Laws of Vietnam

DECISION No.285-TCHQ/QD OF NOVEMBER 20, 1997 PROMULGATING THE REGULATION ON DETERMINING PRICES FOR CALCULATION OF IMPORT-EXPORT TAXES

THE GENERAL DIRECTOR OF THE GENERAL DEPARTMENT OF CUSTOMS

- Pursuant to the Ordinance on Customs of February 20, 1990;

- Pursuant to Article 7 of the Law on Import-Export Taxes promulgated on January 4, 1992;

- Pursuant to Article 7 of Decree No.54-CP of August 28, 1993 of the Government;- Pursuant to Decision No.918-TC/QD/TCT of November 11, 1997 of the Minister of Finance;- Pursuant to Circular No.82/1997/TT/BTC of November 11, 1997 of the Ministry of Finance guiding the application of prices for calculation of import-export taxes;- At the proposal of the Head of the Department for Inspection of Import-Export Tax Collection,DECIDES:Article 1.- To issue together with this Decision the Regulation on Determining Prices for Calculation of Import-Export Taxes.Article 2.- This Decision takes effect from December 01, 1997.Article 3.- This Decision shall replace Decision No.192/TCHQ/KTTT of May 15, 1995 of the General Department of Customs; guiding Official Dispatch No.3670/TCHQ-KTTT of November 14, 1996 of the General Department of Customs and the earlier provisions of the General Department of Customs which are contrary to this Decision.Article 4.- The head of the Department for Inspection of Import-Export Tax Collection, the heads of the units attached to the General Department, the Directors of the provincial/municipal Customs Departments shall have to implement this Decision.For the General Director of the General Department of CustomsDeputy General DirectorNGUYEN VAN CAMREGULATION ON DETERMINING PRICES FOR CALCULATION OF IMPORT-EXPORT TAXES (issued together with Decision No.285-TCHQ-QD of November 20, 1997 of the General Director of the General Department of Customs)A.- USE OF PRICES FOR TAX CALCULATION:In principle, the application of prices for tax calculation must be carried out quickly, conveniently and in strict compliance with the regulations on the control of the tax calculation prices, thus avoiding obstruction to the release of goods.The use of prices for tax calculation to specific cases is detailed as follows:I.- FOR IMPORT GOODS:1. At the place for filling customs procedures, the tax officer shall have to examine all the dossiers of the lot of goods, particularly the validity of the contract, receipts and payment vouchers as prescribed. Invoices for the calculation of minimum import tax (issued by the Ministry of Finance and by the General Department of Customs after consulting the Ministry of Finance) and make public such invoices at the place for filling customs procedures.2. Basing him/herself on the results of examination of the goods actually imported and the related documents, the tax officer shall re-examine the following contents: Specific names of the commodities, their symbols and codes, their quality, origin, specifications, volume, weight and unit prices written in the contract..., then determine the tax calculation price on the basis of the minimum import price calculation index effective at the time of the import of goods. More concretely:a/ With regard to import goods on the list of commodities with tax calculation prices controlled by the State as prescribed in Decision No.918-TC/QD/TCT of November 11, 1997 of the Minister of Finance:- If the contractual prices conform with the valid papers related to the sale and purchase of goods and are equivalent to or higher than the minimum purchase prices provided for in the current price indice, the prices for import tax calculation shall be the prices stated in the sale and purchase contract (CIF prices).- If the contractual prices are lower than the prices defined in the minimum price index or if the goods are imported in a mode other than the mode of sale and purchase, the prices for import tax calculation shall be the minimum prices provided for in the current minimum import tax calculation price index.b/ For import goods outside the list of commodities with tax calculation prices controlled by the State:- If they meet conditions prescribed in Point I, Section C of Circular No.82/1997/TT/BTC of November 11, 1997 of the Ministry of Finance guiding the use of prices for import tax calculation, the prices stated in the foreign trade contracts (CIF prices) shall apply.- If they fail to meet conditions for the use of prices stated in the foreign trade contracts as prescribed in Point I, Section C, Circular No.82/1997/TT/BTC of November 11, 1997 of the Ministry of Finance guiding the use of prices for import tax calculation or if they are imported in a mode other than the mode of sale and purchase without payment through a bank, the current minimum import tax calculation price index shall apply.c/ In case the tax calculation must be based on the prices provided for in the minimum price index (for goods with prices controlled by the State or goods which are not eligible for the use of the contractual prices) but such prices are not available in the minimum price index issued by the Ministry of Finance or the General Department of Customs, the tax officer at the place for filling customs procedures shall calculate the tax on the basis of the prices (CIF prices) declared by the concerned enterprise for the newly-made commodities, and at the same time make a price report to be submitted to the price bureau or the tax collection inspection bureau of the local customs department which shall later make a sum-up price report attached with its proposal on the prices for tax calculation (as defined in Point II, Section B of this document) and send it to the General Department of Customs for consideration and direction.d/ For the enterprises and units entitled to make a self-declaration on prices for import tax calculation, they shall have to make commitments and take full responsibility for the veracity and accuracy of the declared prices; if a false declaration is detected, the concerned enterprise shall not only have to pay import tax arrears but depending on the seriousness of its violation, also be fined from two to five times the evaded tax amount.e/ In case the imported goods are accompanied with lawful and valid sale and purchase contracts and eligible for tax calculation according to contractual prices as provided for in Decision No.918-TC/QD/TCT of November 11, 1997 of the Minister of Finance and Circular No.82/1997/TT/BTC of November 11, 1997 of the Ministry of Finance, but the selling and buying prices (CIF prices) written in the foreign trade contracts are two low or too absurd, the local customs department shall report to the General Department of Customs and the Ministry of Finance for direction on each specific case.3. In the use of the prices for tax calculation, it is necessary to state clearly that they are "contractual prices" or minimum prices provided for in the current minimum import tax calculation price index and clearly indicate which price index is used (in the price column of the customs declaration).4. If contractual prices are used, the provincial/municipal customs department shall have to write the goods' specific names, the names of the companies importing them, the serial numbers of the declaration papers, the FOB or CIF prices and the serial numbers of the contracts; consider cases of using contractual prices for tax calculation and once every ten days report them to the General Department of Customs and the Ministry of Finance for considering and directing the determination of tax calculation prices (separate reports are required for specific cases of import as mentioned in Section II, Circular No.82/1997/TT/BTC of November 11, 1997 of the Ministry of Finance).

