Thông tư 172/1998/TT-BTC

CIRCULAR

PROVIDING GUIDELINES FOR IMPLEMENTATION OF DECREES 54-CP DATED 28 AUGUST 1993 AND 94/1998/ND-CP DATED 17 NOVEMBER 1998 OF THE GOVERNMENT MAKING DETAILED PROVISIONS FOR IMPLEMENTATION OF THE LAW ON IMPORT AND EXPORT DUTIES AND LAWS ON AMENDMENT OF AND ADDITION TO THE LAW ON IMPORT AND EXPORT DUTIES

Pursuant to the Law on Import and Export Duties dated 26 December 1991 and the laws on amendment of and addition to the Law on Import and Export Duties dated 5 July 1993 and 04/1998/QH10 dated 20 May 1998;
Pursuant to Decrees 54-CP dated 28 August 1993 and 94/1998/ND-CP dated 17 November 1998 of the Government making detailed provisions for implementation of the Law on Import and Export Duties and the laws on amendment of and addition to the Law on Import and Export Duties;
The Ministry of Finance hereby provides guidelines in relation to import and export duties as follows:

A. SCOPE OF APPLICATION

I. DUTIABLE GOODS AND TAXPAYERS

1. Dutiable goods:

All goods permitted to be exported or imported through bordergates or across the borders of Vietnam as stipulated in article 1 of Decree 54-CP dated 28 August 1993 of the Government shall be subject to export and import duties, except as provided for in clause II of Part A of this Circular.

2. Taxpayers:

Organizations and individuals importing or exporting goods which are subject to export or import duties as stipulated in clause I.1 of Part A of this Decree shall pay export or import duties.

II. GOODS WHICH ARE NOT SUBJECT TO EXPORT AND IMPORT DUTIES

Imported or exported goods which are not subject to export and import duties upon completion of all customs procedures provided for in article 3 of Decree 54-CP dated 28 August 1993 shall include the following:

1. Goods in transit or goods transported on roads which cross the territory of Vietnam.

2. Goods in transit for the purpose of business in the following forms:

- Goods transported directly from an exporting country to an importing country without arriving at a bordergate of Vietnam;

- Goods transported from an exporting country to an importing country via a bordergate of Vietnam without carrying out procedures for import into Vietnam and procedures for export from Vietnam;

- Goods transported from an exporting country to an importing country via a bordergate of Vietnam and deposited into a customs bond warehouse without carrying out procedures for import into Vietnam and procedures for export from Vietnam.

During the process of transport and storage within the territory of Vietnam, goods in transit or goods transported on roads which cross the borders of Vietnam shall be subject to supervision and control as stipulated by the customs office from the time of import to the time of export and shall not be permitted to be sold on the market of Vietnam. In special cases where goods are sold in Vietnam, the permission of the State administrative body of Vietnam shall be required and all customs procedures must be completed.

3. Goods imported from a foreign country into an export processing zone or an export processing enterprise, goods exported (directly or through bordergates of Vietnam) from an export processing zone or an export processing enterprise to a foreign country, or goods transported from an export processing zone or an export processing enterprise to another export processing zone or export processing enterprise within the territory of Vietnam.

4. Goods categorized as humanitarian aid.

The General Department of Customs shall provide the necessary documents for performance of customs procedures in respect of the cases in this Section.

B. BASES FOR CALCULATION OF DUTY

The bases for calculating export and import duties payable are the quantity of goods, the dutiable value and the duty rate applicable to the item of imported or exported goods.

I. QUANTITY OF IMPORTED OR EXPORTED GOODS

The quantity of imported or exported goods used as the basis for calculating duties shall be the quantity of each item of goods actually imported or exported.

II. DUTIABLE VALUE

1. Where the dutiable value has been fixed pursuant to a contract: In respect of goods exported or imported under a foreign trade contract which contains all the principal contents provided for in article 50 of the Commercial Law dated 10 May 1997 (except for goods included in the list of goods the dutiable value of which is subject to State management), the dutiable value shall be determined pursuant to the foreign trade contract in compliance with source documents relating to the purchase or sale, in particular:

(a) In respect of exports: the selling price at the exporting bordergate (FOB), excluding insurance costs (I) and transportation costs (F).

(b) In respect of imports: the purchasing price at the importing bordergate, including insurance costs (I) and transportation costs (F). In the case of goods imported by road, the purchasing price of the goods as delivered at frontier (DAF).

(c) Dutiable value used to calculate import or export duties applicable to export processing zones and export processing enterprises in Vietnam shall be the actual purchasing or selling price at the bordergate of the export processing zones or export processing enterprises pursuant to a contract.

(d) In respect of imports including goods under a contractual warranty (including goods for delivery at a later time) where the payment for the goods under warranty is not separately calculated in the contract, the dutiable value shall be the value in the contract, inclusive of the contractual warranty.

(e) In respect of machinery, equipment and means of transport exported to a foreign country for repair, upon re-import into Vietnam, the dutiable value shall be the cost of repair under the contract signed with the foreign party.

(g) In respect of leased machinery, equipment and means of transport, the dutiable price shall be the rent under the contract signed with the foreign party.

(h) In respect of goods processed by a foreign party for a Vietnamese party, upon import, the dutiable value shall be the actual value of imported goods, minus the value of raw materials, supplies and goods exported to the foreign country for processing, pursuant to the signed contract. (The import duty rate shall be calculated on the basis of each item of processed goods actually imported and the origin of goods shall be the origin of the processing country. The actual value of the imported goods shall be determined on the basis of the dutiable value provided for in clause II of Part B of this Circular.)

(i) Where imported goods which have been used in Vietnam are subject to recollection of duties, the value used to calculate duties payable shall be determined on the basis of the remaining use value of the goods at the time of recollection of duties pursuant to the results of inspection of the quality of the goods by the authorized State body and shall be calculated as follows:

- where the remaining use value is thirty (30) per cent or less, the dutiable value shall be equal to ten (10) per cent of the import price of brand-new goods;

- where the remaining use value is over thirty (30) per cent up to fifty (50) per cent, the dutiable value shall be equal to twenty (20) per cent of the import price of brand-new goods;

- where the remaining use value is over fifty (50) per cent up to seventy (70) per cent, the dutiable value shall be equal to thirty (30) per cent of the import price of brand-new goods;

- where the remaining use value is over seventy (70) per cent up to eighty five (85) per cent, the dutiable value shall be equal to forty five (45) per cent of the import price of brand-new goods;

- where the remaining use value is over eighty five (85) per cent, the dutiable value shall be equal to sixty (60) per cent of the import price of brand-new goods.

2. In respect of goods the price of which is managed by the State, the dutiable value shall be the price stipulated in the list of prices provided by the Ministry of Finance. Where the price pursuant to a foreign trade contract is higher than the price stipulated in the list provided by the Ministry of Finance, the price pursuant to the contract shall be applied.

3. In respect of imported goods which do not satisfy all conditions for determining dutiable value pursuant to a contract provided for in Circular 82/1997/TT-BTC dated 11 November 1997 of the Ministry of Finance, or goods otherwise imported without a contract (such as gifts, non-trade imports or exports, import and export activities of residents in border areas, and so forth) where the settlement is not made through banks (such as barter or payment of labour cost in the form of goods), the dutiable value shall be applied pursuant to the list of prices used to calculate duties provided by the Ministry of Finance (in the case of goods the price of which is subject to State management) or provided by the General Department of Customs (in the case of goods the price of which is not subject to State management).

Conditions for application of dutiable value pursuant to a foreign trade contract shall be implemented in accordance with Circular 82/1997/TT-BTC dated 11 November 1997 of the Ministry of Finance.

4. Exchange rate used to calculate duties:

The dutiable value shall be calculated in Vietnamese dong. The exchange rate used as the basis for determining the dutiable value in respect of imported or exported goods shall be the actual average inter-bank rate quoted by the State Bank of Vietnam in the daily People's Newspaper. In the case of days on which the daily People's Newspaper is not issued (or is issued, but does not display such rate), the exchange rate used to calculate duties on such days shall be the exchange rate used to calculate duties on the preceding day.

