Công văn 879/TCHQ-TXNK

To: Customs Departments of provinces and cities.

Pursuant to Clause 7 Article 16 of Law on Export and Import Duties No. 107/2016/QH13, materials and supplies imported for manufacturing exported products shall be exempted from import duties;

Pursuant to Article 59 of Law on Customs No. 54/2014/QH13, commodities that are materials and supplies imported for manufacturing exported products must be subject to customs inspection and supervision from the date of import, during product manufacturing process and until the date on which products are exported or repurposed;

Pursuant to Article 60 of Law on Customs No.54/2014/QH13 and Article 12 of Decree No. 134/2016/ND-CP dated September 1, 2016 of the government, customs declarants are responsible for informing exported product manufacturing facilities of enterprises with customs authority and using imported materials and supplies for manufacturing exported products;

Pursuant to Article 77 of Law on Customs No. 54/2014/QH13 on post-clearance inspection to assess accuracy and truthfulness of documents presented and submitted by customs declarants to customs authority; assess compliance of customs declarants with customs laws and other regulations and law related to import, export;

Pursuant to Article 17 and Chapter II of Law on Tax Administration No. 38/2019/QH14, tax payers are responsible for declaring tax accurately and honestly, submitting tax declaration, being legally responsible for accuracy, honesty and adequacy of tax declaration, and submitting tax duly.  Tax authorities shall perform tax administration via inspection and investigation thereby issuing decision on dealing with tax affairs to guarantee adequate tax collection and submission to State Budget;

Pursuant to Clause 20 Article 5 of Law on Value-Added Tax No. 13/2008/QH12, materials and supplies imported for manufacturing exported products under contracts for manufacturing and exporting signed with overseas parties shall not be subject to value-added tax; 

Pursuant to Article  60 of Law on Tax Administration No. 38/2019/QH14 on disposal of tax, late payment and excess payment fine;

Pursuant to Article 17 of Decree No. 126/2020/ND-CP dated October 19, 2020 of the Government on elaborating to Law on Tax Administration on defining tax applicable to import, export products;

Pursuant to Clause 20 Article 4 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of Ministry of Finance, materials and supplies imported for manufacturing exported products under contracts for manufacturing and exporting signed with overseas parties shall not be subject to value-added tax; 

Pursuant to Article 131 of Circular No. 38/2015/TT-BTC and amendments thereto under Clause 64 Article 1 of Circular No. 39/2018/TT-BTC dated April 20, 2018 of Ministry of Finance on procedures for disposal of tax, late payment and excess payment fine,

General Department of Customs hereby requests Customs Departments of provinces and cities to:

1. Regarding tax policies for imported products for manufacturing of exported products for processing.

Pursuant to Resolution No. 178/NQ-CP dated December 12, 2020 of the Government on Government’s Regular Meeting dated November 2020: “The Government hereby requests Ministry of Finance to exempt import duties of products imported for manufacturing and exporting where enterprises hire other enterprises to process parts of imported materials and components or hire other enterprises to process one or many stages of the products and receive semi-finished products to proceed with manufacturing and exporting or receive final products to export according to Clause 7 Article 16 of Law on Export and Import Duties No. 107/2016/QH13.

Assigns Ministry of Finance to direct customs authority to return imposed tax submitted by enterprises as per the law and refrain from collecting tax of enterprises which have not submitted imposed the tax; develop close management measures to prevent policy exploits”.   

According to which, for products imported for manufacturing and exporting that have been registered under customs declaration from September 1, 2016 (effective date of Law on Export and Import Duties), enterprises that hire other enterprises to process parts of imported materials and components or hire other enterprises to process one or multiple steps of products and receive semi-finished products to proceed with manufacturing and exporting or receive final products to export entirely shall be exempted from submitting import duties according to Clause 7 Article 16 of Law on Export and Import Duties No. 107/2016/QH13. 

General Department of Customs shall assign Customs Departments of provinces and cities to inspect final accounts on use of imported materials and imported products of enterprises utilizing imported products for manufacturing and exporting. In case enterprises importing products for manufacturing of exported products show signs of risk or enterprises importing materials, components, machinery, equipment or exporting product observe unusual increase or decrease productivity compared to manufacturing capacity or statement figures on use of materials and exported products show unusual difference  with figures recorded on system of customs authorities, customs authorities shall conduct post-clearance inspection in enterprise headquarter to verify whether imported products for manufacturing and exporting are utilized for the right purpose and exempted from tax as per the law, especially for enterprises importing products for manufacturing and exporting which hire other enterprises to process to prevent policy exploit.

2. Regarding inspection measures for products imported for manufacturing and exporting that are processed on rental service.

- Customs Departments of provinces and cities shall increase customs inspection and supervision for products imported for manufacturing and exporting from the point of export, during manufacturing process until the point of export or repurposing.

- Customs Departments of provinces and cities shall review all cases where post-clearance inspection has been conducted in headquarters of enterprises hiring other enterprises to process products and, if post-clearance inspection results determined that enterprises import products for manufacturing and exporting where the enterprises hire other enterprises to process parts of materials and components or hire other enterprises to process one or multiple steps of products and receive semi-finished products to proceed with manufacturing and exporting or receive final products for exporting rather than domestic consumption, adopt Article 3 hereof.

3. Regarding import duties and VAT in import process for products imported for manufacturing and exporting that are processed on a rental basis.

- In case enterprises have not been imposed with tax, customs authorities shall not issue decisions on tax imposition.

- In case enterprises have been imposed with tax but have not submitted imposed tax to state budget, customs authorities shall amend or annul decisions on tax imposition according to Point h Clause 5 Article 17 of Decree No. 126/2020/ND-CP dated October 19, 2020 of the Government.

- In case enterprises have been imposed with tax and submitted imposed tax to state budget, customs authorities shall amend or annul decisions on tax imposition according to Point h Clause 5 Article 17 of Decree No. 126/2020/ND-CP dated October 19, 2020 of the Government. The submitted tax shall be dealt with according to regulations on disposing tax, late payment and excess payment fine under Article 60 of Law on Tax Administration No. 38/2019/QH14, Article 131, Article 135 of Circular No. 38/2015/TT-BTC and amendments thereto under Clause 64, Clause 65 Article 1 of Circular No. 39/2018/TT-BTC. Regarding VAT:

For VAT that has been imposed, submitted but has not been returned by tax authorities, customs authorities shall return as per the law.

Pursuant to decision on return of customs authorities, enterprises shall declare imposed VAT that has been returned by customs authorities as per the law.

4. Reporting regime.

Customs Departments of provinces and cities shall submit reports on tax disposal for cases in which enterprises import products for manufacturing and exporting and have the products processed on a rental basis using attached form to General Department of Customs (via Department of Import, Export Tax) on the 30^th of the final month of a quarter.

For your acknowledgement and implementation. Difficulties that arise during the implementation should be reported to the General Department of Customs for consideration./.