What are guidelines on import tax refund for goods imported to serve manufacture or business operation in Vietnam and the products are already exported?

Are goods imported to serve manufacture or business operation in Vietnam and the products are already exported eligible for import tax refund?

Based on point d, clause 1, Article 19 of the Law on Export and Import Duty 2016, the provisions for cases of export-import tax refund are as follows:

Tax Refund

1. Cases of tax refund:

...

d) Taxpayers who have paid tax on goods imported to serve manufacture or business operation purposes but have used them to produce export goods and have exported the products;

đ) Taxpayers who have paid tax on machinery, equipment, tools, and transport vehicles of organizations or individuals permitted to be temporarily imported and re-exported, except in cases rented to implement investment projects, construction, installation, or serve production, and when re-exported overseas or exported into a non-tariff zone.

The amount of import tax refunded is determined based on the remaining use value of the goods upon re-export, calculated according to the time of use and retention in Vietnam. In cases where the goods have no remaining use value, the paid import tax will not be refunded.

No tax refund for the amount of tax that is below the minimum level prescribed by the Government.

...

Therefore, taxpayers who have paid tax on goods imported to serve manufacture or business operation purposes but have used them to produce export goods and have exported the products are eligible for an import tax refund.

What are guidelines on import tax refund for goods imported to serve manufacture or business operation in Vietnam and the products are already exported? (Image from the Internet)

What are guidelines on import tax refund for goods imported to serve manufacture or business operation in Vietnam and the products are already exported?

Based on Article 36 of Decree 134/2016/ND-CP (amended by clauses 18 and 20, Article 1 of Decree 18/2021/ND-CP, with certain contents annulled by point a, clause 2, Article 2 of Decree 18/2021/ND-CP), provisions for import tax refund for goods imported to serve manufacture or business operation but have resulted in exported products are as follows:

(1) Conditions for import tax refund

Taxpayers who have paid import tax on goods imported to serve manufacture or business operation but have used them to produce export goods and have exported the products overseas or exported them into a non-tariff zone are eligible for an import tax refund.

(2) Imported goods eligible for import tax refund

Imported goods eligible for import tax refund include:

- Raw materials, supplies (including supplies for packaging or packaging for exporting products), components, and semi-finished products imported directly constituting export products or directly participating in the process of producing export goods, but not directly transforming into goods;

- Finished products imported for attachment, assembly into export products, or incorporated into synchronized goods with export products;

- Components and spare parts imported for warranty purposes for export products.

(3) Basis for determining goods eligible for import tax refund

- Organizations or individuals manufacturing export goods must have manufacturing facilities on Vietnamese territory; have ownership or use rights over machinery and equipment at the production facility suitable for the imported raw materials, supplies, components used to produce export goods;

- The value or quantity of imported raw materials, supplies, components refunded is the value or quantity of the imported raw materials, supplies, components actually used to produce the actual exported products;

- The exported product has undergone customs procedures under the export production model;

- Organizations or individuals directly or entrustingly import goods, and export products.

Taxpayers are responsible for accurately and honestly declaring on the export customs declaration about products exported from previously imported goods.

(4) Formula for calculating the refunded import tax amount

The refunded import tax amount is determined by the allocation method according to the following formula:

Refunded import tax amount (corresponding to actually exported products) = (Export product value / Total value of all acquired products) x Total import tax amount of imported raw materials, supplies, components

The value of exported products is determined by the quantity of products actually exported multiplied (x) by the taxable value of the exported goods.

Note:

- In cases where one type of raw material, supplies, components is imported for production and results in two or more types of products, and only one type is exported, import tax is refunded for the portion of the raw materials, supplies, components constituting the exported product based on the total value of all acquired products.

- The total value of all acquired products is the sum of the export product's value and the sales value of domestically consumed products. The export product's value does not include the value of domestically purchased raw materials, supplies, components constituting the export product.

(5) Import tax refund dossier

The import tax refund dossier includes:

(i) Official Dispatch requesting an export tax refund and import tax refund for export or import goods sent through the customs authority's electronic data processing system based on information criteria in Form No. 01 Appendix VIIa or an official letter requesting Export and Import Duty refund as per Form No. 09 Appendix VII issued with Decree 134/2016/ND-CP: 01 original copy.

(ii) Payment vouchers for export and import goods if already paid: 01 copy

(iii) Export and import contracts and invoices according to export and import contracts for the purchase and sale of goods; entrusted export and import contracts if it is a form of entrusted export, import: 01 copy

Taxpayers declare on the export customs declaration information about contract number, date, name of the partner purchasing the goods.

(iv) Report on tax calculation of imported raw materials, supplies, components (as per Form No. 10 in Appendix VII issued with Decree 134/2016/ND-CP).

The import tax amount of raw materials, supplies, components refunded must correspond to the quantity, type of imported raw materials, supplies, components actually used to produce the actual exported product.

(v) Processing contract signed with foreign clients (for cases of importing raw materials, supplies, components to produce products, then using these products to process export goods under a processing contract with overseas clients): submit 01 copy;

(6) The procedures for submitting, receiving, processing the tax refund dossier are implemented according to the legal provisions on tax management.

Which entities are eligible for import tax refund for goods imported to serve manufacture or business operation in Vietnam and the products are already exported?

Based on clause 1, Article 36 of Decree 134/2016/ND-CP, it is stipulated that taxpayers who have paid import tax on goods imported to serve manufacture or business operation but have used them to produce export goods and have exported the products overseas or to a non-tariff zone are eligible for an import tax refund.

Thus, the person eligible for import tax refund for goods imported to serve manufacture or business operation in Vietnam and the products are already exported is the import taxpayer.

Additionally, based on Article 3 of the Law on Export and Import Duty 2016, import taxpayers include the following entities:

(1) Owners of imported goods.

(2) Organizations entrusted with imports.

(3) Exit and entry individuals having imported goods, sending or receiving goods through Vietnamese borders and customs.

(4) Persons authorized, guaranteed, and pay tax on behalf of taxpayers, including:

- Customs procedure agents in cases where they are authorized by taxpayers to pay import taxes;

- Enterprises providing postal services, international express delivery services in cases where they pay taxes on behalf of taxpayers;

- Credit institutions or other organizations operating under the Law on Credit Institutions in cases where they guarantee and pay taxes on behalf of taxpayers;

- People authorized by goods owners in cases where the goods are gifts from individuals; luggage sent before or after the trip by travelers exiting, entering;

- Branches of enterprises authorized to pay taxes on behalf of enterprises;

- Others authorized to pay taxes on behalf of taxpayers according to the law.

(5) People purchasing, transporting goods within the tax exemption quota of border residents but do not use for production, consumption and sell in the domestic market and foreign traders allowed to do businesses in export, import goods in border markets under legal provisions.

(6) People with imported goods that are not subject to tax or are exempt from tax but later fall into taxable categories according to legal provisions.

(7) Other cases as prescribed by law.