Thông tư 40/2008/TT-BTC

CIRCULAR

GUIDING THE GOVERNMENTS DECREE No. 40/2007/ND-CP OF MARCH 16, 2007, PROVIDING FOR CUSTOMS VALUATION OF IMPORTED GOODS AND EXPORTED GOODS

Pursuant to June 14, 2005 Law No. 45/2005/QH11 on Import Tax and Export Tax;
Pursuant to June 29, 2001 Customs Law No. 29/2001/QH10, and June 14, 2005 Law No. 42/2005/QH11 Amending and Supplementing a Number of Articles of the Customs Law;
Pursuant to November 29, 2006 Law No. 78/2006/QH11 on Tax Administration;
Pursuant to the Governments Decree No. 77/2003/ND-CP of July 11, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;
Pursuant to the Governments Decree No. 40/ND-CP of March 16, 2007, providing for customs valuation of imported goods and exported goods;
The Finance Ministry guides the implementation as follows:

Part I

GENERAL PROVISIONS

I. SCOPE OF REGULATION AND OBJECTS OF APPLICATION

1. This Circular provides for customs valuation for the purpose of calculating duties and making statistics on imported goods and exported goods.

2. Imported goods and export goods are objects of application of this Circular.

3. In case a treaty to which Vietnam is a contracting party contains provisions different from those of this Circular, that treaty prevails.

II. PRINCIPLES AND METHODS OF CUSTOMS VALUATION

1. Custom value to be used for the purpose of duty calculation (below referred to as dutiable value) is determined on the following principle and according to the following method:

a/ For exported goods, the dutiable value is the selling price of the exported goods at the border gate of exportation (FOB or DAF price), which is exclusive of international insurance cost (I) and international freight (F).

If no goods sale and purchase contract is available, the export dutiable value is the value declared by the customs declarant.

b/ For imported goods, the dutiable value is the actual price payable upon arrival of the goods at the first border gate of importation and determined by applying the six methods of dutiable value determination specified in Sections I thru VI, Part II of this Circular one after another and stopped immediately at any method by which the dutiable value can be determined.

The order of application of dutiable value-determining methods specified in Sections IV and V, Part II of this Circular may be changed when so requested in writing by custom declarants.

2. Customs value to be used for the purpose of making statistics (below referred to as statistical value) is determined on the following principle:

a/ For dutiable goods, the statistical value is determined based on the dutiable value already determined on the principle and by the method specified at Point b, Clause 1 of this Section.

b/ For non-dutiable goods, goods exempt from duty or considered for duty exemption, or of which the dutiable value cannot be determined under Point b, Clause 1 of this Section, the statistical value is the value declared by customs declarants on the following principle:

- For imported goods, the statistical value is the selling price of the goods at the first border gate of importation (CIF price);

- For exported goods, the statistical value is the selling price of the goods at the border gate of exportation (FOB or DAF price).

III. TIME OF CUSTOMS VALUATION AND DUTY PAYMENT TIME LIMIT

1. The time of customs valuation for imported goods or exported goods is the date a customs declarant registers a customs declaration of the imported goods or exported goods.

In case the dutiable value determination must be delayed, the time of dutiable value determination for imported goods is the date a customs office or customs declarant successfully determines the dutiable value under this Circular.

2. Duty payment time limit:

a/ For differences between duty amounts assessed by customs offices and tax amounts declared or calculated by duty payers themselves after the customs clearance of their goods, this time limit is 10 (ten) days after customs offices sign decisions on duty assessment.

b/ For other cases, the duty payment time limit complies with the provisions of Clauses 3, 4 and 5, Article 52 of the Tax Administration Law.

IV. INTERPRETATION OF TERMS

Terms and expressions referred to in this Circular are construed as follows:

1. Goods purchase and sale contract means a written agreement on goods purchase and sale made for the purpose of importing goods into Vietnam, whereby the seller is obliged to deliver goods and transfer the ownership of goods to the purchaser and receive money; and the purchaser is obliged to pay money to the seller and receive goods. Agreements made in the form of telegraph or e-mail or by telex or fax or another form of electronic communication and printed out on papers are also regarded as written agreements.

2. Purchase commission means a sum of money paid by a purchaser to an agent for representing the purchaser in purchasing imported goods at the most reasonable price.

3. Sale commission means a sum of money paid by a seller to an agent for representing the seller in selling exported goods to purchasers.

4. Brokerage commission means a sum of money payable by a purchaser or seller or both to a broker that acts as an intermediary in an imported goods sale and purchase transaction.

5. Royalty and licensing fee means a sum of money payable by a purchaser directly or indirectly to the intellectual property rights holder or a person authorized or licensed by the intellectual property rights holder for the use of intellectual property rights. For example, a sum of money paid for a patent, layout design copyright, trademark, mark license, copyright or production license.

6. Different goods are regarded as having values which closely approximate to one another if the value disparity between them is caused by the following objective factors:

- Their nature or characteristics of their manufacturing industries;

- Their seasonality;

- Their insubstantially commercial distinctiveness.

Upon considering the approximate equality of the two values, it is necessary to subject them to the same purchase and sale condition.

7. Identical imported goods means goods which are the same in all respects, including:

- Physical characteristics, such as surface, composition materials, method of manufacture, functions, utility; mechanical, physical and chemical characteristics;

- Quality;

- Reputation of marks;

- They are made in the same country or by the same manufacturer or licensed manufacturer.

Imported goods which basically satisfy the conditions for being regarded as identical imported goods but have minor differences in appearance, such as color, size and design, which do not affect their values, are still regarded as identical.

Imported goods are not regarded as identical if in the process of manufacturing any of these goods, technical designs, construction designs, development plans, fine-art designs, design drawings, charts, sketches or similar products or services, which are made in Vietnam and supplied free of charge by the purchaser to the seller, are used.

8. Similar imported goods means goods which are not alike in all respects but have the same substantial characteristics, including:

- They are made of equivalent raw materials and materials or by the same method of manufacture;

- They have the same function or utility;

- They are of equal quality;

- They are commercially interchangeable, for example: a purchaser accepts goods in substitution for similar goods;

- They are made in the same country or by the same manufacturer or licensed manufacturer and imported into Vietnam.

Imported goods are not regarded as similar if in the process of manufacturing any of these goods, technical designs, construction designs, fine-art designs, development plans, design drawings, charts, sketches or similar products or services, which are made in Vietnam and supplied free of charge or at reduced cost by the purchaser to the seller, are used.

9. Imported goods of the same class or category means goods belonging to a group or a frame group of goods manufactured by the same industry or in the same domain, including identical imported goods and similar imported goods.

For example: Construction steel products, including steel rods, wound coils and sections (U, I or V shape) manufactured by the steel industry, are regarded as goods of the same category.

- In the method of determining the dutiable value based on the deductible value, imported goods of the same class or category may be goods imported from all other countries into Vietnam, regardless of their origin.

- In the method of determining the dutiable value based on the computed value, imported goods of the same class or category must be imported goods of the same origin with the goods being valued.

10. First border gate of importation means the port of destination stated in the bill of lading. For road, railway or river channel transportation, the first border gate of importation is the port of destination stated in the contract.

Part II

DUTIABLE VALUE OF IMPORTED GOODS

I. DETERMINING THE DUTIABLE VALUE ON THE BASIS OF THE TRANSACTION VALUE

The dutiable value of imported goods must be first of all determined on the basis of the transaction value.

Transaction value is the price actually paid or payable by the purchaser to the seller for the purchase of an imported goods and adjusted under the provisions of Section VII, Part II of this Circular.

The price actually paid or payable is determined to be the total sum of money already paid or payable by the purchaser directly or indirectly to the seller for the purchase of imported goods.

1. The transaction value is applied if the following conditions are fully satisfied:

a/ There are no restrictions on purchasers right to dispose of or use the goods after they are imported other than the following restrictions which:

a.1/ Are imposed by Vietnamese law, such as provisions requiring imported goods to be labeled in Vietnamese, on goods subject to conditional import or a form of inspection before customs clearance, etc.

a.2/ Limit the places where the goods may be sold; or,

a.3/ Do not affect the value of the goods.

These restrictions constitute one or several factors directly or indirectly related to imported goods but do not increase or decrease prices actually paid for these goods.

For example: The seller requests the purchaser not to sell or display imported goods before the seller markets these goods.

b/ The price or sale is not subject to some conditions or payments for which a value cannot be determined for the goods being valued.

For example:

- The seller fixes the price of the imported goods on condition that the purchaser will purchase a certain quantity of other goods.

- The price of the imported goods depends on the prices of other goods which will be sold by the importer to the exporter.

- The price of the imported goods is fixed on the basis of a mode of payment extraneous to the imported goods, for example: imported goods are semi-finished products supplied by the seller to the purchaser on condition that the seller will receive back a certain quantity of finished products manufactured from these imported semi-finished products.

In case the sale or price of the goods is dependent on one or several conditions but the purchaser possesses objective and valid documents for the determination of the pecuniary impact of such dependence, this condition shall still be regarded as being met. Upon determination of the dutiable value, the money amount reduced due to the dependences impact must be added to the transaction value.

c/ After reselling, transferring or using imported goods, the purchaser is not required to additionally pay any sum of money from the proceeds of the disposal of imported goods, except for the additions specified at Point e, Clause 2, Section VII, Part II of this Circular.

d/ The purchaser and seller have no special relationship or have a special relationship which does not influence the transaction value. The consideration of the special relationships influence on the transaction value is guided in Clause 3 of this Section.

