117/2011/TT-BTC in Vietnam, Circular No. 117/2011/TT-BTC guiding customs procedures for goods processed for in Vietnam

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THE MINISTRY OF FINANCE -------	SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom – Happiness ---------
No. 117/2011/TT-BTC	Hanoi, August 15, 2011

CIRCULAR

GUIDING CUSTOMS PROCEDURES FOR GOODS PROCESSED FOR FOREIGN TRADERS

Pursuant to Customs Law No. 29/2001/QH10 of June 29, 2001, and Law No. 42/2005/QH11 of June 14, 2005, Amending and Supplementing a Number of Articles of the Customs Law;

Pursuant to Import Duty and Export Duty Law No. 45/2005/QH11 of June 14, 2005, and Tax Administration Law No. 78/2006/QH11 of November 29, 2006;

Pursuant to the Government’s Decree No. 154/2005/ND-CP of December 15, 2005, detailing the implementation of a number of articles of the Customs Law on customs procedures and customs inspection and supervision;

Pursuant to the Government’s Decree No. 12/2006/ND-CP of January 23, 2006, detailing the implementation of the Commercial Law’s provisions on international purchase and sale of goods and agency for purchase, sale, processing and transit of goods with foreign partners;

Pursuant to the Government’s Decree No. 87/2010/ND-CP of August 13, 2010, detailing a number of articles of the Import Duty and Export Duty Law;

Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

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The Ministry of Finance guides customs procedures for goods processed for foreign traders as follows:

Section 1: GENERAL PROVISIONS

Article 1. Interpretation of terms

1. Processing raw materials include principal raw materials and auxiliary raw materials:

a/ Principal raw materials are raw materials constituting the principal component of a product.

b/ Auxiliary raw materials are raw materials used for the creation of a processed product but not constituting the principal component of the product.

2. Processing supplies are products and semi-finished products used in the process of producing a processed product but not directly constituting the product. Processing supplies include also packages or materials for making packages containing processed products.

3. Processing scraps are raw materials, supplies, machines and equipment discarded in the process of processing but recovered and used as raw materials for another process of production.

4. Processing wastes are raw materials and supplies discarded in the process of processing and unusable.

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6. Processed product norms agreed in a contract include:

a/ Raw material use norm, which is the necessary and reasonable amount of raw materials to produce a processed product unit;

b/ Supplies consumption norm, which is the amount of supplies consumed in order to produce a processed product unit;

c/ Raw material or supplies wastage percentage, which is the amount of raw material or supplies wastage, including natural wastage and wastage due to the creation of processing scraps, defective processed products and processing wastes (excluding scraps and wastes already included in use norms) calculated in a percentage (%) of the raw material use norm or supplies consumption norm.

7. Norm of separation of component raw materials from original raw materials is the amount of component raw materials separated from an original raw material;

For component raw materials separated from original raw materials, the wastage percentage is the amount of wasted original raw materials calculated in a percentage (%) after going through the stage of separation into component raw materials.

8. Machines, equipment and instruments directly used for processing are those in a technological line to turn out processed products, which are leased or lent by the principal to the processor for the performance of a processing contract.

9. Processed goods referred to in Article 29 of the Government’s Decree No. 12/2006/ND-CP of January 23, 2006, are finished products of a process of production or processing which satisfy the requirements of the principal agreed upon in a processing contract.

Article 2. Forms of processing contracts

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2. Signatures and seals in contracts:

Foreign traders shall sign while Vietnamese traders shall sign and seal contracts according to Vietnamese law. Traders being private business households shall sign and write their full names and numbers and dates of issuance of their identity cards.

3. For electronic documents accompanying contracts issued by principals being foreign traders, the processors being Vietnamese traders shall sign and append their seals for certification.

Vietnamese traders being private business households shall comply with Clause 2 of this Article.

