AMCHAM KPMG update on VAT of transport & logistic business

Transcription

1 AMCHAM KPMG update on VAT of transport & logistic business Ho Chi Minh City 18 Mar 2010 TAX AND CORPORATE SERVICES 2009 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of 1

2 VAT Key issues under complicated regulations 0% VAT for Int l transportation (previously exempt); 0% VAT for exported services; VAT rate change for domestic transport, logistic services VAT on agent commission income Tax treatment of offshore services vs. onshore services Different tax treatment due to different Article 8 of relevant tax treaties Different provision of Agency Agreement Invoicing compliance for Agents 2009 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of 2

3 Legal basis where you need to look at? VAT: FCT VAT Law, e.g. Circular 129 (export services? Int l transport?) Private rulings of MOF, GDT and local tax authorities Guidance of withholding tax, i.e. Circular 134 Double tax treaty: Regulation on transport, regulations of Commercial Law on agency activities, logistic services, 2009 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of 3

4 Latest update VAT on freight trading OL 15448: (OL 5477 ; OL 4576) Buy and sale difference: 10% Hired freight charge: 0% with supporting evidence for qualifying conditions of Circular 112. Issues Complicated invoicing procedures Commercial issue to disclose margin VAT on total amount if not disclose 2009 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of 4

5 Latest update VAT on freight trading OL 3055 dated 15 Mar 2010 Addresses to the issue 0% on total amount if qualify Circular 112 Conditions and administrative issues Transport contract: No definition. No operation of means of transportation. Payment thru a bank. Based on B/L? Not to include other services, CFS? Replacing OL No guidance of effective date. Cancellation and revision issued invoices? Risk of incorrect VAT rate and wrong tax treatment? 2009 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of 5

6 Latest update Marine services OL 5477 dated 13 July 2009 Container loading, lifting service supplied to foreign shipping companies by service companies at Vietnamese ports: VAT 0% (if qualify Circular 112 conditions) If carried out by shipping companies through Agencies: apply VAT rate on transport as an element of FCT. OL 583 dated 25 Feb 2010 Loading and lifting services supplied by the shipping liner is subject to VAT at 0% KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of 6

7 Latest update Commission OL 2098; OL2598 issued in 2008 Agents of foreign shipping liners sell int l freight at fixed price, directly sold by the agents: VAT rate 0%. Commissions of freight collected but not sold directly: VAT 10%. Commission of other logistic services: VAT 10% OL 583 dated 25 Feb 2010 Commission of freight (and fees) collection: VAT 10% 2009 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of 7

8 Latest update export service OL 4088 dated 18 Mar 2009 Services provided by local companies to foreign organisations but performed inside Vietnam is not treated as exported services. OL dated 27 Oct 2009 Export services include services provided to enterprises located in free-tax zones: but not include services supplied outside the free tax zones, such as warehousing, transportation. What about others of the same nature? 2009 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of 8

9 Latest update Invoicing procedures OL 3947 dated 25 Sep 2009 Logistic companies collect revenue for foreign parties: total invoice amount is the gross price charged to customers. VAT is calculated as an element of FCT. For customers who are EPEs: total invoice amount is the gross price, VAT rate line and VAT payable line on the invoice is crossed out (not zero?). NOT consistent with guidance on export service KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of 9

10 Risks of non-compliance Risks of non-compliance under Law on Tax Admin and VAT Law Under charge of VAT: collect at invoice issuing party (risk of no deduction for CIT). Over charge of VAT: customs can claim the correct charge only (except to qualify further conditions) (CIT risk) Wrong treatment of export service leads to wrong claim of input VAT Penalties 2009 KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of 10

11 ACTIONS VAT on freight trading: when issuing invoice, NOT include other services if not qualify for export services. Clarify administration issues Commission income: to clarify the technical basis for the different tax treatment between freight collection and collection of other services. Export service: Be careful with supply of logistic services to EPEs, enterprises inside free-tax zone. To clarify for other services performed outside free tax zone KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of 11

12 VAT of transport and logistic business Q&A Presenter s contact details Ta Hong Thai KPMG Ltd thta@kpmg.com.vn KPMG Limited, a Vietnamese limited liability company and a member firm of the KPMG network of 12