2. The transaction value consists of the following:

a/ The purchase price stated in invoices:

In case the purchase price stated in invoices includes discounts for the lot of imported goods, these discounts must be subtracted in determining the dutiable value on the conditions that the discount policy is stated in writing before the goods are loaded onto a means of transport, there are lawful and valid data and documents for excluding these discounts from the invoice price, and those documents must be submitted together with the customs declaration.

Types of discount include:

- Discount based on the commercial level of the goods purchase and sale transaction;

- Discount based on the quantity of purchased and sold goods;

- Discount based on the mode and time of payment;

Discounts are accepted to be deducted upon determination of the dutiable value on condition that they conform to international commercial practice.

If goods for which there are contractual discounts are imported in different lots (with different declarations), these discounts may be considered and accepted only after the importing enterprise submits the manifest and documents proving that the importation and payment for the whole contract have been completed. The customs office at which the enterprise opens its customs declarations shall check relevant records and documents submitted by the enterprise to prove that discounts have been actually given.

b/ Adjustments under the guidance in Section VII, Part II of this Circular.

c/ Sums of money payable by the purchaser but not yet included in the purchase price stated in invoices, including:

- Prepaid amounts, advances and deposits for the manufacture, purchase, sale, transportation or insurance of goods.

- Indirect payments to the seller, such as sums of money paid by the purchaser to a third party at the request of the seller or sums of money paid by debt clearing.

3. Determination of special relationships influence on transaction value:

a/ If the purchaser and the seller have a special relationship which does not influence the transaction value, the customs declarant shall report this relationship and determine the dutiable value according to the transaction value.

b/ If the customs office, based on available information, suspects that the special relationship has influenced the transaction value, it shall promptly notify in writing the customs declarant of grounds for its suspicion.

c/ The customs office shall create favorable conditions for the customs declarant to explain and supply more information in order to clarify the special relationship between the purchaser and the seller which does not influence the transaction value of the imported goods specified at Point d of this Clause.

Past 30 working days after receiving the customs offices notice, if the customs declarant fails to explain and supply more relevant information, the customs office shall determine the dutiable value of the imported goods lot on the principles and methods of dutiable value determination specified in Sections I thru VI, Part II of this Circular.

d/ The special relationship between the purchaser and seller is considered not influencing the transaction value if it satisfies one of the following two conditions:

d.1/ Despite the special relationship, the purchase and sale transaction is still conducted between the seller and purchaser like purchase and sale transactions with purchasers who have no special relationship with the seller.

- Example 1:

+ The purchase and sale price of the imported goods has been negotiated and agreed upon in the commercial contract in a manner consistent with the normal pricing negotiation and agreement practices of that goods line or with the way the seller offers the goods purchase and sale price to other purchasers who have no special relationship with the seller.

+ The purchase and sale price of the imported goods is inclusive of also all costs and a profit corresponding to overall profit from the sale of goods of the same class or category.

The customs office shall examine the way the purchaser and the seller have organized the purchase and sale relationship and the manner of negotiation to reach the declared price before reaching a conclusion on whether the declared value has been influenced by the special relationship.

d.2/ The transaction value closely approximates to any of the following values of the goods lot exported to Vietnam on the same day or within 60 days (of the calendar year) before and after the date of exportation of the goods lot being valued:

- The dutiable value determined on the basis of the transaction value of identical or similar imported goods sold to other importers that have no special relationship with the exporter (the seller);

- The dutiable value of identical or similar imported goods determined on the basis of the deductible value specified in Section IV, Part II of this Circular;

- The dutiable value of identical or similar imported goods determined on the basis of the computed value specified in Section V, Part II of this Circular.

d.3/ The above dutiable values are used for comparison purposes only and the dutiable value of identical or similar imported goods must be adjusted to the same condition with the imported goods being valued:

- Adjustment to the same purchase and sale condition: The adjustment of the dutiable value of identical or similar imported goods to the same purchase and sale condition with the goods lot being valued complies with the guidance of Point b, Clause 2, Section III, Part II of this Circular.

- Adjustment of additions or reductions under the guidance of Section VII, Part II of this Circular.

4. Determination of the dutiable value of imported goods being carrier media bearing software for data processing devices:

a/ The dutiable value of imported goods being carrier media bearing software is the value actually paid or payable for these carrier media, exclusive of the value of the software they bear, on condition that the softwares invoice value is separated from the carrier medias invoice value.

The dutiable value of carrier media is inclusive of the purchase price stated in invoices and expenses for recording or installation of the software in the media.

Software referred to herein means data, programs or instructions which are expressed in the form of commands, codes, diagrams or any other form and can make data processing devices in which they are installed capable of performing a task or achieving a specified result (for example: software programs, instructions describing digitalized information programs). Audiovisual sequences in feature films or video recordings are not regarded as software under this regulation.

Carrier media means floppy disks, compact disks, magnetic tapes or cards or any objects capable of storing information, which are used as devices for temporarily storing or transmitting software. To be used, software must be transmitted to, installed in or integrated into data processing devices.

Carrier media mentioned herein exclude integrated circuits, microchips, semi-conductor circuits and the like or parts affixed on circuit boards or devices.

b/ The provisions of Point a of this Clause do not apply to the determination of the dutiable value of devices, machines or equipment bearing imported software falling into one of the following cases:

- Software is recorded, installed or integrated in imported goods other than carrier media or in hardware of machines or equipment.

- The value actually paid for imported software is one of the additions specified in Section VII, Part II of this Circular.

5. Documents to be submitted:

- Customs dossier as specified;

- Other documents relevant to the dutiable value determination.

II. DETERMINING THE DUTIABLE VALUE BASED ON THE TRANSACTION VALUE OF IDENTICAL IMPORTED GOODS

If the dutiable value of imported goods cannot be determined on the basis of their transaction value guided in Section I, Part II of this Circular, it may be determined on the basis of the transaction value of identical imported goods.

The method of determining the dutiable value of imported goods on the basis of the transaction value of identical imported goods is guided in Section III of this Part, in which the phrase similar imported goods should be replaced by the phrase identical imported goods.

III. DETERMINING THE DUTIABLE VALUE ON THE BASIS OF THE TRANSACTION VALUE OF SIMILAR IMPORTED GOODS

1. Determining the dutiable value:

If the dutiable value of imported goods cannot be determined according to the methods guided in Sections I and II, Part II of this Circular, it may be determined on the basis of the transaction value of similar imported goods on condition that these similar imported goods have been accepted by customs offices for the determination of the dutiable value based on the transaction value and have the same purchase and sale condition and export time condition with the imported goods being valued under the guidance in Clause 2 of this Section.

If there is no similar imported goods lot with the same purchase and sale condition with the imported goods being valued, other similar imported goods lots with different purchase and sale conditions may be chosen, provided that adjustments must be made to the same purchase and sale condition.

2. Conditions on similar imported goods lots to be chosen:

To be chosen, similar imported goods lot must satisfy the following conditions:

a/ Export time condition:

The similar imported goods lot must be exported to Vietnam on the same day or within 60 days before or after the date of exportation of the imported goods being valued.

b/ Purchase and sale conditions:

b.1/ Condition on commercial level and quantity:

b.1.1/ The similar imported goods lot must have the same condition on commercial level and quantity with the imported goods lot being valued.

b.1.2/ If no imported goods lot mentioned at Item b.1.1 is found, an imported goods lot at the same commercial level but in a different quantity may be chosen and the transaction value of these similar imported goods must later be adjusted to the same quantity with the goods lot being valued.

b.1.3/ If no imported goods lot mentioned at Items b.1.1 and b.1.2 is found, an imported goods lot at a different commercial level but in the same quantity may be chosen and the transaction value of this similar imported goods lot must later be adjusted to the same commercial level with the goods lot being valued .

b.1.4/ If no imported goods lot mentioned at Items b.1.1, b.1.2 and b.1.3 is found, an imported goods lot at a different commercial level and in a different quantity may be chosen and the transaction value of this similar imported goods lot must later be adjusted to the same commercial level and quantity with the goods lot being valued.

b.2/ Condition on distance and mode of transport, and insurance:

The similar imported goods lot must have the same distance and mode of transport, or have been adjusted to the same distance and mode of transport with the goods lot being valued.

If there is a significant difference in insurance cost between two lots, the similar imported goods lot must be adjusted to the same insurance condition with the goods lot being valued.

c/ If the method of determining the dutiable value based on the transaction value of similar imported goods is applied but no similar imported goods manufactured by the same manufacturer or licensed manufacturer is found, goods manufactured by other manufacturers and of the same origin may be considered and chosen.

d/ In case of determining the dutiable value determination according to this method, if more than one transaction value of similar imported goods are found, the dutiable value is the lowest transaction value after similar imported goods have been adjusted to the same purchase and sale condition with the goods lot being valued.

During the time of carrying out customs procedures, if there is insufficient information for choosing imported goods identical or similar to imported goods being valued, the dutiable value of imported goods must not be determined under the guidance in Section II or Section III, Part II of this Circular but must be determined according to the next method.