Article 3. Contents of processing contracts

The contents of a processing contract must comply with Article 30 of the Government’s Decree No. 12/2006/ND-CP of January 23, 2006.

In case the principal and processor conduct transactions via a third party, such must be expressed in the contract, contract annex or relevant document as proof.

Article 4. Annexes to processing contracts

1. Annexes to a processing contract are an integral part of the processing contract.

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Particularly for the value of raw materials and supplies imported for processing, when it is changed or added, the value indicated on the commercial invoice of the import dossier will be accepted and no adjustment annex is required.

3. For a processing contract which is valid for more than one year, different annexes may be made for performance. The period of performance of each annex must not exceed one year. In special cases in which the time of processing a product lasts for more than one year, the processing contract/annex may be performed for each product (e.g., seagoing ship building or repair).

Article 5. Customs clearance places

Customs procedures for a specific processing contract (including receipt of the contract, acceptance of norms, performance of customs procedures for each lot of imports or exports under the contract and liquidation of the contract) shall be carried out at a district-level Customs Department under a provincial-level Customs Department which is selected by the trader concerned. Specifically:

1. At the district-level Customs Department of the locality where the trader’s production establishment performing the processing contract (including sub-processing establishment) is based, or

2. At the district-level Customs Department of the locality where the trader’s office (head office or office of its lawfully established branch) is based.

3. If there is no customs office in the locality where its production establishment, its head office or the office of its branch is based, the trader may select a district-level Customs Department convenient for customs clearance registration.

Article 6. Responsibilities of traders and customs offices

1. Traders:

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Using for proper purposes and according to norms processing raw materials and supplies under Article 31 of the Government’s Decree No.12/2006/ND-CP of January 23, 2006.

Notifying their processing contracts; carrying out import procedures for raw materials and supplies; notifying and adjusting norms; carrying out procedures for intermediary processing; carrying out export procedures for processed products; and liquidating processing contracts and carrying out other procedures related to processing contracts with customs offices.

Coordinating with customs offices in applying information technology to managing and liquidating processing contracts and carrying out import and export procedures for processed goods.

2. Customs offices:

Carrying out customs procedures, supervising and examining the performance of processing contracts by traders.

Applying information technology to facilitate and strictly manage the performance of processing contracts by traders.

Section 2: CUSTOMS PROCEDURES FOR GOODS RECEIVED FOR PROCESSING IN VIETNAM FOR FOREIGN TRADERS

Article 7. Procedures for notification of processing contracts

1. Responsibilities of traders:

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a/ The processing contract and its annexes (if any): To submit 2 originals (1 to be kept by the customs office and 1 to be returned to the trader after the contract is received) and 1 Vietnamese version (if the contract is made in a foreign language other than English).

b/ The business registration certificate or investment license or investment certificate, for traders being foreign-invested enterprises (if carrying out registration procedures for the first time): To submit 1 copy certified by the trader.

c/ The tax identification number registration certificate (if carrying out registration procedures for the first time): To submit 1 copy certified by the trader.

d/ The permit of the Ministry of Industry and Trade, for processed goods on the list of imports and exports subject to permits: To submit 1 copy certified by the trader and produce the original for comparison.

e/ The certificate of eligibility for scrap import (in case of importing scraps for use as processing raw materials) as provided by law: To submit 1 copy certified by the trader and produce the original for comparison.

f/ A document explaining and evidencing its production establishment, for traders undertaking the processing for the first time, indicating the address of the trader’s head office, the address of the production establishment, goods items and equipment line (including kinds and quantities of existing machines and equipment), design capacity, workforce… (even for cases of processing outsourcing); the account number and the name of the bank with which the trader deposits its money: To submit 1 original.

The trader is required to give explanations only once and make additional explanations when there are any changes in the explained contents. In case of change in the legal person status, address of its working office or production establishment (from the time of submitting the processing contract to the time of completing the liquidation of the contract), the trader shall promptly notify in writing these changes to the district-level Customs Department managing the processing contract.

g/ The processing outsourcing contract (for the case of outsourcing the processing of all products): To submit 1 copy certified by the trader and produce the original for comparison.

