Customs Procedures and Tax Policies for Export Production Goods Designated for Delivery

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Customs procedures and tax policies for the case where export processing enterprises sell goods to foreign traders but deliver to other export processing enterprises as designated by foreign traders are as follows:

1. Regarding customs procedures

Pursuant to Clause 1, Article 15 of Decree 69/2018/ND-CP, except for goods that are prohibited from export, import; goods temporarily suspended from export and import, traders are allowed to temporarily import goods into Vietnam under contracts signed with foreign countries for the purpose of warranty, maintenance, renting, borrowing, or for other purposes within a certain period and then re-export those goods out of Vietnam.

Pursuant to Article 41 of Decree 69/2018/ND-CP, the processing recipient is allowed to rent or borrow machinery and equipment from the ordering party to perform the processing contract; the rental, borrowing, or gifting of machinery and equipment must be agreed upon in the processing contract.

Simultaneously, pursuant to Article 50 of Decree 08/2015/ND-CP amended and supplemented at Clause 23, Article 1 of Decree 59/2018/ND-CP and Clause 2, Article 61 of Circular 38/2015/TT-BTC amended and supplemented by Clause 40, Article 1 of Circular 39/2015/TT-BTC:

- In the case of goods rented or borrowed under the agreement in the processing contract, the designated enterprise receiving the goods shall carry out TNTX (temporary import for re-export) procedures in accordance with the provisions of Clause 2, Article 61 of Circular 38/2015/TT-BTC as amended and supplemented in Clause 40, Article 1 of Circular 39/2015/TT-BTC.

- In the case of goods being TNTX molds under the mold loan contract, the designated enterprise receiving the goods shall base its execution on the actual goods in accordance with the provisions of Article 15 of Decree 69/2018/ND-CP; customs procedures shall follow the provisions of Article 50 of Decree 08/2015/ND-CP as amended and supplemented in Clause 23, Article 1 of Decree 59/2018/ND-CP.

2. Regarding tax policy

According to Clause 1, Article 4 of the Export and Import Tax Law 2016, a non-tariff zone is an economic area within Vietnamese territory, established in accordance with the law, with precise geographical boundaries, separated from the outside area by hard fences, ensuring conditions for customs control, supervision, and inspection activities by customs authorities and related agencies for exported and imported goods and vehicles, passengers entering and exiting; commercial transactions between the non-tariff zone and the outside are considered export and import.

According to Point c, Clause 4, Article 2 of the Export and Import Tax Law 2016, goods exported from a non-tariff zone to foreign countries; goods imported from foreign countries into the non-tariff zone and used only within the non-tariff zone; and goods transferred from one non-tariff zone to another are not subject to export and import taxes.

Pursuant to Clause 2, Article 2 of Decree 134/2016/ND-CP, goods exported from the domestic market to export processing enterprises, export processing zones, bonded warehouses, bonded production zones, and other non-tariff zones in compliance with Clause 1, Article 4 of the Export and Import Tax Law; goods imported from export processing enterprises, export processing zones, bonded warehouses, bonded production zones, and other non-tariff zones in compliance with Clause 1, Article 4 of the Export and Import Tax Law into the domestic market are subject to export and import taxes.

Simultaneously, according to Clause 9, Article 16 of the Export and Import Tax Law 2016, machinery, equipment, and occupational tools temporarily imported, re-exported, temporarily exported, and re-imported for work within a certain period or for processing for foreign traders, except for machinery, equipment, tools, and vehicles of organizations and individuals allowed to be temporarily imported, re-exported to carry out investment projects, construction, installation works, and production services, are exempt from export and import taxes.

From the above regulations, it can be seen that in the case where an export processing enterprise sells goods to a foreign company but delivers them to another DNCX as designated by the foreign party, the designated enterprise receiving the goods meeting the provisions in Clause 1, Article 4 of the Export and Import Tax Law 2016, the goods are not subject to import taxes.

If the designated enterprise receiving the goods is a domestic enterprise that has signed a processing contract with a foreign company, and the goods are temporarily imported molds as agreed in the processing contract, they are exempt from import taxes according to the provisions of Clause 9, Article 16 of the Export and Import Tax Law 2016.

If the designated enterprise receiving goods is a domestic enterprise that does not have a processing contract with a foreign company and the goods are molds under a loan contract (without payment), the goods are not exempt from import taxes according to Clause 9, Article 16 of the Export and Import Tax Law 2016; the designated enterprise receiving the goods must declare and pay import taxes as regulated, and when re-exporting the molds out of Vietnam, the paid import tax shall be refunded. The amount of refundable import tax is determined based on the remaining usage value of the goods upon re-export according to Point d, Clause 1, Article 19 of the Export and Import Tax Law 2016.

Nguyen Trinh

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