What is a tax-suspension warehouse? What are regulations on establishing tax-suspension warehouse locations in Vietnam?

What is a tax-suspension warehouse in Vietnam?

Based on Clause 9, Article 4 of the Law on Customs 2014, it is stipulated as follows:

Terminology Explanation

In this Law, the following terms are understood as follows:

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9. A tax-suspension warehouse is a warehouse used to store imported raw materials and supplies that have been cleared for customs but tax has not yet been paid by the tax-suspension warehouse owner for the production of export goods.

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Thus, it can be understood that a tax-suspension warehouse is a warehouse for storing materials that have been cleared but for which the tax-suspension warehouse owner has not yet paid production taxes.

Where must a tax-suspension warehouse be established in Vietnam?

Based on Clause 2, Article 62 of the Law on Customs 2014, it is stipulated as follows:

Conditions for establishing tax-suspension warehouses, tax suspension warehouses, and locations for gathering loose cargo

1. tax-suspension warehouses, locations for gathering loose cargo are established in the areas with the following zones:

a) Seaports, international civil airports, inland ports for the import, export of goods, land border gates, international intermodal railway stations;

b) Industrial zones, high-tech zones, non-tariff zones, and other areas as prescribed by law.

2. A tax-suspension warehouse is established within the area of the factory of the enterprise producing export goods.

3. The General Director of the General Department of Customs decides on the establishment, extension of operation time, temporary suspension, and termination of the operation of tax-suspension warehouses, tax suspension warehouses, and locations for gathering loose cargo.

4. The Government of Vietnam regulates the details of the establishment and operation of tax-suspension warehouses, tax suspension warehouses, and locations for gathering loose cargo.

So, a tax-suspension warehouse is established within the factory area of the enterprise producing export goods.

What is a tax-suspension warehouse? What are regulations on establishing tax-suspension warehouse locations in Vietnam? (Image from the Internet)

How is a tax-suspension warehouse recognized for an export enterprise with an export turnover of 40 million USD?

An enterprise producing export goods with an export turnover of 40 million USD or more, to be recognized as a tax-suspension warehouse, must meet the conditions outlined in Clause 2, Article 16 of Decree 68/2016/ND-CP as follows:

- Have an accounting system and information technology application that meets the standards of the state management agency to track, manage imported, exported, stored, and remaining goods in the warehouse;

- Located within the production facility area of the enterprise, separated from areas containing non-tax deferred raw materials and supplies, equipped with a surveillance camera system that meets the data exchange standards of the customs agency to monitor goods entering, exiting the tax-suspension warehouse.

- Have at least two consecutive years of exporting activity without violating customs and tax laws;

- Comply with accounting and statistical laws;

- Conduct payments via bank as prescribed by law.

In addition to the recognition procedure of the tax-suspension warehouse, follow Article 18 of Decree 68/2016/ND-CP which outlines the recognition procedure as follows:

Step 1: The enterprise submits its application directly, via postal service, or the electronic information receiving system of the customs authority to the General Department of Customs.

Application for recognizing a tax-suspension warehouse:

- An application document requesting recognition of a tax-suspension warehouse according to Form No. 01 in the appendix issued with Decree 68/2016/ND-CP: 01 original copy. (Download)

- The design layout of the tax-suspension warehouse area: 01 copy.

Step 2: Within 10 working days from the date of receiving the complete documents of the enterprise, the General Department of Customs completes the document inspection and warehouse inspection. After the inspection, the customs authority and the enterprise sign a record noting the inspection contents.

Step 3: Within 05 working days from the date of completing the document inspection and warehouse inspection, the General Director of the General Department of Customs issues a decision recognizing the tax-suspension warehouse or sends a written response to the enterprise if the conditions are not met as prescribed.

In the case of incomplete documents, within 05 working days from the date of receiving the enterprise’s documents, the General Department of Customs issues a notification requesting the enterprise to supplement the documents.

More than 30 working days from the notification date without a written response from the enterprise, the General Department of Customs has the right to cancel the documents.

What are the rights and obligations of a tax-suspension warehouse owner in Vietnam?

According to Clause 2 and Clause 4, Article 63 of the Law on Customs 2014, the tax-suspension warehouse owner has the following rights and obligations:

- Store goods that are imported raw materials and supplies for the production of export goods;

- Rearrange, repack, and move goods within the warehouse;

- Notify the customs authority in advance of the plan to bring raw materials and supplies from the tax-suspension warehouse into production;

- Every 03 months, provide a written report to the Customs Department managing the tax-suspension warehouse about the status of goods and warehouse operations;

- No later than January 31 every year, compile a summary of import customs declarations and the quantity of raw materials and supplies that have been brought into the tax-suspension warehouse, as well as a summary of export customs declarations and the quantity of goods that have been exported in the previous year, and send it to the Customs Department managing the tax-suspension warehouse.

- The tax-suspension warehouse owner is responsible for implementing accounting and statistical policies, equipping means and technical devices to manage goods electronically, and connecting with the customs authority to carry out customs supervision and inspection as prescribed by the Law on Customs .