2. Tasks of customs offices receiving processing contracts:

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a1/ To examine the conditions for the receipt of the processing contract;

a2/ To check the completeness, consistency and validity of the processing contract;

a3/ To enter in a computer information relating to the processing contract; return to the trader 1 original of the processing contract and original documents already produced;

a4/ If a dossier is invalid, the customs office shall immediately notify such in an operational requirement card to the trader for dossier completion. In case of receiving multiple dossiers at a time and it is unable to immediately make such notification to the trader, within 2 working hours after receiving an invalid dossier, the customs office shall notify such in an operational requirement card to the trader for dossier completion.

a5/ Within 8 working hours after the trader submits a complete and valid dossier, the customs office shall complete the procedures for receiving the processing contract.

b/ For cases in which inspection of production establishments is conducted before receiving processing contracts:

b1/ To perform the jobs specified at Points a1, a2, a3 and a4, Clause 2 of this Article;

b2/ Within 5 working days after the trader submits a complete and valid dossier, the customs office shall complete the inspection of its production establishments and the receipt of the processing contract (or it shall refuse such receipt in an operational requirement card if conditions are not fully met).

For a trader having a production establishment in a province or city other than the locality in which it notifies its processing contract, within 8 working days after the trader submits a complete and valid dossier, the customs office shall complete the inspection of the production establishment and the receipt of the processing contract (or it shall refuse such receipt in an operational requirement card if conditions are not fully met).

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c/ If the customs office gives no feedback within the time limit specified in Clause 2 of this Article, the trader will be automatically permitted to perform the processing contract.

3. Tasks of customs offices carrying out procedures for receiving processing contract annexes:

For a processing contract annex, the customs office shall examine and compare its contents with the processing contract. If their terms are consistent, it shall receive the annex, enter information notified therein in a computer and return to the trader the original annex and the original documents (if any).

Article 8. Inspection of production establishments

1. Cases in which inspection of production establishments is required:

a/ Traders notify the performance of processing contracts for the first time to customs offices;

b/ Traders accept processing but outsource the entire processing under the processing contract/annex to other traders;

c/ No product is exported after 3 months (or a cycle of production of a product for processing specific products like ships, mechanical engineering products, etc.) from the clearance of the import procedures for the first lot of raw materials and supplies under the processing contract/annex.

d/ Customs offices shall conduct inspection on the basis of risk management results and probability to assess traders’ observance of law.

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a/ After the trader submits a complete dossier of notification of the processing contract; or

b/ During the production process.

3. The leaderships of district-level Customs Departments managing the processing contracts are competent to decide on the inspection of the traders’ production establishments and issue written notifications of inspection details 3 working days in advance to traders.

4. Contents of inspection of production establishments:

a/ Checking the lawful right to use or own workshops, machines and equipment at the production establishment:

Should there be no certificates of the agency granting business registration certificates of the lawful right to use or own workshops, machines and equipment at production establishments, the customs office shall directly:

a1/ Check papers proving the lawful right to use workshops and production ground. If there is a contract on lease of workshops and production ground, its validity term must be equal to or longer than the validity term of the processing contract;

a2/ Check the right to own or use machines and equipment at the production establishment against the trader’s declaration in the explanation document to determine the trader’s actual right to own or use such machines and equipment, checking import declarations (for imported machines and equipment); purchase invoices and documents (for locally procured machines and equipment); or financial leasing contracts (for financially leased machines and equipment). For financial leasing contracts, their validity term must be equal to or longer than that of the processing contract;

b/ Check the status of workforce to perform the processing contract;

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b1/ For traders having operated for 2 months or longer:

b1.1/ Check labor contracts; or

b1.2/ Check workers’ pay list of the month preceding the inspection; or b1.3/ Check the list of workers for whom insurance premiums have been contributed which is certified by the insurer for the month immediately before the inspection.

b2/ For traders having commenced production activities for only less than 2 months, check the status of workforce during the process of production.