3. Documents to be submitted:

a/ If applying the method of determining the dutiable value based on the transaction value of similar imported goods, customs declarants shall submit, apart from customs dossiers as specified, enterprise-certified copies of the following documents to customs offices:

- Customs declaration and declaration of the value of similar imported goods;

- Transport contract of similar imported goods (in case of adjustment of freight);

- Insurance contract of similar imported goods (in case of adjustment of insurance cost);

- Commercial contract and commercial invoice of similar imported goods, exported goods price lists of the foreign manufacturer or seller (in case of adjustment of quantity and commercial level);

- Other lawful and valid documents and vouchers necessary and relevant to the dutiable value determination (when necessary).

b/ When applying the method of determining the dutiable value based on the transaction value of similar imported goods, customs offices shall base themselves on information available at customs offices where the dutiable value is determined and documents and vouchers supplied by customs declarants for determining the dutiable value.

IV. DETERMINING THE DUTIABLE VALUE ON THE BASIS OF THE DEDUCTIBLE VALUE

1. Determining the dutiable value:

If the dutiable value of imported goods cannot be determined according to the methods guided in Sections I, II and III, Part II of this Circular, it may be determined on the basis of the deductible value and based on the unit price at which imported goods, identical or similar imported goods are sold on Vietnams domestic market minus (-) reasonable expenses for and profits earned from the sale of the imported goods.

This method is not applied if goods chosen for determining the unit price fall into one of the following cases:

- They have not yet been sold on the domestic market or their sales have not yet been reflected on accounting books and documents under Vietnams accounting law;

- They are involved in assists provided by any person as specified at Item d.1, Point d, Clause 2, Section VII, Part II of this Circular.

2. Conditions on a unit price on the Vietnamese market to be chosen:

a/ It must be the unit price at which imported goods being valued, identical or similar imported goods are sold in the conditions as when imported.

b/ It must be the unit price at which the greatest aggregate quantity of goods is sold, which is sufficient for establishing that unit price. Goods are sold on the earliest day after the importation but before the expiration of 90 days after the date of importation of the goods being valued. The domestic purchaser and the seller have no special relationship.

Example 2: Goods lot A consists of many goods items, including item B being valued according to the deductive method. Goods lot A was imported on January 1, 2005. A goods lot consisting of a goods item identical to goods item B was imported earlier and sold to many domestic purchasers at different prices and at different times as follows:

In the above example, the sale unit price chosen for deduction is VND 800/unit corresponding to the greatest quantity of units sold (450) and sufficient for establishing the unit price. This unit price satisfies the conditions on a unit price to be chosen, including:

- The greatest aggregate quantity (450).

- The sale time is within 90 days after the date of importation.

3. Deduction principle:

The determination of deductions must be based on accounting data and available lawful and valid accounting documents and recorded and reflected under Vietnamese accounting standards.

Deductions must be those allowed to be accounted as reasonable and lawful expenses of enterprises under the Vietnamese accounting law.

4. Deductions to be made from the sale unit price:

Deductions to be made from the sale unit price are reasonable expenses for and profits earned from the sale of goods on the Vietnamese market, including:

a/ Costs of transport and insurance and expenses for other activities related to the transportation of goods after their importation, specifically as follows:

a.1/ Costs of transport and insurance and expenses for other activities related to the transportation of goods incurred during the time of transportation from the first border gate to the importers warehouse or the place of delivery in inland Vietnam;

a.2/ Costs of transport and insurance and expenses for other activities related to the transportation of goods incurred during the time of transportation from the importers warehouse in inland Vietnam to the place of goods sale, in case the importer bears these costs and expenses.

b/ Taxes, charges and fees payable in Vietnam upon the importation and sale of the imported goods on the domestic market of Vietnam.

c/ Commissions or general expenses and profits related to the sale of the imported goods in Vietnam.

c.1/ In case the importer is a sale agent for a foreign trader, the commission will be deducted. If that commission is inclusive of expenses specified at Points a and b of this Clause, these expenses must not be further deducted.

c.2/ In case of importation by the mode of definite purchase and sale, general expenses and profits shall be deducted: General expenses and profits must be taken as a whole upon determining the deductible value. The determination and allocation of general expenses and profits to an imported goods lot must comply with Vietnamese accounting regulations and standards.

General expenses include direct and indirect expenses for the importation and sale of gsoods on the domestic market, such as expenses for marketing goods, expenses for storage and preservation of goods before sale, expenses for management of the importation and sale of goods, etc.

Bases for determining deductions are data recorded and reflected on accounting vouchers and books of the importer and compliant with Vietnamese accounting regulations and standards. These data must be consistent with those obtained from activities of purchasing and selling imported goods of the same class or category in Vietnam.

5. For goods sold not in the conditions as when imported:

a/ If no sale unit price of goods sold in the conditions as when imported is found, the sale unit price of imported goods having been further processed in the country, minus (-) expenses for processing for the added value of the goods, will be used on condition that added expenses for further processing in the country and expenses specified in Clause 4 of this Section are quantifiable. If these added expenses cannot be separated from the sale price, the method next to the method of determining the dutiable value on the basis of the deductible value will be applied.

b/ If imported goods, after the processing, still retain their nature, characteristics and utility as when imported but are knocked down into parts for sale on the domestic market, the deductible value must not be used to determine the dutiable value of the goods.

c/ If, after the processing, imported goods have their nature, characteristics and utility changed to the extent that they cannot be recognized as the originally imported goods, this method must not be applied.

6. Documents and vouchers to be submitted:

The customs declarant or importer shall submit enterprise-certified copies of the following documents together with the customs procedure dossier:

a/ Sale invoices issued or permitted by the Ministry of Finance for use.

b/ Sale agent contract, if the importer is a sale agent of the exporter. This contract must specifically state the commission receivable and various expenses payable by the agent.

c/ Written explanation of sale turnover and expenses specified in Clause 4 of this Section.

d/ Customs declaration and declaration of the value of the goods lot chosen for deduction.

e/ Other necessary documents for checking and determining the dutiable value as requested by the customs office.

V. DETERMINING THE DUTIABLE VALUE ON THE BASIS OF THE COMPUTED VALUE

1. If the dutiable value of imported goods cannot be determined according to the methods specified in Sections I thru IV of this Circular, it may be determined on the basis of the computed value. The computed value of imported goods includes the following items:

a/ Direct expenses for the manufacture of imported goods: Cost or value of raw materials and materials, expenses for the manufacture process or other processing used in the manufacture of imported goods. These expenses include also the following:

- Expenses specified at Points a, b and c, Clause 2, Section VII, Part II of this Circular;

- The value of assists under the guidance at Item d.1, Point d, Clause 2, Section VII, Part II of this Circular.

The value of assistance products specified at Item d.1.4, Point d, Clause 2, Section VII, Part II and carried out in Vietnam can be computed into the dutiable value only if the manufacturer agrees to pay for those assistance products.

b/ General expenses for and profits from the sale of goods of the same class or the same category with imported goods being valued, made in the country of exportation for sale into Vietnam. These general expenses and profits must be taken as a whole upon determining the computed value.

General expenses include all direct or indirect expenses for the manufacture and sale of goods for export but not yet computed under the guidance of Point a, this Clause.

c/ Costs of transport and insurance and expenses related to the transportation of imported goods as guided at Point g and h, Clause 2, Section VII, Part II of this Circular.

2. Bases for determining the computed value:

These bases are figures recorded and reflected on accounting vouchers and books of the manufacturer, unless these figures are inconsistent with those collected from activities of manufacturing, purchasing and selling imported goods of the same class or the same category made in the country of exportation by the manufacturer for export to Vietnam.

3. Documents to be submitted:

The customs declarant or the importer shall submit certified copies of the following documents and, at the same time, produce their originals for comparison:

a/ The manufacturers written explanation of the expenses specified at Points a and b, Clause 1 of this Section, enclosed with manufacturer-certified copies of accounting documents and figures compatible with this explanation.

b/ Sale invoices of the manufacturer;

c/ Vouchers of expenses specified at Point c, Clause 1 of this Section.

If the above documents and vouchers are insufficient, the dutiable value will be determined by the next method instead of the method guided in this Section.

VI. DETERMINING THE DUTIABLE VALUE ACCORDING TO THE INFERENTIAL METHOD

1. If the dutiable value of imported goods cannot be determined according to the methods guided in Sections I thru V, Part II of this Circular, it may be determined by the inferential method based on objective documents and figures available at the time of determining the dutiable value.

By the inferential method, the dutiable value determined by sequentially and flexibly applying the dutiable value-determining methods guided in Sections I thru V, Part II of this Circular and immediately stopping at the method by which the dutiable value can be determined, provided that such application complies with the provisions of Clause 2 of this Section.

2. When determining the dutiable value according to this method, the customs declarant and the customs office may not use the following values in determining the dutiable value:

a/ The sale price on the domestic market of goods of the same kind made in Vietnam.

b/ The sale price of goods in the domestic market of the country of exportation;

c/ The sale price of goods for export to a third country;

d/ The manufacture costs of goods, excluding those used in the computing method;

e/ The minimum dutiable value;

f/ Arbitrary or fictitious prices;

g/ A valuation system permitting the use of the higher of two alternative values as the dutiable value.

