Gerneral department of Vietnam Customs issued Letter no. 2695 / TCHQ-TXNK dated May 6, 2019 on donating inventories of export processing enterprises. The contents is following:
The General Department of Customs received the Official Letter No. 4118/2019 / SDV dated April 3, 2019 of Samsung Display Vietnam Co., Ltd. requesting instructions to donate a number of unsold goods and unused goods for training facilities and society center. In this regard, the General Department of Customs has the following opinions:
1.Regarding procedures for offering and donating goods of export-processing enterprises:
According to Clause 10 Article 1 of Circular No. 39/2018 / TT-BTC dated April 20, 2018 of the Ministry of Finance amending and supplementing Clauses 1 and 2, Article 21 of Circular No. 38/2015 / TT-BTC March 25, 2015 on the declaration of changing the purpose of use and domestic consumption.
According to Clause 55, Article 1 of Circular No. 39/2018 / TT-BTC dated April 20, 2018 of the Ministry of Finance amending and supplementing Article 79 of Circular No. 38/2015 / TT-BTC.
Proposing the Company to base on the above provisions to carry out procedures for giving and donating goods in stock, without the need to use.
2.Regarding tax policies for gifts and Donations:
a) Import tax:
According to the provisions of Clause 2, Article 16 of the Law on Import Tax and Export Tax No. 107/2016 / QH13, exemption of import tax for:
“2. Personal belongings, gifts from foreign entities to Vietnamese entities and vice versa within the tax-free allowance.
If the quantity or value of personal belongings or gifts exceeds the tax-free allowance, the excess amount or value shall be taxed, unless the recipient is an entity funded by state budget and permitted by a competent authority to receive them or they are meant to serve humanitarian or charitable purposes”.
Under the provisions of Point b, Clause 2, Article 8 of the Government’s Decree No. 134/2016 / ND-CP of September 1, 2016, on the duty-free quotas for donations and gifts:
“b) Gifts given by a foreign organization or individual to a Vietnamese organization whose operating cost is covered by state budget as prescribed by state budget laws; gifts given for humanitarian or charitable purposes whose customs value does not exceed VND 30,000,000 shall be exempt from duties up to 04 times per year.
Where duty-free allowance is exceeded by an organization whose operating cost is covered by state budget, duty exemption shall be decided by the Ministry of Finance on a case-by-case basis.
Therefore, if foreign organizations and individuals donate goods to Vietnamese organizations and individuals in the duty-free quotas prescribed in Clause 2, Article 8 of Decree No. 134/2016 / ND-CP, they shall be exempt from tax. import.
Dossiers and procedures for tax exemption comply with Clauses 3 and 4, Article 8 of Decree No. 134/2016 / ND-CP.
b) Value added tax:
Pursuant to the provisions in Clause 19, Article 4 of Circular No. 219/2013 / TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the subjects not subject to VAT
“19.Imported goods, goods/services sold to other organizations and individuals as humanitarian aid or non-refundable aid in the following cases:
b) Gifts for regulatory bodies, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations, and the army prescribed by the laws on gifts;
The limit on tax-free imported goods is specified in the Law on Export and import tax and its guiding documents.“
Pursuant to Clause 3, Article 5 of the Prime Minister’s Decision No. 31/2015 / QD-TTg of August 4, 2015, prescribing the norms of duty-free gifts and donation:
“3.Gifts and donations given by foreign organizations or individuals to Vietnamese organizations, and those given by Vietnamese organizations or individuals to foreign organizations with the value of less than VND 30,000,000 (thirty million Vietnam dong) shall be entitled to export, import exemption consideration and exempted from value-added tax. As for gifts or donations exceeding the permitted amount of VND 30,000,000 (thirty million Vietnam dong), they shall be exempt from import duty, excise tax and VAT levied on all of their shipment under the following circumstances:
a) Consignee is permitted to receive such gifts and donations being public administrative agencies, socio-political organizations, political – social – professional organizations for use by competent authorities;
b) Goods are gifts or donations serving the charity and humanitarian purposes.”
Therefore, gifts and donation of foreign organizations and individuals for Vietnamese organizations in the limit are not subject to VAT. The value of the gift value over limit must be paid according to regulations.
It suggests Company to base on the above regulations to implement. In case of any problems, please contact to customs office for specific answers.
The General Department of Customs notice to Samsung Display Vietnam Co., Ltd for implementation and knowledge.