Goods stuck at Lang Son due to China's new C/O

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The centralised inspection yard at Tan Thanh-Lang Son Border Gate. Photo: H.K

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According to Tuong, in the process of receiving imported goods dossiers, from 9 am on August 20, many enterprises submitted new C/O form E. Through the inspection, border gate customs units realised the inconsistency with provisions in Circular 36/2010/ TT-BCT of the Ministry of Industry and Trade.

According to enterprises, from August 20, the Chinese C/O form E issuer has issued a new form of C/O form E. Lang Son Customs checked the C/O submitted by enterprises and identified that the new C/O form E match with the form stipulated in Circular 12/2019/TT-BCT dated July 30, 2019 of the Ministry of Industry and Trade on rules of goods origin in the Framework Agreement on comprehensive economic cooperation between the Association of Southeast Asian Nations and the People's Republic of China.

However, this Circular 12/2019/TT-BCT will take effect from September 12, 2019. In particular, the C/O form E in Appendix II attached to Circular 12/2019/TT-BTC has some differences compared to the current C/O form. Therefore, border gate customs units have no basis to accept new C/O forms submitted by enterprises.

To better understand the issue, Customs news contacted Mr. Nguyen Van Dung who works at a broker specializing in customs procedures for enterprises engaged in import and export activities through Tan Thanh Border Gate. Dung said, on August 20, the Chinese competent authority issued the new C/O form E to enterprises different from the current C/O form. This new C/O form E is applied to shipments since August 20. However, when the customs broker submitted this new C/O to Vietnamese Customs authority, it was not accepted.

“The Customs Authority explained that Circular 12/2019/TT-BCT of the Ministry of Industry and Trade will take effect from 12 September, 2019. Therefore, if enterprises want to clear shipments, they should pay taxes in advance and then supplement C/O. When the Circular takes effect, enterprises will submit C/O according to regulations to enjoy tax refund and tax incentives,” Dung said.

The representative of Tan Thanh Customs Branch (Lang Son Customs Department) said that the Chinese authority applied the new C/O form E without notification so while waiting for instructions from relevant agencies, the branch directed enterprises to pay taxes in advance to clear the shipment and then supplement the C/O to enjoy preferential treatment. However, many enterprises disagreed.

Currently, enterprises submit C/O form E for all fruit shipments imported through Tan Thanh Border Gate to enjoy special preferential tax. This is an agricultural product that needs to be cleared quickly, so this regulation is causing concern for enterprises importing goods from China.

New C/O form E issued by Chinese authority since August 20.

Waiting for specific instructions

China’s sudden application of the new C/O form E without notification has caused concern to the business community and confusion to Lang Son Customs Department. Currently, Lang Son Customs Department has recorded the problems faced by enterprises and reported them to the General Department of Vietnam Customs for further instructions.

Mr. Do Thanh Tuyen, representative of HAB Company, a company specializing in importing aluminium bars through Huu Nghi Border Gate Customs Branch, said that on August 20, when the company was issued the C/O form by the Chinese authority, the company submitted to Huu Nghi Border Gate Customs Branch to import goods. Huu Nghi Customs guided the company to pay taxes in advance and then supplement C/O for the shipment. However, as a company specializing in importing aluminium bars, the value of each shipment is VND 4 to 5 billion, if paying taxes in advance, the company must pay from VND 400 to 500 million on each shipment. This is too much for the company. Thus, the company is waiting for instructions from Vietnamese competent authorities and the response from Chinese competent authorities.

Mr. Hoang Duy Hiep, representative of Bach Viet Lang Son Company Limited, said that his company has problems with two shipments of artificial grass and fruit, because currently China does not issue the former C/O form E. If the company pays taxes in advance and then supplement C/O, the tax amount will be very high. If the goods are not cleared quickly, they will be damaged and the cost for storage is from VND5-10 million per day. Therefore, the company hopes that the Customs authority will provide solutions soon.

Mr. Tran Bang Toan, Manager of Huu Nghi Customs Branch (Lang Son Customs Department) said that the Branch has instructed enterprises to pay taxes in advance, then supplement C/O and carry out tax refund procedures. However, currently the Customs has no specific instructions due to China suddenly applying a new C/O form E.

Toan said that with the sudden change from China, import and export enterprises are suffering losses because the cost for storage of shipments at the border gate will increase and they will be fined for the late delivery of goods to their partners. If enterprises carry out the import procedures from now to September 12 (the effective date of Circular 12/2019/TT-BCT), they must pay a large amount of tax.