Laws of Vietnam

1. All exports and imports of joint venture enterprises, enterprises with 100% foreign owned capital and business cooperation parties (hereunder collectively referred to as foreign-invested enterprises) must carry out customs procedures and are subject to customs control and supervision according to the provisions of Vietnamese law.

2. Pursuant to Article 71 and Article 76 of Decree No. 24/2000/ND-CP of July 31, 2000 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam (hereunder called Decree No. 24/2000/ND-CP for short):

- When carrying out customs procedures for imports (including equipment, machinery, supplies, imported means of transport to create fixed assets; raw materials and supplies imported for production and other imports), the foreign-invested enterprises must submit to the customs office the original copy of the import plan (when filling in the procedures for the import of the first batch of goods. In the following times, each time the enterprises must produce the original copy enclosed with the monitoring card) approved by the Ministry of Trade or the bodies authorized by the Ministry of Trade, except for the import of spare parts for which the enterprises are allowed to carry out import procedures directly with the Customs Office without the written import approval.

- For exports, the enterprises shall carry out customs procedures at the Customs Office without written approval of the Ministry of Trade (except those on the list of goods banned from export, and the list of goods subject to conditional export).

3. Customs procedures for exports and imports of foreign-invested enterprises shall conform to the regulations on customs procedures for common exports and imports (except exports and imports of export processing enterprises and enterprises in the industrial parks which are subject to separate specific regulations). In case of disparity between the general regulations on customs procedures and the provisions in the Circular, the provisions in this Circular shall apply.

4. Imports to create fixed assets are allowed to be inspected at the factories, at the foot of the project or at warehouses of the enterprises.

For imports, which are raw materials for production, and exports, if the factory of the enterprise lies in an export processing zone or an industrial park, they can be inspected at the factory. In other cases, basing themselves on the concrete conditions of each enterprise and the managerial capacity of the customs service, the heads of the provincial/municipal Customs Departments shall decide how to apply the above provisions to each factory.

5. Except the goods exempt from import tax as stipulated in Article 57 of Decree No. 24/2000/ND-CP, all other exports and imports of foreign-invested enterprises shall be subject to export and import taxes and other relevant taxes as prescribed by law.

6. As stipulated in Article 57 of Decree No. 24/2000/ND-CP and guiding documents of the Ministry of Trade, when approving the import plans, the Ministry of Trade has clearly provided for the lists and value of tax-free imports and the list and value of goods that can be imported but shall be subject to import tax and other relevant taxes.

The Customs Offices shall base themselves on the stipulations in the above documents to make export and import procedures.

The procedures for tax exemption and reimbursement shall conform to current regulations.

II. SOME CONCRETE GUIDANCES

1. Import:

1.1. Expertise of imported equipment and machinery to execute investment projects as prescribed in Article 73, Decree No. 24/2000/ND-CP:

The investment-licensing bodies shall have to examine this question. When making customs procedures, the Customs Offices shall base themselves on the import plans approved by the Ministry of Trade or the bodies authorized by the Ministry of Trade without requesting the enterprises to submit or produce the expertise certificates.

The imported equipment, machinery and materials mentioned in this article are equipment, machinery and materials imported to create fixed assets (including those used to expand the scope of the project or to replace or renew the technology). The raw materials and materials imported to make products are not regulated by this Article 73.

1.2. Places to make customs procedures:

- For goods exempt from import tax under Article 57 of Decree No. 24/2000/ND-CP;

The enterprises shall fill in import procedures for this kind of goods at the customs units of the places where the enterprises base their head offices or branches or factories. In cases where there is no customs office at these places, the enterprises can choose the place which they deems most convenient. However, they shall have to fill in the import procedures at the same place until all goods of this kind have been imported. In special cases and with the approval of the General Department of Customs, the enterprises can choose a customs unit of the place where they do not base their head offices or branches or factories to fill in the procedures.

For the goods exempt from import tax as stipulated at this Point, tax shall not be calculated when import procedures are carried out. For the goods exempt from import tax but liable to value added tax, they shall have to pay tax as prescribed.

- For imports not in tax-exemption category, the enterprise may fill in import procedures at the customs office of the import border gate or at the customs office of the place where the factory of the enterprise is located, except consumer goods imported in the business form which must be necessarily fill in customs procedures at the customs office of the import border gate.

