Customs Procedures and Tax policies for export products delivered in Vietnam as designated by foreign enterprises

The General Department of Vietnam Customs issued letter no. 4594 / TCHQ-TXNK dated July 16, 2019. the contents is as below:

The General Department of Customs received the official letter PSNV-PUS-MOLD / 06052019 on May 6, 2019, Official Letter PSNV-MOULD / 02052019 dated 2/5/2019 of Panasonic System Networks Vietnam Co., Ltd. on interconnection problems. The products of export and import are designated by foreign traders to be delivered in Vietnam. In this regard, the General Department of Customs has the following opinions:

1. Customs Procedures

Pursuant to Clause 1, Article 15 of the Government’s Decree No. 69/2018 / ND-CP of May 15, 2018 : Except for prohibited exports or imports; suspended exports or imports, a trader may temporarily import goods to Vietnam under a contract concluded with a foreign party for the purposes of the warranty and maintenance, lease, borrowing, use or other purposes for a specified period and re-export them out of Vietnam”.

Pursuant to Article 41 of Decree No. 69/2018 / ND-CP dated May 15, 2018 of the Government specifies: “The processor is entitled to lease or borrow machinery of ordering party to perform the processing contract. The leasing, borrowing or giving of such machinery and equipment shall be agreed upon in the whose creditors cease to exist processing contract”.

Pursuant to Article 50 of Decree No. 08/2015 / ND-CP of January 21, 2015 (amended and supplemented in Clause 23, Article 1 of Decree No. 59/2018 / ND-CP of April 20, 2018) of the Government to provide for customs procedures for construction equipment, machinery and means, molds, samples of TNTX, TXTN for production, construction, project implementation and testing;

Pursuant to Clause 2, Article 61 of Circular No. 38/2015 / TT-BTC of March 25, 2015 (amended and supplemented in Clause 40, Article 1 of Circular 39/2015 / TT-BTC of April 20, 2018) of the Ministry of Finance prescribing customs procedures for rented and borrowed machinery and equipment to directly serve processing contracts;

Based on the above provisions, if the goods are rented or borrowed according to the agreement in the processing contract, the enterprises designated to receive the goods shall carry out the TNTX procedures according to the provisions of Clause 2, Article 61 of Circular No. 38/2015. / TT-BTC (amended and supplemented in Clause 40, Article 1 of Circular 39/2015 / TT-BTC) of the Ministry of Finance.

In case goods are models/mold of temporary import for re-export  under the borrowing contract, enterprises designated to receive goods based on actual goods shall comply with the provisions of Article 15 of Decree No. 69/2018 / ND-CP; Customs procedures shall comply with the provisions of Article 50 of Decree No. 08/2015 / ND-CP (amended and supplemented in Clause 23, Article 1 of Decree No. 59/2018 / ND-CP) of the Government.

2. Tax policies

Pursuant to Clause 1, Article 4 of the Law on Import Tax and Export Tax No. 107/2016 / QH13 prescribed :Free trade zonemeans 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 Point c, Clause 4, Article 2 of the Law on Import Tax and Export Tax No. 107/2016 / QH13 prescribed : Goods exported from a free trade zone to abroad; goods imported from abroad to a free trade zone and used within such free trade zone; goods transported from one free trade zone to another do not incur export and import duties.

Pursuant to Clause 2, Article 2 of Decree No. 134/2016 / ND-CP dated September 1, 2016 of the Government :Goods exported from the domestic market into export processing enterprises, export processing zones, tax-suspension warehouses, bonded warehouses and other free trade zones defined in Clause 1 Article 4 of the Law on Export and import duties; goods imported from export processing enterprises, export processing zones, tax-suspension warehouses, bonded warehouses and other free trade zones defined in Clause 1 Article 4 of the Law on Export and import duties into the domestic market;

Pursuant to Clause 9, Article 16 of the Law on Import Tax and Export Tax No. 107/2016 / QH13 prescribed :Goods temporarily imported or exported to participate in fairs, exhibitions, product introduction, sports or art events, or other events; machinery and equipment temporarily imported for re-export for testing, research and development; machinery and equipment, tools temporarily imported or exported to be used for certain period of time or serve overseas processing, except for machinery, equipment, tools, vehicles permitted to be temporarily imported too serve investment projects, construction, installation, or manufacture,

Pursuant to the above provisions, in case of Panasonic System Networks Vietnam Co., Ltd. (DNC) sells goods to Panasonic Corporation (Japan) but delivers to other EPEs as designated by Panasonic Corporation, enterprises designated to receive goods  meet the provisions of Clause 1, Article 4 of the Law on Import Tax and Export Tax No. 107/2016 / QH13, it  shall not be subject to import tax.

If enterprises designated to receive goods are domestic enterprises that have signed processing contracts with Panasonic Corporation (Japan), goods being temporary import samples under agreement in processing contracts shall be exempt from import tax. Export as stipulated in Clause 9 Article 16 of the Law on Import and Export Tax No. 107/2016 / QH13.

If an enterprise is designated to receive goods as a domestic enterprise without a processing contract with Panasonic Corporation (Japan), the goods is a model/mold under the loan contract (not paid) not exempt from import tax. According to Clause 9, Article 16 of the Law on Import Tax and Export Tax No. 107/2016 / QH13, enterprises designated to receive goods must declare and pay import tax according to regulations, when re-exporting the model is exported to oversea, it shall be refunded the paid import tax. The amount of import tax shall be refunded based on the remaining use value of goods upon re-export under the provisions of Point e, Clause 1, Article 19 of the Law on Import Tax and Export Tax No. 107/2016 / QH13.

General Department of Customs has an opinion as above to Panasonic System Networks Vietnam Co., Ltd for knowledge.

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