Customs Newsletters – Legal Updates April 2024

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1. The opinion of the Ministry of Finance on Article 35 of Decree No. 08/2015/NĐ-CP regarding on-spot import and export activities

The viewpoint of the Ministry of Finance:

To comply with Point c, Article 35 of Decree No. 08/2015/NĐ-CP, foreign enterprises must meet the condition of “not being present in Vietnam”.

Cases where foreign traders are “present in Vietnam” will not be able to carry out on-spot import and export activities. For example: having representative offices, branches, investing in establishing economic organizations, investing capital, buying shares, purchasing contributed capital; implementing investment projects; investing under BCC contracts; new forms of investment and new types of economic organizations, etc.

Exported and imported goods must be brought into/taken out of Vietnam’s territory or brought into/taken out of separate customs areas. For trading activities between Vietnamese enterprises and foreign enterprises, where goods are designated to be delivered to another enterprise in Vietnam, essentially, the goods do not physically cross the border or enter a separate customs area. Therefore, the cases referred to are not considered import and export activities.

The Ministry of Finance is currently gathering opinions from relevant Ministries and Agencies to compile and propose to the Government options for handling when abolishing Article 35 of Decree No. 08/2015/NĐ-CP regarding on-spot import and export activities.

Source: Official letter No.2516/BTC – TCHQ

2. Tax policy for temporarily imported goods exempt from tax when changing the purpose of use, transferring for domestic consumption                

In the case where enterprises temporarily import goods for warranty, repair, replacement, and subsequently re-exporting, such goods fall under the category of tax exemption.

(According to Point c, Clause 9, Article 16 of the Law on Export and Import Taxes 2016)

However, if the temporarily imported goods, before re-exporting, are converted for domestic consumption, the enterprise must declare a new customs declaration. At the same time, the management policy and tax policy for exported and imported goods are applied at the time of customs declaration registration.

(According to Clause 12, Article 1 of Decree No. 59/2018/NĐ-CP)

Source: Official letter No. 1008/TCHQ-TXNK

3. The issue of export tax exemption for goods produced from recycling activities, waste treatment

Current situation: The government has repealed the provision based on the products listed in the investment project, the investment registration certificate of waste treatment facilities to consider exempting export taxes for products obtained from recycling activities, waste treatment.

(According to Decree 08/2022/NĐ-CP)

Therefore, from the effective date of Decree 08/2022/NĐ-CP until now (since 01/10/2022), Customs authorities have no basis to consider export tax exemption for products obtained from recycling activities, waste treatment.

The Ministry of Finance has currently issued Official Letter No. 1392/BTC-TCHQ on 01/02/2024 to propose to the Ministry of Natural Resources & Environment regarding the content:

  • Criteria for determining products produced from recycling activities, waste treatment eligible for export tax exemption
  • Criteria for determining machinery, equipment, vehicles, tools, specialized materials belonging to the list of environmental protection activities eligible for import tax exemption.

Source: Official letter No. 2395/BTC -TCHQ 

4.  Value Added Tax (VAT) refund for exported goods and services  

  • In cases where enterprises engage in both export and domestic consumption of goods and services, the business entity must separately account for the input VAT related to exported goods and services.
  • If a company cannot separately account for the input VAT of exported goods and services, the input VAT shall be determined based on the ratio of revenue from exported goods and services to the total revenue from all goods and services.
  • Enterprises are eligible for VAT refund for exported goods and services if, after offsetting against the VAT on domestically consumed goods and services, there remains an amount of 300,000,000 VND or more. (The refunded tax amount shall not exceed 10% of the revenue from exported goods and services).
  • The input VAT of exported goods and services that has not been refunded in the current period shall be carried forward as a deduction against the VAT of the subsequent period.

Source: Official letter No. 1229/TCT-KK   

5. Notice of the use of imported tax-exempt goods

Annually, enterprises are obligated to report on the usage status of tax-exempt imported goods.

  • This is to be carried out using electronic Form No. 07, Appendix VIIa, issued with Decree 18/2021/NĐ-CP.
  • In cases where it is necessary to report the “Tax-exempt list” to customs authorities, it should be done using Form No. 18, Appendix VII, issued with Decree 18/2021/NĐ-CP.
  • Implementation deadline: within 90 days from the end of the fiscal year.

(According to Clause 15, Article 1 of Decree No. 18/2021/NĐ-CP)

Note: Enterprises may be fined from 2,000,000 to 5,000,000 VND if they fail to submit the report on the usage status of tax-exempt goods within the specified deadline.

(According to Clause 3, Article 7 of Decree 128/2020)

Source: Official letter No. 553/HQTPHCM-TXNK

6. Temporary suspension of temporary import, re-export of ore and monazite ore products

The Ministry of Finance decides to temporarily suspend the temporary import, re-export of ore and monazite ore products.

Belonging to group 26.12, HS code: 2612.20.00

Effective period: from May 13, 2024, to December 31, 2027.

Source: Circular No. 05/2024/TT-BTC