Importing Goods and Raw Materials for Domestic Production: What Type Code Should Be Used in the Customs Declaration?
What type of customs declaration code is applied for importing raw materials to produce domestically?
To complete the application of legal regulations, the General Department of Customs recently issued Official Dispatch 4213/TCHQ-TXNK in 2022 guiding JX Nippon Oil & Energy Vietnam Co., Ltd. on applying codes for the import and export of goods and fuels to serve domestic production as follows:
According to the regulations in the Export and Import Code Table attached to Decision 1357/QD-TCHQ in 2021 as follows:
Import type:
Type A12: Business production import is used in cases where Vietnamese enterprises import raw materials, supplies, machinery, and equipment to serve domestic production (including imported goods to implement investment projects):
- Import from abroad;- Import from non-tariff zones, export processing enterprises;- On-spot import (excluding GC, SXXK, DNCX enterprises in non-tariff zones);- Import of goods in the form of financial leasing.
The enterprise's import of raw materials for the production of goods to serve domestic consumption in the form of A12 is appropriate.
Export type:
Type B11: Business export is used in cases where:
- Enterprises export goods abroad or to non-tariff zones, DNCX, or on-the-spot export as directed by foreign traders according to the purchase contract;- Foreign-invested enterprises (including DNCX) exercise the right to export goods sourced from domestic purchases.
Thus, in cases where the enterprise exports products made from all or part of the imported raw materials abroad, the E62 code should be applied.
What type of customs declaration code is applied for importing raw materials to produce domestically?
Does a company importing goods for business and then exporting products made from imported raw materials abroad get a VAT refund?
Clause 4, Article 18, Circular 219/2013/TT-BTC (amended by Article 2, Circular 25/2018/TT-BTC) regulates subjects and cases of VAT refund as follows:
Subjects and cases eligible for VAT refund
...
4. VAT refund for exported goods and services
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b) The business establishment does not get a VAT refund in the following cases: Importing goods and then exporting but not conducting the export at the customs operation area according to customs laws; exporting goods but not conducting the export at the customs operation area according to customs laws.
c) The tax authority carries out a refund first, audits later for taxpayers producing exported goods who have not been subject to handling for smuggling, illegal transportation of goods across borders, tax evasion, tax fraud, commercial fraud for two consecutive years; taxpayers not categorized as high risk according to the Tax Management Law and guiding documents.
Simultaneously, Official Dispatch 4213/TCHQ-TXNK in 2022 provides guidelines on VAT refunds as follows:
Based on Clause 1, Article 60, Tax Management Law 2019, which regulates the handling of overpaid tax, late payment, and fines:
Handling of overpaid tax, late payment, and fines
1. A taxpayer that has overpaid tax, late payment, and fines greater than the amount due is entitled to offset the overpaid amount against any outstanding tax, late payment, fines, or deduct the excess to the next tax payment or request a refund if there is no outstanding tax, late payment, or fines.
In case the taxpayer requests to offset excess tax, late payment, fines against tax due, late payment, fines, the equivalent late payment interest shall not be calculated from the date of excess payment to the date the tax authority processes the offset.
Based on Article 22, Circular 219/2013/TT-BTC, which regulates the organization of VAT collection:
- The Tax Authority is responsible for managing and collecting VAT and refunding VAT to business establishments; The Customs Authority is responsible for managing and collecting VAT on imported goods.
Based on Article 131, Circular 38/2015/TT-BTC (amended by Clause 64, Article 1, Circular 39/2018/TT-BTC) regulates as follows:
Procedures for handling excess tax, late payment, and fines
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4. The handling of excess VAT shall be carried out following the provisions of Article 132 of this Circular. Excess VAT shall be processed concurrently with import tax (if any).
Based on the above regulations, the customs authority processes excess VAT refunds for imported goods, and the Tax Authority processes VAT refunds for business establishments.
However, in cases of importing goods in the form of business imports and then exporting products made from all or part of the imported raw materials abroad, this is not included in the handling of excess tax as per Article 60, Tax Management Law 2019.
What are the procedures for handling excess tax, late payment, and fines?
Based on the regulations at Article 131, Circular 38/2015/TT-BTC (amended by Clause 64, Article 1, Circular 39/2018/TT-BTC) regulating the procedures for handling excess tax, late payment, and fines as follows:
Procedures for handling excess tax, late payment, and fines
...
4. The handling of excess tax, late payment, and fines shall be carried out following the provisions of Article 132 of this Circular. Excess VAT shall be processed concurrently with import tax (if any).
Article 132, Circular 38/2015/TT-BTC (amended and supplemented by Clause 65, Article 1, Circular 39/2015/TT-BTC) regulates the handling of excess tax, late payment, and fines as follows:
When the taxpayer no longer owes any tax, late payment, fines, and other payable amounts, including outstanding fees and charges:
- The customs authority shall, based on the refund decision, issue a payment order to the State Treasury to refund the taxpayer upon request;- If the taxpayer requests to offset the payable tax against subsequent declarations: Once the taxpayer incurs tax payable and requests in writing for an offset, the customs authority shall, based on the refund decision and the taxpayer's request, issue a document to adjust the state budget receipt or a payment order to the State Treasury for a refund cum offset against the payable amounts.
When the taxpayer still owes tax, late payment, fines, and other payable amounts, including outstanding fees and charges:
- If the taxpayer requests an offset, the customs authority issues a payment order to the State Treasury to pay the state budget on behalf of the taxpayer;- If the taxpayer does not request an offset but the customs authority identifies that the taxpayer still has obligations to pay taxes, late payment, fines, and other payable amounts, including outstanding fees and charges, the customs authority handles it according to point b.1 clause 1 Article 132, Circular 38/2015/TT-BTC and notifies the taxpayer.
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