Customs Newsletters – Legal Updates July 2024

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1. Import of remanufactured goods under the EVFTA and UKVFTA agreements 

The Government of Vietnam has just issued Decree No. 66/2024/ND-CP on management of the import of refurbished goods (remanufactured goods) under the EVFTA and UKVFTA agreements. 

This Decree applies to refurbished goods being goods under Chapters 84, 85, 87, 90 and 9402; if the goods have part or all of the parts derived from the used goods but have the same features, operating conditions, service life and warranty as the new product. 

The import of refurbished goods from the EVFTA and UKVFTA areas will have to comply with conditions including: 

  • Have a certificate of eligibility as refurbished goods 
  • Meet the rules of origin  
  • The product label must have the words “Refurbished goods” in Vietnamese 

Tax, customs and trade policies for refurbished goods apply the same as policies for new goods of the same type imported into Vietnam. 

Before January 30 of each year, traders importing refurbished goods must submit a report on the import of refurbished goods of the previous year to the licensing agency and the Ministry of Industry and Trade. 

Source: Decree 66/2024/ND-CP 

2. Tax treatment for imported goods that are forced to be re-exported 

The content of the Official Letter refers to the case where the enterprise has registered an import declaration but the goods are forced to be re-exported due to ineligibility for import. The import declaration has not been cleared at that time and will be canceled after the re-export of goods. 

In this case, the enterprise will be considered for a refund of the tax paid if the customs declaration is amended or canceled, resulting in a reduction in the payable tax amount compared to the previously paid tax amount

(Pursuant to Article 60 of the Law on Tax Administration 2019). 

Source: Official Letter 2864/TCHQ-TXNK

 

3. Continue to maintain the value-added tax (VAT) reduction policy in the second half of 2024  

The Vietnamese Government has recently issued Decree 72/2024/ND-CP regulating the value-added tax (VAT) reduction policy in the second half of 2024. 

Basically, Decree 72/2024/ND-CP has similar content to Decree No. 94/2023/ND-CP. The notable contents of this Decree are as follows:    

  • Validity period: from 2024/07/01 to 2024/12/31  
  • Goods and services eligible for tax reduction:  

Reduction of value-added tax (VAT) on goods and services subject to the tax rate of 10%  

Explanation: Goods and services will be subject to 10% VAT when they are not subject to 5% tax, not subject to 0% tax and not subject to VAT.  

(According to Article 11 of Circular 219/2013/TT-BTC)  

  • Groups of goods and services not eligible for tax reduction:  
  • Telecommunications goods and services, financial activities, banking, securities, insurance, real estate business, metals and prefabricated metal products, mining products, coke, refined petroleum, chemical products – Details in Appendix I 
  • Goods and services subject to excise tax – Details in Appendix II  
  • Information technology goods and services – Details in Appendix III  
  • Tax reduction:  
  • For enterprises calculating VAT by the deduction method: 2% reduction (from 10% >>8%)    
  • For enterprises calculating value-added tax by the percentage method of total turnover: 20% reduction in the percentage rate for tax calculation.  
  • Instructions for declaration on the VNACCS/VCIS system 

To declare the 8% value-added tax (VAT) rate, enterprises select code VB225 in the information indicator box “Code for application of tax rates/other tax rates” on the import electronic declaration from 01/07/2024.  

Code VB225 does not apply to cases where goods are not subject to VAT or subject to VAT of 0%, 5%. 

(According to the guidance in Official Letter No. 3160/TCHQ-TXNK dated July 01, 2024) 

The Vietnamese Government’s continued maintenance of the 2% VAT reduction policy is expected to help businesses reduce production costs and lower costs, thereby contributing to improving the financial situation of businesses.  

Source: Decree 72/2024/ND-CP 

4. On-spot import and export: identification of foreign traders without presence in Vietnam  

In case foreign traders already have a presence in Vietnam such as having a representative office, branch, investment in the establishment of an economic organization; investment in capital contribution, purchase of shares, purchase of contributed capital; implementation of investment projects; investment in the form of BCC contracts; new forms of investment and types of economic organizations as prescribed by the Government are not subject to on-spot import and export specified at Point c, Clause 1, Article 35 of Decree No. 08/2015/ND-CP. 

However, the current Vietnamese law only stipulates the concept of foreign traders not having a presence in Vietnam without providing detailed guidance on the composition of dossiers, documents, methods and procedures for identification and inspection, and also does not stipulate that the competent agency is responsible for guiding this content. This leads to difficulties for the Ministry of Finance (General Department of Customs) in guiding enterprises to carry out on-spot import and export procedures. 

To overcome this problem, the General Department of Customs proposes the Ministry of Industry and Trade and the Ministry of Planning and Investment to issue a guiding document on the composition of dossiers and documents and the method and order of identification and inspection of foreign traders with/without presence in Vietnam. Response deadline before 20/06/2024. 

Source: Official Letter 2643/TCHQ-GSQL