Is tax reduction apply to goods lost during customs supervision in Vietnam?

Is tax reduction apply to goods lost during customs supervision in Vietnam?

Based on Article 18 of the Law on Export and Import duties 2016, the regulation on the reduction of export and import tax is as follows:

- In cases where exported or imported goods are damaged or lost during customs supervision and these incidents are certified by an authorized agency or organization, a tax reduction may be granted.

The level of tax reduction is proportional to the actual loss ratio of the goods. In cases where the exported or imported goods are completely damaged or lost, taxes are not required to be paid.

- Tax reduction procedures are carried out in accordance with the law on tax administration.

Thus, according to the above regulation, goods lost during customs supervision are eligible for a reduction of export and import taxes.

The amount of reduction correlates with the actual loss ratio of the goods. In cases where the exported or imported goods are entirely damaged or lost, no taxes need to be paid.

What is the procedure for export and import duty reduction for goods lost during customs supervision in Vietnam?

The procedure and steps for tax reduction are stipulated in Article 32 of Decree 134/2016/ND-CP, as amended and supplemented by Clause 16 Article 1 of Decree 18/2021/ND-CP. Specifically:

*Documents required for Tax Reduction Application:

- An Official Dispatch requesting tax reduction sent by the taxpayer through the electronic data processing system of the customs authority according to the information criteria at Form No. 3 Appendix VIIa or a letter requesting tax reduction according to Form No. 08 in Appendix VII issued with this Decree: 01 original copy;

- Insurance contract, compensation payment notice from the insurance organization (if any), in cases where the insurance contract does not include tax compensation, there must be confirmation from the insurance organization; contract or compensation agreement with the carrier in case of loss caused by the carrier (if any): 01 photocopy;

- Certified damage report from competent agencies at the location where the damage occurred (e.g., fire report from the local fire police agency; certification from one of the following agencies or organizations: Commune, Ward, Commune-level Town Police; People's Committee of Commune, Ward, Commune-level Town; Industrial Zone Management Board; Export Processing Zone Management Board; Economic Zone Management Board; Border Gate Management Board; Maritime Port Authorities; Aviation Port Authorities where natural disasters, catastrophes, pandemics, or unexpected accidents cause damage to imported raw materials, machinery, equipment): 01 original copy.

- Inspection certificate from a certified inspection service provider detailing the quantity of goods lost or the actual loss percentage of the goods: 01 original copy.

* Procedure

Where to submit documents:

Sub-department of Customs where the customs procedures are processed.

Timing of submission:

- At the time of customs clearance; or

- No later than 30 working days from the date of receiving the confirmation document concerning the extent of damage, loss, or injury;

Resolution timeline:

- If at the time of customs procedures, the taxpayer submits complete documentation as required, the Sub-department of Customs will check the documents, conduct actual goods inspection, verify tax reduction conditions, and process tax reduction within the customs clearance timeframe.

- If the taxpayer submits documentation after the time of customs procedure:

Within 30 days from the receipt of complete documentation, the Provincial/Municipal Customs Department has the responsibility to prepare the documentation, verify the information, assess the accuracy and completeness of the documentation, and decide on tax reduction according to Form No. 12 Appendix VII issued with this Decree or notify the taxpayer of the reasons for not qualifying for tax reduction and the amount of tax payable. If documentation is incomplete, the customs authority will inform the taxpayer within 3 working days from the date of document receipt.

In cases where a physical inspection of goods outside the customs supervision area is needed to resolve tax reduction, a post-clearance inspection decision will be issued at the taxpayer's headquarters to carry out the tasks stipulated at this point within a maximum period of 40 days from the date of receiving full documentation.

Is tax reduction apply to goods lost during customs supervision in Vietnam? (Image from the Internet)

What is the summary of imports and exports eligible for tax exemption in Vietnam?

Based on Clause 17 Article 16 of the Law on Export and Import duties 2016, the regulations are as follows:

[1] Exported or imported goods by foreign organizations or individuals enjoying privileges and immunities in Vietnam in accordance with international treaties which the Socialist Republic of Vietnam is a member; items within duty-free luggage allowances of people on exit and entry; goods imported to be sold at duty-free shops.

[2] Relocating assets, gifts, and presents within the limits of foreign organizations and individuals for Vietnamese organizations and individuals or vice versa.

Relocating assets, gifts, and presents exceeding the duty-free allowance must pay tax on the excess, except where the recipient is an institution or entity funded by the state budget and authorized by competent authorities to accept, or in humanitarian, charitable cases.

[3] Goods traded, exchanged across borders by border residents fall within the list of goods and quotas for production and consumption by border residents.

If goods purchased or transported within the quota are not used for production or consumption by border residents and are exported, imported by foreign traders permitted to do business at border markets, tax is payable.

[4] Goods exempted from export and import taxes under international agreements of which the Socialist Republic of Vietnam is a member.

[5] Goods with a value or tax amount below the minimum threshold.

[6] Imported materials, supplies, components for processing export products; finished products imported for incorporation into processed products; processed export products.

Processed export products manufactured with domestic materials subject to export tax do not get tax exemption for the value of the domestic materials incorporated in the export product.