- For goods imported for production of goods for export or for processing, they shall have to fill in import procedures at a customs unit until the end of the import plan or the expiry of the processing contract.

2. Export:

2.1. The question of export percentage of goods stipulated in the investment license:

The enterprises shall have to directly report to the bodies authorized by the Ministry of Trade and to the Ministry of Planning and Investment on their export percentage. These bodies shall have to inspect and follow the implementation, examine and readjust the export percentage and handle violations. In particular for the enterprises having tax guarantee warehouses, the customs offices shall have to monitor this percentage in order to settle tax-related questions.

2.2. On exports:

- The enterprises shall fill in export procedures as prescribed for exports according to each type of export: business export; export for production of exports; re-export; export for processing...

- For goods temporarily exported for a definite period for repair or warranty, the enterprise must make a written proposal of temporary export for repair or warranty. The written proposal must clearly state the time and the border gate of re-import and must be accepted by the head of the customs office at the border gate. In case of plausible reasons, the enterprise may be granted an extension of re-import time limit, which shall not exceed three months, by the head of the customs office at the border gate. Past this period, if no re-import is effected, the customs office shall have to record the violation and to handle the violation.

2.3. For goods produced for export, when exporting the products, the enterprise may adopt one of the two following methods:

2.3.a. The enterprise shall open an export declaration form at the customs unit, which has filled in import procedures for raw materials. The customs office shall seal up the dossier and the sample of the main raw material and hand them to the goods owner who shall take them to the customs office at the export border gate. The latter shall check the sample and fill in the export procedures. After filling in the export procedures, the border gate customs office shall seal up the sample and hand it to the goods owner who shall produce it again to the customs office, which has filled in the procedures for raw material import. The customs office, which has filled in the import procedures for raw materials shall seal up this sample again, hand it to the goods owner for preservation in order to make procedures for the next batch. Or:

2.3b. If the enterprise does not open an export declaration at the customs unit which has filled in import procedures for raw materials, it shall send an official dispatch to the customs office which has filled in the import procedures for raw materials and the customs office at the export border gate asking to make export procedures at the export border gate. In addition to specifications about the goods (name, quantity...), the official dispatch must clearly state that the export belongs to raw materials import declaration No....dated... the name of the export border gate. It must be enclosed with the list of norms on the use of the raw materials for production of such product.

The customs unit which has filled in the procedures for the import of raw materials shall inspect the sample and the contents of the official dispatch and propose in writing the customs office at the export border-gate to agree to the opening of an export declaration according to the type of production of exports at the customs office where the export procedures are made.

In case the product made from the imported raw material has its form and character altered (for example: the imported raw material is PVC granules but the products are package or plastic bag… or the imported raw material is pharmaceuticals and the products are medicaments, etc.) and as such cannot compare to each other, it is not necessary to seal the samples and the enterprise shall take upon itself the responsibility for the norm of use of the raw materials and the export products which have been produced from raw materials imported earlier.

The rotation between the two customs units shall proceed as follows:

After completing import procedures for the batch of goods, the customs office at the export border gate shall send one set of dossier to the customs office that makes the import procedures for raw materials, return to the goods owner one set of dossier, and the customs office at the export border gate shall keep one set as file.

2.3.c. The place for the settlement of tax is the customs unit that makes procedures for the import of raw materials.

3. Where foreign-invested enterprises or the business cooperation parties sell their products produced by themselves to other enterprises for direct production of products for export stipulated in Clause 2, Article 58 of Decree No. 24/2000/ND-CP.

The buying and selling among these enterprises shall comply with the provisions of the legislation on economic contracts. The customs office shall not make procedures for these activities.

When a (buying) enterprise exports products, abroad the Customs Office shall make procedures as with an export batch without requesting the goods owner to prove the origin of the raw material or semi-finished products for production of such products the various norms and it shall not have the responsibility to certify the actual norms.

4. Customs procedures for cases where foreign-invested enterprises export to foreign traders but the goods do not leave Vietnam, instead are delivered in Vietnam as instructed by the foreign trader (on-the-spot export):

4.1. Export procedures export (procedures of goods delivery):

4.1.a. The exporting enterprise (delivering enterprise): On the basis of the export contract signed with the foreign enterprise, the enterprise’s representative shall go to the customs office where it has filled in procedures for the import of raw and auxiliary materials to produce its products to open a declaration form and fill export procedures as with an ordinary export batch suited to the type of goods. The contract must include a clause providing for the delivery of the goods in Vietnam, with the name and address of the importing enterprise (receiving enterprise).

