Handling administrative fines if failing to declare and pay VAT at the time of on-spot import

Facing the petition of Viet Tien Garment Joint Stock Corporation on the payment of the monetary penalty for not declaring and paying value-added tax when carrying out on-spot import, according to the General Department of Vietnam Customs, the declaration and payment of value-added tax has been clearly specified in legal documents in the field of customs.

Ninh Binh Customs officers review data on enterprises. Photo: H.Nụ

At Point b, Section 4, Part 2 of Official Dispatch No. 2687/TCHQ-TXNK dated June 1, 2021 of the General Department of Vietnam Customs, instructing that products that are imported on the spot will be registered under another form (not the type of processing), taxpayers use the type code of import business (A11), import business and production (A12) to declare and pay import tax.

In case the on-spot importer has paid import tax on goods for production and brought imported products into the production of exported goods and has actually exported the product to a foreign country or into the non-tariff zone, the amount of paid import tax shall be refunded in accordance with the provisions of Article 36 of Decree 134/2016/ND-CP.

In Point c, Clause 1, STT31 of Official Letter No. 5529/TCHQ-TXNK dated November 24, 2021 of the General Department of Vietnam Customs, instructing: “In case goods that are imported on the spot for export production and are subject to import tax and VAT, declaring type code A11, A12 but the importer registered the declaration under the type code E31 and already paid import tax but has not yet paid value-added tax, the taxpayer should make additional declaration of value-added tax as prescribed in Article 20 of Circular 38/2015/TT-BTC as amended and supplemented in Clause 9, Article 1 of Circular 39/2018/TT-BTC”.

Compared with the above regulations and instructions, the General Department of Vietnam Customs said that, in case goods of on-spot import for export production, it was subject to import tax and value-added tax. Thus they must declare according to the type code A11, A12. However, the importer has paid import tax but has not yet paid value-added tax. Therefore, the taxpayer shall make an additional declaration of value-added tax as prescribed in Article 20 of Circular 38/2015/TT- BTC is amended and supplemented in Clause 9 Article 1 of Circular 39/2018/TT-BTC.

Regarding sanctioning of administrative violations, the General Department of Vietnam Customs has issued Official Letter No. 756/TCHQ-TXNK dated March 7, 2022 instructing Quang Ngai Customs Department to implement for similar cases.

Accordingly, the act of failure to declare and pay value-added tax of on-spot importers at the time of carrying out on-spot importation of goods for export production is not subject to the case of not sanctioning administrative violations as prescribed in Clause 11, Article 16 of the Law on Tax Administration No. 38/2019/QH14; Clause 3, Article 6 of Decree 128/2020/ND-CP of the Government.