In respect of foreign currencies for which no transaction is conducted on the foreign currency inter-bank market, it shall be determined on the basis of the foreign currency cross-rate between the actual average buying or selling rate of the United States dollar for Vietnamese dong on the inter-bank market and the rate of the United States dollar for the other foreign currencies on the international market quoted by the State Bank of Vietnam.

5. Import and export duties shall be paid in Vietnamese dong. Taxpayers wishing to pay duties in foreign currency shall pay duties in a freely-convertible foreign currency as published by the State Bank of Vietnam.

The Ministry of Finance shall decide on payment of duties in foreign currency on a case-by-case basis.

III. DUTY TARIFF

1. Import duty rates:

Duty rates applicable to imported goods shall comprise the standard rate, the preferential rate and the special preferential rate, which shall be applied as follows:

(a) The preferential duty rate is the duty rate applicable to imports originating from countries or groups of countries which have signed an agreement with Vietnam on "Most Favoured Nation" status in trade relations and is specified for each item of goods listed in the preferential import tariff.

Conditions for application of the preferential duty rate:

- Imports must be supported by a Certificate of Origin (C/O) from a country or a group of countries which has signed an agreement with Vietnam on "Most Favoured Nation" status in trade relations. That country or group of countries must be included in the list of countries or groups of countries which have signed an agreement on "Most Favoured Nation" status in trade relations with Vietnam, published by the Ministry of Trade.

- The Certificate of Origin of goods must comply with the regulations of the Ministry of Trade.

(b) The special preferential duty rate is the duty rate applicable to imports originating from countries or groups of countries which have signed an agreement with Vietnam on special preferential import duties on the basis of free trade regions or customs duties unions or for the purpose of creating favourable conditions for border trade relations and in other special preferential cases.

Conditions for application of the special preferential duty rate:

- Imports must be supported by a Certificate of Origin (C/O) from a country or a group of countries which has signed an agreement with Vietnam on special preferential import duties. The Certificate of Origin of goods must comply with the regulations of the Ministry of Trade.

- Imports must be goods which are specified in the agreement and satisfy all conditions stated in the agreement.

(c) The standard duty rate is the duty rate applicable to imports originating from countries which have not signed an agreement with Vietnam on "Most Favoured Nation" status in trade relations.

The standard duty rate shall be fifty (50) per cent higher than the preferential duty rate for each item of goods provided for in the preferential import tariff and shall be calculated as follows:

Standard duty rate = Preferential duty rate + [Preferential duty rate x 50%]

Based on the conditions and provisions referred to above, the customs office shall calculate and collect import duties on a case-by-case basis at the relevant duty rate provided for in article 1 of Decree 94/1998/ND-CP dated 17 November 1998 of the Government.

In addition to the standard rate, preferential rate and special preferential rate, in several cases, an additional duty rate may be applied in accordance with separate regulations.

2. Export duty rates:

The export duty rate applicable to each item of goods shall be provided for in the export tariff.

C. REGISTRATION AND DECLARATION OF IMPORTED OR EXPORTED GOODS AND PAYMENT OF DUTY

I. CUSTOMS DECLARATION OF IMPORTED OR EXPORTED GOODS

1. Organizations and individuals with goods permitted to be exported shall fully and accurately declare information stipulated by the customs office, lodge declarations of exported goods, and pay export duties to the customs office which completes the export procedures.

2. Organizations and individuals with goods permitted to be imported shall fully and accurately declare information stipulated by the customs office, lodge declarations of imported goods and pay import duties to the customs office at the bordergate where the goods are imported.

In the case of imported goods for which customs clearance is permitted to be carried out at a location outside the bordergate where the goods are imported, the order for declaration and calculation of duties shall be as follows: The customs office at the location of completion of customs clearance shall be responsible for receiving declaration forms of imported goods and all documents relating to the consignment of imported goods for performance of import procedures, which shall then be forwarded to the customs office at the bordergate where the goods are imported. The customs office at the bordergate where the goods are imported shall be responsible for re-examining all documentation for import of the consignment of goods in order to verify documents relating to the import (at a port, ship lines, and so forth) and shall decide to grant permission for the consignment to be transported to the location of completion of customs clearance outside the bordergate. Upon inspection and calculation of duties, the customs office at the location of completion of customs clearance outside the bordergate shall be responsible for handing over a set of the customs documentation in respect of imported goods (accompanied by a notice of the amount of duties payable) to the customs office at the bordergate where the goods are imported for the purpose of filing and monitoring. Goods which are transported from the bordergate where the goods are imported to a location of completion of customs clearance outside the bordergate shall be subject to supervision and control as stipulated by the customs office.

II. TIME OF CALCULATION OF DUTY AND TIME-LIMIT FOR NOTIFICATION OF DUTY

1. The time of calculation of import or export duties shall be the date on which a taxpayer lodges a declaration of imported or exported goods at the customs office.

Import or export duties shall be calculated on the basis of the duty rate, the dutiable value and the exchange rate on the date on which the taxpayer lodged the declaration of imported or exported goods at the customs office. Where the taxpayer does not actually import or export goods within fifteen (15) days from the date of lodging the declaration of imported or exported goods, the declaration of imported or exported goods which has been lodged at the customs office shall no longer be valid for performing the customs procedures for import or export of the goods. Upon actual import or export of goods, the taxpayer shall re-declare and lodge a declaration of imported or exported goods at the customs office. The time of calculation of duties shall be the date on which the declaration is re-lodged.

2. The time-limit for duty notification as stipulated in article 1 of Decree 94-1998- ND-CP dated 17 November 1998 shall be as follows:

(a) Within eight working hours of the lodging of a declaration of imported or exported goods, the customs office shall officially notify the taxpayer of the amount of duties to be paid pursuant to the declaration of the taxpayer.

(b) Within eight working hours of the completion of inspection of the consignment of goods actually imported or exported by the customs office, if there is a difference between the amount of duties to be paid and the amount of duties notified pursuant to the initial declaration, the customs office must notify the taxpayer of the shortfall or excessive amount in comparison with the amount of duties notified pursuant to the declaration.

Where a compulsory inspection in terms of technical specifications and quality standards is required for the purpose of ensuring the accuracy of duty calculation (such as determination of names of items of goods, tax codes pursuant to the tariff, technical specifications, quality standards, brand-new or second-hand imported goods), the time-limit for notification of the shortfall or excessive amount may be extended, but shall not exceed fifteen (15) working days.

If upon customs inspection and calculation of duties the customs office completing the customs procedures and collecting import duties is unable to determine clearly the items of goods, technical specifications, quality standards, brand-new or second-hand condition used as the basis for calculating duties, it shall have the right to request inspection in the cases provided for in this sub-clause at the same time as notifying the taxpayer of the reasons for inspection. The results of the inspection at the request of the customs office shall be used as the basis for duty calculation and collection of import duties.

III. TIME-LIMIT FOR PAYMENT OF IMPORT AND EXPORT DUTIES

1. In respect of exported goods, fifteen (15) days (that is, calendar days) from the date on which the taxpayer receives the official duty notice of the amount to be paid from the customs office.

2. In respect of goods being supplies and raw materials imported for production of goods for export, nine months (rounded to two hundred and seventy five (275) calendar days) from the date on which the taxpayer receives the official duty notice of the amount to be paid from the customs office.

Requirements for application of the time-limit of nine months (or two hundred and seventy five (275) calendar days) for payment of duties in respect of supplies and raw materials imported for production of goods for export shall be the following:

- Contract for export of goods;

- The taxpayer does not have any overdue debts of duties (at the time of import) in accordance with the Law on Import and Export Duties;

- The registration of supplies and raw materials imported for production of goods for export.

