Export processors can now breathe a sigh of relief as the Ministry of Finance and the Standing Board of the National Assembly’s Finance and Budget Committee have agreed to maintain the value-added tax (VAT) of zero percent on services provided to businesses in non-tariff and export processing zones. The draft of the amended Law on Value Added Tax is expected to go before the National Assembly (NA) at its next session in October 2024. Recently, export processing enterprises have expressed concerns about the proposed abolition of the zero percent VAT for services provided to businesses in non-tariff areas and export processing zones. The draft also narrows the scope of export services eligible for the zero percent VAT, primarily limiting it to services related to international transport, to address challenges in determining the place of consumption of services. With this amendment, all services provided to businesses in non-tariff areas and export processing enterprises would no longer benefit from the zero percent VAT mechanism, which includes the input tax refund/deduction mechanism. If the input VAT mechanism were applied, medium-sized export processing enterprises in Vietnam could face additional tax costs amounting to tens of millions of U.S. dollars annually, not to mention complications […]
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