Will duties on goods initially imported for business operation but eventually used for the manufacture of domestic exports in Vietnam be refunded?

Which entities are the import and export duty payers in Vietnam?

Under Article 3 of the Law on Export and Import Duties 2016, the import and export duty payers include:

- Owners of exports and imports.

- Entrusted exporters and importers.

- People entering and leaving Vietnam carrying exports or imports, sending or receiving goods through Vietnam’s border and border checkpoints.

- Taxpayers’ guarantors and other entities authorized to pay tax on behalf of taxpayers, including:

+ Customs brokerage agents in case authorized by the taxpayer to pay export and import duties;

+ Providers of postal services or international express mail services paying tax on behalf of taxpayers;

+ Credit institutions or other organizations operating under the Law on credit institutions that provide guarantee or pay tax on behalf of taxpayers;

+ People authorized by goods owners in case goods are gifts of individuals; any luggage sent before or after its owner’s arrival or departure;

+ Any branch of an enterprise authorized to pay tax on its behalf;

+ Other people authorized to pay tax on behalf of taxpayers as prescribed by law.

- Any person who purchases or transports goods within the tax-free allowance applied to border residents which are sold domestically instead of being consumed or used for manufacture; foreign traders permitted to deal in exports and imports at bordering markets as prescribed by law.

- Owners of exports or imports that are initially tax-free but then taxed.

- Other cases prescribed by law.

Will duties on goods initially imported for business operation but eventually used for the manufacture of domestic exports in Vietnam be refunded?

Under Article 36 of Decree No. 134/2016/ND-CP stipulating the refund of duties on goods initially imported for business operation but eventually used for the manufacture of domestic exports:

Refund of duties on goods initially imported for business operation but eventually used for manufacture of domestic exports

1. Paid import duties on goods that are initially imported for business operation but eventually used for manufacture of goods that have been exported into a foreign country or a free trade zone shall be refunded.

2. Import duties on the following imports are refundable:

a) Raw materials, supplies (including those for manufacture of packages of exports), components, semi-finished products imported incorporated into the exports or used during the manufacture of exports without being incorporated into the exports;

b) Imported finished products that are attached on exports or packed with exports as a whole;

c) Components and parts imported for repair of exports under warranty.

...

Thus, paid import duties on goods that are initially imported for business operation but eventually used for manufacture of goods that have been exported into a foreign country or a free trade zone shall be refunded.

Moreover, the refundable import duty is calculated as follows:

Will duties on goods initially imported for business operation but eventually used for the manufacture of domestic exports in Vietnam be refunded? (Image from the Internet)

What is the basis for eligibility for duty exemption for goods initially imported for business operation but eventually used for the manufacture of domestic exports in Vietnam?

Pursuant to Clause 3, Article 36 of Decree 134/2016/ND-CP, the basis for eligibility for duty exemption for goods initially imported for business operation but eventually used for the manufacture of domestic exports in Vietnam includes:

- The manufacturer of exports has a factory where exports are manufactured in Vietnam; owns or has the right to use machinery and equipment at the factory which is suitable for the raw materials, supplies and components imported for manufacture of exports;

- The value or quantity of imported raw materials, supplies and components on which import duties are refundable is the actual value or quantity of raw materials, supplies and components used for the manufacture of the products that are exported in reality;

- The exported products are declared as domestic exports;

- The manufacturer directly imports goods and exports the products or authorizes another entity to do so.

The taxpayer shall provide truthful information about the exports derived from the imported goods on the customs declaration.