Troubleshooting implementation of tax administration for goods processed and produced for exports

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Operations at the Investment and Processing Customs Branch, Ho Chi Minh City Customs Department. Photo: ST

Encountering tax policies for cases of importing raw materials and supplies for export production and then outsourcing some stages, Ho Chi Minh City Customs Department reflected the case that enterprises import goods for export production, enterprises do not directly produce but hire its subsidiaries (or affiliated companies) to re-process goods and then receive the finished goods for export according to the export production regime.

However, from September 1, 2016 when the Law on Import and Export Duties No. 107/2016 / QH13 took effect, because of unclear understanding of the regulations on conditions for tax exemption and tax refund, enterprises still import raw materials and supplies according to export production regime and then outsource and receive the finished goods for export.

Through checking the finalization report, the Customs agency has enough basis to identify imported materials and supplies, even though they are outsourced, but have been put into export production and actually exported out of the territory of Vietnam.

For other goods which are not imported in the on-the-spot export production regime, if they are re-exported out of the Vietnamese territory, the paid import duty shall be refunded by Customs. In the case when imported raw materials and supplies for production have actually been exported and are not consumed in the country, if they are not subject to tax exemption they must be taxable. So, what is the basis for tax collection, because actually the goods are not consumed in the Vietnamese market? The enterprises present full documents and vouchers to prove that their goods have been produced and exported, and the tax burden thus limits competitiveness in the international market and fails to encourage export production. If enterprises are subject to tax arrears, they will face difficulties to maintain export production, which may lead to complaints.

Responding to this question, the General Department of Customs said that the problem in which enterprises import goods for export production but do not directly produce and outsource, then receive the finished goods for export in the export production regime, was reported to the Ministry of Finance for consideration and amendment and supplement to Article 12 of the Decree amending and supplementing Decree No. 134/2016 / ND-CP.

In the immediate future, the Department should strictly comply with the provisions of Article 12 of Decree No. 134/2016 / ND-CP and guiding documents for the implementation, including Official Dispatch No. 4787 / TCHQ-TXNK dated August 15, 2018 of the General Customs Department.

At Dong Thap Customs Department, when enterprises open import declarations for raw materials for processing for foreign partners, they encounter difficulties in the declaration of Import Tariff in accordance with the guidance at Point 1.80 of information criteria "Import Tariff Schedule" described in Appendix I replacing Appendix II Circular 38/2015 / TT-BTC guiding the declaration "For goods subject to tax exemption, it is not allowed to declare the tariff code B30 and must select the tariff code which is equivalent to the above mentioned import tax rate”.

However, Point a, Clause 3, Article 31 of Decree No. 134/2016 / ND-CP stipulates the procedures for duty exemption: The taxpayer shall determine and declare the amount of tax-free goods and tax exempted (except tax payable on goods imported or exported for processing by the hirer) while following customs procedures and take responsibility under the law for such declaration.

Thus, Appendix I Circular No. 39/2018 / TT-BTC replacing Appendix II of Circular 38/2015 / TT-BTC guides the declaration of the Import Tariff for processing raw materials for foreign partners is not in line with Point a, Clause 3, Article 31 of Decree No. 134/2016 / ND-CP.

Accordingly, in order to comply with Point a, Clause 3, Article 31 of Decree 134/2016 / ND-CP, Dong Thap Customs proposes amendments and supplements to Point 1.80 of Information criteria "Import tariff Schedule" in Appendix I of Circular No. 39/2018 / TT-BTC replacing Appendix II of Circular 38/2015 / TT-BTC as follows: For goods subject to tax exemption (except for imported goods as processing raw materials for foreign partners), it is not allowed to declare the import tariff code B30, but must select the tariff code corresponding to the above-mentioned import tax rate.

Guiding this problem, the General Department of Customs said, according to the provisions of Circular No. 39/2018 / TT-BTC dated April 20, 2018 of the Ministry of Finance amending and supplementing a number of articles of Circular No. 38 / 2015 / TT-BTC, B30: tariff schedule applies to those who are not subject to import tax, accordingly, when enterprises declare the B30 tariff schedule , the "Tax rate" criteria does not need to be declared.

At STT1.80- information criteria "Import tariff schedule code" in Appendix I of Circular No. 39/2018 / TT-BTC replacing Appendix II Circular No. 38/2015 / TT-BTC guiding the declaration of "For goods subject to tax exemption, it is not allowed to declare the import tariff schedule code as B30, but must select the tariff schedule code corresponding to the above-mentioned import tax rate ”.

For goods to be processed for foreign traders: In the code table of import and export tax exemption used in the VNACCS, there are instructions on declaration of import and export tax exemption code as follows: "Using non-import and export taxable codes for goods which are imported goods for processing for foreign partners; processed products exported to foreign partners; exported goods for processing for Vietnamese side; and processed goods re-imported to Vietnamese side.

In the code table of non-import and export taxable goods used in VNACCS, there are instructions for declaration of non-taxable goods as follows: Code XNG81 - Imported goods for processing for foreign countries (subject to import tax exemption); code XNG82 - Processed goods for re-export to foreign partners (subject export tax exemption); code XNG83 - Exported goods for processing for Vietnamese side (subject to import tax exemption); code XNG84- Processed goods for re-import to Vietnam (subject to import tax exemption).

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Realizing the opinions of Dong Thap Customs Department, the General Department of Customs said that according to the code table of import and export tax exemption used in VNACCS, there are instructions for goods being goods imported / exported for processing, for re-import and export, using code of non-import and export taxable goods. For goods subject to tax exemption (except imported goods as raw materials for processing for foreign partners), it is not allowed to declare the B30 import tariff code, but must select the tariff code corresponding to the above-mentioned import tax rate. .