VAT on EXW Costs Incurred Abroad Recovered by Logistics Companies from Domestic Customers
RegHub explainer by New MarketerLast updated:
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The Ministry of Finance cited the VAT legal framework applicable to EXW costs (foreign domestic transport, loading/unloading, and warehouse-handling fees at the seller's premises) that a logistics company pays to foreign partners and then recovers from domestic customers. Article 9(3) of VAT Law 48/2024/QH15 sets the 10% rate for goods and services not covered by the 0% or 5% schedules, with an explicit inclusion for services supplied by foreign providers without a permanent establishment in Vietnam to Vietnamese organisations or individuals via e-commerce channels and digital platforms; Article 13 of Decree 181/2025/ND-CP sets the VAT base for foreign contractors or sub-contractors at the total revenue received, including costs borne on their behalf by the Vietnamese party. The Ministry did not rule definitively that 10% applies to this exact EXW-recovery scenario - it cited the framework and instructed the enterprise to study the provisions and self-determine its obligations.
Question
A logistics company incurs foreign costs (EXW costs) including foreign domestic transport fees, loading/unloading fees, and warehouse-handling fees at the seller's premises. These costs are paid to foreign service partners and then recovered from domestic customers in Vietnam, either consolidated or separately itemised on invoices.
The company asked for guidance on: (1) whether EXW costs incurred abroad but recovered from domestic customers are subject to VAT in Vietnam; (2) if so, whether the applicable rate is 0%, 8%, or 10%; and (3) what conditions must be met to apply the relevant rate.
Official guidance
The Ministry of Finance cited two legal provisions:
Article 9(3) of VAT Law No. 48/2024/QH15 provides that the 10% rate applies to goods and services not covered by Articles 9(1) or 9(2), with an explicit inclusion for services supplied by foreign providers without a permanent establishment in Vietnam to organisations or individuals in Vietnam via e-commerce channels and digital platforms.
Article 13 of Decree No. 181/2025/ND-CP dated 1 July 2025 provides that the VAT base for services supplied by foreign organisations or individuals (foreign contractors or sub-contractors) without a permanent establishment in Vietnam that have Vietnam-source revenue but have not fully complied with Vietnamese accounting, invoice, and voucher requirements is the total revenue received - before deducting taxes payable - including any costs borne on their behalf by the Vietnamese contracting party.
After citing these provisions, the Ministry concluded that "the VAT legislation already contains clear provisions" and instructed the enterprise to "study the above provisions and comply accordingly." The Ministry did not itself determine whether 10% (or any rate) applies to the specific EXW-recovery scenario - it provided the legal framework and left the determination to the enterprise.
Action points
- Read Article 9(3) of VAT Law 48/2024/QH15 and Article 13 of Decree 181/2025/ND-CP carefully to assess the legal character of the EXW costs being recovered.
- Note that the "including" clause in Article 9(3) refers specifically to foreign-supplier services delivered via e-commerce channels and digital platforms - the enterprise must assess whether its EXW cost-recovery arrangement meets that characterisation.
- Article 13 of Decree 181/2025 is the tax-base rule for foreign contractors - the enterprise must assess whether its foreign partners fall within the scope of that provision.
- Self-determine VAT obligations and the applicable rate through a legal analysis of the specific facts; if uncertainty remains, consult a tax adviser or request direct guidance from the local tax authority on the specific scenario.