Goods exported for processing, then imported, are exempt from export and import duties on the value of exported raw materials constituting the processed product. Goods exported for processing, then imported as resources, minerals, products comprising more than 51% resource, mineral content plus energy costs in product costs are not exempt.

[7] Imported materials, supplies, components for producing export goods.

[8] Goods produced, processed, recycled, assembled in tax-free zones, not using imported materials or components from abroad when imported into the domestic market.

[9] Temporarily imported, re-exported, or temporarily exported, re-imported goods within a certain period, including:

- Goods temporarily imported, re-exported, temporarily exported, re-imported for organizing or participating in fairs, exhibitions, product introductions, sports, cultural, or artistic events, or other events; machinery, equipment temporarily imported, re-exported for testing, R&D; machinery, equipment, professional tools temporarily imported, re-exported, temporarily exported, re-imported for jobs within a certain time or for processing for foreign traders, except where machinery, equipment, tools, transport means temporarily imported, re-exported to execute investment projects, construct buildings, serve production;

- Machinery, equipment, components, and parts temporarily imported to replace, repair foreign ships, aircraft or temporarily exported to replace, repair Vietnamese ships, aircraft abroad; goods temporarily imported, re-exported to supply foreign ships, aircraft docked at ports in Vietnam;

- Goods temporarily imported, re-exported or temporarily exported, re-imported for warranty, repair, replacement;

- Cyclical shipping containers temporarily imported, re-exported or temporarily exported, re-imported for containing exported, imported goods;

- Goods for temporary business import, re-export within the temporary import, re-export period (including extension time) that are credit guaranteed or have provided a deposit equivalent to the import duties of temporarily imported, re-exported goods.

[10] Non-commercial goods in the following cases: samples; photos, films, models replacing samples; advertising publications in small quantities.

[11] Imported goods for creating fixed assets of beneficiaries enjoying investment incentives according to investment law regulations, including:

- Machinery and equipment; components, details, loose parts, accessories for assembling synchronously or using synchronously with machinery, equipment; materials, supplies for making machinery, equipment or components, details, loose parts, accessories of machinery, equipment;

- Special-use transport means in technology chains directly used for production activities of the project;

- Construction materials not produced domestically.

Import tax exemptions for goods imported under this clause apply to both new investment projects and expansion projects.

[12] Plant varieties; animal breeds; fertilizers, plant protection drugs not produced domestically and necessary for import as regulated by competent state management agencies.

[13] Imported materials, supplies, components not produced domestically for the production of investment projects under the list of specially encouraged investment sectors or areas with particularly difficult socio-economic conditions according to investment law, high-tech enterprises, science and technology enterprises, technology science organizations are exempt from import tax for 05 years from production initiation.

Import tax exemptions in this clause do not apply to mineral extraction investment projects; projects producing products where the total value of resources, minerals plus energy costs account for more than 51% of product costs; projects producing, trading goods, services subject to special consumption tax.

[14] Imported materials, supplies, components not produced domestically for the production of investment projects for manufacturing, assembling prioritized research and manufacturing medical equipment are exempt from import tax for 05 years from production initiation.

[15] Imported goods for petroleum activities include:

- Machinery, equipment, accessory parts, special-use transport means necessary for petroleum activities, including temporary import and re-export cases;

- Components, details, loose parts, accessories for assembling synchronously or using synchronously with machinery, equipment; materials, supplies for making machinery, equipment or components, details, loose parts, accessories of machinery, equipment necessary for petroleum activities;

- Supplies necessary for domestic petroleum activities not produced domestically.

[16] Shipbuilding projects, facilities within the list of preferential sectors according to investment law regulations are exempt from taxes for:

- Imported goods for building fixed assets of the shipbuilding facility, including machinery, equipment; components, parts, accessories for synchronous assembly or use with machinery, equipment; materials, supplies for making machinery, equipment or components, parts, accessories of machinery, equipment; technology chain transport means directly serving shipbuilding activities; construction materials not produced domestically;

- Imported goods are machinery, equipment, materials, supplies, components, semifinished products not produced domestically for shipbuilding;

- Exported ships.

[17] Imported machinery, equipment, materials, supplies, components, parts, accessories for printing, minting money activities.

[18] Imported goods are raw materials, supplies, components not produced domestically, directly used for manufacturing information technology products, digital content, software.

[19] Exported, imported goods for environmental protection include:

- Special-use machinery, equipment, means, tools, materials imported not produced domestically for collecting, transporting, handling, processing wastewater, waste gas, waste, monitoring and analyzing the environment, producing renewable energy; handling environmental pollution, responding to, treating environmental incidents;

- Exported products are produced from recycling, waste treatment activities.

[20] Imported dedicated goods not produced domestically serving education directly.

[21] Imported goods are machinery, equipment, accessories, materials, supplies, scientific publications used directly for scientific research, technology development, technology incubation activities, enterprise and science, and technology incubation, technology innovation.

[22] Imported special-purpose goods serving directly for security, defense, wherein special-use transport means must be types not produced domestically.

[23] Exported, imported goods to ensure social security, overcoming natural disasters, catastrophes, pandemics, and other special cases.