5. Prices for the calculation of tax on used import goods shall be equivalent to 70% (seventy per cent) of the prices of brand-new goods of the same type. If the prices of the brand-new goods of the same type are not available, the prices of brand-new goods of the equivalent type shall serve as basis for tax calculation.

II.- FOR GOODS ON THE LIST OF COMMODITIES WITH TAX CALCULATION PRICES CONTROLLED BY THE STATE, IMPORTED BY SUBJECTS DEFINED IN SECTION A, CIRCULAR No.82/1997/TT/BTC OF NOVEMBER 11, 1997 OF THE MINISTRY OF FINANCE FOR USE AS MATERIALS AND RAW MATERIALS TO BE PUT DIRECTLY INTO PRODUCTION OR ASSEMBLY:

1. On the basis of a thorough study of the provisions applicable to the above-said form of import defined in Decision No.918-TC/QD/TCT of November 11, 1997 of the Minister of Finance and Circular No.82/1997/TT/BTC of November 11, 1997 of the Ministry of Finance and the dossier registered for completion of procedures for the import of the lot of goods, the local customs department shall conduct a check and if it deems that all conditions prescribed in Point II, Section C of Circular No.82/1997/TT/BTC of November 11, 1997 of the Ministry of Finance are met, the contractual prices (CIF prices) shall comply with its approval written on the customs declaration.

In implementing these provisions, the local customs department should pay attention to the following:

a/ Regarding the certification of technological lines for the manufacture of products:

- A domestic production unit must obtain certification from the parent ministry or the provincial/municipal People's Committee that it has the necessary technological line for production and assembly, is fully able of making products as prescribed and uses the imported materials and raw materials for the production thereof.

- An enterprise with foreign investment ital must obtain certification from the Ministry of Planning and Investment or the Ministry of Science, Technology and Environment that it has the technological line for production and assembly and complete equipment, meets the prescribed technical conditions, performs the production and business functions in conformity with its investment license and uses the imported materials and raw materials for production and assembly of the products.

b/ The enterprise or unit engaged in the import or consigned import activities must obtain from the tax agency directly managing it the certification that it has strictly observed the regulations on accounting books, vouchers and receipts.

3. If a lot of goods is not qualified for the use of the contractual prices as prescribed in Point II, Circular No.82/1997/TT/BTC of November 11, 1997 of the Ministry of Finance, the local customs department shall base itself on the principles of controlling the tax calculation prices to apply the current minimum price index to tax calculation.

