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PRIME MINISTER
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SOCIALIST
REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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No. 08/2017/QD-TTg
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Hanoi, March 31,
2017
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DECISION
GUIDING
THE IMPLEMENTATION OF THE PROTOCOL BETWEEN THE GOVERMENT OF THE SOCIALIST
REPUBLIC OF VIETNAM AND THE GOVERNMENT OF THE RUSSIA FEDERATION ON SUPPOTING
THE PRODUCTION OF MOTOR VEHICLES IN THE TERRITORY OF VIETNAM
Pursuant to the Law on organization of Government
dated June 19, 2015;
Pursuant to the Law on Treaties dated April 09,
2016;
Implement the Protocol between the Government of
the Socialist Republic of Vietnam and the Government of the Russia Federation
on supporting the production of motor vehicles in the territory of Vietnam
signed at Moscow on March 21, 2016 (hereinafter referred to as “Protocol”);
Implement the Free Trade Agreement between the
Socialist Republic of Vietnam and the Eurasian Economic Union and its members
(Hereinafter referred to as the VN - EAEU FTA Agreement) signed at Burabay, the
Republic of Kazakhstan on May 29, 2015;
Pursuant to the Government’s Decree No.
95/2012/ND-CP dated November 12, 2012 defining the functions, tasks, powers and
organizational structure of the Ministry of Industry and Trade;
At the request of the Minister of Industry and
Trade;
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Chapter I
GENERAL PROVISIONS
Article 1. Scope
This Decision prescribes the process of allocation
of tariff quota, procedure for issuance of license for importation under tariff
quota, inside and outside tariff quota rates and the cooperation and management
mechanism between regulatory agencies to implement the mechanism of tariff
quota on importation applicable to motor vehicles and SKD kits within the
framework of Protocol.
Article 2. Regulated entities
1. Competent State management
authorities.
2. Joint ventures satisfied
all requirements specified in Article 4 this Decision.
Article 3. Definitions
In this Decision, these terms are construed as
follows:
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a) “GAZ”, LLC Automobile manufacturing plant
Address: 603004, 5 Ilyicha, Nizhny Novgorod,
Russian Federation.
b) «KAMAZ» International Trading Company
Address: 423815, 2 Avtozavodsky Avenue, Naberezhny
Chelny, Republic of Tatarstan, Russian Federation.
c)“Ulyanovsky Avtomobilny Zavod” (UAZ) Public
joint-stock company
Address: 432034, 92 Moskovskoe Avenue, Ulyanovsk,
Russian Federation; and
d) The enterprises added or replaced at the request
of the Russian Federation.
2. ”Joint venture” refers to a
juridical person established in accordance with an agreement signed between an
enterprise authorized by the Russia and an interested Vietnamese enterprise
within the territory of Vietnam correspond to law provisions of Vietnam.
3. “Motor vehicle” means a
number of SUV (a sport utility vehicle) of UAZ (M1G); a motor vehicle which is
designed to carry 10 passengers or more, including the driver (M2, M2G, M3,
M3G); a truck (N1, N1G, N2, N2G, N3, N3G) and a specialized vehicle (SB, SC,
SD) as agreed between the enterprise authorized by the Russia and the
interested Vietnamese enterprise.