5. Making of records of inspection of production establishments:

After inspection, customs officers shall make records of inspection of production establishments according to inspected contents. Such records must fully and truthfully reflect actual inspection contents and bear the signatures of inspecting customs officers and at-law representatives of traders of inspected production establishments. The form of this record shall be guided by the General Department of Customs.

6. On the basis of the records of inspection of production establishments, to make conclusions on inspection of production establishments (2 copies), which shall be signed by a leader of the district-level Customs Department and sent (1 copy) to the trader for compliance. The form of this conclusion shall be guided by the General Department of Customs.

7. Handling of results of inspection of a production establishment which show that conditions for the performance of the processing contract are not satisfied:

a/ If the processing contract is not yet received, the customs office shall return the dossier of notification of the processing contract and clearly state the reason.

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If the production establishment exists but fails to satisfy all production conditions according to the required production process, the customs office shall request the trader to make a written commitment to redress the problem within a specified period. It shall concurrently suspend import procedures for subsequent lots of raw materials and supplies under the processing contract until the trader satisfies all conditions on the production establishment suitable to kinds of processed goods and conformable with the trader’s explanations in the document of explanation on the production establishment.

If there is no establishment production, the customs office shall stop clearing import procedures for raw materials and supplies for the performance of the processing contract and request explanations from the trader. Depending on the nature and severity of the violation, it shall forward the dossier to an anti-smuggling or post-customs clearance inspection customs unit for verification, investigation and handling in accordance with law.

Article 9. Procedures for norm notification, adjustment and inspection

1. Norm notification

a/ Traders shall submit to customs offices a table of use norms, consumption norms and wastage percentages of raw material and supplies, made according to form No. 03/TBDM-GC/2011 in Appendix I to this Circular (not printed herein).

Notification of norms of export products shall be made for each category of product. Norms of separation of component raw materials from original raw materials shall be notified for each category of original raw material.

For a raw material used for the production of different kinds of products, the amount of such raw material discarded from the production of a kind of product which is used for the production of another kind of product must neither be regarded as scraps nor included in the wastage percentage, and must be regarded as component raw material.

For categories of goods of various sizes, traders shall declare either norms applicable to each size or the average norms for each category of goods. Traders shall calculate average norms by the method guided in form No.03/TBDM-GC/2011 in Appendix I to this Circular, and give explanations.

b/ In case traders notify average norms for each category of goods but in the process of exportation of processed products they adjust the quantities of exported products of each size compared to the quantities of products of each size in the table explaining the parameters used for calculating the average norms in the initial notification, they shall recalculate the average norms based on the real conditions of exported goods and notify them to the customs offices which have received the initial norms.

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In case the units of calculation used in the notified table of norms cannot accord with those used in the list promulgated together with the Ministry of Finance’s Decision No. 107/2007/QD-BTC of December 25, 2007, traders shall convert the quantities of goods stated in import/export declarations to the units of calculation used in the notified table of norms.

2. Time of norm notification:

a/ For a category of goods the quantity of which indicated in the contract/annex is wholly exported upon a single exportation: At least 10 days before the date of registration of the declaration for the exportation of such category of goods.

b/ For a category of goods the quantity of which indicated in the contract/annex is exported in multiple times: Before or at the time of registration of the declaration for the first exportation of such category of goods.

3. Time of norm adjustment:

a/ For a category of goods the quantity of which indicated in the contract/annex is wholly exported upon a single exportation: At least 5 days before the date of registration of the export declaration.

b/ For a category of goods the quantity of which indicated in the contract/annex is exported in multiple times: At least 5 days before the time of registration of the declaration for the last exportation of such category of goods (for adjustment due to calculation mistakes) or at least 5 days before the time of registration of the declaration for export of products with adjusted norms (for adjustments for a reason stated at Point b, Clause 4 of this Article).

