Foreign business owner when conducting on-spot export and import trading operations in Vietnam should pay attention to the following issues:
1.What is indirect import and export?
According to Article 86 of 38/2015/TT-BTC, Indirect exports include:
- Processed products: hired/borrowed machinery and equipment; excess materials; waste, rejects under processing contracts
- Goods traded between an inland enterprise and an EPE or an enterprise in a free trade zone;
- Goods traded between a Vietnamese company and a foreign entity without a representative in Vietnam and are requested to be delivered to another enterprise in Vietnam by the foreign entity.
Foreign traders (eg. company A in Korea) buy goods (raw materials, processed products …) from a trader in Vietnam (company B in Vietnam) and sell these goods for another Vietnamese trader (company C in Vietnam). Thus, the contracts are signed among companies (A signed with B; A signed with C) are international trade contracts, goods must be imported and exported. However, goods must not be transported out of the national border but transported and delivered in the territory of Vietnam.
Indirect export and import goods shall apply to goods sold by Vietnamese traders (Vietnamese trader is trader established and registered under Vietnamese law, including foreign-invested enterprises, export-processing enterprises) exported to foreign trader (foreign trader being traders established or registered under foreign law or permitted and recognized by law of foreign countries) but that goods are requested to be delivered to another enterprise in Vietnam by the foreign entity.
2.What are goods imported and exported on the spot?
– Indirect exported goods are regarded as export goods; indirect imported goods are regarded as imported goods. So, it must comply with the provisions of law on management of export and import goods and tax policies for export and import goods.
Pursuant to Clause 3, Article 2 of the Law on Import Tax and Export Tax No. 107/2016 / QH13, indirect export and import goods are subject to tax.
Basis for determining that goods imported or exported on the spot must have two separate contracts:
a/ The export, processing or hire contract containing a provision that the goods shall be delivered to recipients in Vietnam;
b/ The import, processing or hire contract containing a provision that the goods shall be received from deliverers in Vietnam
– Indirect exporter (hereinafter referred to as export enterprise): Being a person designated by a foreign trader to deliver goods in Vietnam.
– Indirect importer (hereinafter referred to as importing enterprise) : is a buyer of a foreign trader but is designated by a foreign trader to receive goods in Vietnam from an on-site exporter.
3.Place of Customs procedures for indirect import and export goods ( clause 2 of Article 86 circular no. 38/2015/TT-BTC)
Customs procedures for indirect export shall be followed at the most convenient Sub-department of Customs selected by the declarant that suit the purpose.
4.Process of import and export procedures on the spot
According to Clause 1 Article 25 Decree 08/2015 / ND-CP:
Customs declaration shall be carried out in the electronic. Customs declarants shall register their customs declaration through the electronic customs procedures under the regulations set out by the Minister of Finance
The customs declarant shall be able to choose between electronic customs declaration and paper customs declaration in accordance with Clause 2, Article 25 of Decree 08/2015-ND-CP amended by Clause 12 Article 1 of Decree 59/2018 / ND-CP.
4.1. Customs dossier
(clause 3 of Article 86 of Circular 38/2015 / TT-BTC is amended by Item 58 Article 1 of Circular 39/2018 / TT-BTC)
The customs dossier of indirect exports shall comply with Article 16 of 38/2015/TT-BTC amending by circular no.39/2018/TT-BTC.
If goods are traded between an inland enterprise and an EPE or an enterprise in a free trade zone, the declarant may use VAT invoices or sale invoices as prescribed by the Ministry of Finance instead of commercial invoices. In case of finance lease by an EPE or an enterprise in a free trade zone, the declarant is not required to submit the commercial invoice, VAT invoice or sale invoice.
Composition of dossier Article 16 Circular No. 38/2015 / TT-BTC (English and vietnamese) : https://drive.google.com/file/d/1JcBpHapoBjf-9SgcdDzf1mOC65a8S6QQ/view?usp=sharing
Instruction on declaring Electronic customs declaration. ( Appendix II of Circular no.38-2015-ND-CP) (Vietnamese): https://drive.google.com/open?id=16kDVa1N4MvyOyanRaVMjtRBzdIFgcef7
Electronic export Declaration (English and Vietnamese) :https://drive.google.com/open?id=1D9L02ZPmnfl_oW8KGRQGT5HXIafU8927
(clause 4 of Article 86 of Circular 38/2015 / TT-BTC is amended by Item 58 Article 1 of Circular 39/2018 / TT-BTC)
Within 15 working days from the day on which the exports are granted customs clearance, the local importer shall complete customs procedures.
4.3 Customs procedures
(clause 5 of Article 86 of Circular 38/2015 / TT-BTC is amended by Item 58 Article 1 of Circular 39/2018 / TT-BTC)
a) The local exporter shall:
a.1) Complete the declaration of exports and combined transport, specifying the destination code of the Sub-department of Customs where import procedures are followed and the enterprise identification number (write “#&XKTC” in “Số quản lý nội bộ của doanh nghiệp” or “Ghi chép khác” on the physical declaration);
a.2) Follow procedures for exporting goods as prescribed;
a.3) Inform the local importer of the completion of export procedures and deliver the goods to the importer after the importer completes import procedures;
a.4) Receive information about the indirect import declaration for which customs procedures have been completed by the local importer for further processing.
b) The importer shall:
b.1) Complete the import declaration by the deadline, specifying the number of the declaration;
b.2) Follow procedures for importing goods as prescribed;
b.3) After import procedures are completed, request the local exporter to carry on the procedures;
b.4) Only sell or use imports for manufacturing after they are granted customs clearance.
c) The customs authority where import procedures are followed shall:
c.1) Complete the export procedures prescribed in Chapter II of this Circular;
c.2) Monitor declarations of indirect exports that have completed customs procedures but have not completed import procedures and inform the Sub-department of Customs where import procedures will be carried out, which will supervise the local importer following the procedures.
d) The customs authority where import procedures are followed shall:
d.1) Carry out inspection according to the classification result given by the e-customs system. If physical inspection of goods is required and goods have undergone physical inspection at the Sub-department of Customs of export, the Sub-department of Customs of import shall not carry out physical inspection;
d.2) Compile monthly lists of indirectly exports that have been granted customs clearance (form No. 01/TB-XNKTC/GSQL in Appendix V enclosed herewith) and send them to the supervisory tax authority of the local importer;
d.3) Cooperate with the Sub-department of Customs where export procedures are carried out in supervising the local importer completing customs procedures.”
Form: . 01/TB-XNKTC/GSQL : https://drive.google.com/file/d/1fpHG00AcDZDxrzOMzoFd4bGCFedE1kz_/view?usp=sharing
Sample set (Due to since 2018 ,there is a change in the declaration of the declaration under section 4.3 at a.1 and b.1, attention should be paid to correct according to current law)