VAT Policy on Processing Goods Outsource to EPE

According to Customs online news, GDC gave the guideline to Local customs and  some enterprises to understand the regulations when implementing VAT policies  on goods which domestic company outsource EPE as below:

According to Clause 3, Article 17 Circular 39/2015/TT-BTC  dated March 25, 2015:

[3. Customs value of the goods imported to Vietnam after being processed by a    foreign party shall include the cost for processing and the value of raw materials  used for the processing that are provided by the foreign party which shown in    the processing contract and the adjustment specified in Articles 13 and 15 of this Circular. The value of materials exported from Vietnam for processing according to the processing contract shall not be included in the customs value of the            processed products.]

In case a domestic enterprise signs a processing contract with a foreign trader but hires an export processing enterprise to outsource, the raw materials and supplies provided wholly by domestic enterprises, the processed products need to pay VAT when import to Vietnam.

In which, the VAT taxable value is the processing fee and the adjustments (if any)  according to the provisions of Clause 3, Article 17 of Circular 39/2018 / TT-BTC and Clause 2 Article 7 of Circular 219/2013 / TT-BTC. It is not included in value of      materials that the domestic enterprise has sent to process.