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VAT not levied on damaged rental or borrowed goods that have been destroyed

Summary

According to the General Department of Customs, in the process of using leased or borrowed goods, if the goods are damaged and ineligible for re-export, required for destruction, and went through the destruction procedures according to regulations, domestic enterprises will not be required to declare and pay value-added tax (VAT).

Updated on : 13-06-2022

The provisions in Clause 20, Article 5 of the Law on VAT 13/2008/QH12 clearly state: “goods temporarily imported for re-export; goods temporarily exported or re-import” are not subject to VAT.

Production of high-tech products at the enterprise. Photo: H.Nu

Accordingly, goods leased or borrowed by domestic enterprises from export processing enterprises and declared to customs under the form of temporary import are not subject to value-added tax.

However, if the lease time has expired, but the domestic enterprise continues to use and fails to re-export the goods, the domestic enterprise must declare and pay VAT and import tax in the new customs declaration as prescribed in Clause 12, Article 1 of Decree 59/2018 dated April 20, 2018 of the Government.

However, if in the process of using leased or borrowed goods, they are damaged and ineligible for re-export, required for destruction, and went through the destruction procedures, domestic enterprises will not be required to declare and pay VAT for the goods.