Shall import-export duties be reduced for goods that are damaged under customs supervision in Vietnam?

Shall import-export duties be reduced for goods that are damaged under customs supervision in Vietnam?

Based on Article 18 of the 2016 Law on Export and import duties provisions on the reduction of import and export duties are as follows:

- Exported and imported goods under the supervision of customs authorities, if damaged or lost and certified by a competent agency or organization, are eligible for tax reduction.

The tax reduction level corresponds to the actual loss ratio of the goods. In cases where exported and imported goods are completely damaged or lost, taxes are exempted.

- The procedure for tax reduction is conducted in accordance with tax management laws.

Therefore, according to the above regulation, goods that are damaged under customs supervision will be eligible for import-export duty reduction.

What are procedures for import-export duty reduction in Vietnam in 2024?

The procedure for tax reduction is specified in Article 32 of Decree 134/2016/ND-CP, amended and supplemented by Clause 16 Article 1 Decree 18/2021/ND-CP. To be specific:

Documents requesting tax reduction:

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

- Insurance contract, compensation notice from the insurance organization (if any), in case the insurance contract does not include tax compensation, there should be confirmation from the insurance organization; contract or compensation agreement from the carrier in cases of damage caused by the carrier (if any): 01 copy;

- Damage cause confirmation record by the functional authority at the location where the damage occurred (fire incident confirmation record by the local fire police authority where the fire occurred; confirmation document by one of the relevant agencies or organizations: Commune-level police authority, Commune-level People's Committee, Industrial Zone Management Board, Export Processing Zone Management Board, Economic Zone Management Board, Border Gate Management Board, Maritime Authority, Aviation Authority where a natural disaster, catastrophe, epidemic, unexpected accident causing damage to imported raw materials, machinery, equipment occurred): 01 original.

- Inspection certificate by a merchant offering inspection services on the quantity of lost goods or the actual loss ratio of goods: 01 original.

Place to submit documents:

The Customs Sub-department where customs clearance is conducted.

Timing of submission:

- At the time of customs clearance; or

- No later than 30 working days from the date of having a confirmation document on the extent of damage, loss, damage;

Resolution timeline:

- In the case where, at the time of customs clearance, the taxpayer submits a complete dossier as prescribed, the Customs Sub-department checks the dossier, checks the actual goods, checks the tax reduction conditions, and implements tax reduction within the customs clearance processing time.

- In case the taxpayer submits the dossier after the time of customs clearance:

Within 30 days from the date of receiving the complete dossier, the Provincial/City Customs Department is responsible for preparing the dossier, checking information, appraising the accuracy and completeness of the dossier, and deciding tax reduction according to Sample No. 12 Appendix VII issued with this Decree or notifying the taxpayer of the reasons for not being eligible for tax reduction and the payable tax amount. If the dossier is incomplete, the customs authority notifies the taxpayer within 03 working days from the date of receiving the dossier.

If additional checks on goods already through the customs supervision area are needed to have sufficient grounds for tax reduction resolution, a post-clearance audit decision is issued at the taxpayer's headquarters, undertaking the tasks stipulated at this point within a maximum of 40 days from the date of receiving the complete dossier.

What is the list of 23 import-export goods exempt from tax in Vietnam?

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

[1] Exported and imported goods of foreign organizations and individuals entitled to preferential rights and exemptions in Vietnam within the limits prescribed by international treaties to which the Socialist Republic of Vietnam is a member; goods within the duty-free baggage allowance of departing and arriving passengers; imported goods for sale at duty-free shops.

[2] Moving assets, gifts within limits from foreign organizations and individuals to Vietnamese organizations and individuals or vice versa.

Moving assets, gifts exceeding the duty-free limit in quantity or value must pay taxes for the excess portion, except where the receiving unit is an agency or organization whose operating budget is secured by the state budget and authorized to receive or for humanitarian and charitable purposes.

[3] Goods traded across borders by border residents belonging to the list of goods and within limits to serve production and consumption of border residents.

If purchased and transported within limits but not used for production or consumption of border residents and export, import goods of foreign traders allowed to trade at border markets must pay taxes.

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

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

[6] Raw materials, supplies, components imported for processing exported products; imported finished products to attach to processed products; processed exported products.

Processed exported products made from domestic raw materials subject to export tax are not exempted from tax corresponding to the domestic raw material value in the processed products.

Exported goods for processing and then re-imported are exempted from export tax and import tax calculated on the export material value forming the processed product. For exported goods for processing and then re-imported that are natural resources, minerals, products with total resource, mineral value plus energy cost accounting for 51% of product cost or more, are not exempt from tax.

