General Department of Vietnam Customs issued letter no.66/TCHQ-TXNK dated 05 Mar 2018 regarding Tax policy on goods of EPE. The content is as below:
In response to Official Letter No. 1393 / HQQNa-NV dated 23/11/2017, Document No. 1346 / HQQNa-NV dated 14/11/2017, Document No. 1080 / HQQNa-NV dated 19/09/2017 of the Customs Department of Quang Nam regarding tax policy for goods selling into domestic market of EPE, General Department of Vietnam Customs has some comments as below:
Pursuant to Clause 1, Article 4 of the Law on Export Tax and Import Tax No. 107/2016 / QH13: “ 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 2, Article 8 of the Law on Export Tax and Import Tax No. 107/2016 / QH13: “2. The time for calculating export or import duty is the time of registration of the customs declaration.
In case of exports or imports that are not subject to taxation, exempt from export or import duties, or applying in-quota duty rates or fixed duty but then the eligibility for tax exemption or in-quota duties is changed as prescribed by law, the time for tax calculation is the time of registration of the new customs declaration.
The time of registration of the customs declaration shall comply with regulations of law on customs”
Pursuant to Clause 5, Article 1 of the Government’s Decree No. 114/2015 / ND-CP of November 9, 2015, amending and supplementing Article 21 of the Government’s Decree No. 29/2008 / ND-CP of March 14, 2008. Regulations on industrial parks, export processing zones and economic zones: “Export-processing enterprises may sell disposal properties of enterprises and goods to Vietnamese market according to law provisions on investment and trade. At time of sale/disposal to Vietnamese market without application of policies on management of exported/imported goods, unless goods are subject to management under specialist conditions/standards or specialist inspection that has not been carried out during the import period, goods that are under management with license must be approved with written document by an agency in charge of licensing the import
Pursuant to Clause 2, Article 22 of the Government’s Decree No. 134/2016 / ND-CP of September 1,2016: “Where goods manufactured, processed, recycled or assembled in a free trade zone using imported raw materials or components, they shall be dutiable when imported into the domestic market according to the duty rates and their dutiable values
Pursuant to Clause 5, Article 25 of Decree No. 08/2015 / ND-CP dated 21 January 2015: “5. If exports or imports are classified as regulated entities required to pay export, import taxes, excise duties, value-added taxes, environmental taxes, or of which export or import taxes are exempted or such tax exemption is under consideration, or of which the tax rate is imposed according to the tariff quota, and cargos are customs released or cleared but then subject to changes in entities that are not required to pay taxes or in purposes for which exports or imports are exempted from paying taxes or under consideration for their tax exemption; exports or imports are taxed at the rate that conforms to the tariff quota; imports are raw materials used for processing or manufacturing exports or temporarily imported – re-exported products that have been released or cleared under customs procedures but then their use purpose has changed for domestic consumption, new customs declarations must be submitted instead. Policies on management of exports and imports and policies on taxes levied on exports and imports shall be implemented in the time when new customs declarations are registered, except when all of policies on management of exports and imports have been fully implemented at the time when the initial customs declaration is registered. ”
Based on the above provisions:
– If EPE satisfies the conditions of the non-tariff area in accordance with Clause 1, Article 4 of the Law on Export Tax and Import Tax No. 107/2016 / QH13, importing materials from abroad for the production of export goods (the goods is exempted from import tax), After that EPE sell products to domestic enterprise, EPEs and inland enterprises carry out customs procedure as for on-spot imports and export. Domestic enterprises must pay importation tax of products purchased from EPEs under Clause 2, Article 22 of Decree No. 134/2016 / ND-CP.
– If EPE does not satisfy the conditions of the non-tariff area in accordance with Clause 1, Article 4 of the Law on Export Tax and Import Tax No. 107/2016 / QH13, importing materials from abroad for the production of export goods (Registering the declarations according to the type of production for export) , After that EPE sell products to domestic enterprise, this is determined to change of purpose of tax exemption. EPEs and inland enterprises shall carry out customs procedure as for type of on-spot imports and export. EPE must pay importation tax according to the provisions of Clause 5, Article 25 of Decree No. 08/2015 / ND-CP, Clause 2, Article 8 of the Law on Export Tax and Import Tax No. 107/2016 / QH13.
The General Department of Customs respond to the Customs Department of Quang Nam province for knowledge and implementation.