Uni 17-05-2018 - Guidance on FCT for machineries with accompanying services

Official letter 13409/CT-TTHT dated 02 Apr 2018 of Ha Noi Taxation Department guiding FCT policy when buying  machineries with accompanying services:

In cases where the company signs a contract with a foreign contractor, contracts on the separation of the value of machinery and equipment, transportation, installation and warranty services, the company shall pay tax on behalf of the foreign contractor on a direct method as follows:

-          For VAT: The VAT rate on the taxable turnover is as follows:

           For machinery and equipment: The company shall declare and pay VAT at the customs office when carrying out the import procedures.

           For services: Design, construction, installation (not including raw materials, machinery and equipment), testing and commissioning,       training, warranty, package management and other services: the rate is 5%

           For transportation services; Construction and installation of raw materials, machinery and equipment: the rate is 3%.

-          Regarding CIT: The CIT rate calculated on the turnover for specific tax calculation is as follows:

           For machinery and equipment: the application rate is 1%

           For services: Design, construction, testing and commissioning, training, warranty, package management and other services: the rate is 5%

           For transportation, construction and installation services with contracted or unpackaged raw materials, machinery and equipment: the rate is 2%