Based on the documentation as stipulated, the customs office completing the import procedures shall notify the enterprise of the time-limit of nine months for payment of duties at the same time as establishing a book recording the debt of duties of the enterprise for the purpose of tax finalization upon actual export of products.

In special cases where the cycle of production or storage of supplies and raw materials of enterprises is longer than nine months, such as ship-building and manufacture of machinery or mechanical equipment, the time-limit for payment of duties may be longer than nine months. The enterprise shall submit an explanatory statement to the Ministry of Finance for consideration and decision on a case-by-case basis.

Where an enterprise entitled to the time-limit for payment of duties being nine months or longer fails to export goods, it shall, in addition to a fine for late payment of duties (calculated from the thirty first day after the date of receipt of the duty notice from the customs office to the date of actual payment of duties), be dealt with in accordance with law. In addition to that, the enterprise shall not enjoy the time-limit of nine months for duty payment in respect of subsequent consignments of goods.

3. In respect of goods temporarily exported for re-import or goods temporarily imported for re-export, the time-limit for payment of duties shall be fifteen (15) days (that is, calendar days) from the date of expiry of the time-limit for temporary export for re-import or temporary import for re-export (including any authorized extension thereof) permitted by the authorized body in accordance with the regulations of the Ministry of Trade.

4. In respect of consumer goods, import duties must be paid in full prior to receipt of the goods. The list of consumer goods shall be provided by the Ministry of Trade.

In cases where the taxpayer has a guarantee in respect of the amount of duties payable, the time-limit for payment of duties shall be thirty (30) days (that is, calendar days) from the date on which the taxpayer receives the official duty notice of the amount to be paid from the customs office provided that:

- The guarantor must be a credit institution or another organization authorized to conduct banking operations in accordance with the provisions of the Law on Credit Institutions.

- The guarantee must specify the name of the guarantor, the name of the guarantee, the guaranteed amount of duties, the period of guarantee and the undertaking of the guarantor.

Based on the written guarantee issued by the guarantor, the customs office completing the import procedures shall notify the taxpayer of the time-limit of thirty (30) days for payment of the guaranteed amount of duties.

If the taxpayer fails to pay the import duties payable within the time-limit for payment of duties stated in the duty notice of the customs office, the customs office shall request the guarantor to pay the amount of duties on behalf of the taxpayer to the State Budget in accordance with the Law on Credit Institutions dated 12 December 1997 and other legal instruments providing guidelines for implementation. The guarantor shall also be liable to pay a fine for late payment of duties calculated from the date on which the taxpayer receives the duty notice. If the guarantor fails to pay the duties to the State Budget within the time-limit of ninety (90) days for payment of duties, the customs office shall have the right to request that the account of the guarantor be frozen until collection of the duties and fine in full.

5. In respect of non-trade imports or exports and import or export activities of residents in border areas, the taxpayers must pay duties in full prior to import of goods into Vietnam or export of goods to a foreign country.

6. In respect of imported goods which are not subject to the time-limits for payment of duties provided for in sub-clauses 2, 3, 4 and 5 above, the time-limit for payment of duties shall be thirty (30) days (that is, calendar days) from the date on which the taxpayer receives the official duty notice of the amount to be paid from the customs office.

7. Where imported goods are subject to different time-limits for payment of duties, declarations of imported goods shall be made separately on the basis of each time-limit for payment of duties.

D. DUTY EXEMPTION, CONSIDERATION OF DUTY EXEMPTION AND TAX REDUCTION

I. DUTY EXEMPTION

Cases in which organizations or individuals importing or exporting goods are exempted from payment of duties as provided for in article 12 of Decree 54-CP dated 28 August 1993 of the Government shall include the following:

1. Goods which are non-refundable aid in accordance with an assistance project or a treaty between the Vietnamese Government and foreign organizations, a written assistance agreement or a notification of assistance.

2. Goods which are temporarily imported for re-export or temporarily exported for re-import for participation in trade fairs and exhibitions.

3. Goods which are moveable assets and entitled to duty exemption in accordance with the following stipulations:

- In respect of moveable assets of foreign organizations or individuals permitted to undertake business or work in Vietnam, application shall be in accordance with Inter-ministerial Circulars 04-TTLB dated 12 February 1996 and 04-BS-TTLB dated 20 October 1996 of the Ministry of Trade, the Ministry of Foreign Affairs, the Ministry of Finance and the General Department of Customs.

- In respect of moveable assets of Vietnamese organizations or individuals which are permitted to be exported to a foreign country for business and working purposes and brought back to Vietnam upon expiry of the term, only assets which have been exported to a foreign country and brought back to Vietnam shall be exempted from duties.

- In respect of a number of consumer goods (such as used cars, motorbikes, televisions sets, refrigerators, air-conditioners and sound systems) of Vietnamese or foreign citizens and their families who are permitted to reside in Vietnam, each family (or individual) shall be entitled to exemption from duties in respect of one item of each type.

4. In respect of imported or exported goods carried within the stipulated quantity of duty-free baggage of individuals upon exit or entry through bordergates, application shall be in accordance with Decree 17-CP dated 6 February 1995 as amended by Decree 79-1998-ND-CP dated 29 September 1998 of the Government.

5. In respect of imported or exported goods of foreign organizations and individuals enjoying rights to privileges and immunities in Vietnam in accordance with the law of Vietnam and in compliance with international treaties to which Vietnam is a signatory or participant, application shall be in accordance with Inter-ministerial Circulars 04-TTLB dated 12 February 1996 and 04 BS-TTLB dated 20 October 1996 of the Ministry of Trade, the Ministry of Foreign Affairs, the Ministry of Finance and the General Department of Customs providing guidelines and additional guidelines for import or purchase in Vietnam, re-export and assignment of necessary supplies required for working and living requirements of diplomatic missions, consulates and representative offices of international organizations enjoying rights to privileges and immunities in Vietnam.

6. In respect of goods imported for processing for a foreign party and re-export pursuant to a signed written contract, the following goods shall be exempted from duties:

- Supplies and raw materials imported for processing;

- Supplies used as part of the process of production or processing (such as paper, chalk, brushes, tailor's chalk, pins, paint, clothes brushes, glue, priming brushes, and so forth) provided that the enterprise must stipulate the levels of use and waste;

- Goods as samples used for processing;

- Machinery and equipment directly used for processing as agreed in the processing contract. Upon expiry of the processing contract, re-export must occur; otherwise a declaration for payment of duties must be made as stipulated;

- Processed products exported (if such products are subject to export duties).

Directors of processors shall be responsible for using imported raw materials, sub-materials and supplies in accordance with the purpose of processing; any breach shall be dealt with in accordance with law.

Imported machinery, equipment, raw materials, supplies and processed products used by the foreign party as payment of processing fees shall be subject to payment of import duties.

7. Machinery, equipment and means of transportation brought by foreign contractors into Vietnam by way of temporary import for re-export for construction of works and projects funded by Official Development Aid (ODA) shall be exempted from import duties and export duties upon re-export.

Upon expiry of the period of construction of the works or projects, the foreign contractor must re-export, otherwise it must declare and pay import duties as stipulated.

The Ministry of Finance delegates the General Department of Customs to deal with duty exemption on a case-by-case basis in accordance with the above provisions. When dealing with duty exemption in the cases referred to in sub-clauses 1, 2, 3, 5, 6 and 7, the customs office must issue a decision on duty exemption in accordance with its powers and retain documentation as stipulated. On the basis of the decision on duty exemption, the customs office shall carry out the customs clearance in respect of the amount of import duties exempted and state clearly in the customs declaration of imported or exported goods: Aitem class of goods exempted from payment of duties in accordance with Decision ... of ... dated ...