3. Some examples of flexible application of dutiable value-determining methods:

a/ Application of the method of determining the dutiable value on the basis of the transaction value of identical or similar imported goods.

a.1/ If there is no identical or similar imported goods exported to Vietnam on the same day or within 60 days before or after the date of exportation of the imported goods lot being valued, identical or similar imported goods exported within a longer time limit, which, however, must not exceed 90 days before or after the date of exportation of the goods lot being valued may be chosen.

a.2/ If there is no identical or similar imported goods of the same origin, imported goods of a different origin satisfying other conditions on identical or similar imported goods may be chosen.

b/ Flexible application of the method of determining the dutiable value on the basis of the deductible value in any of the following ways:

b.1/ If no unit price is determined for deduction within 90 days after the date of importation, the sale unit price of goods sold in the greatest aggregate quantity within 120 days after the date of importation of the goods lot chosen for deduction may be chosen.

b.2/ If there is no unit price of the very imported goods or identical or similar imported goods resold to persons having no special relationship with the importer, the unit price of goods resold to purchaser having special relationship with the importer may be chosen on condition that the special relationship does not influence the price in the purchase and sale transaction.

c/ The dutiable value of imported goods may be determined to be equal to that of identical imported goods already determined on the basis of the deductible value or computed value.

d/ The dutiable value of imported goods may be determined to be equal to that of similar imported goods already determined on the basis of the deductible value or computed value.

4. Apart from examples provided in Clause 3 of this Section, the flexible application of the dutiable value-determining methods may be based on the price database and lawful and valid objective documents but must not violate the provisions of Clause 2 of this Section.

VII. ADJUSTMENTS

1. Principles for adjustment

a/ For additions, adjustments can be made only when the following conditions exist:

- These additions are paid by the purchaser and have not yet been included in the price actually paid or payable.

- These additions are directly related to the imported goods.

- If the imported goods lot involves additions but there is no objective figure for determining the dutiable value, the dutiable value will be determined by the method next to the method of determining it on the basis of the transaction value.

b/ For deductions, adjustment can be made only when there are lawful and valid figures and documents, which are available at the time of determining the dutiable value, for separating these deductions from the sale price.

2. Additions:

a/ Commissions and brokerage, except for purchase commission. If these expenses are inclusive of tax amounts payable in Vietnam, these tax amounts are not required to be added to the dutiable value of imported goods.

b/ Costs of containers which are treated as being one with imported goods, including the packing material cost and other expenses related to the purchase, sale and transportation of packing materials to the place of goods packing and preservation.

Containers, tanks and racks for multiple use as tools for packing goods for transportation are not regarded as tare. Therefore, they are not regarded as tare expenses to be added.

c/ Packing costs, including the following:

c.1/ Packing material cost consisting of packing material price and other expenses related to the purchase, sale and transportation of packing materials to the place of goods packing.

c.2/ Packing labor cost consisting of amounts paid for workers packing the goods being valued and related expenses.

If the purchaser has to bear expenses for packing workers accommodation and travel during the time of goods packing, these expenses are also accounted as packing labor cost.

d/ The value of goods or services supplied free of charge or at reduced cost by the purchaser directly or indirectly to the manufacturer or the seller for manufacture or sale of goods exported to Vietnam (below referred to as the value of assists).

d.1/ Assists include:

d.1.1/ Raw materials, components, parts and the like which compose or are incorporated in imported goods.

d.1.2/ Raw materials, materials and fuels consumed in the process of manufacturing imported goods.

d.1.3/ Tools, devices, dies, molds, models and the like which are used for the manufacture of imported goods.

d.1.4/ Design drawings, technical drawings, fine-art designs, development plans, construction designs, model designs, diagrams, sketches and similar products and services made in foreign countries and necessary for the process of manufacturing imported goods.

d.2/ Valuation of assists:

- If assistance goods or services are purchased from a party having no special relationship for supply to the seller, the value of assists is the purchase price of these assistance goods or services.

- If assistance goods or services are manufactured by the importer or a party having special relationship with the importer for supply to the seller, the value of assists is the manufacture cost of these assistance goods or services.

- If assistance goods or services are made by the purchasers manufacturing establishment located in a foreign country but there is no document or voucher for separately accounting these assistance goods or services, the value of assists is determined by allocating the total manufacture cost of that establishment in the same period to the volume of goods or services made.

- If assists are hired or borrowed by the purchaser, the value of assists is hiring or borrowing expenses.

- If assists are used goods, the value of assists is the residual value of these goods.

- If assistance goods are processed by the purchaser before being supplied to the seller for the manufacture of imported goods, the value added at the processing stage must be added to the value of assists.

- If assists are sold at reduced cost by the purchaser to the exporter, the reduced value must be added to the dutiable value.

- If there are redundant raw materials, materials and scraps collected from assists in the process of manufacturing imported goods, the value of these collected redundant raw materials and materials and scraps may be deducted from the value of assists, if there are figures reflecting the collected value.

The determined value of assists covers also expenses related to the purchase and sale, transport and insurance up to the place of manufacture of imported goods.

d.3/ Allocation of the value of assists to imported goods

d.3.1/ Principle for allocation of the value of assists

- The value of assists must be fully allocated to imported goods;

- The allocation must be recorded in lawful and valid documents;

- The allocation must comply with Vietnamese accounting regulations and standards.

d.3.2/ Method of allocating the value of assists:

Customs declarants shall themselves allocate assists to imported goods according to one of the following methods:

- Allocating to the quantity of imported goods in the first shipment;

- Allocating to the quantity of goods units manufactured up to the date of importation of the first shipment;

- Allocating to all products expected to be manufactured under the purchase and sale agreement between the purchaser and seller (or the manufacturer);

- Allocating on the principle of gradual decrease or increase;

- Apart from the above methods, purchasers may use other allocation methods on condition that they comply with the accounting law and the allocation is recorded in writing.

e/ Royalty and licensing fee:

e.1/ Royalty or licensing fee must be added to the price actually paid or payable for imported goods only when the following conditions are satisfied:

e.1.1/ Royalty or licensing fee is paid for the use of intellectual property rights directly related to imported goods being valued.

If the payable royalty or licensing fee is not directly related to imported goods, it is not required to be added upon determining the dutiable value.

Example 3: An importer pays a royalty for using the process of producing fabric printed with blurry patterns to the copyright holder. Later, the importer imports equipment and machinery for the production of that kind of fabric from an exporter other than the copyright holder. The royalty is not required to be added to the transaction value of imported goods because it is paid only for the use of the production process, not for the imported machinery or equipment.

e.1.2/ Royalty and licensing fee must be directly or indirectly paid by the purchaser. The payment of royalty and licensing fee must constitute a condition for the purchase and sale of imported goods. The purchaser agrees to pay a royalty or licensing fee as part of the purchase and sale for the purpose of acquiring imported goods.

Customs declarants shall submit to customs offices copies bearing a true copy seal of documents and vouchers showing the payment of royalty or licensing fee and the licensing document issued by the copyright holder or the licensing right holder.

e.1.3/ Royalty and licensing fee are not yet included in the sale price of the goods being valued.

e.2/ Royalty and licensing fee are not required to be added to the dutiable value in the following cases:

e.2.1/ They are charges payable by the purchaser for the right to reproduce imported goods or copy artistic works in Vietnam.

e.2.2/ They are charges payable by the purchaser for the right to distribute or resell imported goods, in case the payment of these charges does not constitute a condition of the sale of imported goods.

If the charges paid for the right to reproduce, distribute or resell imported goods have been included in the sale price, they are not allowed to be deducted from the dutiable value of imported goods.

e.2.3/ If part of royalty and licensing fee is included in the price of imported goods while the other part is based on other factors not related to the imported goods and these two parts cannot be identified and separated or it is impossible to single out the royalty under a financial agreement between the purchaser and seller, royalty and licensing fee are not required to be added to the dutiable value.

e.3/ Bases for determining royalty and licensing fee:

e.3.1/ Bases for determining royalty and licensing fee are vouchers of payment of royalty and licensing fee or other lawful and valid documents stating the obligation to pay these amounts.

e.3.2/ If royalty and licensing fee cannot be determined at the time of importation due to their dependence on post-importation sale turnover or for other reasons specified in the goods purchase and sale contract or a separate written agreement on payment of royalty, the customs declarant shall declare and commit in writing to additionally declaring these expenses for determining the full dutiable value of the goods lot and fulfilling the tax obligation.

f/ Sums of money payable by the importer from proceeds of resale, disposal or use of imported goods which are transferred to the seller in any form.

Example 4: The importer shall pay a sum of money equal to a certain percentage of post-importation goods sale turnover or rent.

If, at the time of importation, it is impossible to determine this sum of money, which must be added, due to its dependence on post-importation goods sale turnover or for other reasons specified in the goods purchase and sale contract or a separate written agreement, the customs declarant shall declare and commit in writing to additionally declaring this expense for determining the full dutiable value of the goods lot and fulfilling the tax obligation.

g/ Cost of transport and all other expenses directly related to the transportation of imported goods to the place of importation, such as expenses for cargo handling, towage and portage expenses, demurrage, rents for containers, tanks and racks for multiple use as tools for packing goods for transportation. The value of this adjustment is determined on the basis of the transportation contract or documents or vouchers related to the transportation.

g.1/ If a goods lot consists of different kinds of goods but the bill of lading does not specify each kind of goods, the customs declarant shall himself/herself allocate these expenses to each kind of goods by using allocation methods in the following order of priority:

- Allocation based on the transport cost rate advice of the carrier;

- Allocation based on the weight or volume of goods;

- Allocation based on the ratio of the purchase price of each kind of goods to the total value of the goods lot.

g.2/ If the purchase price is not yet inclusive of the cost of transport but the purchaser has no voucher or has unlawful and invalid vouchers, the method of determining the dutiable value on the basis of the transaction value must not be applied.

h/ Cost of insurance for goods up to the place of importation:

h.1/ If the importer fails to buy insurance for goods, this cost is not required to be added to the dutiable value.

h.2/ Insurance premium which has been paid for the whole goods lot consisting of different kinds of goods but not specified for each kind of goods shall be allocated according to the value of each kind of goods.

