Exports to 6 CPTPP countries: Tax refund will be made for eligible shipments from 14 January 2019

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Customs officers of Saigon KV 1 port inspect imported cars. Photo: T.H

4 conditions for enjoying preferential treatment

The decree is applied to countries including Mexico, Japan, Singapore, New Zealand, Canada and Australia in which the CPTPP Agreement entered to enjoy special preferential import and export tax rates. The tariff will have a four-year roadmap, from 2019-2022. This is a relatively reasonable time for traders to plan production and business. To enjoy incentives in the CPTPP enterprises must satisfy 4 conditions.

Firstly, traders need to note whether the importing or exporting country has implemented the CPTPP or not. Until now, in addition to Vietnam, only six countries have ratified and implemented this agreement. Therefore, traders are only entitled to incentives when exporting to and importing goods from these six countries. In the future, if more countries ratify and implement the CPTPP, the Ministry of Finance will announce the roadmap for these countries, such as Malaysia, Brunei and Peru.

Secondly, with the four-year roadmap, traders need to review commodity lines and cut the roadmap of their products. For example, for cars imported from Japan, the import tax rate in 2019 will be reduced to 64% and further decrease by 6% per year for following years.

Thirdly, to enjoy incentives, traders must have import goods records in the importing country and must have shipping bills. Accordingly, goods from Vietnam must be exported to the importing country to avoid exporting to a third country. In the case where goods are not shipped directly from the exporting country to the importing country, but go through member countries, it is still considered as direct shipping. In addition, goods are also permitted to be transhipped or transited in countries other than CPTPP members. However, during the transhipment and transit, there are not production stages and no changes in the nature and origin, the goods shall be permitted to enjoy incentives.

Fourthly, the goods must have a certificate of origin from CPTPP countries.

Regarding enjoyment of tax incentives, Director of International Cooperation Department, under the Ministry of Finance Vu Nhu Thang said the special preferential import and export tariff, is applied to two groups of countries which have been implemented CPTPP from the end of 2018 (including Canada, Australia, New Zealand and Singapore) and the group of countries implemented from 2019. Accordingly, traders should read the Tariff to understand the reduction roadmap. For example, the reduction roadmap for Australia starts from the second year and for Mexico from the first year.

Concerning export tax, because the preferential tariff has not been issued, currently, when exporting goods to the CPTPP countries, traders still have to pay tax and submit two documents: shipping bills and customs declarations. Then, within 1 year after the goods have arrived at the destination, traders will bring the documents to the Customs office for tax refund.

Thang also said that the import tax is only one of the advantages for Vietnamese goods to enter these markets. Whether the goods can enter the markets or not depends on its quality and technical standards of the importing country as well as the requirements of goods origin.

Tax refund procedures have been specified

Regarding tax refund after the goods have arrived in CPTPP countries, Deputy Director of Import-Export Tax Department under General Department of Customs, Dao Thu Huong, said that the Decree has provisions on handling overpaid tax for declarations registered from 14 January 2019 to the effective date of the Decree on the Tariff. If the goods are eligible for enjoying the preferential tax rate under the CPTPP Agreement, tax has been paid and the applicable tax rate at the time of registration of the declaration is higher than the preferential tax rate in the CPTPP, the overpaid tax shall be settled.

Huong said procedures and records to handle overpaid tax are described in Clause 64, Article 1 of Circular No. 39/2018 / TT-BTC on customs procedures; customs inspection and supervision; export tax, import tax and tax administration for import and export goods. Accordingly, within 12 months from the declaration being registered, traders can submit a tax refund application to the Customs. A tax refund application includes a written request to the customs office to handle overpaid tax according to provisions in Circular 39 and certificate of origin described by CPTPP. In the case of goods transhipped or transited at a third country other than CPTPP countries, the customs declarant must submit additional documents proving that the goods remain of the CPTPP origin.

After submitting all the above documents, the customs declarant will make an additional declaration for the initial declaration, the additional declaration is to adjust the tax rate at the registration time of the initial declaration (because all CPTPP members are members of the WTO, so at the registration time of initial declaration, the applicable tax rate is the MFN tax rate). In the additional declaration, the trader will amend the applicable tax rate and select the CPTPP tax rate and the Customs data processing system will automatically enter the corresponding CPTPP tax rate after the trader has completed the additional declaration and submitted the documents to the customs office through the e-customs system.

Within 5 days from the date of receiving the valid documents, the customs office shall compare it with the initial documents and check the accuracy of the declared information. If the information is sufficient, the Customs will issue a decision to handle overpaid tax for the trader.

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In addition, procedures for handling overpaid tax are also detailed in Clause 65, Article 1 of Circular 39, amending Circular 38. Specifically, when receiving the tax refund decision of the customs office, if the trader does not owe tax debts, the customs office will handle overpaid tax at the request. In cases where the trader requests a refund, the customs office will make a payment order so that the State Treasury to make the payment. If the trader decides to make up for the next declarations, the customs office will base on the tax amount arising in subsequent declarations to implement the clearing.

If the trader still owes tax, the customs office will compensate the overpaid tax according to the tax refund decision for the tax debts by the trader.