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5. “Local content” means the
domestic value added content calculated in accordance with the following
formula:
Local content
=
Cost of raw
materials of Vietnam
+
Direct labor cost
+
Direct overhead
cost
+
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*100%
Ex Works (EXW)
a) Cost of raw materials of Vietnam means the value
of raw materials, components or goods made in Vietnam and satisfied the origin criteria
in accordance with the rules specified in Chapter 4 (Rules of Origin) of
Agreement VN - EAEU FTA;
b) Direct labor cost includes salaries, bonuses and
other benefits of workers associated with the production process in accordance
with the law of Vietnam, including compulsory social and health insurance;
c) Direct overhead cost includes but is not limited
to administrative and commercial expenses; costs of fixed assets associated
with the production process (costs of rental, building depreciation, taxes,
including income tax and mortgage interest); rental costs and interest payable
on plants and equipment; plant protection costs; insurance costs (plant,
equipment and materials used in the production of goods); costs for using
public services (energy, electricity, water and other public service charges
associated with the production of goods); research and development costs,
design and engineering costs; dyes, molds, tools and depreciation, maintenance
and repair of plants and equipment; royalties or licenses (related to
copyrighted machines or processes used in the production of goods or the right
to produce goods); costs of testing and inspection of materials and goods;
warehouse costs; costs for recycling wastes and costs of elements used in the
calculation of the value of raw materials, i.e. port fees and the fees for
release of goods and import duties on dutiable items;
d) Profit means the net profit of the joint
ventures after deducting all taxes and fees in accordance with the Vietnamese
law;
dd) EXW price means the price of goods based on Ex
Works which is provided for in Incoterm 2010 promulgated by the International
Chamber of Commerce.
Article 4. Requirements
applicable to joint ventures
Eligible joint ventures include:
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2. Each enterprise authorized
by the Russia is eligible to establish only one joint venture in the territory
of Vietnam.
3. The capital contribution
ratio of Vietnamese enterprises in the joint venture shall be at least 50% of
the total charter capital of such joint venture.
4. The joint ventures shall be
established and operated for a period of at least 10 years but not more than 30
years.
5. The enterprises authorized
by the Russia shall not transfer their capital in the joint ventures to any
third party from the third country.
6. The local content that the
joint ventures shall achieve for the years of 2020 and 2025 is set as follows:
Year
2020
2025
Sport utility vehicles (SUV) of “UAZ”
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40%
Motor vehicles which are designed to carry 10
passengers or more, including the driver
35%
50%
Trucks
30%
45%
Specialized vehicles
25%
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7. The motor vehicles
manufactured by the joint ventures to use in the territory of the Socialist
Republic of Vietnam shall meet the technical requirements, standards and conformity
assessment procedures in accordance with the laws of Vietnam.
Chapter II
IMPORT TARIFF QUOTAS
Article 5. Import tariff quotas
1. Total import tariff quotas
applicable to all joint ventures until 2021:
Year
2016
2017
2018
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2020
2021
Motor vehicles (one unit of vehicle)
800
850
900
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2.500
3.000
3.000
2.500
2.500
2. The Ministry of Industry
and Trade shall allocate the import tariff quota for each joint venture annually
based on the total import tariff quota specified in Clause 1 Article 5 this
Decision, notify on the allocation of import tariff quotas of the Ministry of
Industry and Trade of the Russian Federation and the current process of the
implementation of the production plan of the joint venture sent to the Ministry
of Industry and Trade.
3. The volume of quota granted
in the following year may be exempted, subject to the implementation of local
content of the joint ventures in their production plans and the implementation
of quota in the previous year in accordance with the following formula:
Volume of import tariff quotas granted in the
following year
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In which:
a) M is the volume of quotas for each joint venture
in accordance with Clause 1 Article 5 this Decision and the notice of the
Russia (Ministry of Industry and Trade of the Russian Federation) on allocation
of import tariff quota;
b) A is the percentage of actual failure to
implement the local content in the production plan of the previous year;
c) B is the volume of quotas specified in Clause 1
Article 5 this Decision that is not taken up in the previous year and is
transferred to the following year;
d) C is 30% of M for the following year if the
joint venture executes from 50 to 80% of the quota in the previous year (M of
the year before) specified in Clause 1 Article 5 this Decision;
dd) D is 50% of M for the following year if the
joint venture executes less than 50% of the quota in the previous year (M of the
year before) specified in Clause 1 Article 5 this Decision.
4. If there are any changes in
the volume of quotas specified in Clause 1 Article 5 this Decision, the
Ministry of Industry and Trade of Vietnam shall notify the Ministry of Industry
and Trade of Russian Federation before January 31 annually.