4. Cases of norm adjustment:

a/ Due to calculation mistakes (e.g. mistakes in the use of methods of calculation; units of calculation; commas and stops; and calculation results).

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5. The time limit for notification of average norms recalculated under Point b, Clause 1 of this Article is 15 days after the whole quantity of goods of a category with average norms is exported.

6. When adjusting norms of a category of goods, a trader is not required to change the heading of the category of goods notified to the customs office. The trader and customs office carrying out procedures for the processing contract shall reach agreement on the addition of a sub-heading for the category of goods in the table of adjusted norms and the export declarations for such category of goods.

7. Norms already notified, adjusted or recalculated by traders with customs offices shall be used for liquidation of processing contracts.

8. Cases of inspection of norms:

a/ The trader notifies the increase of norms;

b/ There is a suspected sign of norm fraud;

c/ Within 365 days after the issuance of the sanctioning decision, for traders having been sanctioned for norm frauds. Past the time limit, norm inspection shall be conducted under Points a and b, Clause 8 of this Article.

9. Competence to decide on norm inspection: Leaders of district-level Customs Departments managing processing contracts, post-customs clearance inspection sub-departments and the Post-Customs Clearance Inspection Department.

10. Places of norm inspection:

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b/ Inspection at traders’ production establishments.

11. Methods of norm inspection:

a/ Direct inspection by customs offices;

b/ Inspection by specialized assessment organizations.

12. Time of norm inspection:

a/ After the trader submits the notified table of norms or the written notification of an adjusted norm, or

b/ Upon liquidation of the processing contract, or c/ Upon post-customs clearance inspection.

13. Principles of norm inspection:

The principles of inspection comply with Article 3 of the Government’s Decree No. 154/2005/ND-CP of December 15, 2005. Inspection must be limited to a level suitable to results of information analysis, assessment of goods owners’ law observance and risks of violation of the customs law.

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a/ To give detailed explanations about the grounds and methods of elaborating norms of categories of goods notified to the customs office, enclosed with product samples and their technical design documents (e.g., cutting diagrams for garments).

b/ To produce accounting books and documents to the customs office upon request and create favorable conditions for the customs office to quickly and accurately inspect norms.

c/ To comply with the customs office’s decisions on norm inspection.

15. Tasks of inspecting customs officers:

a/ To conduct inspection according to the prescribed process without obstructing traders’ production;

b/ Time limit for inspection:

b.1/ For documentary examination at the customs office: Norm inspection must be completed within 8 working hours after it begins.

In case a contract/annex covers different categories of goods to be inspected and their norm inspection cannot be completed within 8 working hours, it can be prolonged to the subsequent working day and the prolonged time must not exceed 8 working hours after the inspection begins;

b.2/ For documentary examination in combination with physical inspection at a trader’s production establishment: Norm inspection must be completed within 3 working days after the inspection begins. For products with particular characteristics for which norm inspection requires coordination among specialized agencies, the inspection time limit must not exceed 2 working days after the assessment results are received from specialized agencies;

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d/ To make a written record certifying the result of inspection upon completion of inspection, which fully and truthfully reflects the actual inspection and bears the signatures of the inspecting customs officer and an at-law representative of the trader concerned. The form of norm inspection record shall be guided by the General Department of Customs.

e/ On the basis of the written record of norm inspection, to make a written conclusion on norm inspection (2 copies), which shall be signed by a leader of the district-level Customs Department and shall be sent (1 copy) to the trader concerned for compliance. The form of written conclusion on norm inspection shall be guided by the General Department of Customs.

f/ Measures to be taken when the conclusion states that the norms notified or adjusted by the trader are not true to reality (higher than actual norms):

f1/ To make a record of the violation and administratively sanction the violator according to regulations;

f2/ If the processing contract/annex is not yet liquidated, the norms identified through inspection serve as the basis for liquidation;

f3/ If the processing contract/annex has been liquidated, the norms identified through inspection serve as the basis for the collection of tax arrears.