II. CONSIDERATION OF DUTY EXEMPTION

Organizations or individuals importing or exporting goods in cases which are exempted from payment of duties must submit the following documents as stipulated:

1. Goods which are imported for specialized use for purposes of security, national defence, scientific research and education and training:

(a) Goods which are imported for specialized use for purposes of security and national defence:

- Official letter of the head of the line ministry requesting a duty exemption;

- Detailed list of the item class and quantity of goods to be imported for specialized use for purposes of security or national defence which has been approved by the head of the line ministry after being registered and mutually agreed with the Ministry of Finance at the beginning of the relevant year (no later than the thirty first day of March every year, the line ministry must register a plan for import);

- Import licence issued by the Ministry of Trade (if any);

- Customs declaration of imported goods (for which customs clearance is completed and duties are calculated);

- Contract for import authorization (in the case of goods imported by authorized dealers).

(b) Goods which are imported for specialized use for scientific research:

- Official letter of the entity undertaking the scientific research program requesting a duty exemption;

- Documents relating to the scientific research program consisting of:

- Decision of approval of the program at ministerial and State level;

- List of goods to be imported for implementation of the program approved by the authority approving the program;

- Customs declaration of imported goods (for which customs clearance is completed and duties are calculated);

- Contract for import authorization (in the case of goods imported by authorized dealers).

(c) Goods which are imported for specialized use in education and training:

- Official letter of the entity undertaking the education and training work requesting a duty exemption;

- Decision of the line ministry on approval of the project of investment in equipment and supplies for education and training;

- List of equipment and supplies for the project approved by the line ministry;

- Customs declaration of imported goods (for which customs clearance is completed and duties are calculated);

- Contract for import authorization (in the case of goods imported by authorized dealers).

Based on the documents as stipulated, the Ministry of Finance shall consider and determine any duty exemption on a case-by-case basis. The customs office shall, on the basis of the decision of the Ministry of Finance on duty exemption, carry out the customs clearance in respect of the amount of import duties exempted and state clearly in the customs declaration of imported or exported goods: Aitem class of goods exempted from payment of duties in accordance with Decision ... of ... dated ....

2. Imported goods of enterprises with foreign owned capital and foreign parties to business co-operation contracts under the Law on Foreign Investment in Vietnam as stipulated in article 2.2 of Decree 94/1998/ND-CP dated 17 November 1998 of the Government shall be subject to the guidelines in Circular 74-TC/TCT dated 20 October 1997 providing guidelines for implementation of provisions on taxation in respect of forms of investment under the Law on Foreign Investment in Vietnam and Circular 63/1998/TT-BTC dated 13 May 1998 providing guidelines for implementation of a number of provisions relating to taxation with a view to encouragement and guarantee of foreign direct investment in Vietnam as stipulated in Decree 10/1998/ND-CP.

3. Imported goods of domestic investors under the Law on Promotion of Domestic

Investment as stipulated in article 2.3 of Decree 94/1998/ND-CP dated 17 November 1998 of the Government shall be subject to separate regulations.

4. Goods being gifts from foreign organizations and individuals to Vietnamese organizations and individuals and vice versa must be accompanied by the following:

- Official letter requesting an exemption from import or export duties;

- Export-import licence issued by the customs office (if any);

- Notification, decision or agreement for delivery of gifts by the owner;

- Documents relating to import or export of the gift package.

Subjects and stipulated quantities of gifts entitled to duty exemption and management of the use thereof shall be regulated under Circular 28-TC-TCT dated 17 July 1992 of the Ministry of Finance. However, in relation to gifts from Vietnamese organizations and individuals to foreign individuals and from foreign organizations and individuals to Vietnamese individuals, only gifts given to each individual which have a value of not more than one hundred (100) United States dollars may be exempted from duties. If a single gift is given to more than one person, then each person shall be exempted from duties to the extent of one hundred (100) United States dollars of the value of the gift and the total value of the gift must not exceed one thousand (1,000) United States dollars. If a gift package exceeds the price limit as stipulated above, the whole package shall be subject to export-import duties. In the special case of a gift package of a humanitarian or charitable nature (including gifts being machinery, equipment, raw material, supplies, waste materials and products of a processing contract for a foreign party), the Ministry of Finance shall consider and determine on a case-by-case basis.

Sample goods from foreign organizations and individuals to Vietnamese organizations and individuals and vice versa shall be subject to the quantities provided for in Circular 28-TC-TCT dated 17 July 1992 of the Ministry of Finance; the documentation shall include the following:

- Official letter requesting an exemption from import or export duties;

- Notification or agreement for delivery of samples;

- Export-import licence issued by the customs office (if any);

- Documents relating to import or export of the consignment of goods.

On the basis of the documents and the provisions referred to above, provincial and municipal Customs Departments shall consider and issue a decision on duty exemption in respect of consignments of goods being gifts or samples from foreign organizations and individuals to Vietnamese individuals and from Vietnamese organizations and individuals to foreign individuals within the price limit (that is, not exceeding one hundred (100) United States dollars). In the case of other gifts and samples, the Ministry of Finance shall consider and determine any exemption from export or import duties on a case-by-case basis. The customs office shall, on the basis of the decision on duty exemption, carry out the customs clearance in respect of the amount of import duties exempted and state clearly in the customs declaration of imported or exported goods: Aitem class of goods exempted from payment of duties in accordance with Decision ... of the Ministry of Finance dated ....

5. Goods imported for sale as duty-free goods shall be subject to the control of the customs office in accordance with the regime of control and supervision of goods imported for sale as duty-free goods provided for in the Regulations on Duty-Free Shops issued with Decision 205/1998/QD-TTg dated 19 October 1998 of the Prime Minister of the Government for the purpose of ensuring the principle that goods shall be subject to the supervision and control of the customs office from the import stage to their sale.

Where goods imported for sale in duty-free shops are sold on the market of

Vietnam or to purchasers who are not entitled to duty-free status, the enterprise operating the duty-free shop must declare and pay duties as stipulated.

The General Department of Customs shall implement duty exemption and control duty-free goods as stipulated in this sub-clause.

III. Consideration of Duty Reduction

In respect of imported goods which are damaged or lost for valid reasons in the process of transportation, loading or unloading (provided that the goods are still under the supervision and control of the customs office), the provincial or municipal Customs Department shall, on the basis of the level of damage or loss, issue a decision for dealing with them and verify relevant documents for a corresponding duty reduction on a case-by-case basis.

E. REFUND OF DUTY AND COLLECTION OF DUTY

I. REFUND OF DUTY

1. In respect of goods which qualify for a refund of duty as stipulated in article 16 of Decree 54-CP dated 28 August 1993 of the Government, when lodging a request for a refund of an amount of export or import duties paid, organizations and individuals must submit the following documents:

(a) In respect of imported goods for which duties have already been paid and which are still in storage in the bordergate area under the supervision of the customs office, but which are now permitted to be re-exported, the following documents shall be required:

- Official letter requesting a refund of import duties paid which states clearly the reasons for the request;

- Customs declarations of imported and exported goods for which the customs office completes the customs clearance. The customs declaration of exported goods must have confirmation from the customs office that the goods are still in storage in the bordergate area, or are still under the supervision of the customs office and in an area under the control of the customs office;

- Receipts for payment of duties;

- Contract for import or export authorization (where goods are imported or exported by authorized dealers).

(b) In respect of exported goods for which duties have already been paid but which are no longer to be exported, the following documents shall be required:

- Official letter requesting a refund of export duties already paid;

- Customs declaration for the exported goods with confirmation from the customs office that the goods are no longer to be exported as stated in the declaration;

- Receipts for payment of duties.

(c) In respect of goods for which duties have already been paid but a lesser amount of goods is actually imported or exported, the following documents shall be required:

- Official letter requesting a refund of the excessive amount of export or import duties already paid;

- Customs declaration of imported or exported goods for which the customs clearance is completed;

- Receipts for payment of duties;

- Invoices for sale or purchase of goods under a foreign trade contract.