[7] Raw materials, supplies, components imported for the production of exported goods.

[8] Products manufactured, processed, recycled, assembled in non-tariff zones without using imported raw materials, components from abroad when importing into the domestic market.

[9] Goods temporarily imported, re-exported, or temporarily exported, re-imported within a certain time, including:

- Goods temporarily imported, re-exported, temporarily exported, re-imported for organizing or participating in fairs, exhibitions, product introduction events, sports, cultural, art events or other events; machinery, equipment temporarily imported, re-exported for testing, research and development of products; machinery, equipment, professional tools temporarily imported, re-exported, temporarily exported, re-imported for performing tasks for a certain time or serving processing for foreign traders, except in cases of machinery, equipment, tools, vehicles, means of organizations, individuals licensed to temporarily import, re-export for implementing investment projects, construction, installation works, production serving.

- Machinery, equipment, components, spare 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 moored at Vietnamese ports.

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

- Round-trip means of temporary import, re-export or temporary export, re-import to contain export, import goods.

- Goods for temporary import, re-export business within the temporary import, re-export period (including extension period) guaranteed by a credit institution or have deposited an amount equivalent to the import tax amount of temporarily imported, re-exported goods.

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

[11] Imported goods for creating fixed assets of subjects eligible for investment incentives under investment law, including:

- Machinery, equipment; components, spare parts for synchronous assembly or use with machinery, equipment; raw materials, supplies for manufacturing machinery, equipment or manufacturing components, parts, accessories of machinery, equipment.

- Special-purpose vehicles in the technology line directly serving the production activities of the project.

- Construction materials not yet produced domestically.

Import tax exemption for imported goods under this clause applies to both new investment projects and expanded investment projects.

[12] Plant varieties; animal varieties; fertilizers, pesticides not yet produced domestically, necessary imports according to regulations by competent state management agencies.

[13] Raw materials, supplies, components not yet produced domestically imported for the production of investment projects belonging to the list of industries and sectors of special investment incentives or areas with particularly difficult socio-economic conditions under investment law, high-tech enterprises, scientific and technological enterprises, science and technology organizations are exempted from import tax within 5 years, from the start of production.

Import tax exemption under this clause does not apply to projects for mineral exploitation; projects producing products with total resource, mineral value plus energy cost accounting for 51% of product cost or more; projects producing and trading goods and services subject to excise tax.

[14] Raw materials, supplies, components imported not yet produced domestically for projects producing, assembling prioritized research, manufacturing medical equipment are exempted from import tax within 5 years, from the start of production.

[15] Imported goods serving petroleum activities, including:

- Machinery, equipment, spare parts, special-purpose vehicles necessary for petroleum activities, including temporary import, re-export cases.

- Components, parts, accessories for synchronous assembly or use with machinery, equipment; raw materials, supplies for manufacturing machinery, equipment or manufacturing components, parts, accessories of machinery, equipment necessary for petroleum activities.

- Necessary supplies for petroleum activities not yet produced domestically.

[16] Projects, shipbuilding facilities in the list of incentivized industries under investment law are exempt from tax for:

- Imported goods to create fixed assets of shipbuilding facilities, including: machinery, equipment; components, parts, accessories for synchronous assembly or use with machinery, equipment; raw materials, supplies for manufacturing machinery, equipment or manufacturing components, parts, accessories of machinery, equipment; transportation vehicles in the technology line directly serving shipbuilding; construction materials not yet produced domestically.

- Imported goods are machinery, equipment, raw materials, supplies, components, semi-finished products not yet produced domestically for shipbuilding.

- Export ships.

[17] Machinery, equipment, raw materials, supplies, components, parts, accessories imported serving the production of currency, coin.

[18] Imported goods are raw materials, supplies, components not yet produced domestically directly serving the production of information technology products, digital content, software.

[19] Exported, imported goods to protect the environment, including:

- Specialized machinery, equipment, vehicles, tools, and materials imported not yet produced domestically for collecting, transporting, processing, treating wastewater, waste, emissions, monitoring and analyzing the environment, producing renewable energy; handling environmental pollution, responding, resolving environmental incidents.

- Exported products produced from recycling, waste treatment activities.

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

[21] Imported goods are machinery, equipment, parts, materials, specialized documents, scientific publications directly used for scientific research, technology development, technology incubation, science and technology enterprise incubation, technology renovation.

[22] Imported specialized goods serving directly for security, defense, of which specialized vehicles must be types not yet produced domestically.

[23] Exported, imported goods for ensuring social welfare, overcoming consequences of natural disasters, catastrophes, epidemics, and other special cases.