After the export declaration form is registered, the enterprise shall itself organize the delivery of goods to the importing enterprise on the instruction of the foreign buyer as stipulated in the contract.

4.1b. Task of the customs office making export procedures:

It shall make procedures to register the export declaration form and apply the tax policy for the batch of goods as in the procedures for other export batches, seal the customs dossier and hand it to the exporting enterprise. The latter shall produce it together with the goods to the customs office for the making of import procedures at the place of delivery and reception of goods between the two enterprises. After receiving back the declaration form on which the result of the goods inspection delivered by the customs unit making import procedures, the leadership of the customs office shall affix his/her signature certifying the completion of the customs procedures.

4.2. Import procedures (goods reception procedures):

4.2a. The importing enterprise (receiving enterprise): On the basis of the importing contract signed with the foreign country, the import enterprise shall open the import declaration form suited to the right type of import and the current import policies. If the batch of imported goods belongs to the type of processing and the raw material is imported to produce goods for export, the enterprise must register the declaration form and fill in the procedures at the customs unit that manages the processing contracts or manages the imported raw and auxiliary materials and export products (output and input) of this goods.

The contract must include a clause providing for the reception of goods in Vietnam and the name and address of the delivering enterprise.

4.2. b. Tasks of the customs office making the import procedures:

It shall make the procedures to register the import declaration forms suited to the right type, check and compare the import dossier with the export dossier sent by the customs office that makes the export procedures (through the delivering enterprise), check the real goods, write down the result of goods inspection, sign and stamp to certify the real exportation on the export declaration form and send the set of dossier to the customs office at the place where the export procedures are made, certify the real importation on the import declaration forms. If the reality of the goods does not match the dossier of the goods batch, the customs office shall make a written record to handle as prescribed.

- On certifying the real exportation, the customs office must clearly record the details of the on-the-spot import declaration form (serial number, date and place where the declaration form is made).

- On certifying the real importation, the customs office must clearly record the details on the on-the-spot declaration forms (serial number, date and place where the declaration form is made).

- The other procedures as well as the tax policies shall conform with the regulations on each type.

5. The settlement of accounts of the projects stipulated in Article 102 shall proceed as follows:

Within 30 days after the investment licensing agency issues the certificate of registration of the report on final account settlement of the project, the enterprise’s representative shall go to the customs office of the place where goods of these types are imported to fill in the procedures for settlement of accounts.

The dossier to be submitted comprises:

- The report (original copy) on final settlement of accounts of the project, already certified by the investment permit issuing agency.

- The document (original copy) approving the import plan by the Ministry of Trade or the agency authorized by the Ministry of Trade, enclosed with the monitoring card of the customs authorities for the whole project.

- List of quantities and values of imported raw materials, machinery and equipment

- Declaration form of imports.

Within 30 days after reception of the complete dossier, the customs office that has filled in the import procedures for the enterprise shall have to complete the settlement of accounts and certify this completion in writing.

For the goods imported to create fixed assets and allowed to change their use propose or goods not used up, the customs office shall base itself on the permit of the Ministry of Trade to make the procedures.

6. With regard to the processing or reprocessing by the foreign-invested enterprises stipulated in Article 75 of Decree No. 24/2000/ND-CP, the General Department of Customs provides the following guidance:

- The processing scope of shall comply with the above-said Article 75.

- Customs management of processed goods shall comply with the provisions in Decree No. 57/1998/ND-CP of July 31, 1998 of the Government detailing the implementation of the Commercial Law regarding export, import activities, processing and acting as buying and selling agency with foreign countries, Official Dispatch No. 584/CP-KTTH of June 7, 1999 of the Government, guiding documents of the Ministry of Trade, the General Department of Customs and the concerned ministries and branches.

III. TAX GUARANTEE WAREHOUSES

1. Regarding the tax-guarantee warehouses stipulated in Article 79 of Decree No. 24/2000/ND-CP, the General Customs Department provides the following guidance for implementation:

The enterprise shall not yet have to calculate and pay import tax and other related taxes when it imports raw materials and materials for storage at the tax-guarantee warehouses to cater for production.