4. The supply of imported materials and raw materials by a domestic independent business cost-accounting enterprise to another (including units of the same corporation or union...) shall not be considered "direct input into production".

5. With regard to the imported materials and raw materials on the list of commodities with tax calculation prices controlled by the State, which have been taxed according to the contractual prices (CIF prices) that are lower than the prescribed minimum prices, if they are not directly put into production but sold or transferred to other enterprises, units or organizations, within two days after such sale or transfer, the concerned units or enterprises shall have to declare to the customs agency of the locality where the procedures for the import of the lot of goods has been completed. The local customs department shall, on the basis of the declaration made by the importing unit and certification by the local tax department, re-calculate the tax for the transferred materials in accordance with the regulations on the tax calculation prices at the time of transfer and then issue a notice on the additional tax amount.

6. In order to manage customs declarations for import registration in this form, the tax collection inspection bureau of the local customs department shall have to open a monitor book which must include the following details:

+ The name of the importing unit

+ The serial number of the import contract

+ The registration number of the customs declaration

+ The opening date of the customs declaration

+ The import volume

+ The volume of goods that have been put into production

+ The remaining volume of goods (that have not yet been put into production)

+ The volume of goods transferred (not directly put into production)

Once every three months, the local customs department shall request the importing unit to discuss directly with it on a detailed calculation of the volume of goods imported in this form, which have not yet been put into production or not been directly put into production.

III.- REGARDING GOODS IMPORTED BY ENTERPRISES WITH FOREIGN INVESTMENT ITAL AND RAW MATERIALS AND MATERIALS IMPORTED FOR THE PRODUCTION OF GOODS FOR EXPORT:

1. With regard to goods imported by enterprises with foreign investment ital, which are not exempt from import tax under the Law on Foreign Investment in Vietnam:

a/ With regard to import goods which are not exempt from tax as prescribed, the determination of tax calculation prices shall comply with the current regulations guiding the determination of tax calculation prices as provided for in Points I and II, Section A of this document.

b/ With regard to goods which are raw materials, spare parts, accessories and materials imported for the production of export goods, which, when being imported, are subject to the import tax, and when being exported are eligible for the reimbursement of the tax amount corresponding the volume of materials and raw materials used for the production of the export products, the tax shall be calculated according to the prices stated in the foreign trade contract. The remaining raw materials, if not being used for the production of export goods and subject to the tax payment when imported the tax calculation prices shall be re-determined according to the guidances on the application of tax calculation prices provided for in this document.

c/ To avoid the possibility that the goods owner may lower the goods' prices to sell them within the country or increase the goods' prices to raise the value of his/her ital contributions, the provincial/municipal customs department shall have to monitor specific cases, summarize and report them to the General Department of Customs for handling measures, which, however, must not affect the release of goods.

2. With regard to raw materials imported for the production of goods for export (by enterprises without investment ital contributions): if being exported in the form of finished products and eligible for the reimbursement of the tax amount corresponding to the volume of finished products, the determination of tax calculation prices shall also comply with the provisions of Point I(b), this Section.

3. With regard to materials and raw materials imported for the processing of goods for foreign countries:

- The provisions of Official Dispatch No.663/TCHQ-KTTT of February 28, 1997 of the General Department of Customs shall apply: the tax calculation in the customs declaration is not required, and the goods shall be examined and quickly released.

- In case the materials and raw materials imported for the processing of goods for foreign countries have not been used up or the finished products therefrom have not been exported, if they have been subject to import tax payment, the prices for tax calculation shall be determined in accordance with guidances provided for in this document and the time for determination shall be the time when the reason for tax exemption changes.

IV.- FOR EXPORT GOODS:

In case a foreign trade contract is lawful and valid as prescribed in Point I, Section C, Circular No.82/1997/TT/BTC of November 11, 1997 of the Ministry of Finance and the prices written thereon conform with the relevant valid documents, the tax calculation prices shall be the prices stated in the foreign trade contract (FOB prices, excluding the freight "F" and insurance premium "I")

B.- SETTING PRICES:

I.- CASES WHERE TAX CALCULATION PRICES MUST BE SET:

- For newly-made goods with tax calculation prices controlled by the State but such prices are not available in the price index promulgated together with Decision No.918-TC/QD/TCT of November 11, 1997 of the Minister of Finance;

- For goods with tax calculation prices not controlled by the State, which are not qualified for the application of the contractual prices for tax calculation as prescribed in Article 2, Decision No.918-TC/QD/TCT of November 11, 1997 of the Minister of Finance, or goods imported in a mode other than the mode of sale and purchase for which the tax calculation prices have not yet been specified in the minimum import tax calculation price index promulgated jointly by the General Department of Customs and the Ministry of Finance.

