Vietnam Issues New VAT Rate for Imported Medical Equipment

In June 2021, Vietnam issued Round No. 43/2021/TT-BTC (Round 43) which implements a discount within the value-added tax (VAT) charge for imported medical tools from 10 p.c to 5 p.c. Round 43 has come into pressure since August 1, 2021.

Accordingly, companies can apply for the 5 p.c charge if they’ve one of many following paperwork:

• Import license;
• Certificates of registration for circulation; or
• The doc certifies the eligibility for circulating the medical tools.

The medical tools and instruments eligible for the brand new VAT charge embrace:

• Scanning, imaging, and screening tools;
• Specialised tools for surgical procedure;
• Blood transfusion devices;
• Emergency medical service autos;
• Measuring devices for measuring blood stress, cardiac actions, pulse;
• Syringes;
• Vaccines; and
• Chemical compounds for experimentation and sterilization, amongst many others.

Alternatives for overseas suppliers

The brand new VAT charge could be advantageous for overseas suppliers, particularly as 90 p.c of medical units in Vietnam are imported because the majority of native producers can not meet native demand, solely in a position to produce decrease worth tools reminiscent of disposable provides and hospital beds. Though, there may be an rising variety of startups growing digital drugs options.

A lot of Vietnam’s present medical tools wants are out of date and plenty of hospitals lack adequate tools for intensive care models and surgical procedure. Nevertheless, Vietnam’s continued financial growth and development of the middle-class (set to account for 26 p.c of the nation’s inhabitants by 2026) have led to an rising demand for high-quality healthcare. These developments provide market alternatives for overseas medical machine suppliers.

Most imports come from Japan, Germany, the USA, China, and Singapore, totaling over US$500 million in 2019. The medical machine market was valued at US$1.4 billion in 2019, making Vietnam the ninth largest medical machine market within the Asia-Pacific area.  This sector is forecasted to develop at a median charge of 10 p.c per 12 months over the following 5 years.

Some 90 p.c of medical machine imports comprise diagnostic imaging tools (magnetic resonance imaging, X-ray, and ultrasounds), and tools used for surgical procedure, and emergency resuscitation testing tools. Different areas of development embrace emergency tools, monitoring tools, and orthopedics tools.

The most important purchaser of medical units is native authorities hospitals, accounting for 84 p.c of the market. Native personal hospitals and analysis and academic establishments are exhibiting the strongest demand, whereas foreign-owned hospitals are additionally giant purchasers however normally obtain their provides from their sponsoring nation. The federal government can also be pushing to extend funding to improve hospitals all through the provinces and healthcare expenditure per capita is anticipated to develop 9.2 p.c per 12 months, reaching US$262 by 2025 (US$26 billion for the nation).

Leveraging free commerce agreements

International traders may also reap the benefits of Vietnam’s varied free commerce agreements reminiscent of by means of the EU-Vietnam free commerce settlement (EVFTA), the  UK-Vietnam FTA (UKVFTA), and the Regional Complete Financial Partnership (RCEP). Moreover, because of its membership within the Affiliation of Southeast Asian Nations (ASEAN), Vietnam has turn out to be a signatory to a number of FTAs that the regional commerce bloc has signed.