Công văn 2964/BTC-TCHQ

In implementation of the Direction by Deputy Prime Minister Nguyen Sinh Hung according to Document No. 7996/VPCP–KTTT dated 20 November 2008 of the Government Office on solving scraps and by-products of the textile products from factories, the Ministry of Finance raises following opinions:

1. In the event the loss rate of scraps and by-products is smaller than or equivalent to 3%:

- Do not collect import tax to the scraps and by-products processing from of the textile products if the loss is smaller or equivalent to 3% after processing and the scraps and by-products are still be in used and the factories will sell to the domestic market,

- The factory is entitled to declare full information with the Customs Authority and Domestic Tax Authority,

- The scraps and by-products are within the loss rate according to the loss standard which have been agreed in the processing agreement,

- The scraps and by-products are not in bulk in reality,

- As selling these scraps and by-products to the domestic market, the factory will have income, and then the factory is responsible for paying the tax obligation to the domestic tax authorities in compliance with the current laws (the factory must pay VAT, enterprise tax (if any)).

2. In the event the loss rate of the scraps and by-products is over 3%:

- The factory must declare to the Customs Authority and pay the import tax, VAT, excise tax (if any) for the Customs Authority and pay other financial obligations for the domestic tax authorities.

- The payable tax is the different amount between the import tax amount of raw materials as importing and subtract (-) the duty-free import tax amount.

3. In the event the factory sells the scraps and by-products to the domestic market without paying for the tax will be treated as follows:

a. In the event the use purpose of the scraps and by-products is changed in various time belonging various agreements and import declarations, the checking of scraps and by-products data on store registration cards, store logs, VAT receipts of scraps and by-products for domestic consumption to identify the scraps and by-products belonging to the time of the processing agreement and the time of changing the use purpose to calculate the exempted tax amount and the payable tax according to the instruction at section 1 and 2 above.

b. In the event after checking the books and receipts but cannot identify the scraps and the by-products of the processing agreement and the time of changing the use purpose because the accounting books and receipts are not full and exact, the factory is asked to identify the number of scraps and by-products itself, the time of changing the use purpose, the processing agreement of the domestic consumption products, the import declaration and the factory is responsible for these declarations and confirmation according to available laws.

4. The tax return to the factory which has paid the arrears tax to the scraps and by-products:

The City and provincial customs authority will ask the factory to declare and check the exempted tax rate of scraps and by-products according to instructions at section 1, 2 and 3 above. If the loss rate of scraps and by-products is smaller than or equivalent to 3%, the factory is not responsible for paying the tax. If such loss rate is over 3%, the factory will be paid the tax according to current regulations. In the event the amount that the factory has paid exceeding the payable tax amount, the relevant authority is responsible for returning the exceeding amount to the factory according to available regulations. The returning amount is from the State Budget for 2008.

5.This Document is applicable to the processing agreement/processing agreement appendix which has been liquidized before 31 December 2008. 

The processing agreement/processing agreement appendix which has registered before 1 January 2009 will applicable to the instructions by Circular No. 05/2009/TT-BTC dated 13 January 2009 of the Ministry of Finance on instructing some contents of the customs procedures, export tax, import tax and tax management to the import products and export products according to Decree No. 30/2008/NQ-CP dated 11 December 2008 of the Government on urgent solutions to prevent the economic decline to maintain the economic growth rate and ensure the social welfare.

The Ministry of Finance is responsible for giving instructions to all involved organizations and factories to know and implement this Document. Vietnam textile association is asked to popularize and copy this Document to all textile products processing factories for foreign entrepreneurs. In the event there are any arising difficulties, the association is responsible for raising opinions and enclosing its suggestions to the Ministry of Finance (General Department of Customs) to be considered and solved.