Article 10. Notification of codes of raw materials and supplies

1. For units having applied to managing and liquidating processing contracts before or at the time of carrying out import procedures for raw materials and supplies, traders shall notify codes of raw materials and supplies according to form No. 01/TBNVL-GC/2011-Appendix I to this Circular (not printed herein): To submit 2 originals.

In case an original raw material is separated into many raw materials for the production of different kinds of products and the final finished products are those created from component materials or from the combination of component materials and others, both the original and component raw materials shall be registered in the list of imported raw materials.

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2. In case a new category arises in the course of performance of a processing contract/annex, the trader shall make additional notification to the customs office.

3. For units having not yet applied information technology to managing and liquidating processing contracts, traders shall use consecutive natural numbers starting from 01 as codes for raw materials and supplies.

Article 11. Procedures for importation of processing raw materials and supplies

1. For processing raw materials and supplies provided from abroad by the principal:

a/ To follow the guidance on customs procedures applicable to commercial imports in Part II of the Ministry of Finance’s Circular No. 194/2010/TT- BTC of December 6, 2010, guiding customs procedures; customs inspection and supervision; import and export duties and tax administration with regard to imports and exports (below referred to as Circular No. 194/2010/TT-BTC), without making duty declaration and checking duty calculations.

b/ For raw materials and supplies purchased by the principal and sent by a third party designated by the principal to the processor, the customs dossier of the imported lot must also contain a document of the principal notifying the processor of the receipt of such goods from the third party.

c/ For finished products supplied by the principal for attachment to or packaging together with processed products into complete goods for export abroad, customs procedures are the same as those applicable to processing raw materials, provided that the following conditions are met:

c1/ The name of the finished product and the purpose of its supply, namely for attachment to or packaging together with processed products into complete goods for export abroad, are clearly indicated in the processing contract/annex;

c2/ They are managed like raw materials and supplies imported for processing;

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d/ Sampling and sample storage: The taking and storage of samples of processing raw materials and their photos comply with the guidance in Article 15 of Circular No. 194/2010/TT-BTC.

2. For processing raw materials and supplies supplied by the principal in the form of on-spot import and export, customs procedures shall be carried out under Article 15 of the Government’s Decree No. 154/2005/ND-CP of December 15, 2005, and the guidance in Article 41 of Circular No.194/2010/TT-BTC.

3. In case processing raw materials and supplies are imported via the express delivery service and the express delivery service provider has registered a declaration according to the form subject to tax payment, at the goods owner’s request, the district-level Customs Department managing the processing contract shall re-register the declaration for the goods owner on the basis of the declaration unsuitable to the form of importation, and issue a written notice to the district-level Customs Department managing goods imported through the express delivery service for refunding the paid tax money (if any) to the trader. The procedures and dossier of refund of the paid tax money to traders comply with the guidance in Circular No. 194/2010/TT-BTC.

If the goods owner knows in advance that his/her goods have arrived in Vietnam, he/she shall register a customs declaration suitable to the form of importation with the district-level Customs Department managing the processing contract then transfer the dossier to the express delivery service provider for carrying out customs procedures at the district-level Customs

Department managing goods imported via this service. Border-gate transfer procedures are the same as those for goods imported via the express delivery service. If the owner of the imported goods lot subject to physical inspection makes a written request for physical inspection at the place of inspection of goods imported via the express delivery service, the district-level Customs Department managing these goods shall conduct inspection at the request of the trader and the district-level Customs Department managing the processing contract.

Article 12. Customs procedures for raw materials and supplies supplied by processors for processing contracts

1. For raw materials and supplies produced or purchased in the Vietnamese market by the processors:

a/ The names, norms, wastage percentages, quantity of goods, unit price, payment method and time must be agreed upon in the processing contract/annex.

