Customs Newsletters – Legal Updates June 2024

Customs Newsletters - Legal Updates June 2024

1. Latest update on the “On-spot export & import”

The GDC has just issued a new official letter on May 28, 2024, to address the concerns and recommendations of KOCHAM regarding the “on-spot export & import” policy. Some notable points from the GDC include: 

  • While waiting for Decree 08/2015/ND-CP to be amended and supplemented, the GDC plans to add one transitional provision to facilitate on-spot export & import activities: “Goods sold between Vietnamese enterprises and foreign enterprises without a presence in Vietnam and designated by foreign enterprises to deliver goods to Vietnamese enterprises will continue to carry out in-country import-export procedures for a maximum period of one year and must still meet the condition of foreign enterprises without a presence in Vietnam  

(Related to point c of Clause 1, Article 35 of Decree 08/2015/ND-CP) 

  • Currently, customs procedures for goods sold between EPEs (Export Processing Enterprises) and domestic enterprises are carried out in accordance with the regulations on on-spot export & import. There is no provision to stop on-spot export & import procedure for this transaction.  

(Point b, Clause 1, Article 35 of Decree 08/2015/ND-CP) 

  • The General Department of Customs maintains its position: In cases where an EPE sells goods to a foreign trader but is designated to deliver the goods to a Vietnamese enterprise, the condition of “not having a presence in Vietnam” must be met to carry out on-spot export & import procedure. 

Source: Decision No.: 2352/TCHQ-PC 


2. Simplification of AEO (Authorized Economic Operator) recognition procedures

On May 14, 2024, the Vietnamese government issued Decision No. 412/QĐ-TTg to approve the Plan for Cutting and Simplifying Procedures for AEO Recognition: 

  • Simplification and reduction measures: 

Simplify the conditions for AEO recognition procedures by lowering the export and Import turnover requirements for small and medium-sized enterprises (SMEs). 

  • Rationale:   

Currently, according to data from the General Statistics Office, SMEs account for over 97% of businesses in Vietnam. Reducing the export and import turnover requirements aims to create favorable conditions for SMEs to be recognized as AEOs, facilitating them to shorten customs clearance time and enhance supply chain efficiency. 

  • Implementation roadmap:   

From 2024 to 2025, the provisions of Decree No. 08/2015/ND-CP related to AEOs will be amended, including:  

  • Clause 4, Article 10: Conditions on export and import turnover 
  • Article 11: AEO recognition procedures 

*Notes: The Authorized Economic Operator (AEO) program is a major reform of the Customs sector to facilitate the business community. Specific benefits that AEOs can enjoy include: exemption from document inspection, exemption from physical inspection of goods; customs clearance with incomplete declaration; priority in customs procedures; specialized inspection; tax procedures; in-country import-export procedures; post-clearance inspection… 

Source: Decision No. 412/QĐ-TTg 


3. Guidelines for tax refund for imported goods for business production (A12) but then put into production for export (E62) 

In cases where businesses import raw materials for business production but then use these raw materials for export production, they are entitled to a refund of the import duty paid.  

(Based on Clause 1, Article 36 of Decree No. 134/2016/ND-CP) 

Conditions for tax refund: 

  • The business has a production facility for export goods in Vietnam; has ownership or right to use machinery and equipment at the production facility suitable for imported raw materials, materials and components for the production of export goods.  
  • Export products are subject to customs procedures under the production-export type;  

Tax refund dossier: the business prepares the complete dossier as instructed in Clause 5, Article 36 of Decree No. 134/2016/ND-CP 

*Note: Currently, there are no regulations on the refund of import duty for raw materials on-spot imported, after which these raw materials are handed over to another business for processing, completion and receiving the finished product for export abroad. 

Source: Circular No.: 2058/TCHQ-GSQL  


4. Regulations on exemption from import duty for goods re-imported after repair or replacement

During a recent meeting with the GDC, the Representative of the KOCHAM stated that Vietnamese law currently lacks implementing regulations for exempting customs duties for goods re-imported after repair or recycling. (The provision is stipulated in Article 2.6 of the Free Trade Agreement between Vietnam and Korea – VKFTA). This has led to businesses not being exempted from customs duties in a reasonable manner when re-importing goods after repair or replacement. 

In response to this issue, Vietnam Customs stated that the current Vietnamese customs laws are match with the content of Article 2.6 of the VKFTA, specifically: Goods temporarily imported for re-export, temporarily exported for re-import for warranty, repair, or replacement are exempt from import and export duties if they do not change their shape, function, and basic characteristics and do not create other goods. 

(Clause 2, Article 13 of Decree No. 134/2016/ND-CP) 

If the above regulations are not met, import and export duties must be paid. In that case, if goods are imported for repair abroad, the customs value is determined to be the actual cost of repairing the imported goods and must be consistent with the documents related to the repair of the goods.  

(Clause 4, Article 17 of Circular No. 39/2015/TT-BTC)  

Source: Decision No.: 2352/TCHQ-PC  


5. Handling cases where the name of goods on the C/O is different from the name of goods on the import declaration  

Our servicesAccording to the guidance of the General Department of Customs, businesses will be denied a certificate of origin for goods when: 

  • The name of the goods on the C/O is different from the name of the goods on the import declaration; or 
  • The name of the goods on the C/O is different from the classification analysis result; or 
  • The name of the goods on the C/O is different from the actual imported goods (if any) 

Source: Circular No.: 2011/TCHQ-GSQL 


6. Tax policy for cases where ETPs receive processing for domestic enterprises 

  • In cases where domestic enterprises hand over goods for ETPs to process, they are exempt from export tax.  

(Based on Clause 2, Article 10 of Decree No. 134/2016/ND-CP) 

  • In cases where domestic enterprises re-import goods processed by ETPs, they must pay import tax and VAT.  

 (Based on Clause 2, Article 22 of Decree No. 134/2016/ND-CP) 

 Source: Circular No.: 2370/TCHQ-TXNK