II.- PRICE SETTING PROCESS:

- When calculating tax according to prices (CIF prices) declared by the enterprise itself for the lot of the newly-made goods (the minimum prices of which have not been provided for in the current minimum import tax calculation price index), the tax officer at the place for filling customs procedures shall make a price report and send it to the tax collection inspection bureau or the price bureau of the local customs department on the same day of tax calculation.

- The tax collection inspection bureau or the price bureau shall have to make a summary price report attached with its proposals on the tax calculation prices and send it to the leadership of the local customs department and within two days from the date of the registration of the import declaration on the lot of the newly-made goods, shall have to report by fax to the General Department of Customs and at the same time send an official dispatch to the General Department of Customs and the Ministry of Finance. The provincial/municipal customs departments shall not be allowed to issue decisions on the setting of tax calculation prices.

In the price report all columns, sections and notes must clearly state the grounds for making price proposals and for keeping the goods' samples or not. The local customs department shall have to take responsibility before the General Department of Customs for the proposed prices as well as the grounds for making such proposal.

- Within 15 days after receiving the price reports from the local customs departments, the General Department of Customs shall have to decide the concrete levels of prices to be uniformly applied by the customs departments in all localities. The General Department of Customs shall consult the Ministry of Finance to gather the price reports and issue a decision on the amendment and supplement to the minimum price index.

- In case the local customs department discover that the prices prescribed in the minimum price index are not reasonable, it shall report in time to the General Department of Customs and the Ministry of Finance for prompt adjustment.

C.- SETTLEMENT OF COMPLAINTS:

- In case an importing unit complains about the application or the setting of high prices or unreasonable prices as compared with the average CIF prices applicable at the border gate, the customs department of the province or city where the customs procedures have been completed shall consider the complaint and proceeds as follows:

+ If the prices are unreasonable since the tax officer has improperly applied the prices in the minimum price index, the provincial/municipal customs department shall re-examine such application, reply in writing to the complainant and at the same time apply the prescribed prices.

+ If the complaint is about the unreasonably high tax calculation prices which have been, however, specified in the minimum price index, the provincial/municipal customs department shall transfer the complaint dossier to the General Department of Customs and the Ministry of Finance for consideration and reply.

- After the General Department of Customs has sent a written reply to the importing unit and the customs department of the province or city where the customs procedures have been completed, the latter shall study such official dispatch and settle the case quickly and conveniently in the spirit of the directions in the official dispatch. In case the reply from the General Department of Customs remains unclear, the local customs department must immediately report it to the General Department of Customs. Within 7 days after receiving the official dispatch giving reply on the settlement of the complaint from the General Department of Customs, the provincial/municipal customs department shall have to settle the goods owner's claim.

- If the importing unit does not satisfy with the settlement by the General Department of Customs, it may lodge its complaint to the Ministry of Finance, and the opinions of the Minister of Finance shall be final.

D.- HANDLING OF VIOLATIONS:

An importing enterprise, if detected to be violating the provisions of Decision No.918-TC/QD/TCT of November 11, 1997 of the Minister of Finance and Circular No.82/1997/TT/BTC of November 11, 1997 of the Ministry of Finance guiding the application of import tax calculation prices, shall, besides having to pay the import tax and special consumption tax (if any) arrears but also be sanctioned for tax evasion in accordance with the provisions of the current Law on Import and Export Taxes, the Law on Special Consumption Tax, Decree No.22-CP of April 17, 1996 of the Government on sanctions against administrative violations in the field of taxation, and Circular No.45-TC/TCT of August 1st, 1996 of the Ministry of Finance guiding the implementation of Decree No.22-CP.

For a repeat violation (from the second time onwards), the local customs department shall not allow the concerned unit, organization or enterprise to continue the application of the regulations provided for in Circular No.82/1997/TT/BTC of November 11, 1997 of the Ministry of Finance.

In the course of implementation, any arising problem must be promptly reported to the General Department of Customs for study, consideration and appropriate amendment and supplement.

For the General Director of the General Department of Customs

Deputy General Director