OFFICIAL LETTER

ON VALUE-ADDED TAX (VAT) RATE OF SERVICES OF REPAIR OF MEANS OF TRANSPORT

To: Provincial/municipal Tax Departments

The General Department of Taxation has received official letters of several Tax Departments, requesting guidance on VAT rate of services of repair of means of transport. Concerning this matter, the General Department of Taxation gives the following opinions:

Point 2.36, Section II, Part B of the Finance Ministry’s Circular No. 32/2007/TT-BTC of April 9, 2007, guiding the implementation of the Government’s Decree No. 158/2003/ND-CP of December 10, 2003, Decree No. 148/2004/ND-CP of July 23, 2004, and Decree No. 156/2005/ND-CP of December 15, 2005, detailing the implementation of the Value-Added Tax Law and the Law Amending and Supplementing a Number of Articles of the Value-Added Tax Law stipulates: “Repair of machinery, equipment and means of transport which are mechanical products” shall be subject to the VAT rate of 5%.

Point 3.27, Section II, Part B of the Finance Ministry’s Circular No. 32/2007/TT-BTC of April 9, 2007, stipulates: “Repair and warranty services (excluding services specified at Point 2.36, Section II, Part B of this Circular)” shall be subject to the VAT rate of 10%.

According to the above guidance, services of repair of automobiles liable to excise tax shall be subject to the VAT rate of 10%; and services of repair of means of transport which are mechanical products shall be subject to the VAT rate of 5%.

The General Department of Taxation requests provincial/municipal Tax Departments to review the VAT application in order to properly apply the right VAT rates under the guidance of this Official Letter.

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FOR THE GENERAL DIRECTOR OF TAXATION
DEPUTY GENERAL DIRECTOR




Pham Duy Khuong