Guidance on VAT exemption or reduction for damaged imported goods

On May 6, 2025, the Customs Department issued Official Letter No. 4072/CHQ-NVTHQ providing guidance for enteprises on the handling of value-added tax (VAT) for cases where imported goods are damaged due to fire or storms.

Accordingly, the Customs Department confirmed that imported goods are subject to import duty and VAT, unless specific exemptions are provided by law. For import duty, the applicable laws clearly provide that importers may be entitled to a reduction of import duty in cases where goods are damaged while under customs supervision, with the reduction proportionate to the actual loss incurred.

However, regarding VAT, the current legal instruments governing VAT do not provide any provisions for exemption or reduction in the event that goods are damaged or destroyed. Therefore, the Customs Department confirmed that enterprises have no legal grounds to seek a VAT exemption or reduction for imported goods that have suffered damage.