Imported raw and auxiliary materials and products stored at the tax-guarantee warehouse shall include only raw and auxiliary materials used to cater for production and products made by the same enterprise.

2. Conditions for the establishment of tax-guarantee warehouses are stipulated in Article 79 of Decree No. 24/2000/ND-CP. To ensure the management requirements of the customs office, the enterprises shall have also to meet the following demands:

a/ To strictly observe the prescriptions of law; to have clear business, financial and credit relations.

b/ To have in operation a system of books and vouchers to fully and closely monitor the export, import, deliveries from and receptions into the warehouses according to prescriptions of Vietnamese law, or a system of books and vouchers accepted by the competent State agency of Vietnam.

c/ The factory and warehouses must be located in areas convenient to the management and supervision by the Customs Service.

3. Procedures to apply for setting up a tax-guarantee warehouse:

3.1. An enterprise that wishes to set up a tax-guarantee warehouse shall have to send to the provincial or city customs office two sets of dossier composed of the following papers:

- An application for setting up a warehouse (according to the form issued by the General Department of Customs).

- The investment license (notarized copy).

- Map of the enterprise and map of the tax-guarantee warehouse.

- Operating rules of the tax-guarantee warehouse of the enterprise.

3.2. Within 10 days after receipt of the complete and valid dossier, the customs office of the concerned province or city shall make a survey and, if all conditions are met, shall make a written proposal to the General Department of Customs (attached to a set of dossier). The written proposal must record fully and concretely all the remarks on the conditions stipulated at Point 2, Part III of this Circular, on the applicant for setting up the warehouse, the local customs office’s capacity of supervising, managing and controlling the warehouse.

Within 20 days after receipt of the dossier and the proposal of the provincial or municipal customs office, the General Department of Customs shall issue the permit to set up the tax-guarantee warehouse or shall answer the enterprise in writing.

The permit to set up the tax-guarantee warehouse is valid for one year. On its expiry, if the enterprise still meets all the conditions and applies in writing for extension of the permit to the provincial or municipal customs office, the General Department of Customs shall consider the extension by one year each time.

In case the tax-guarantee warehouse expires its effective period, if the enterprise does not apply for extension, the raw and auxiliary materials still left in the warehouse shall be handled as follows:

- If the enterprise no longer needs to use these materials and makes a written proposal, the customs office shall make procedures for re-export or destruction.

- If the enterprise makes a written proposal to change to the form of import of raw material to produce goods for export or for domestic consumption, the enterprise shall register a new customs declaration form. The customs office shall calculate the tax and issue a tax notice. The time to register the declaration form and to calculate the tax is the expiry of the effective time of the tax-guarantee warehouse. The grace period shall comply with prescriptions of the Law on Export Tax and Import Tax for each type of goods.

3.3. To get the permit to set up and extend the permit for the tax bonded warehouse, the enterprise shall have to pay a fee stipulated in the Joint Circular No. 71/2000/TTLT-BTC-TCHQ of July 19, 2000 of the Ministry of Finance and the General Department of Customs.

4. Customs procedures for taking goods into and out of the tax-guarantee warehouse:

Customs procedures for imported raw and auxiliary materials taken into the tax-guarantee warehouse and for export products are the same as for batches of ordinary imported or exported goods. Particularly, the tax calculation and payment for imported raw and auxiliary materials shall comply with the following:

4.1. The enterprises must open separate declaration forms for the imported raw and auxiliary materials that enjoy tax guarantee. A separate declaration form must be opened for the raw and auxiliary materials imported for production for domestic consumption.

The basis for determination of the percentage of imported raw materials that enjoy tax guarantee is the percentage of products for export recorded in the investment license (if the enterprise conducts its export according to the percentage stipulated in its investment license) or the percentage determined by the enterprise which must not be lower than 50% of the products that are turned out. In both cases, the enterprise must send a written registration to the customs office of the province or city that manages the tax -guarantee warehouse and the General Department of Customs prior to the first of January each year.

Basing itself on the percentage of products for consumption on the domestic market as registered by the enterprise in the above-mentioned way, the customs office shall register the declaration form, calculate and collect the import tax on the raw and auxiliary materials for production of products to be consumed on the domestic market.