If expenses specified at Points g and h of this Clause are inclusive of a value-added tax amount payable in Vietnam, this tax amount is not required to be added to the dutiable value.

3. Deductions:

If the following amounts are already included in the transaction value and there are objective data from lawful and valid documents available at the time of determination of the dutiable value, these amounts may be deducted to determine the dutiable value:

a/ Expenses incurred after the goods importation, including expenses for construction, architecture, installation, maintenance or technical assistance or consultancy, supervision or similar expenses.

b/ Cost of transport and insurance in inland Vietnam. If these expenses are related to different kinds of goods, they must be allocated to the goods to be valued on the principles specified at Point g and h, Clause 2 of this Section.

c/ Taxes, charges and fees payable in Vietnam and already included in the purchase price of imported goods. If a charge or fee is related to different kinds of goods but cannot be determined directly for each kind of goods, it must be allocated in proportion to the ratio of the purchase price of each kind of goods to the total value of the goods lot.

d/ Expenses borne by the purchaser and related to the marketing of imported goods, including:

- Expenses for market research and survey for to be-imported products;

- Expenses for advertising brands or trademarks of imported goods;

- Expenses for the display or introduction of newly imported products;

- Expenses for participation in trade fairs or exhibitions on new products;

- Expenses for inspection of the quantity and quality of goods before importation. If these expenses are agreed upon between the purchaser and seller and constitute part of the price actually paid or payable by the purchaser to the seller, they must not be deducted from the transaction value.

- Expense for opening L/C for payment for the imported goods lot, in case this expense is paid by the purchaser to the bank that represents the purchaser in making payment for the goods.

e/ Payable interests related to the payment for imported goods, on condition that:

- Payable interests must be stated in writing and separated from the price actually paid or payable;

- When requested, the purchaser shall prove that the declared value is the price actually paid or payable and that the payable interest rate is compatible with the common credit interest rate applicable at the time when and in the country where the financial agreement is implemented.

Example 5: Purchaser A signs a contract with seller B to purchase a lot of refrigerators.

It is stated in the contract that:

+ If the purchaser pays for the goods within two weeks from the date of issuance of a commercial invoice, the goods value is USD 9,700.

+ If the purchaser pays for the goods two weeks after the date of issuance of a commercial invoice, the payable goods value is USD 10,000 (USD 9,700 + USD 300).

The commercial invoice produced by the purchaser upon carrying out customs procedures shows the goods lot value of USD 9,700.

Because the customs office finds out through the inspection of the import dossier that the purchaser has paid for the goods two weeks after the date of issuance of the invoice, the price actually paid or payable is USD 10,000.

In this case, though the commercial invoice shows the goods lot value of USD 9,700, the value actually paid by the purchaser to the seller is USD 10,000.

The dutiable value = the value actually paid or payable = USD 10,000.

VIII. DETERMINING THE DUTIABLE VALUE OF IMPORTED GOODS IN SOME SPECIFIC CASES

1. For imported goods which are exempt from duty or considered for duty exemption but later used for purposes other than those for which the duty exemption is given or considered, duty payment declarations must be made. In a duty payment declaration, the value for import duty calculation is determined on the basis of the residual use value of goods computed according to their use and presence duration in Vietnam (from the date of importation stated in the customs declaration to the date of tax recalculation) and specifically determined as follows:

- Particularly for imported automobiles which are exempt from duty but later used for purposes other than those for which the duty exemption is given, when procedures for transferring these automobiles are carried out, if the price declared at the time of duty-free importation is lower than that of identical or similar imported goods available on the price database at the time of transfer, the price available on the price database at the time of transfer and the above ratio will be used to determine the dutiable value.

2. For scraps collected from the processing of goods for a foreign party and sold by the processee to the Vietnamese party, the dutiable value is determined as follows:

+ If there is a goods purchase and sale contract, the principles and methods of determining the dutiable value specified in Sections I thru VI, Part II of this Circular shall be applied to determine the dutiable value.

+ If there is no purchase and sale contract, the dutiable value is determined under the provisions of Clause 7 of this Section.

3. For imported goods that are rented or borrowed, the dutiable value is the price actually paid under the contract signed with the foreign party and consistent with lawful and valid vouchers related to the rent or borrowing of goods.

4. For imported goods that have been brought abroad for repair, the dutiable value is repair expenses actually paid under the contract signed with the foreign party and consistent with lawful and valid vouchers related to the repair of goods.

5. Warranty goods: In case imported goods consist also of warranty goods under the purchase and sale contract (including also goods consigned later), the dutiable value is the value actually paid for these imported goods, including the value of warranty goods. The value and quantity of warranty goods, warranty conditions and duration must be specified in the contract.

6. Sales promotion goods: In case imported goods consist of also sales promotion goods under the purchase and sale contract (including also goods consigned later), the dutiable value is determined as follows:

a/ If the value of sales promotion goods is stated in the purchase and sale contract and does not exceed 10% of the imported goods, the dutiable value of the imported goods (inclusive of that of sales promotion goods) is the value actually paid for the whole imported goods lot;

b/ If the value of sales promotion goods cannot be separated from the value of the imported goods or exceeds 10% of the imported goods value, the dutiable value of the whole imported goods lot (the dutiable value of the imported goods and that of sales promotion goods) is not determined on the basis of transaction value but according to the next method of determination.

7. For imported goods without a purchase and sale contract, such as goods sold, purchased or bartered by border inhabitants; imported goods of passengers on entry within or in excess of duty-free quotas; goods being gifts or presents within or in excess of duty-free quotas; imported goods of post and express mail service providers; and other goods without purchase and sale contracts, the dutiable value is determined as follows:

a/ For goods in single units:

- For automobiles, motorbikes or machines or equipment in single units valued at VND 50 million or more according to the price database, the dutiable value is determined by the customs office on the principles and according to the dutiable value-determining methods specified in Sections I thru VI of this Circular and based on the price database at the time of valuation.

- For other goods in single units: the dutiable value is the declared value.

b/ For goods in multiple units:

- If the declared total value of the goods lot is VND 5 million or less, the dutiable value is the declared value.

- If the declared total value of the goods lot is more than VND 5 million (including cases in which Vietnamese organizations or individuals purchase goods in bordering countries and import them into Vietnam; goods carried along on the same or a different flight by passengers on entry; goods being gifts or presents), the dutiable value shall be determined by the customs office on the principles and dutiable value-determining methods specified in Sections I thru VI, Part II of this Circular and based on the price database at the time of valuation.

8. Other particular cases:

a/ If imported goods are redundant compared to the goods purchase and sale contract signed with a foreign party:

a.1/ If redundant imported goods are identical or similar to imported goods stated in the contract: The dutiable value of redundant imported goods is determined by the method used for determining the dutiable value of the goods volume stated in the contract.

a.2/ If redundant imported goods are different from imported goods stated in the contract and permitted for import, their dutiable value is determined on the principle of sequential application of the dutiable value-determining methods guided in Sections II thru VI, Part II of this Circular other than the transaction value method.

b/ If imported goods are inconsistent with the purchase and sale contract signed with a foreign party:

b.1/ If imported goods are of improper specifications and permitted for import, their dutiable value is the value actually paid for imported goods. Goods of improper specifications means actually imported goods which are different in terms of color, dimensions or models from those described in the purchase and sale contract and these differences do not affect the actually paid price.

b.2/ If imported goods are inconsistent with the purchase and sale contract and permitted for import, their dutiable value is determined on the principle of sequential application of the dutiable value-determining methods specified in Sections II thru VI, Part II of this Circular other than the transaction value method.

c/ If imported goods are damaged or lost for justifiable reasons in the course of transportation and handling:

c.1/ For goods which are neither damaged nor lost, their dutiable value is the value actually paid for imported goods (damage- or loss-free part).

c.2/ For damaged or lost goods, their dutiable value is determined on the basis of the dutiable value of intact goods and reduced in proportion to the damage or loss level and in accordance with inspection results and relevant dossiers.

d/ For goods imported for compensation for damage or loss specified at Point c of this Clause, the dutiable value is determined under the guidance provided in Sections I thru VI, Part II of this Circular.

e/ For actually imported goods with a quantity disparity compared with commercial invoices due to their characteristics but in conformity with delivery and payment conditions stated in the purchase and sale contract, the import duty amount is determined as follows:

e.1/ Regarding the determination of the quantity of actually exported or imported goods: If verification has been conducted, verification results will serve as a basis for determining the quantity of actually exported or imported goods.

e.2/ Upon determining the dutiable value, the commercial invoice and the purchase and sale contract (delivery conditions, tolerable error, natural characteristics of goods and payment conditions) must be based on. The dutiable value must not be lower than the actually paid value stated in the commercial invoice and related documents.

e.3/ Some specific examples:

Example 6:

An enterprise imports under a contract 1,000 tons of tobacco shreds at a unit price of USD 100/ton and with a water content of 2%. The commercial invoice states: 1,000 tons x USD 100 = payable value of USD 100,000.