(d) In respect of imported goods which are inconsistent in quality, specifications or type with the signed commercial contract with an overseas sender due to the fault of the overseas sender as verified in writing by a body responsible for State evaluation and confirmed by the overseas sender, Customs Departments of provinces and cities under central authority shall, on the basis of results of evaluation of imported goods and the State regulations currently in force, consider and permit the importation of goods or compel re-export of goods, at the same time as re-calculating the amount of import duties payable for the purpose of proper collection of duties in respect of the goods actually imported in the case where there is a change in duty rates and dutiable value. Where an enterprise has paid import duties but the amount of duties paid exceeds the amount payable in respect of the goods actually imported as re-calculated by the customs office, the excessive amount of duties shall be refunded to the enterprise or any shortfall shall be paid in full.

The application file for a refund of duties shall include the following:

- Official letter requesting a refund of the excessive amount of import duties paid (clearly stating the reasons for the refund of duties);

- Results of evaluation of imported goods by the authorized body;

- Confirmation by the overseas sender for the delivery of goods inconsistent with the contract;

- Customs declaration of imported or exported goods specifying the results of inspection, and other documents relating to the import of the consignment of goods;

- Receipts for payment of duties.

(e) Where taxpayers have made an error in the declaration, they shall be refunded any excessive amount of duties paid in the preceding year from the date of examination or discovery (to the date of lodging of the declaration of imported or exported goods); the file for a refund of duties shall include the following:

- Official letter requesting a refund of the excessive amount of import or export duties paid (clearly stating causes and reasons for the error);

- Customs declaration of imported or exported goods (accompanied by other relevant import-export documents);

- Receipts for payment of duties and duty notices of the customs office.

(g) In respect of supplies and raw materials imported for the manufacture of goods for export:

- Supplies and raw materials entitled to refund of duty shall include the following:

- Supplies and raw materials directly constituting products;

- Supplies and raw materials used as part of the process of production of goods for export, but not directly constituting products, such as paper, chalk, brushes, tailor's chalk, pins, paint, clothes brushes, glue, priming brushes, provided that an enterprise shall stipulate the levels of use for a product; and the director of the enterprise shall be responsible for such levels.

A refund of duty shall be considered in the following cases:

- Enterprises importing raw materials and supplies, then directly manufacturing or delivering for the purpose of processing and receiving products for export (including the case of co-operation for production of goods for export);

- Enterprises importing raw materials and supplies for production of goods for sale in the domestic market, but then seeking export markets and using such raw materials and supplies for production of goods for export and actually exporting them to a foreign country;

- Enterprises importing raw materials and supplies for production of goods for export where capital has been partly contributed by foreign parties to foreign invested enterprises established under the Law on Foreign Investment in Vietnam, which goods shall be exported to foreign customers or to the parent company abroad.

The file for a refund of duty shall include the following:

- Official letter requesting a refund of import duties already paid by the enterprise with a statement detailing the quantity of products for export, the actual levels of use of imported raw materials, and the amount of import duties paid and the amount of import duties for which a refund is sought;

- Export contract signed with foreign parties (which states clearly, amongst other things, quantity, specifications, quality, and types of goods for export) and contract for import of raw materials and supplies for production of goods for export;

- Customs declaration for imported raw materials and supplies for which customs clearance has been completed;

- Customs declaration for goods actually exported as certified by the customs office at the bordergate;

-Receipts for payment of duties;

- Contract for export or import authorization (if goods are imported or exported by authorized dealers).

Levels of use of raw materials and supplies for production of goods for export shall be stipulated by the enterprise and the director of the enterprise shall be responsible for legal bases and accuracy of such levels and shall register them with the customs office (where the procedures for export and import of products in the future are to be completed). The registration of levels of use with the customs office shall be carried out prior to the performance of the procedures for import. Where the registered levels of use are not in accordance with the actual levels of use, the enterprise must promptly report to the customs office where the levels of use have been registered for the purpose of use as a basis for refund of duty upon actual export of products. Where raw materials for production of goods to be sold on the domestic market are imported, but then export markets are sought and acquired, the enterprise must prepare and submit levels of use to the customs office prior to completion of the procedures for refund of duty and the director of the enterprise shall be responsible for such levels of use. Import duties to be refunded shall be determined on the basis of the actual levels of use provided that they do not exceed the registered levels of use.

Where there is doubt about any level of use of supplies and raw materials for production of products for export, the customs office may request the opinion of the body responsible for the specialized management of such item, which shall be used as a basis for determination of a refund of duties to the enterprise. Every year, the customs office shall co-ordinate with the local tax office to examine levels of use of supplies and raw materials for production of products for export relating to determination of refund of import duties.

* Where a type of raw material is imported for production of two or several different types of products (for example, an enterprise imports wheat for production of flour but acquires flour and bran or an enterprise imports condensate for refinery of oil but acquires petrol and diesel) but only one type of product is exported, the import duties to be refunded shall be calculated in accordance with the following formula of allocation:

Where raw materials and supplies have been imported for production of goods which are actually exported within the time- limit for duty payment provided for in clause III of Part C of this Circular, they shall be exempted from payment of an amount of import duties corresponding to the amount of goods actually exported. The file for duty exemption shall be the same as the file for refund of duty, with the exception that the receipt for payment of duties shall be replaced by the official duty notice of the customs office.

(h) Goods which are temporarily imported for re-export or temporarily exported for re-import shall be entitled to refund of import or export duties and shall be exempted from import duties upon re-import, or export duties upon re-export in the following cases:

- Goods temporarily imported for re-export or goods temporarily exported for re-import in accordance with the method of trading goods temporarily imported for re-export or goods temporarily exported for re-import; and goods imported by authorized dealers for foreign parties, the following documents shall be required:

- Official letter requesting a refund of export or import duties already paid;

- Export-import licence issued by the Ministry of Trade which clearly states goods temporarily imported for re-export or goods temporarily exported for re-import, and goods imported by authorized dealers for foreign parties (if any);

- Customs declaration for imported and exported goods for which customs clearance is completed and certified by the customs office as to the quantity, weight, and type of goods re-exported or imported;

- Foreign trade contract signed by both the seller and the purchaser or the contract for import authorization signed with the foreign party;

- Receipts for payment of duties;

- Contract for export or import authorization (if goods are imported or exported by authorized dealers).

- Where goods are imported by a Vietnamese enterprise in the capacity of an agent for delivery or sale to overseas buyers; goods are imported for sale to foreign carriers on international routes via ports of Vietnam and Vietnamese carriers on international routes stipulated by the Government; the following documents shall be required:

- Official letter requesting a refund of import duties;

- Official letter of the Ministry of Trade permitting import which clearly states the method of trading (import for sale to foreign aircraft landing in Vietnam, Vietnamese aircraft on international lines, and so forth);

- Customs declaration for imported goods;

- Receipts for payment of duties;

- Sales invoices;

- Customs declaration for goods actually exported as certified by the customs office at the bordergate;

- Goods sales agency contract and contract or agreement for supply of goods.

In respect of drinks served on international flights, the customs declaration for exported goods shall be replaced by the delivery form certified by the customs office at the airport.

Where goods temporarily imported for re-export or goods temporarily exported for re-import are actually re-exported or re- imported, as the case may be, within the time-limit for duty payment provided for in clause III of Part C of this Circular, they shall be exempted from payment of the amount of import or export duties corresponding to the amount of goods actually re-imported or re-exported. The file for duty exemption shall be the same as the file for refund of duty (with the exception that the receipt for payment of duties shall be replaced by the official duty notice of the customs office).

(i) In respect of goods exported from the domestic market to export processing zones or export processing enterprises, the refund of duty shall be implemented as in the case of import of raw materials and supplies for production of goods for export, or goods temporarily imported for re-export referred to above.