For the imported raw and auxiliary materials taken into the tax-guarantee warehouse to produce goods for export, the customs office shall not yet calculate and inscribe the tax on the declaration form but shall clearly determine the name of the goods, its type and quantity on the declaration form and must enter it in the monitoring book.

4.2. For the goods taken into the tax-guarantee warehouse that are damaged or have lost their quality and are no longer fit for production, they are allowed to go through customs procedures for re-export or destruction. The destruction shall proceed as follows:

- The enterprise shall send a written document to the customs office managing the tax-guarantee warehouse, stating the reason, the name of the goods, their type and the quantity of the raw and auxiliary materials that need to be destroyed and the serial number and date of the import declaration form made for such raw and auxiliary materials.

The enterprise shall itself organize and take responsibility for the destruction. The destruction shall be carried out under the supervision of the customs office, the tax office and the environment office.

The result of the destruction must be recorded in a certification paper. This paper shall be the voucher for the future settlement of accounts.

4.3. The question of keeping raw and auxiliary materials in the tax-guarantee warehouse: The enterprise is allowed to keep imported raw and auxiliary materials for production of goods for export and for domestic consumption in the tax-guarantee warehouse but must keep each kind separately. The customs office shall also manage these kinds separately. In the process of production, the enterprise may transfer part of the raw and auxiliary materials from one kind to another but must propose in writing to the local customs office and observe the registered export percentage.

When importing raw and subsidiary materials, the goods senders do not necessarily have to separate the vouchers and goods into two kinds but may send a common batch for both kinds. But when making import procedures they must make separate declaration forms for each kind.

4.4. At the end of the plan year (December 31) and on January 31 of the subsequent year at the latest, the enterprise must work out an sum-up table of the declaration forms and the total volume of the imported raw and auxiliary materials enjoying the tax guarantee regime, sum up the export declaration forms and the total volume of exports and send them to the customs office. After checking the accuracy of the report, compare it with the dossier kept at the customs office and basing itself on the registered percentage of products to be exported by the enterprise, the customs office shall proceed as follows:

a/ If the export percentage is lower than the tax guarantee rate, the enterprise shall immediately pay tax for the difference between the quantity of finished products to be exported and the quantity of actually-exported products. In addition, the enterprise shall be fined for tax payment delay as prescribed by law. If lower than 50% of the products are exported or if after three consecutive years, the enterprise still fails to achieve the committed percentage, the customs office of the province or city shall propose to the General Department of Customs to withdraw the tax-guarantee warehouse permit.

The applicable tax rates shall conform to the regulations of the Ministry of Finance at the time when the customs office issues the decision to collect tax.

b/ If the export percentage is higher than the tax-guarantee rate the enterprise shall be reimbursed the tax amount already paid for the difference between the actually exported amount and the amount for which it has paid tax.

c/ The enterprise having a tax-guarantee warehouse must take responsibility for the accuracy and completeness of the sum-up reports mentioned in this point.

4.5. The imported goods taken into the tax-guarantee warehouse are not allowed to be sold on the Vietnamese market. In case the Ministry of Trade allows their sale on the Vietnamese market, the enterprise must pay import tax and other taxes as prescribed by law.

5. Management of the tax-guarantee warehouses by the customs service.

In principle the tax-guarantee warehouses at the enterprises come under the regular control and supervision by the customs office. However, depending on concrete conditions, the heads of the provincial/municipal customs departments shall decide the direct supervision or shall determine the right to inspect and supervise but they shall not conduct direct regular supervision. The inspection and supervision by the customs service shall be conducted mainly when there are goods brought in or out of the tax-guarantee warehouses and through the following acts: making customs procedures for the exports and imports of the enterprises, settlement of accounts of each batch of goods; checking the reports of the enterprises; direct or unexpected inspection (including on the books, vouchers, the system of files on the computer networks, inventorying goods in the warehouses).

The enterprises shall have to organize the management of the warehouses and create all favorable conditions and to closely cooperate with the customs service in conducting the above inspection and supervision regime.

IV ORGANIZATION OF IMPLEMENTATION

1. This Circular takes effect after its signing. All the earlier stipulations which are contrary to this Circular are now annulled.

2. All acts of violating the provisions of this Circular and other relevant provisions shall be handled according to law.

For the General Director of Customs
Deputy General Director
DANG VAN TAO