Article 6. Regulations on
import tariff rates
1. The import tariff rates
inside the import tariff quota shall be 0% if the origin of the goods is in accordance
with the rules specified in Chapter 4 (Rules of Origin) of Agreement VN - EAEU
FTA and approved by the Certificate of Origin issued with indication of 55%
value added content calculated in accordance with Chapter 4 (Rules of Origin)
of Agreement VN - EAEU FTA. The value of Vietnamese materials shall be excluded
from the calculation of value added content.
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a) If the goods obtain the Certificate of Origin in
accordance with Agreement VN - EAEU FTA (Certificate of Origin form EAV), the
import tariff rate outside the import tariff quota shall be the effective
import tariff rate specified in the Agreement VN - EAEU FTA;
b) If the goods do not obtain the Certificate of
Origin form EAV, the import tariff rates outside the import tariff quota shall
be determined in accordance with related law provisions on taxes of Vietnam.
Chapter III
PROCEDURE FOR ISSUANCE
OF LICENSE FOR IMPORTATION UNDER TARIFF QUOTAS AND IMPORTATION UNDER TARIFF
QUOTAS
Article 7. Procedures for
issuance of license for importation under the tariff quota
1. The joint venture shall
submit the annual production plan to the Ministry of Industry and Trade, in
which specify:
a) Type and quantity of vehicles which will be produced;
b) The list of components in SKD kits;
c) Tariff lines corresponding to motor vehicles and
SKD kits which will be imported at 8-digit number level according to the list
of Vietnam’s exports and imports;
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dd) Expectation of the implementation of the
agreement on technology transfer and human resources training;
2. Within 30 days from the
receipt of the production plan sent by the joint venture, the Ministry of
Industry and Trade shall announce the result of the approval of this plan. In
case it is necessary to clarify or supplement the production plan, the Ministry
of Industry and Trade shall notify the joint venture on specific requests for
additional information to be provided.
Within 10 days from the receipt of the production
plan sent by the joint venture, the Ministry of Industry and Trade shall
announce the approval or rejection of this plan.
3. Based on the annual
production plan approved by the Ministry of Industry and Trade of the joint
venture and the allocation of tariff quota of the Ministry of Industry and
Trade of Russian Federation, joint ventures shall submit their applications to
the Ministry of Industry and Trade for import licenses in accordance with the
tariff quotas to import motor vehicles and/or SKD kits, together with the
Certificate of Origin form EAV granted by a competent authority of the Russian
Federation in accordance with the regulations specified in the Protocol. The
following information must be specified in the application:
a) Number of registrations for all types of
vehicles, importing date;
b) 8-digit tariff lines according to the list of
Vietnam’s exports and imports, corresponding to the approved production plan
(except parts and components of motor vehicles produced in the territory of
Vietnam).
4. The Ministry of Industry
and Trade shall grant the import license in accordance with the tariff quota
based on the production plan and specific requirements on importation of the
joint venture within 14 days from the receipt of the application of the joint
venture. The license will expire after December 31 annually.
Article 8. Procedure for
importation
Based on the import license in accordance with the
tariff quota granted by the Ministry of Industry and Trade and the law
provisions of Vietnam, customs authorities at checkpoints where the import
procedure is carried out shall grant customs clearance in accordance with the
principle of automatic subtraction of tariff quota for each product in the
license.
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Import licenses under quotas shall be revoked if
joint ventures commit one of the following cases:
1. The joint venture does not
operate in accordance with the Vietnam laws.
2. The joint venture does not
meet the requirements on local content within 10 years from the effective date
of the Protocol as specified in Clause 6 Article 4 this Decision.
3. Enterprises authorized by
the Russia transfer their capital in the joint venture to any third party from
a third country.
4. The joint venture does not
fulfill its duty in the agreements related to technology transfer.
5. The joint venture does not:
carry out specific activities to contribute to the development of Vietnam's
auto parts manufacturing industry; develop car maintenance and repair service
system; provide technical training for local workers and support for motor
vehicles and SKD kits produced by joint ventures into foreign markets,
including the Eurasian Economic Union.
