Decree 18: Meeting the requirements of tax administration, creating favorable conditions for taxpayers

	Decree 18: Supplement regulations to ensure equality between production and processing
	General Department of Vietnam Customs instruct Decree 18 for over 200 enterprises
	Decree 18/2021/ND-CP specifying tax incentives for processing activities, export production

Outsourcing, manufacturing and exporting activities at Youngone Nam Dinh Co., Ltd. Photo: H.Nu

The Decree has many new points that are clearly and transparently defined, not only creating favorable conditions for import and export enterprises in implementing tax policies but also meeting the requirements of tax management of Customs.

According to the General Department of Customs, Decree 18 has many new points to overcome the incomplete issues in Decree 134, meeting the requirements and direction of the Government on solving import and export tax problems; improve the business environment, enhance national competitiveness, in line with international practices.

After nearly seven months of implementation, Decree 18 has supplemented the provisions that on-spot imported goods are subject to import tax from the country, group of countries or territories that implement MFN treatment to remove difficulties for businesses and to contribute to reducing trade deficit.

In addition, for goods imported for production and export, Decree 18 stipulates that taxpayers are allowed to hand over part or all of the imported goods to hire other domestic units for processing and manufacturing one or several stages or the whole stage after which the products are returned for export. This regulation has created favorable conditions for manufacturing and export enterprises to enjoy tax incentives similar to those for goods for processing.

In order to promote the production and processing capabilities of domestic enterprises as well as in the non-tariff zone to participate in the supply chain of exported goods, Decree 18 has added regulations on taxpayers' delivery of imported goods for processing, production for export, hire other organizations or individuals to manufacture or re-process in foreign countries or non-tariff zones.

Compared with the past, enterprises have to pay tax on destroyed goods produced for export, however, Decree 18 has added regulations that goods imported for export production are allowed to be destroyed in Vietnam and actually destroyed and eligible for import tax exemption. According to the General Department of Customs, this regulation contributes to reducing difficulties for businesses when goods imported for export production are forced to be destroyed.

At the same time, in order to reduce costs for export processing enterprises, Decree 18 has abolished the 3% rate for scrap and discarded products of processed goods that are transferred for domestic consumption and are exempt from import tax.

Amid the pandemic, in order to simplify administrative procedures and create favorable conditions for businesses, Decree 18 promptly revised the authority to settle tax reductions in cases where taxpayers submit dossiers after the time of carrying out customs procedures, the customs department of the province or city (instead of the Ministry of Finance as before).

Also according to the leader of the General Department of Customs, Decree 18 expands the tax-exempt subjects, in order to create favorable conditions for those participating in import-export activities. Compared with the old regulations in Decree 134, Decree 18 has amended and supplemented the basis for determining tax exemption for goods imported for processing and manufacturing for export; abolished tax exemption procedures after customs procedures for goods imported in direct service of national defense and security; amended tax exemption norms for gifts of foreign organizations and individuals to Vietnamese agencies and organizations whose operating expenses are guaranteed by the state budget in accordance with the budget law; gifts for humanitarian purposes and charity.

Some enterprises with production headquarters in Dong Van - Ha Nam industrial zone also appreciate the tax exemption regulations for goods imported for processing, and processed products for export under processing contracts are exempt from import and export tax according to the provisions of Clause 6, Article 16 of the Law on Import Tax and Export Tax.

Enterprises believe that this regulation has reduced the procedures and large volume of tax declaration and payment documents between Customs and enterprises. In addition, with specific and transparent regulations, it has contributed to the reform of administrative procedures in the direction of increasing the application of information technology, improving the business environment, enhancing national competitiveness, facilitating maximum benefits for import and export activities for enterprises.