Tax exemptions under the new Law on export and import Duties

New Decree by the Government detailed tax exemptions as specified in Law No. 107 on export and import Duties. Photo: T.Trang.

Tax exemption under norms

Under Article 16 of the Law on export tax, import duty and tax exemption under the norms, 6 provisions in the Decree 134/2016 / ND-CP specify 7 cases of tax exemptions according to the following norms: import and export goods of foreign individuals and organizations that enjoy privileges and immunities in Vietnam under Vietnamese laws; luggage of people on exit and entry; movable assets of organizations and individuals; import gifts or presents; goods purchased by border residents; goods sent via courier services; goods with a minimum value and a minimum amount of tax payable.

Basically, the rules on the subject, criteria and procedures for the application of the exemptions under the norms inherit the current legal provisions which are implemented permanently under the Prime Minister's Decision (such as Decision 52/2015/QD-TTg dated 20-10-2015 on trades and consumptions among border residents, Decision 31/2015/QD-TTg dated 4-8-2015 on luggage norms, movable assets, gifts and presents, samples are free from tax, tax exemptions (non-taxable) and the international experiences in complying international commitments.

In addition, in order to maximum the efficiency of the Decree, cases exceeding duty-free quotas must pay all taxes prescribed by law, for excess goods and guarantee the legal provisions of the policy on ex-import goods at the time of export or import.

Tax exemption for imported goods for processing export products

Decree 134/2016/ND-CP specifies regulations on imported goods for processing export products in paragraph 6, article 16 of the Law on export & import duty on the basis of current regulations. Customs procedures dealing with surplus scrap, waste and raw materials, and materials in outsourcing processes are stipulated in Circular 38/2015/TT-BTC of the Ministry of Finance. Accordingly, raw materials, and excess materials imported for processing must not exceed 3% of the total amount of raw material supplies and are exempt from Customs procedures for transfer and free from paying import duty, but must be declared and paid relevant taxes as prescribed by law.

To enhance legitimacy and guarantee the stability of the policy, the Decree stipulates the rate of scrap, waste and raw materials, and redundant materials during manufacturing and processing which are eligible for tax exemption on the basis of fundamental contents of the current regulations and appropriate adjustments in order to be consistent with the nature of the processed goods. In particular, Clause 4, Article 10 of the decree regulates: "surplus imported scrap, waste and raw materials and supplies for processing not exceeding 3% of the total amount of each material and supplies actually imported under processing contracts are exempt from import duty tax when they are sold for domestic consumption, but must be declared and paid VAT, excise tax, environmental protection tax (if any) to Customs authorities.”

For exported goods for processing, processed import products, as specified in Article 11 of the Decree: natural resources, minerals, products with a total value of natural resources and minerals plus the cost of energy accounted for less than 51% of the cost for processing export products are not exempt from export duty. The determination must comply with the provisions in Decree 100/2016/ND-CP dated 1-7- 2016 providing detailed regulations and guidelines for implementation of the Law amending and supplementing some articles of the Law on VAT, the Law on Special Consumption tax and the Law on tax Administration. At the same time, to comply with the Law on Tax Administration in implementing the self-responsibilities of taxpayers are stipulated at Point a, Clause 1, Article 11 of the draft decree: "Taxpayers must declare and determine the total value of natural resources and minerals plus costs less than 51% of energy prices before handling Customs procedures for export goods "

Tax exemption for imported goods for manufacturing export products

Clause 7 of Article 16 of the Law No. 107 on export and import duty regulates tax exemptions for imported materials, supplies and components for manufacturing export products. Accordingly, raw materials and materials for manufacturing exports which are subjected to import tax and tax refunds as stipulated in the current regulations are moved to non-tax. Moreover, Article 12 of the Decree also specifies the materials, supplies and exemption cases by type of manufacturing. Besides, cases of tax refunds according to current regulations are converted to exempt cases prescribed by Law on export and import duty in 2016.

Tax exemptions temporary import for export goods in a given period

According to Clause 9, Article 16 of the Law on export and import and Law No. 107 on tax exemption for temporary import for export goods or temporary export for import goods in a given period, cases of exemption are instructed as follows: temporary import for export goods or vice-versa for warranty, repair and replacement must not alter the shape, utilities and basic characteristics of the temporarily imported or temporarily exported goods and not create another (except for replacing the goods under the warranty conditions of the contract); Revolving means to store temporary import for re-export or temporarily exported for re-import goods are: empty containers with or without hooks; soft tub liners for containing liquid; other means can be used repeatedly to store goods for export and import.

Besides, as stipulated at the Point đ, Clause 9, Article 16 of the Law on export and import duty and in Article 13 of the Decree on the tax guarantee for temporarily imported for export goods in accordance with the provisions in Law of credit institutions and the law on tax administration, taxpayers can choose the form of deposit within the temporarily imported for export period (including the extension period). Moreover, enterprises also have to pay an amount equivalent to the tax of temporarily imported goods to the account of the Customs offices at the State Treasury. This amount is reimbursed upon the re-export of temporarily imported goods.