Article 10. Change of
authorized enterprises in accordance with the Protocol
The Ministry of Industry and Trade shall take
charge and review the request of the Russia (the Ministry of Industry and Trade
of Russian Federation) on the supplementation or replacement of authorized
enterprises based on the criteria specified in the Protocol and send a
confirmation to the Russia on eligible enterprises within 28 days from the
receipt of the request and necessary documents.
Chapter IV
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Article 11. Cooperation
mechanism in the issuance of import licenses under tariff quotas
1. The Ministry of Industry
and Trade shall take charge in:
a) Implementing the procedures for review and
issuance of import licenses under tariff quotas;
b) Reviewing the request of the Russia on
supplementation and replacement of authorized enterprises in accordance with
the Protocol and notifying to the concerned ministries and sectors in case of
accepting the request.
2. The Ministry of Industry and
Trade shall take charge and cooperate with concerned ministries in approving
the production plans of joint ventures to grant import licenses under tariff
quotas, in which:
a) The Ministry of Science and Technology shall
review and accept the fragmentation of imported SKD kits specified in the
production plan in accordance with effective regulations;
b) The Ministry of Finance shall review the
compatibility of the list of motor vehicles and SKD kits proposed to enjoy the
duty exemption under tariff quotas in the 8-digit production plan according to
the list of Vietnam’s exports and imports.
3. Before January 31 annually,
the Ministry of Industry and Trade shall notify the Ministry of Finance on the
adjusted tariff quotas.
4. The Ministry of Industry
and Trade shall notify the Ministry of Finance on the list of motor vehicles
and SKD kits to be imported of each joint venture immediately after approving
the production plan of such joint venture.
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Chapter V
INSPECTION AND REPORT
Article 12. Inspection
1. The Ministry of Industry
and Trade shall inspect the production; evaluate the implementation of tariff
quotas, the implementation of the commitments on local content of each joint
venture and the adjustment of the duty-free quotas for the following year.
2. The Ministry of Finance
shall inspect the customs clearance of shipments to ensure that the imported
motor vehicles and SKD kits are duty free in accordance with the list of motor
vehicles and SKD kits sent by the Ministry of Industry and Trade and the import
licenses under tariff quotas issued by the Ministry of Industry and
Trade.
3. The Ministry of Transport
shall inspect motor vehicles and SKD kits manufactured by joint ventures to use
in the territory of Vietnam to ensure that such motor vehicles and SKD kits
meet the technical requirements, standards and conformity assessment procedures
specified in relevant law provisions of Vietnam.
Article 13. Reporting
responsibilities
1. The joint venture shall comply
with the Vietnam laws.
2. Before January 15 annually,
joint ventures shall submit to the Ministry of Industry and Trade their reports
on the production and business results of the previous year, the implementation
of tariff quotas and implementation of local content, in which specify:
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b) Type and quantity of manufactured vehicles;
c) Information on necessary data to calculate the
local content (costs of raw materials of Vietnam, direct labor costs, direct
overhead costs, profits and EXW price);
d) The most recent update of the annual financial
statement.
Chapter VI
IMPLEMENTATION CLAUSE
Article 14. Effect
This Decision takes effect on May 15, 2017.
After the Protocol comes into force, every 5 years,
the Ministry of Industry and Trade shall cooperate with concerned ministries
and sectors in reviewing the commitments on local content of each joint venture
and consider revoking the license of the joint venture if the joint venture
does not reach the local content as committed in Clause 6 Article 4 this
Decision after 10 years.
Article 15. Implementation
responsibilities
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2. Ministers of Industry and
Trade, Finance, Planning and Investment, Science and Technology and Transport
shall implement this Decision./.
PRIME MINISTER
Nguyen Xuan Phuc
[1] The classification of motor transport vehicles
by categories is regulated in the United Nations Economic Commission for Europe
(UNECE) regulations