(k) Goods which have been exported, but for a particular reason are imported back into Vietnam, shall be entitled to a refund of export duties already paid and exempted from import duties provided that:

- Such goods are actually imported back into Vietnam within a period of six months from the date of actual export;

- Such goods have not been subject to the process of manufacture, repair or use abroad;

- Such goods are imported back into Vietnam through the same bordergate by which such goods were exported.

The file for a refund of export duties and exemption from import duties shall include the following:

- Official letter requesting a refund of export duties and exemption from import duties which clearly states the reasons for import back into Vietnam;

- Notification of the foreign customer or agreement with the foreign customer for return of goods, which clearly states the reasons and quantity of goods returned;

- Customs declaration of exported goods, foreign trade contract signed with the foreign customer and invoices for sale of goods to the foreign customer;

- Receipts for payment of duties;

- Customs declaration for the goods imported back, which clearly states that these goods were exported in accordance with the particular customs declaration for exported goods, and detailed results of inspection of the customs office at the bordergate certifying that the goods are imported back into Vietnam;

- Contract for import or export authorization (if goods are imported or exported by authorized dealers).

Where the exported goods are imported back into Vietnam within the time-limit for payment of export duties provided for in clause III of Part C of this Circular, they shall be exempted from payment of the amount of export duties corresponding to the amount of goods actually imported.

The file for exemption from import or export duties shall be the same as the file for refund of duty (with the exception that the receipt for payment of duties shall be replaced by the official duty notice of the customs office).

Where the exported goods are goods which a Vietnamese enterprise has processed for foreign parties and have been made from raw materials already exempted from imported duties, and then the goods have to be re- imported for repair, re-processing or sale, the customs office which controlled and finalized the initial processing contract shall continue to monitor and control such goods when exported and also finalize import duties in respect of raw materials in accordance with clause I.6 of Part D of this Circular. If the goods are not exported, they must be the subject of a declaration for duty payment as stipulated.

Where the exported goods have been produced from imported raw materials; or goods are temporarily imported for re-export (and therefore are entitled to a refund upon export) and have to be re-imported back into Vietnam, then the enterprise must repay the initial import duties, or shall not be eligible for a refund (if not yet in fact refunded), corresponding to the quantity of goods which have had to be re-imported into Vietnam. When the goods re-imported back into Vietnam are actually exported again, the enterprise shall make a declaration for payment of import duties (assuming the goods are subject to export duties) and may be considered for an import duty refund in accordance with sub-clauses 1(g) or 1(h) of clause I of Part E of this Circular.

(l) Imported goods which for a particular reason must be re-exported to a foreign country (that is, exported back to an overseas sender or re- exported to a third country) shall be entitled to a refund of import duties already paid on the amount of re-exported goods and an exemption from export duties provided that:

- Such goods are re-exported to the foreign country within a period of six months from the date of actual import;

- Such goods have not been subject to a process of manufacture, repair or use in Vietnam;

- Such goods are re-exported to the foreign country through the same bordergate by which such goods were imported.

The file for a refund of import duties already paid and exemption from export duties shall include the following:

- Official letter requesting a refund of import duties and exemption from export duties which clearly states the reasons for export back to the overseas sender or re-export to a third country (specifying quantity, types of exported goods, and so forth);

- Contract for purchase of goods signed with the overseas sender; sales invoices issued by the overseas sender;

- Customs declaration for imported goods which have been inspected by the customs office, specifying quantity, quality and types of imported goods;

- Receipts for payment of duties;

- Written agreement for return of goods to the overseas sender which clearly states reasons therefor or contract for sale of goods to the overseas party which clearly states quantity, quality, types, origin of goods, and so forth;

- Customs declaration for exported goods certified by the customs office at a bordergate, which clearly states quantity, quality, types of exported goods, and customs declaration under which the exported goods had been imported;

- Invoices which have the effect of an ex-warehouse order or sales invoices for exported goods;

- Contract for import or export authorization (if goods are imported or exported by authorized dealers).

Where the imported goods are not in conformity with the contract, the results of an evaluation of the goods by the body responsible for State evaluation shall be required.

In respect of the amount of goods sent by the overseas party to replace the amount of goods not in conformity with the contract which were re- exported, the enterprise shall declare and pay import duties as stipulated.

Where the goods are re-exported within the time-limit for payment of import duties provided for in clause III of Part C of this Circular, they shall be exempted from payment of the amount of import duties corresponding to the amount of goods re-exported. The file for exemption from import duties shall be the same as the file for refund of duty (with the exception that the receipt for payment of duties shall be replaced by the official duty notice of the customs office).

(m) Machinery, equipment and means of transportation of organizations and individuals which are permitted to be temporarily imported or borrowed for re-export for the purpose of carrying out investment projects, construction and installation of works or used for production and other purposes must be declared for payment of import duties as stipulated upon import and shall be entitled to refund of import duties upon re- export from Vietnam. A refund of import duties shall be determined on the basis of the remaining use value of the machinery, equipment and means of transportation re-exported which shall be calculated on the basis of the duration of use and stay in Vietnam (in the case where the remaining use value is nil, no duty shall be refunded).

Detailed provisions shall be applied as follows:

* In respect of brand-new goods imported into Vietnam:

- If the duration of use and stay in Vietnam is six months or less, the whole of the import duties already paid shall be refunded.

- If the duration of use and stay in Vietnam is over six months up to one year, eighty five (85) per cent of the import duties already paid shall be refunded.

- If the duration of use and stay in Vietnam is over one year up to two years, seventy five (75) per cent of the import duties already paid shall be refunded.

- If the duration of use and stay in Vietnam is over two years up to three years, fifty five (55) per cent of the import duties already paid shall be refunded.

- If the duration of use and stay in Vietnam is over three years up to four years, forty (40) per cent of the import duties already paid shall be refunded.

- If the duration of use and stay in Vietnam is over four years up to five years, thirty five (35) per cent of the import duties already paid shall be refunded.

- If the duration of use and stay in Vietnam is over five years, fifteen (15) per cent of the import duties already paid shall be refunded.

* In respect of used goods which are permitted to be imported into Vietnam:

- If the duration of use and stay in Vietnam is six months or less, the whole of the import duties already paid shall be refunded.

- If the duration of use and stay in Vietnam is over six months up to one year, eighty (80) per cent of the import duties already paid shall be refunded.

- If the duration of use and stay in Vietnam is over one year up to two years, sixty (60) per cent of the import duties already paid shall be refunded.

- If the duration of use and stay in Vietnam is over two years up to three years, forty five (45) per cent of the import duties already paid shall be refunded.

- If the duration of use and stay in Vietnam is over three years up to four years, thirty (30) per cent of the import duties already paid shall be refunded.

- If the duration of use and stay in Vietnam is over four years up to five years, fifteen (15) per cent of the import duties already paid shall be refunded.

The file for a refund of import duties shall include the following:

- Official letter requesting a refund of import duties;

- Official letter of the Ministry of Trade or the General Department of Customs permitting import which clearly states that goods are temporarily imported for re-export (in the case where such official letter is required in accordance with State regulations);

- Contract (or written agreement) for import or borrowing of machinery, equipment, tools or means of transport;

- Customs declaration for imported or exported goods for which the customs office has completed customs clearance and certified the quantity and types of goods actually imported or re-exported;

- Receipts for payment of duties;

- Contract for import or export authorization (if goods are imported or exported by authorized dealers).

Where organizations and individuals importing machinery, equipment, tools and means of transportation for re-export cannot re-export upon expiry of the time-limit for re-export, provided that they obtain the permission of the Ministry of Trade or other authorized body for transfer to other users in Vietnam for continuing management and use, upon transfer, they shall not be treated as exported goods and shall not be entitled to refund of import duties. The transferee or purchaser shall not be liable to pay import duties. Upon actual re-export from Vietnam, a refund of import duties shall be considered in accordance with this sub- clause. Upon request for a refund of duty, in addition to the documents referred to above, an organization or individual requesting a refund of duty shall submit the following documents:

- Official letter of the Ministry of Finance (or an authorized body) permitting the transfer or receipt of the temporarily imported machinery, equipment, tools and means of transportation (in the case where such official letter is required in accordance with State regulations);

- Sale and purchase contract or minutes for handing over or taking over the machinery, equipment, tools and means of transportation between the two parties;

- Invoices which have the effect of an ex-warehouse order or sales invoices issued by the importing organization or individual to the purchaser or transferee.

