Công văn 3906/TC/TCT

To: Provincial/municipal Tax Departments

The Finance Ministry has received the Vietnam Tobacco Corporation's Official Letter No. 309/TLVN-CV-TCKT of November 17, 2004, requesting guidance on SCT rates for filter cigarettes produced from tobacco shreds which are manufactured by domestic tobacco shred-processing factories. Regarding this matter, the Finance Ministry gives the following opinion:

According to the provisions of Section II, Part B of the Finance Ministry's Circular No. 119/2003/TT-BTC of December 12, 2003, guiding the implementation of the Government's Decree No. 149/2003/ND-CP of December 4, 2003, which details the implementation of the SCT Law and the Law Amending and Supplementing a Number of Articles of the SCT Law:

Filter cigarettes produced mainly from imported raw materials shall be subject to the tax rate of 65%.

Filter cigarettes produced mainly from home-made raw materials shall be subject to the tax rate of 45%.

Filter cigarettes produced mainly from imported raw materials, which are subject to the tax rate of 65%, are those produced with the volume of imported tobacco shreds accounting for 51% or more of the total volume of tobacco shreds used therefor.

According to the above-said provisions, the SCT rate of 65% shall apply to filter cigarettes produced mainly from imported tobacco-shred raw materials. The SCT rate of 45% shall apply to filter cigarettes produced mainly from tobacco shreds which are manufactured or processed by Vietnam-based enterprises, or with the volume of imported tobacco shreds accounting for less than 51% of the total volume of tobacco shreds used therefor.

Any problems arising in the course of implementation should be reported by concerned localities and units to the Finance Ministry for study and settlement.