It is prohibited to supply raw materials and supplies on the list of goods banned or suspended from export;

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c/ Customs procedures:

The processors shall carry out customs procedures for raw materials and supplies supplied or purchased by themselves with import duty and permits in the Vietnamese market (including those of import origin). When carrying out export procedures for processed products, they shall declare and calculate export duty (if any) in an annex to the export goods declaration (form PLTK/2002-XK).

The customs offices may not liquidate raw materials and supplies produced or purchased by the processors themselves in the Vietnamese market for which traders, when exporting processed products, declare in form No.02/NVLCU-GC/2011- Appendix I to this Circular (not printed herein) and take responsibility before law for the declared data. In this case, the tax policy shall be implemented under the Government’s Decree No.87/2010/ND-CP of August 13, 2010, and Article 113 of Circular No.194/2010/TT-BTC.

2. For raw materials and supplies directly purchased by the processors from abroad for processing contracts:

a/ Their names, norms, wastage percentages, quantities, unit prices and payment method and time must be agreed upon in the processing contract/annex.

b/ Permission of a competent agency must be obtained, for raw materials and supplies on the list of imports subject to permits; it is prohibited to supply raw materials and supplies on the list of goods banned or suspended from export or import.

c/ The customs procedures and import duty policy and refund procedures are as follows:

c1/ For raw materials and supplies supplied by the processors which are imported after it is so agreed in the processing contract/annex: To register the import declaration suitable to the form of processing; the way of writing on the import declaration is as follows: declaration No.…./NK/GC- CU/…

When carrying out import procedures, the processors shall submit 1 copy of the contract on goods purchase and sale. In this case, the applicable tax policy shall be based on the form of processing.

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c2.1/ Being compatible with raw materials and supplies to be supplied as agreed in the processing contract/annex in terms of quantity, specifications and categories.

c2.2/ The time of importation is within 2 years from the time of registration of the import declaration to the time of registration of the export declaration for products using supplied raw materials and supplies.

d/ When carrying out export procedures for processed products, the processor shall declare in form No. 02/NVLCU-GC/2011-Appendix I to this Circular; this form shall be filed together with the export declaration.

3. For cases of purchase of goods between inland and export processing enterprises for supply: Customs procedures shall be carried out under the guidance in Article 45 of Circular No. 194/2010/TT-BTC and Points a, b and d, Clause 2 of this Article.

Article 13. Customs procedures for imported machines and equipment for the performance of processing contracts

1. The import of leased or borrowed machines and equipment for the performance of a processing contract must comply with regulations on policies on import and export management.

2. For foreign-invested enterprises, the import of leased or borrowed machines and equipment for the performance of a processing contract must comply with the guidance in Circular No. 04/2007/TT-BTM of April 4, 2007, of the Ministry of Trade (now the Ministry of Industry and Trade).

3. Customs procedures:

a/ For leased or borrowed machines and equipment to be directly used for processing which are exempt from import duty, customs procedures applicable to goods temporarily imported for re-export shall be carried out at the Customs Department managing the processing contract.

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Article 14. Customs procedures for goods imported or exported for use as processing samples (samples not for sale)

1. For goods imported or exported for use as processing samples, customs procedures shall be carried out as for non-commercial imports and exports guided in Part III of Circular No. 194/2010/TT-BTC.

2. Goods used as processing samples must meet the following conditions:

a/ They may only be used as processing samples and are of no commercial value (e.g., perforated goods or goods bearing the “sample product” mark, single shoes, one-sleeved shirts);

b/ The goods lot documents evidence that they are sample goods;

c/ For each sample goods category, only five product units may be imported or exported.