2. Order for dealing with refunds of duty shall be carried out as follows:

- In respect of the cases in (a), (b), (c), (d) and (e) of clause I.1 of this Part, the customs body responsible for inspection of imported or exported goods shall certify and the customs officers of the customs office responsible for calculation of duty shall re-check and complete the procedures for refund of duty. The director of the Customs Department shall sign a decision on refund of duty. The amount of import or export duties refunded shall be credited against the amount of duties to be paid by the taxpayer in the following period. Where the amount of duties to be refunded is large or a taxpayer will not carry out import or export activities in the following period, the director of the Customs Department shall certify and request the Ministry of Finance (Department of State Budget) to refund duties directly to the taxpayer in accordance with the decision of the Customs Department on refund of duty.

- In respect of the cases in (g), (h), (i) and (m) of clause I.1 of this Part, upon collection of any duties, the customs office shall deposit such duties into a separate account of the provincial or municipal Customs Department at the State Treasury. When the taxpayer entitled to a refund of duty requests the refund of duty, the provincial or municipal Customs Department shall, on the basis of the file as stipulated, examine, consider and sign a decision on refund of duty (or duty exemption) and refund duties to the taxpayer from the above deposit account at the State Treasury.

- In respect of the cases in (k) and (l) of clause I.1 of this Part, the Ministry of Finance shall, on the basis of the file as stipulated, examine, consider, sign and issue a decision on refund of duty (or duty exemption) to taxpayers. Based on the decision of the Ministry of Finance on refund of duty, the Customs Department at which the organization or individual has registered the declaration of imported or exported goods and paid duties shall monitor in order to credit against the amount of duties to be paid by the taxpayer in the following period. Where the amount of duties to be refunded is large or a taxpayer will not carry out import or export activities in the following period, the director of the Customs Department shall certify and request the Ministry of Finance (Department of State Budget) to refund duties directly to the taxpayer. When refunding duty in accordance with decisions on refund of duty, the Customs Department shall carry out customs clearance for the purpose of refund of duties paid in respect of each customs declaration for imported or exported goods and shall clearly state A..... dong of duty is refunded in accordance with Decision ... of ... dated ...

Where an amount of duties is refunded by way of credit against the amount of duties to be paid by the taxpayer in the following period, it must be clearly stated in the customs declaration for imported or exported goods in respect of which duties are deducted: A..... dong of duty is deducted in accordance with Decision ... of ... dated ...

3. Time-limit for lodging of files and time-limit for consideration of refund of duty:

- Time-limit for lodging of files:

No later than sixty (60) days from the date of import or export or from the date of completion of a contract or contractual agreement, taxpayers entitled to refund of import or export duties must complete and lodge a file as stipulated to the authorized body for consideration and resolution of refund of duty in accordance with applicable provisions.

- Time-limit for consideration of refund of duty:

Within a time-limit of thirty (30) days from the date of receipt of the full file as stipulated from a taxpayer entitled to a refund of duty, the authorized body shall be responsible for signing and issuing a decision on refund of duty to taxpayers entitled to the refund of duty within its authority as stipulated.

II. RE-COLLECTION OF IMPORT AND EXPORT DUTIES

1. Cases in which import or export duties shall be collected:

- Where goods which are entitled to duty exemption or reduction in accordance with Part D of this Circular are used for a purpose other than the purpose for which duty is exempted or reduced, the duty which has been exempted or reduced shall be collected in full.

- Where a taxpayer has made an error in declaration of imported or exported goods, duty shall be re-collected for one year preceding the date on which such error is discovered.

Errors in declarations shall be errors in calculation or codes of tariffs.

- In the case of fraud or tax evasion, duty and fines shall be re-collected for the five years preceding the date on which the fraud or tax evasion is discovered. Fraud or tax evasion shall include all cases subject to re- collection of duty other than the two cases referred to above.

2. The applicable bases for calculation and re-collection of import or export duties shall be the dutiable value and the duty rate stipulated at the time of calculation and re-collection of duty.

3. The time-limit for declaration for re-collection of duty shall be two days from the date of change in the purpose of use stated in relevant papers, source documents and invoices. Where no source document is available for determining the date of change in the purpose of use, the date used to determine re-collection shall be the date of registration of the declaration for imported or exported goods.

4. The time-limit for payment of duty recollected shall be as provided for in clause III of Part C of this Circular. A taxpayer failing to pay duty within the time- limit referred to above shall be dealt with in accordance with clause I.1 of Part G of this Circular.

G. DEALING WITH BREACHES

I. DEALING WITH BREACHES IN RELATION TO TAXATION

Pursuant to the Law on Import and Export Duties, laws on amendment of and addition to a number of articles of the Law on Import and Export Duties and Decree 94/1998/ND-CP dated 17 November 1998 of the Government, taxpayers, tax officers and other individuals committing breaches of the Law on Import and Export Duties shall be dealt with as follows:

1. In respect of taxpayers:

(a) Failure to comply with the regulations in relation to procedures for registration and declaration of imported or exported goods, import duty and source documents relating to calculation and payment of import or export duties shall, depending on the nature and seriousness of the breach, be subject to a warning or a fine for administrative offence in relation to taxation.

(b) Failure to make payment of duties or fines within the time-limit for payment stated in the tax notice, decision on re-collection of duty or penalty decision shall be subject to payment of, in addition to the full amount of duties or fines stipulated by law, a fine of one tenth of one (0.1) per cent of the amount for each day of delay.

(c) Making false declarations or tax evasion shall, depending on the nature and seriousness of the breach, be subject to payment of, in addition to the full amount of duties in accordance with the Law on Import and Export Duties, a fine of between one to five times the amount of duty evaded in respect of the following:

- Failure to declare imported or exported goods;

- Making a false declaration as to the actual goods to be exported or imported with respect to name of goods, price, quantity, type, quality, origin of goods, and so forth;

- Forging files and vouchers relating to sale and purchase or providing the customs office with incomplete or inaccurate files relating to duty calculation;

- Giving a false purpose of use or an inaccurate description of the condition of goods in order to take advantage of a duty exemption or reduction or refund of duty;

- Using goods entitled to duty exemption or reduction for a purpose other than the purpose for which duty is exempted or reduced, but intentionally failing to make a declaration for re-collection of duty, selling duty-free goods to unauthorized customers or marketing duty-free goods in the Vietnamese market without obtaining permission.

A taxpayer who evades a large amount of duties or who still continues to commit the breach or commits other serious offences after having been previously subjected to an administrative penalty for offences in relation to taxation shall be prosecuted for criminal liability in accordance with law.

(d) The following measures shall be taken in respect of failure to pay duties or fines in accordance with a penalty decision:

- Bank deposits of the taxpayer at banks, credit institutions or State

Treasury shall be debited the amount of duties or fines.

Banks, credit institutions or State Treasury shall, on the basis of the penalty decision of the customs office or an authorized body, be responsible for debiting the amount of duties or fines payable from the balance of the bank account of the taxpayer prior to recovery of the debt.

- Goods and physical evidence of the taxpayer who is liable to pay duties or fines shall be seized as security for full payment of any duties or fines payable.

- Assets shall be seized in accordance with stipulations of the law as security for full payment of any outstanding amount of duties or fines.

- The customs office shall not complete the procedures for import or export of the next consignment of the taxpayer until the taxpayer makes full payment of duties or fines.

The above breaches in relation to import and export duties shall be dealt with in accordance with the procedures and order provided for in legal instruments on dealing with breaches in relation to taxation.

