Vietnam: What are the regulations on handling of the tax policies in case the goods is imported on the spot by the domestic enterprise from the export processing enterprise and free trade zones?
- What are the common definitions in case the goods is imported on the spot by the domestic enterprise from the export processing enterprise and free trade zones in Vietnam?
- Can the exemption of duties be applied to goods imported from the export processing enterprise and free trade zones?
- What are the regulations on the tax policies in case the goods is imported on the spot by the domestic enterprise from the export processing enterprise and free trade zones?
What are the common definitions in case the goods is imported on the spot by the domestic enterprise from the export processing enterprise and free trade zones in Vietnam?
Pursuant to Clause 2, Clause 3, Article 2 of the Law on Import and Export Duties 2016 as follows:
- Goods exported from the domestic market into free trade zones; goods imported from free trade zones into the domestic market.
- Goods indirectly exported-imported; goods exported and imported by enterprises exercising their right to export, import, or distribute.
Pursuant to Clause 1, Article 4 of the Law on Import Tax and Export Tax 2016 as follows:
Free trade zone means an economic zone located within Vietnam’s territory, established in accordance with law, having a definite geographic boundary, and separated from the outer area by hard fences in order to facilitate customs inspection and customs control by the customs authority and relevant agencies with regard to exports and imports, inbound and outbound vehicles and passengers; the trading relationship between the free trade zone and the outside area is consider exportation and importation.
Pursuant to Clause 1, Article 35 of Decree 08/2015/ND-CP as follows:
On-the-spot exports and imports shall include:
- Those produced in Vietnam under contract manufacturing arrangements and sold to Vietnamese organizations or individuals by overseas ones;
- Those traded under the sale and purchase contract between domestic enterprises and exporting and processing enterprises or enterprises located in free trade zones;
- Those traded under the sale or purchase contract between Vietnamese enterprises and overseas organizations or individuals that have no representative in Vietnam, and delivered or received under the designation arrangement between foreign merchants with other enterprises in Vietnam.
Can the exemption of duties be applied to goods imported from the export processing enterprise and free trade zones?
Pursuant to Point h, Clause 2, Article 12 of Decree 134/2016/ND-CP (amended and supplemented in Clause 6, Article 1 of Decree 18/2021/ND-CP) as follows:
Goods that are imported in-country for processing according to the customs declaration shall be exempt from import duties if the importer satisfies the requirements specified in Point a and Point b Clause 2 Article 10 of this Decree. If goods that are imported in-country for other purposes, the in-country importer shall declare and pay duties at the rates and dutiable values of the in-country imports that are applicable when the declaration is registered.
In case the in-country importer has paid import duties, used the in-country imports for manufacture of goods for export and exported the goods to a foreign country or a free trade zone in reality, paid import duties will be refunded in accordance with Article 36 of this Decree.
What are the regulations on the tax policies in case the goods is imported on the spot by the domestic enterprise from the export processing enterprise and free trade zones?
Pursuant to the above provisions, the tax treatment of goods imported on the spot for export production shall be carried out as follows:
- In case a domestic enterprise imports goods directly from an export processing enterprise to produce goods for export through a sale and purchase contract, it shall be exempt from import tax if it meets the provisions of Clause 2, Article 12 of the Decree. 134/2016/ND-CP amended and supplemented in clause 6, Article 1 of Decree 18/2021/ND-CP. Declaration shall use E31 code - importing materials for domestic export and the importer shall be eligible for import duty exemption and not be subject to VAT.
In case an export processing enterprise sells goods to a foreign organization or individual but is appointed by a foreign organization or individual to deliver goods to a domestic enterprise through a purchase and sale contract between a domestic enterprise and a foreign enterprise. goods imported by domestic enterprises on the spot from export processing enterprises shall be exempt from import tax if they satisfy the provisions of Clause 2, Article 12 of Decree 134/2016/ND-CP, as amended and supplemented in Clauses 6 Article 1 Decree 18/2021/ND-CP. Declaration shall use E31 code - importing materials for domestic export and the importer shall be eligible for import duty exemption and not be subject to VAT.
- In case a domestic enterprise signs a goods purchase contract with a foreign trader who is not present in Vietnam, and is designated by the foreign trader to receive goods from another enterprise in Vietnam, the products imported on the spot shall be registered on the website. If you sign a declaration according to the type of business import (A11) or import business production (A12), you must declare and pay import tax according to the instructions in Official Dispatch No. 2687/TCHQ-TXNK dated June 1, 2021 of the General Department Customs (attached to the official letter).
For other taxes, enterprises must declare and pay tax corresponding to the declaration under A11, A12 codes.
When locally imported products are put into production and actually exported to a foreign country or a non-tariff zone, the enterprise shall be entitled to a refund of import tax corresponding to the amount of locally imported raw materials and supplies constituting the finished product. export according to the provisions of Article 36 Decree 134/2016/ND-CP.
The answer is based on Official Dispatch 3487/TCHQ-TXNK 2021 on on-spot imports and exports issued by the Vietnam General Department of Customs.
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