Tax reform strategy: What are amendments to regulations on indirect export in Vietnam?

What is indirect export in Vietnam?

Currently, there is no specific legal definition for the concept of on-the-spot import and export. However, indirect export can be understood as a form where goods produced by enterprises in Vietnam are sold to foreign traders but are delivered to another enterprise in Vietnam as designated by the foreign trader.

This means that goods do not need to leave the territory of Vietnam but only need to move from the manufacturing enterprise to the domestic receiving enterprise. This form helps to save transportation costs, time and also enjoys many tax benefits.

According to Clause 1, Article 86 Circular 38/2015/TT-BTC, indirect export include:

- Processed products; leased or borrowed machinery and equipment; surplus materials and supplies; scrap and defective products under the processing contract;

- Goods traded between domestic enterprises and export processing enterprises, enterprises in non-tariff zones;

- Goods traded between Vietnamese enterprises and foreign organizations and individuals that do not have a presence in Vietnam but are designated by foreign traders to deliver and receive goods with other enterprises in Vietnam.

Tax reform strategy: What are amendments to regulations on indirect export in Vietnam? (Image from the Internet)

Tax reform strategy: What are amendments to regulations on indirect export in Vietnam?

According to point c, Clause 1, Section 3, Article 1 Decision 508/QD-TTg in 2022, the implementation solution for the tax policy reform strategy for export tax and import tax according to the tax system reform strategy until 2030 is as follows:

- Continue to narrow down the number of tax rate levels to simplify the import tariff schedule, striving to reduce the number of import tax rates from the current 32 levels to about 25 levels by 2025 and 20 levels by 2030;

- Research, amend, and supplement export tax and import tax policies to promote exports, encourage the increase of domestic value, and limit the export of raw resources and minerals;

- Have appropriate preferential policies to promote the development of key industries, supporting industries, and priority areas, ensuring consistency with the country's socio-economic development orientations in each period and international commitments;

- Research and amend regulations on indirect export and regulations related to non-tariff zones to ensure synchronization with relevant laws, limit trade fraud, and tax evasion.

Accordingly, the implementation of the tax policy reform strategy for export tax and import tax will research and amend regulations on indirect export to ensure synchronization with relevant laws, limit trade fraud, and tax evasion.

What documents are required to apply for tax reduction for exports and imports in Vietnam?

According to Clause 2, Article 32 Decree 134/2016/ND-CP (amended by Clause 16, Article 1 Decree 18/2021/ND-CP and point d, Clause 20, Article 1 Decree 18/2021/ND-CP), the application dossier for export and import tax reduction includes:

(1) Official Dispatch requesting tax reduction sent by the taxpayer through the customs data processing system according to the information criteria in Form No. 3 Appendix VIIa or an official letter requesting tax reduction according to Form No. 08 in Appendix VII issued together with Decree 18/2021/ND-CP: 01 original copy;

(2) Insurance contract, indemnity notice from the insurance organization (if any). If the insurance contract does not include indemnity for taxes, there must be a confirmation from the insurance organization; contract or settlement report with compensation from the transport carrier for the loss caused by the carrier (if any): 01 photocopy;

(3) Damage cause verification report from the relevant authority in the area where the damage occurred (damage verification report from the local fire prevention and fighting authority where the fire occurred; verification documents from one of the following authorities or organizations: Commune-level Police; Commune-level People's Committee; Industrial Park Management Board; Export Processing Zone Management Board; Economic Zone Management Board; Border Gate Management Board; Maritime Administration; Aviation Administration where the force majeure event such as natural disasters, epidemics, or unexpected accidents causing damage to imported raw materials, machinery, and equipment occurred): 01 original copy.

(4) Inspection certificate from the inspector service business regarding the quantity of lost goods or the actual loss rate of goods: 01 original copy.