2. Tax officers and other individuals committing breaches of the Law on Import and Export Duties shall be dealt with in accordance with article 22 of the Law on Import and Export Duties dated 26 December 1991 and article 20 of Decree 54-CP dated 28 August 1993 of the Government. Officers and bodies responsible for collection of duties intentionally dealing with a case in an unlawful manner must collect outstanding duties. If the re-collection of the duties in full results in damage to the taxpayer, the officer or body responsible for collection of duties shall be liable for compensation in accordance with law.

II. POWERS TO DEAL WITH BREACHES IN RELATION TO TAXATION

1. Upon discovery that taxpayers have breached the Law on Import and Export Duties, customs offices at all levels must investigate to determine clearly the conduct, seriousness and causes of the breaches and the responsibility of organizations and individuals for the breaches and shall prepare a file on the breach as stipulated. Based on the regulations and levels of penalties for administrative offences in relation to taxation, the customs office shall, depending on the power at each level to deal with breaches, issue a penalty decision or propose that it be dealt with by a superior customs office or law authority within its authority, in particular:

- Directors of provincial or municipal Customs Departments directly responsible for the management of collection of import and export duties shall have the power to deal with breaches by taxpayers as stipulated in sub-clauses 1(a) and 1(b) and to impose penalties for administrative offences in relation to taxation as stipulated in sub-clause 1(c) of clause I of this Part.

- Directors of provincial or municipal Customs Departments directly responsible for the management of collection of import and export duties shall have the power to apply the measures stipulated in sub-clause 1(d) of clause I in accordance with law and to refer files to the authorized body to deal with in accordance with law in the case of the breaches provided for in sub-clause 1(c) of clause I of this Part.

2. Where a tax office investigates and discovers a false declaration or duty evasion by a taxpayer, the director of the Taxation Department of the province or city under central authority shall have the power to issue a decision on re-collection of duties and fines in accordance with the Law on Import and Export Duties and this Circular. The provincial or municipal Customs Department shall be responsible for co-ordinating with the Taxation Department to re-collect duties and fines in accordance with applicable regulations. Where the Customs Department identifies that a decision on re-collection of duties and fines is not in conformity with the Law on Import and Export Duties, the Customs Department shall have the right to request the Taxation Department to consider an amendment of the decision on re-collection of duties and fines. If they fail to reach agreement on re-collection of duties and fines, the Customs Department and the Taxation Department shall report the matter to the General Department of Customs and the General Department of Taxation respectively for decision.

If agreement cannot be reached, the decision of the Ministry of Finance shall be final. Results of recollection of duties and fines shall be included in the results of collection of duties of the locality where the re-collection is carried out.

3. Where examination and identification is by other bodies, they shall prepare a file and request the customs office to issue a decision on re-collection of duties and fines and to carry out re-collection as stipulated.

4. Entities and individuals making notable achievements in examination and discovery for re-collection of import and export duties and fines shall be rewarded in accordance with applicable regulations.

H. COMPLAINTS AND TIME-LIMITS

I. RIGHTS AND RESPONSIBILITIES OF TAXPAYERS WITH RESPECT TO COMPLAINTS IN RELATION TO TAXATION

Pursuant to article 19 of Decree 54-CP dated 28 August 1993, taxpayers shall have the right to lodge complaints with the General Department of Customs against customs officers, customs offices and other officers and authorized bodies dealing with breaches provided for in clauses 1 and 3 of article 20 of the Law on Import and Export Duties dated 26 December 1991 as amended and added to by clause 5 of article 1 of Law 04-1998-QH10 dated 20 May 1998. Within a time-limit of twenty (20) days from the date of receipt of the complaint, the General Department of Customs shall be responsible for resolution of the complaint of the taxpayer. Pending resolution of the complaint, the complainant organization or individual must still pay duties and fines in full and on time in accordance with the notice or penalty decision.

If a complainant organization or individual is not satisfied with the decision of the General Department of Customs, or does not receive the opinion of the General Department of Customs for resolution within the time-limit for resolution, the organization or individual shall have the right to lodge a complaint with the Ministry of Finance or to initiate legal action at a court in accordance with law. Where the organization or individual does not initiate legal action at a court but lodges a complaint with the Minister of Finance, the decision of the Minister of Finance shall be final.

Procedures and order for lodging a complaint or initiating legal action and consideration and resolution shall be carried out in accordance with the laws currently in force.

II. RESPONSIBILITIES AND RIGHTS OF BODIES WITH RESPECT TO RESOLUTION OF COMPLAINTS

Bodies shall be responsible for dealing with complaints of taxpayers within the time- limit provided for in article 19 of Decree 54-CP dated 28 August 1993 of the Government. If a case falls outside their power for resolution, such bodies must refer the file or report to the authorized body for resolution as stipulated.

The body dealing with complaints shall have the right to request the complainant organization or individual to provide files and documents relating to the complaint.

If the organization or individual refuses to provide such files and documents, the body dealing with complaints shall have the right to refuse consideration and resolution of the complaint and to notify the complainant.

I. COLLECTION AND PAYMENT OF DUTY AND REPORTING

I. COLLECTION AND PAYMENT OF DUTY

Import and export duties and fines shall be paid to the State Budget in the relevant chapter, type, clause, class and item of the schedule of the State Budget in accordance with the Law on State Budget. Duties collected in respect of goods being supplies and raw materials imported for production of goods for export; goods temporarily imported for re-export or temporarily exported for re-import; or machinery, equipment, tools and facilities imported for construction or production by way of temporary import for re-export shall be paid to a separate deposit account at the State Treasury. The customs office shall only use deposits in this account to refund duties to taxpayers entitled to refund of duty as stipulated in sub-clauses 1(g), 1(h), 1(i) and 1(m) of clause I of Part E of this Circular.

II. REPORTING

1. Reporting on collection and payment of duties, outstanding duties and refund of duties:

(a) Reporting on collection and payment of duties:

Every month, the General Department of Customs shall prepare and submit a report on collection and payment of duties to the Ministry of Finance, including an interim report for a period of fifteen (15) days in Form 01-BCN (enclosed) and no later than the tenth day of the following month the official report on duty collected in the previous month in Form 02-BCT (enclosed).

(b) Reporting on outstanding duties:

For every month, no later than the tenth day of the following month, the General Department of Customs shall submit a report on the outstanding duty as at the end of the month in Form 03-BCD (enclosed) to the Minister of Finance.

(c) Reporting on duties temporarily collected or refunded from the escrow account:

For every month, no later than the tenth day of the following month, the General Department of Customs shall submit a report on duty temporarily collected and duty refunded in the previous month in Form 04-BCTT (enclosed) to the Ministry of Finance.

2. Reporting on duty-free goods and goods entitled to duty exemption:

For every quarter, no later than the twentieth day of the first month of the following quarter, the General Department of Customs shall submit a report on duty exemption and goods which are not subject to duty and for which customs procedures have been completed in the quarter in Form 05-BCMT (enclosed) to the Ministry of Finance.

K. ORGANIZATION OF IMPLEMENTATION

This Circular shall be of full force and effect as of 1 January 1999. Circulars 72A- TC-TCT dated 30 August 1993; 53-TC-TCT dated 13 July 1995; 84-1997-TT-BTC dated 13 November 1997; and 106-1998-TT-BTC dated 23 July 1998 of the Ministry of Finance and other previous legal instruments providing guidelines on import and export duties which are inconsistent with this Circular are hereby repealed.

The Ministry of Finance delegates the General Department of Taxation to monitor and examine collection and payment of import and export duties by the customs offices in accordance with article 23 of Decree 54-CP dated 28 August 1993 of the Government and this Circular.

The General Department of Customs shall implement the provisions of the Law on Import and Export Duties within the customs branch and examine implementation in accordance with this Circular.

If any problems arise during implementation, entities and bodies are requested to report in a timely manner to the Ministry of Finance for consideration, guidance and amendment.