- The goods volume actually imported within the tolerable error under the contract: When imported, if this volume weighs between 1,020 and 980 tons through the customs inspection, the payment value for duty calculation is USD 100,000.

- For the actually imported goods volume in excess of the tolerable error under the contract: If the inspected goods volume weighs 1,200 tons, the actually imported goods volume is determined to be 1,200 tons and the dutiable value is determined as follows: 1,000 tons x USD 100 + 176 tons x USD 100 (the goods volume for dutiable value determination is 1,176 tons = 1,200 tons - (1,200 tons x 2%).

If the actually imported goods volume is 900 tons, smaller than that stated in the commercial invoice, which is issued according to the actually delivered goods, the dutiable value is the payment value stated in the commercial invoice.

Part III

EXAMINATION OF THE DUTIABLE VALUE

I. EXAMINATION OF THE DUTIABLE VALUE AT THE STAGE OF CUSTOMS CLEARANCE

1. Principles and objects of examination:

a/ Objects of examination: customs dossiers and documents related to the determination of the dutiable value of goods subject to dossier examination or physical examination of goods.

b/ Examination principles: application of value risk management.

The value examination on the principle of application of value risk management is conducted on the basis of classifying goods into those on the list of goods subject to price risk management and those outside that list, specifically as follows:

b.1/ For goods on the list of those subject to price risk management:

The General Department of Customs shall draw up and promulgate a list of goods subject to price risk management and guide provincial-level Customs Departments how to use this list as a basis for the examination and assessment of the truthfulness and accuracy of the declared values, organizing the explanation and exercising the right to consultation (below referred to as consultation for short) on goods lots with doubted declared values under Clause 5 of this Section.

Criteria for drawing up a list of goods subject to price risk management include:

- Imported goods subject to high duty rates and with large import value;

- Sensitive imported goods which are vulnerable to trade frauds.

Based on management capability, trade fraud practices and management human resources, the list of goods subject to price risk management may be changed in different periods in order to suit practical management requirements.

b.2/ For goods outside the list of those subject to price risk management: Directors of provincial-level Customs Departments shall draw up lists of important goods subject to concentrated management in their respective localities to serve as a basis for examining and assessing the truthfulness and accuracy of declared values and organizing consultations on goods lots with doubted declared values under Clause 5 of this Section.

Important goods subject to concentrated management in localities are those frequently imported or those with large import values, subject to high duty rates or vulnerable to trade frauds through prices but not yet specified in the list of goods subject to price risk management.

Directors of provincial-level Customs Departments shall take the initiative in gathering, analyzing and proposing in periodical reports to the General Department of Customs goods and groups of goods which need to be added to the list of goods subject to price risk management.

2. Contents of examination:

The customs office shall examine in detail the following contents:

a/ Declared contents: The customs office shall examine all items on the import declaration and value declaration made by the customs declarant, paying attention to carefully inspecting the following items:

Full name of the goods, detailed signs, code, mark and origin of the goods, which are consistent with those on the value declaration. Specifically as follows:

- Declared name of the goods is an ordinary trade name accompanied with substantial features of the goods, such as composition, component materials, ingredients and their contents, capacity, size, design model, utility, mark, origin, etc., satisfying the requirements on classification and identification of factors affecting and relating to the determination of the dutiable value of goods.

- In case the name of the goods is not specifically and clearly declared under the above provisions, the customs declarant is required to make additional declaration. If the customs declarant makes no or inadequate additional declaration, the case shall be handled under Point a, Clause 3 of this Section.

For example: For motorbikes and automobiles, there must be information on their brands, manufacturers, manufacturing countries, design models, cylinder capacity, models, other signs and codes, etc.

- Units of calculation: These units must be clearly quantified according to units of measurement (for example, m, kg). If it is impossible to clearly quantify these units (for example, carton, box), it is necessary to convert these units into their equivalents (number of boxes in a container, weight of a box in kg or number of packets or pieces in a box).

b/ Examination of the accuracy of dossiers (for example, arithmetical calculations); the truthfulness and substantial consistency between documents in the customs dossier set (comparison of terms of the contract, etc.); comparison of contents of the commercial invoice and the commercial contract; comparison of contents declared in the value declaration and relevant documents in the customs dossier.

c/ Examination of the legality and validity of documents related to the dutiable value determination.

d/ Examination of adherence to the principles and methods of dutiable value determination specified in this Circular; application conditions and order of the methods used for determining the declared value.

For example: The customs declarant has improperly applied the prescribed order of the dutiable value-determining methods specified in Part II of this Circular.

e/ Examination of the accuracy and truthfulness of the declared value: The customs office shall compare the declared value with the price database at the time of value examination in order to assess risks and check the accuracy and truthfulness of the declared value.

The price database used for examining the declared value consists of price data collected, updated and used under the Regulation on development, management and use of the price database promulgated by the Finance Ministry.

3. Processing of examination results:

a/ The declared value shall be rejected and the dutiable value shall be determined on the principles and according to the methods specified in this Circular if:

After the examination, the customs office detects any of the following violations: Violation related to procedures and dossiers; principles and order of application of the dutiable value-determining methods (below referred to as violations related to procedures and dossiers). Specifically as follows:

Cases of violation related to procedures and dossiers in which the declared value must be rejected include:

a.1/ The customs declarant is requested to make an additional declaration of the goods name but makes no or inadequate declaration.

a.2/ There is an inconsistency between contents of documents in the customs dossier submitted or produced by the customs declarant to the customs office and there is a ground to believe that the customs declarant has declared untruthful contents related to the valuation;

For example: There is a disparity in terms of goods description between the commercial invoice and the transportation contract.

a.3/ The customs dossier and relevant documents are unlawful or invalid;

a.4/ The customs declarant makes no or inadequate or inaccurate declaration of transaction elements affecting the value (for example: no declaration of adjustments, special relationship, royalty, licensing fee);

a.5/ The methods of dutiable value determination specified in Clause 2, Article 4 of the Governments Decree No. 40/2007/ND-CP of March 16, 2007, have been improperly applied or have not been applied in the prescribed order;

a.6/ Any of the conditions upon the application of the methods of dutiable value determination specified in Articles 7 thru 12 of the Governments Decree No. 40/2007/ND-CP of March 16, 2007, is not satisfied;

For example: The customs declarant fails to satisfy the condition on the right to dispose of or use goods after importation upon the application of method 1; or fails to satisfy the condition on time upon selection of identical or similar goods in case of application of method 2 or 3, etc.

b/ Handling of doubted cases:

In the course of examination, if the customs office has a doubt about violations specified at Point a of this Clause but does not have sufficient grounds for conclusion, or has a doubt about the declared price specified at Item b.3, Point b of this Clause, it shall handle the case as follows:

b.1/ If it has no doubt about the price but has a doubt about a violation related to procedures or dossier, it shall accept the declared value and at the same time direct its doubt about the violation toward the stage of customs clearance.

b.2/ If it has a doubt about the price and has a doubt or no doubt about violations related to procedures and dossier, it shall handle the case as follows:

b.2.1/ For goods on the list of goods subject to price risk management:

The customs office shall notify the customs declarant of grounds for the doubt about the declared price, and the method of valuation and the price determined by it, and handle the case as follows:

b.2.1.1/ If the customs declarant agrees with the price and valuation method determined by the customs office, the customs office shall issue a notice on valuation and tax assessment under regulations and clearly state them in the import declaration.

b.2.1.2/ If the customs declarant disagrees with the price and valuation method determined by the customs office, the customs office shall request the customs declarant to pay a security and conduct consultations under Clauses 4 and 5 of this Section.

b.2.1.3/ In case of a doubt about the price but the declared value is 5% or less lower than that on the price database at the time of examination, the director of the provincial-level Customs Department shall be assigned to base on the actual imported goods lot and information and data on the imported goods and the importing enterprise to decide on the application of a security and organize consultations on that goods lot.

b.2.2/ For goods outside the list of goods subject to price risk management:

b.2.2.1/ The customs office shall notify the customs declarant of grounds for its doubt about the declared price, and the valuation method and price determined by itself, and then handle the case under Item b.2.1, Point b of this Clause, for goods on the list of important goods subject to concentrated management in units as decided by the director of the provincial-level Customs Department.

b.2.2.2/ For goods outside the list of important goods decided by the director of the provincial-level Customs Department, the declared value will be accepted and the doubt will be directed toward the stage of customs clearance.

b.3/ Cases of doubt about prices:

Based on the price database at the time of value examination, the customs office shall compare the declared value with values available on the price database in order to check the accuracy, truthfulness and objectivity of the declared value.

An imported goods is considered subject to a doubt about price if it falls into one of the following cases:

b.3.1/ It has a declared value lower than the lowest dutiable value of an identical or similar goods determined by the customs office; or the lowest declared value of an identical or similar goods already accepted by the customs office as the dutiable value (without comparison with doubted goods lots in need of consultations).

Identical or similar goods used for comparison are those exported to Vietnam on the same day or within 60 days before or after the date of exportation of the goods subject to price doubt. If no identical or similar goods within the above time limit is found, this time limit may be extended to 90 days before and after the date of exportation of the goods subject to price doubt.

b.3.2/ The imported goods has its declared value lower than or equal to the declared value of imported parts of the same kind in complete sets; or lower than or equal to the declared value of main materials constituting an imported finished product.

