Vietnam, when receiving processed goods, domestic enterprises shall carry out customs procedures according to regulations on ordering goods processing abroad, declaring and paying VAT at customs stages.
The Company does not have to declare and pay VAT on processed goods for domestic enterprises. The company makes sales invoices (invoices for businesses in the non-tariff area) to declare corporate income tax (CIT) revenue according to regulations.
- VAT and invoices for repair activities:
Case 1: Domestic enterprises carrying out customs procedures, having declared and paid VAT on mold repair services at customs stage, the company does not have to declare and pay VAT, the company makes sales invoices (invoices for enterprises in the non-tariff area) to declare corporate income tax.
Case 2: Domestic enterprises do not carry out customs procedures, do not declare VAT payment for mold repair services at customs stage, the company must declare and pay VAT to the tax authority:
- If the Company applies VAT according to tax credit method, the Company uses a VAT invoice, applying a VAT rate of 10%;
- If the Company registers to apply VAT by direct method, the Company uses sales invoices (invoices for businesses in the non-tariff area) to issue and send to customers and prepare VAT declaration and payment by direct method in VAT declaration form No. 04/VAT; in which the % rate for calculating VAT on repair services revenue is 5%.