How does the Ministry of Finance guide the handling of import tax reduction i nVietnam in case imported goods are damaged by fire?

Main Content

• In case the goods are damaged due to objective reasons, can the import and export tax be reduced?
• What documents do I need to submit in order to receive import and export tax reduction in Vietnam due to damaged goods?
• Time to submit the application for reduction of export tax or import tax due to damaged goods?
• The latest guidance from the Ministry of Finance on handling goods on fire?

In case the goods are damaged due to objective reasons, can the import and export tax be reduced?

Pursuant to Clause 1, Article 32 of Decree 134/2016/ND-CP stipulating the case of import and export tax reduction in Vietnam as follows:

“Article 32. Export and import tax reductions”

1. Imported and exported goods are in the process of supervision by customs authorities as prescribed in the Customs Law 2014 and guiding documents, if they are damaged or lost due to objective causes. tax reduction according to the provisions of Clause 1, Article 18 of the Law on Import Tax and Export Tax.”

Thus, imported and exported goods are only eligible for tax reduction because they are damaged or lost due to objective reasons while they are still in the process of customs supervision.

In addition, in Clause 1, Article 18 of the Law on Import Tax and Export Tax 2016, there is a provision that the tax rate will be reduced when goods are damaged due to objective reasons as follows:

Article 18. Tax reduction

1. Imported and exported goods that are under customs supervision, if damaged or lost, certified by a competent assessment agency or organization, will be entitled to tax reduction.

The tax reduction corresponds to the actual loss rate of the goods. In case the exported or imported goods are damaged or lost, tax is not required.”

Accordingly, the tax reduction in Vietnam will be based on the actual loss rate of the goods, if the goods are completely damaged, no tax will be paid.

How does the Ministry of Finance guide the handling of import tax reduction in Vietnam in case imported goods are damaged by fire?

What documents do I need to submit in order to receive import and export tax reduction in Vietnam due to damaged goods?

Pursuant to Clause 2, Article 32 of Decree 134/2016/ND-CP as amended by Clause 16, Article 1 of Decree 18/2021/ND-CP, as follows:

“Article 32. Export and import tax reductions”

...

2. Dossier of request for tax reduction, including:

a) The taxpayer's written request for tax reduction sent through the electronic data processing system of the customs authority according to the information criteria in Form 3, Appendix VIIa or the official letter requesting tax reduction according to Form No. 08 in Appendix VII issued together with this Decree: 01 original;

b) Insurance contract, notice of payment of indemnity from the insurance receiving organization (if any), in case the insurance contract does not include the content of tax compensation, it must be certified by the insurance organization; contract or written record of compensation agreement of the carrier in case of loss caused by the carrier (if any): 01 photocopy;

c) Minutes of certifying the cause of damage by the competent authority in the area where the damage occurs (the record of certification of the fire by the fire prevention and fighting police agency of the locality where the fire occurred; the written document) certification by one of the following relevant agencies and organizations: Public Security Offices of communes, wards and townships; People's Committees of communes, wards and townships; Management boards of industrial parks; Management boards of processing zones Export; Economic zone management board; Border gate management board; Maritime port authority; Airport authority where force majeure events such as natural disasters, catastrophes, epidemics, unexpected accidents cause damage to Imported raw materials, machinery and equipment): 01 original.

d) An assessment certificate of the trader providing assessment services regarding the quantity of lost goods or the actual loss rate of the goods: 01 original.”

Accordingly, when wishing to reduce export tax or import tax because goods are damaged due to objective reasons, organizations and individuals need to prepare documents according to the above provisions.

Time to submit the application for reduction of export tax or import tax due to damaged goods?

Pursuant to Clause 3, Article 32 of Decree 134/2016/ND-CP and Clause 16, Article 1 of Decree 18/2021/ND-CP stipulates as follows:

“Article 32. Export and import tax reductions”

...

3. Procedures and authority for tax reduction:

a) Taxpayers submit dossiers to the Sub-department of Customs where customs procedures are carried out at the time of customs procedures or within 30 working days from the date of receiving a written certification of the extent of damage or loss. cool, damage;

b) In case at the time of carrying out customs procedures, the taxpayer submits a complete dossier as prescribed, the Sub-department of Customs shall check the dossier, inspect the actual goods, check the conditions for tax reduction and make the reduction. tax within the time limit for carrying out customs procedures as prescribed in Article 23 of the Customs Law;

c) In case the taxpayer submits the application file after the time of customs procedures:

Within 30 days from the date of receipt of a complete dossier, the Customs Department of the province or city is responsible for making a dossier, checking information, appraising the accuracy and completeness of the dossier, and deciding on tax reduction. according to Form No. 12, Appendix VII issued together with this Decree, or notify taxpayers of the reasons for not being eligible for tax reduction and the payable tax amount. If the dossier is incomplete, the customs authority shall notify the taxpayer within 03 working days from the date of receipt of the dossier.

In case it is necessary to carry out physical inspection of goods that have passed the customs supervision area to have sufficient grounds for tax reduction, a decision on post-clearance inspection shall be issued at the taxpayer's office and carry out the following tasks: specified at this point within a maximum period of 40 days from the date of receipt of a complete application.”

Thus, the time to submit the application for reduction of export tax or import tax for goods damaged due to objective causes is within 30 working days from the date of receiving a written certification of the extent of damage or at the time of customs clearance.

The latest guidance from the Ministry of Finance on handling goods on fire?

Recently, the Ministry of Finance issued Official Letter 5568/BTC-TCHQ dated June 13, 2022 guiding the handling of tax on goods on fire with the following contents:

“The Ministry of Finance assigned the General Department of Customs to review and direct the City Customs Department. Ho Chi Minh City based on the tax reduction proposal submitted by Dong Phuong Company to the customs office; Minutes of damage confirmation by the competent authority, the assessment certificate of the trader providing assessment services, the certification of the insurance agency and related papers and the results of the inspection of the warehouse import and export notes, the relevant accounting vouchers at the head office of the enterprise to identify the number of machinery and equipment of the company damaged by fire.

The results of the inspection and review determine that the quantity, type and value of the damaged goods are consistent with the amount of import tax the enterprise proposes to reduce, the compensation amount of the insurance agency excluding the import tax amount. to reduce import tax corresponding to the quantity of damaged goods in accordance with the provisions of law.

In case the enterprise has declared and paid tax for the number of machinery and equipment eligible for tax reduction, the Customs Department of Ho Chi Minh City will Ho Chi Minh City handles overpaid tax according to regulations.

In case enterprises sell and liquidate the above damaged machinery and equipment, they must pay VAT and corporate income tax in accordance with the law on VAT and corporate income tax.”

Accordingly, the handling of tax on goods damaged by fire shall comply with the above guidance of the Ministry of Finance.