The time limit for seeking data must comply with Item b.3.1 of this Point b.

b.3.3/ The imported goods has its declared value lower than the value of an identical or similar goods on the list of goods subject to price risk management.

b.3.4/ The imported goods has its declared value lower than the value determined by the customs office after gathering information from other sources already converted to the same condition with the goods lot being examined.

b.3.5/ The imported goods involves discounts and its declared value after these discounts are deducted is lower than the value of an identical or similar goods available on the price database.

b.3.6/ If no identical or similar goods under this Circular is found for comparison or examination of the declared value, the definition of identical or similar goods will be applied in a more flexible manner and in a broader scope, specifically as follows:

- For imported goods with many properties or utilities, the value of goods of the same type with an identical basic function already available on the price database may be used for comparison.

- For imported goods of higher quality, the value of goods of the same type and lower quality already available on the price database may be used for competition.

- For imported goods originating from developed countries or groups of developed countries, the value of goods of the same type from underdeveloped or developing countries or groups of underdeveloped or developing countries available on the price database may be used for comparison (for example, for imported goods being examined and originating from Japan, the value of goods of the same type originating from the Republic of Korea available on the price database may be used for comparison).

The time limit for data search must comply with Item b.3.1 of this Point b.

c/ Acceptance of the declared value: The customs office shall accept the declared value in cases other than those specified at Points a and b of this Clause.

4. Delayed dutiable value determination

a/ Cases of delayed dutiable value determination:

a.1/ Customs declarants delay the dutiable value determination if they do not have sufficient necessary information for determining the dutiable value at the time of customs declaration registration.

a.2/ The customs office delays the dutiable value determination in cases imported goods are subject to immediate duty payment and concurrently subject to consultation under Items b.2.1.2 and b.2.2.1, Point b, Clause 3, Section I, Part III of this Circular.

b/ Procedures for delaying the dutiable value determination:

b.1/ For cases in which the customs declarant delays the dutiable value determination:

- At the time of customs declaration registration, the customs declarant must request in writing the customs office to delay the dutiable value determination for the reason that information necessary for the dutiable value determination is insufficient and permit customs clearance, together with a commitment to paying a security sufficient to secure the whole duty amount of the imported goods lot assessed by the customs office.

- Based on the customs declarants written request, the customs office carrying out procedures for importing goods shall determine the dutiable value used for calculating the payable security under Item c.3, Point c of this Clause and notify it in writing to the customs declarant.

- The customs office may permit the customs clearance only when the customs declarant pays the security under this Circular.

- Within 30 days (of the calendar year) from the date of customs clearance of goods, the customs declarant shall make additional declaration of information necessary for determining the dutiable value of the imported goods lot and recalculate the payable duty amount under regulations. Past the time limit of 30 days, if the customs declarant fails to make an additional declaration for determining the dutiable value, the customs office shall determine the dutiable value and notify it in writing to the customs declarant for compliance.

b.2/ For cases in which the customs office delays the dutiable value determination:

- The customs office shall clearly notify in writing the customs declarant of the following contents:

+ Grounds for doubt;

+ Request for the customs declarant to take part in explanation and exercise the right to consultation.

+ Payable security: calculated under Item c.3, Point c of this Clause.

- The customs office will only permit the customs clearance when the customs declarant pays the security according to its notice.

- In the duration of security, the customs office shall organize consultation on the accuracy and truthfulness of the declared value under the provisions of Clause 5 of this Section on consultation before concluding on the dutiable value and notifying it in writing to the customs declarant for compliance.

c/ Security amount in cases of delayed dutiable value determination:

c.1/ Forms of security include:

- Bank guarantee; or,

- Payment of collateral; or,

- Payment of deposit; or,

- Other forms: the customs office shall temporarily keep legal documents of title (for automobiles, motorbikes) or part of imported goods for which procedures are carried out.

The customs declarant may request the application of any of the above forms of security. Based on the customs declarants request, the director of the district-level Customs Department shall decide on application of an appropriate form of security.

c.2/ Security duration: The security duration must be long enough for consultation and tax assessment (dutiable value determination) and fulfillment of the tax obligation under regulations.

c.3/ Security amount:

- Security amount must be sufficient for securing the whole payable duty amount.

The director of the district-level Customs Department shall base himself/herself on the price database and the principles and methods of dutiable value determination specified in this Circular to decide on the value used for calculating the security and the payable security amount.

- If the customs declarant has paid a duty according to the declaration, the security amount is equal to the difference between the duty amount calculated on the basis of the price determined by the customs office and that calculated on the basis of the price declared by the customs declarant.

c.4/ Security procedures:

c.4.1/ For the form of guarantee:

Guarantees must comply with the tax administration laws provisions on guarantees for payable tax amounts.

c.4.2/ For the form of deposit:

Procedures for paying and refunding a deposit are as follows:

- The deposit amount is remitted into the customs offices deposit account at the State Treasury.

- After making a conclusion on the dutiable value, the district-level Customs Department shall carry out procedures for transferring the deposit amount corresponding to the increased duty amount (if any) from the customs offices deposit account to the state budget revenue account under current regulations.

- Upon the expiration of the security duration, if the customs office does not adjust the dutiable value and accept the declared value, it shall refund the deposit amount paid by the customs declarant.

- The district-level Customs Department shall immediately refund the overpaid deposit amount to the customs declarant.

c.4.3/ For other forms of security:

- If the customs declarant does not apply the form of guarantee or deposit, he/she shall request in writing the customs office to apply another form.

- The director of the district-level Customs Department shall, based on the customs declarants request and the practical situation, decide on an appropriate form of security and procedures.

5. Consultation:

a/ Competence to conduct consultation:

- The director of the district-level Customs Department shall, based on the provisions of this Circular, notify the customs declarant that the imported goods lot is subject to consultation.

- The director of the provincial-level Customs Department shall organize the consultation.

Based on the practical situation and management capability, the director of the provincial-level Customs Department may authorize the director of the district-level Customs Department to conduct consultation and take responsibility for the consultation by the district-level Customs Department.

b/ Form of consultation: direct consultation.

c/ Cases subject to consultation are those specified in Items b.2.1.2 and b.2.2.1, Point b, Clause 3, Section I, Part III of this Circular.

For the same goods item for which import procedures are carried out by the same enterprise at the same customs office and under the same contract or several contracts, consultation is required only for the first imported goods lot, provided that:

- Information related to the examination and determination of the dutiable value obtained by the customs office from the price database and information collected by other professional methods up to the time of examination and determination of the dutiable value for a new goods lot are the same as information used for organizing consultation on the first imported goods lot.

- The customs declarant accepts the use of results of the first-time consultation for subsequent imported goods lots.

d/ Consultation and processing of consultation results:

d.1/ Preparation for consultation:

- The customs office shall:

+ Notify in writing the customs declarant of the time and place for consultation; the dossier and documents related to the consultation; and grounds for doubt about the declared value.

+ Collect information available on the price database and related documents. Analyze and sum up information for consultation.

+ Prepare questions to be asked in the consultation, focusing on doubts about the dossier, price and discounts.

+ Come up with reason(s) for rejecting the declared value, and provide the dutiable value it has determined and the valuation method it has used.

- The customs declarant shall:

+ Supply information, documents and vouchers as required by the customs office.

+ Send a representative, who is authorized to decide on contents related to the dutiable value determination, or a fully authorized attorney to participate in the consultation meeting.

+ Answer questions in the course of consultation related to the import transaction at the request of the customs office.

d.2/ Contents to be consulted:

Based on the dossier, documents and information and data prepared in advance, the customs office shall request the customs declarant to answer questions related to the declaration of details of the import transaction; the accuracy and truthfulness of the declared value; and the method of dutiable value determination the customs declarant has applied.

The customs office shall focus on clearing its doubts about the dossier and the declared value. Questions and answers made in the course of consultation must be fully and truthfully recorded in the consultation minutes. Concluding the consultation minutes, based on answers of the enterprise, price information and data, the customs office shall clearly state that the declared value and proposed dutiable value are accepted or rejected. Participants in the consultation shall jointly sign the consultation minutes.

d.3/ The time limit for organizing consultation and determining the dutiable value is 30 days (of the calendar year) from the date of declaration registration. The director of the provincial-level Customs Department shall create conditions for the customs declarant to participate in the consultation within the prescribed time limit.

d.4/ Processing of consultation results:

d.4.1/ The customs office shall reject the declared value and determine the dutiable value in the following cases:

d.4.1.1/ The customs declarant has declared untruthful contents related to the dutiable value determination:

- The customs declarant fails to declare or has declared falsely the price actually paid or payable; factors related to the dutiable value determination (adjustments, special relationship, conditions on application of the valuation method).

- The exporter or its representative has information affirming that the declared price is untrue to the actual purchase and sale.

- Information obtained by the customs office by other professional methods affirms that the transaction value is untruthful.

- Information supplied by the customs declarant, through examination, is found to be inaccurate, supplied documents are found to be forged, unlawful or invalid.

d.4.1.2/ The customs declarant fails to prove or has unsuccessfully proved the truthfulness and accuracy of contents related to the dutiable value determination:

- Upon the expiration of the prescribed time limit for consultation, the customs declarant still refuses or fails to participate in the consultation.

- Upon the expiration of the prescribed time limit for consultation, the customs declarant still fails to supply information, documents and vouchers required by the customs office.

- The customs declarant fails to explain or prove, or unconvincingly or groundlessly explain or prove matters doubted by the customs office (the reasonability of the dossier; the declared price or special relationship influencing the transaction value; inconsistency between the customs declarants answers and the customs dossiers; inconsistencies in the dossier, documents and vouchers declared or produced by the enterprise; the reasonability of the declared price and price of an identical or similar goods available on the price database).

In case of rejection of the declared value, the customs office shall notify such in writing to the customs declarant, clearly stating grounds for the rejection.

d.4.2/ Acceptance of the declared value: The customs office shall accept the declared value in cases other than those specified in Item d.4.1 of this Point.

e/ All documents and dossiers related to the consultation must be archived together with customs dossier sets.

f/ In order to ensure the truthfulness and objectivity of the dutiable value examination and determination, the customs office may, apart from organizing the consultation, consult opinions of concerned agencies and units.

6. The General Department of Customs shall specify the procedures for examining and determining the dutiable value.

II. POST-CUSTOMS CLEARANCE EXAMINATION OF THE DUTIABLE VALUE

Based on the level of risk of each goods item, line or group, imported objects and types of importation, post-customs clearance examination of the dutiable value may be conducted as follows:

1. The district-level Customs Departments section in charge of reexamination shall:

Examine customs dossiers, declared prices and documents related to the determination of dutiable values of imported goods, and dossiers which have not yet been checked in detail at the stage of customs clearance. Its examination must be conducted under the provisions of Clause 2, Section I, Part III of this Circular. Through the examination, if it detects errors in or violations related to dossiers, documents and valuation methods, it shall reject declared values and determine dutiable values according to the principles and methods specified in Sections II thru VI, Part II of this Circular. If it has doubts about dossiers, documents and declared prices but does not have sufficient grounds for concluding on acts of fraud, it shall transfer the doubted cases to the section in charge of post-customs clearance examination for further verification and clarification under regulations.

2. The section in charge of post-customs clearance examination shall:

Based on the doubts about dossiers, documents and declared prices transferred from the reexamination section or the section in charge of examination at the customs clearance stage, assess the level of risk of each goods item or line or importing enterprise and conduct the post-customs clearance examination at the customs office or the enterprises office. Examination contents and procedures comply with regulations on post-customs clearance examination.

3. The section in charge of anti-smuggling investigation shall:

Organize the examination and verification of cases showing signs of big frauds in value, such as: forging of dossiers and documents or collusion in lowering or falsely declaring the value, transferred from the section in charge of post-customs clearance examination, or serious and systematic cases detected by anti-smuggling forces.

4. For goods lots that have their values already examined at the customs clearance stage, regardless of whether their declared values are rejected or accepted after consultations but the reexamination section, the section in charge of post-customs clearance examination or the section in charge of anti-smuggling investigation detects violations, these violations shall still be handled under law, duty arrears shall be fully collected, and the responsibility of the section in charge of examination at the customs clearance stage shall be identified. If this section has committed a violation, it shall be disciplined under regulations of the customs service and law.

5. Results of the post-customs clearance value examination must be notified to the section in charge of customs clearance examination within 5 days after they are obtained.

Part IV

RIGHTS AND OBLIGATIONS OF CUSTOMS DECLARANTS; RESPONSIBILITIES OF CUSTOMS DECLARANTS

I. RIGHTS OF CUSTOMS DECLARANTS

1. To request customs offices to keep confidential commercial information they supply to customs offices, including information on purchasers, sellers, consigners, domestic goods purchasers, prices of goods sold in the country, and production costs of imported goods.

2. To request customs offices to guide the dutiable value determination and notify in writing dutiable values, documents, valuation and calculation methods used to determine dutiable values in case dutiable values are determined by customs offices.

3. To request the organization of consultations to prove the accuracy and truthfulness of values they declare when customs offices have doubts.

4. To request customs offices to release goods in case of necessity to delay the dutiable value determination after paying a security for payable duty amounts.

5. To lodge complaints about prices determined by customs offices.

6. To request in writing the change of the order of applying the deductible value method and the computed value method.

II. OBLIGATIONS OF CUSTOMS DECLARANTS

1. To fully and accurately declare, based on dossiers of imported goods lots, the principles and methods of dutiable value determination specified in this Circular, expenses related to the purchase and sale of imported goods and determine by themselves dutiable values of imported goods according to the dutiable value declaration form set by customs offices.

2. To submit dutiable value declarations, copies of lawful and valid documents used for determining dutiable values together with import goods declarations. To submit and produce documents to serve as a basis for examining and determining dutiable values when requested by customs offices.

3. To explain and submit to the examination by customs offices of the accuracy and truthfulness of declared values. To coordinate with customs offices in verifying the accuracy and truthfulness of declared contents related to dutiable values.

4. To take responsibility before law for the accuracy and truthfulness of declared contents and results of customs valuation for taxation and customs statistical purposes.

5. To take responsibility for the non-delivery of documents sent by post from customs offices to addresses they have registered with customs offices on customs declarations.

6. To pay security amounts as requested by customs offices under Item 4, Section I, Part III of this Circular.

III. RESPONSIBILITIES AND POWERS OF CUSTOMS OFFICES

1. To keep confidential commercial information related to declared values as requested by customs declarants, except for cases in which such information must be supplied to concerned agencies in accordance with law.

2. To explain and guide customs declarants in complying with the provisions of the Governments Decree No. 40/2007/ND-CP of March 16, 2007, and the guidance in this Circular.

3. To notify in writing customs declarants of dutiable values, documents, valuation and calculation methods they have applied to determine dutiable values when so requested in writing by customs declarants.

4. To supply dutiable value declaration forms to customs declarants and guide them in filling in these forms in compliance with each dutiable value determining method. To organize the printing, distribution and issuance of dutiable value declaration forms to customs declarants.

5. To examine contents declared and dutiable values determined by customs declarants under the provisions of Part III of this Circular.

6. To request customs declarants to explain, submit or produce documents related to the purchase and sale of and payment for goods to prove the accuracy and truthfulness of declared values. If doubting about related documents, to compare these documents with their originals to ensure the truthfulness.

7. To determine dutiable values on the basis of dossiers of imported goods lots, the price database and the dutiable value-determining methods specified in this Circular in the following cases:

a/ Customs declarants cannot determine dutiable values according to the methods specified in Sections I thru VI, Part II of this Circular.

b/ Customs offices reject declared values in the cases specified at Point a, Clause 3 and Item d.4.1, Point d, Clause 5, Section I, Part III of this Circular.

c/ Customs declarants fail to comply with the provisions of the Governments Decree No. 40/2007/ND-CP and the guidance in this Circular.

Part V

COMPLAINTS AND HANDLING OF VIOLATIONS

I. COMPLAINTS AND SETTLEMENT THEREOF

1. Customs declarants may complain about results of dutiable value determination by customs offices. Complainants have the rights and obligations provided by the law on complaints and denunciations. Written complaints must clearly state grounds and reasons for making complaints. In the course of making complaints, customs declarants shall still abide by customs offices decisions on dutiable values, unless these decisions are suspended from enforcement under the Law on Complaints and Denunciations.

Complaints about administrative decisions or acts of certain authorities shall be settled for the first time by heads of these authorities.

2. If disagreeing with results of the first-time complaint settlement by customs offices, customs declarants may lodge second-time complaints with immediate superiors of issuers of decisions on the first-time complaint settlement or institute administrative lawsuits at courts under the law on complaints and denunciations and the law on administrative procedures.

In case complainants further lodge their complaints, they shall send their complaints enclosed with copies of decisions on the first-time complaint settlement and relevant documents (if any) to persons responsible for second-time complaint settlement.

Heads of immediate superiors of authorities settling first-time complaints shall issue decisions on second-time complaint settlement.

3. Complaints for which decisions on second-time complaint settlement have been issued and those accepted by courts for handling will not be considered for settlement.

4. If complaints are not settled, complaint-settling authorities shall reply in writing to complainants within a time limit prescribed by law, clearly stating reasons for refusal to settle complaints.

II. HANDLING OF VIOLATIONS

1. Customs officers and employees who lack a sense of responsibility and violate the provisions of the Governments Decree No. 40/2007/ND-CP of March 16, 2007, and the guidance in this Circular, causing damage to duty payers and loss of duty amounts, shall pay compensations for damage and loss in accordance with law and shall, depending on the nature and severity of their violations, be disciplined or examined for liability in accordance with law.

2. Duty payers shall pay duty arrears when their acts of tax evasion are detected by customs offices or other competent agencies.

Part VI

ORGANIZATION OF IMPLEMENTATION

1. The Finance Ministry shall coordinate with other ministries and line associations in organizing the collection and exchange of information on prices to serve the value examination and determination.

2. The General Department of Customs shall organize the price database to serve the dutiable value examination and determination within the customs service.

Inter-provincial and provincial-level Customs Departments shall organize the collection, processing, reporting and use of information on prices under regulations of the General Department of Customs.

3. The General Director of Customs shall guide, direct and organize the implementation of this Circular.

4. This Circular guides the examination and determination of the value of exported goods and imported goods and replaces Appendix I to the Finance Ministrys Circular No. 113/2005/TT-BTC of December 15, 2005. Other contents which are contrary to this Circular are annulled.

This Circular takes effect 15 days after its publication in CONG BAO.