Article 15. Procedures for exportation of processed products abroad

1. The customs dossier:

a/ The customs declaration: To submit 2 originals;

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c/ The export permit, for goods subject to export permits as prescribed by law: To submit 1 original, for cases of single exportation, or to submit 1 copy and produce the original for comparison and making of a conciliation slip, for cases of multiple exportation;

d/ Other relevant documents as required by law: To submit 1 original.

2. Customs procedures are the same as those for commercial exports guided in Part II of Circular No. 194/2010/TT-BTC but tax declaration and tax calculation checking with regard to exported products will not be carried out; in addition, the following shall be complied with:

a/ If the processed products for export are made of/from raw materials and supplies supplied by the processor, customs procedures comply with the guidance in Article 12 of this Circular.

b/ If the processing contract/annex states that finished processed products will be imported for attachment to processed products for export, such must be clearly declared in the export customs declaration.

c/ If the processed products are exported to a third partner whose name and address, however, are not yet indicated in the processing contract, when registering the export declaration, the trader shall submit to the customs office a copy of the principal’s document designating the delivery of goods to a third party.

d/ For an export goods lot subject to physical inspection, the trader shall produce, upon request, to the customs office the preserved raw material samples (in case samples have been taken) and the notified table of norms.

If the trader has lost the samples or the custom office doubts that to-be- exported products are not produced from imported raw materials, customs officers conducting physical inspection shall take samples of exported products for assessment (or photograph the products for examination if sampling is impossible).

e/ The customs office shall carry out procedures for registration of export declarations only for goods categories for which norms have been notified by traders.

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4. Customs procedures applicable to exported processed goods which are returned for repair or re-processing comply with Article 51 of Circular No 194/2010/TT-BTC.

Article 16. Customs procedures for on-spot import and export of processed products

The conditions for on-spot export and import comply with the Government’s Decree No. 12/2006/ND-CP of January 23, 2006. The specific customs procedures are as follows:

1. For processed products imported on spot for use as production raw materials:

a/ On-spot import procedures:

a1/ Exporting traders shall:

a1.1/ Fill in all items required for exporting traders on 4 on-spot import and export customs declarations, sign and seal them;

a1.2/ Hand 4 on-spot import and export customs declarations, goods and export invoices or added-value invoices to the importing trader.

a2/ Importing traders shall:

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a2.2/ Receive goods delivered on spot by the exporting trader;

a2.3/ Submit the customs dossier, comprising the on-spot import-export declaration, the purchase and sale contract signed with the principal containing a term on receipt of goods from the processor, and produce the export invoice or added-value invoice of the exporting trader and other documents as required for each form of importation (excluding bill of lading) and samples of goods imported on spot (for goods imported on spot for use as raw materials for export production) to the district-level Customs Department at which it carries out import procedures for carrying out on-spot import procedures according to regulations applicable to each form of importation;

a2.4/ After completing on-spot import procedures, keep 1 declaration and hand 2 remaining declarations to the exporting trader.

a3/ Customs offices carrying out on-spot import procedures shall:

a3.1/ Receive and register customs declarations and check duty calculations (for dutiable goods); conduct physical inspection only when detecting signs of violation;

a3.2/ Certify the customs clearance, sign and seal 4 on-spot import and export declarations;

a3.3/ Keep 1 declaration and documents submitted by the trader, return to the importing trader 3 declarations and documents produced by the trader;

a3.4/ Issue a written notice to the tax office managing the importing trader for monitoring, either in writing or via the computer network, if available between the district-level Customs Department carrying out import procedures and the local tax office.

b/ On-spot export procedures:

...

b2/ The customs office carrying out on-spot export procedures shall:

b2.1/ Receive the on-spot export customs dossier;

b2.2/ Follow the steps of registration of the declaration according regulations; check duty calculations for raw materials and supplies supplied by the processor (if any). Certify the customs clearance, and sign and seal the customs declaration;

b2.3/ Keep 1 customs declaration together with documents submitted by the trader and return to the trader 1 declaration and documents produced by the trader.

c/ In case traders deliver and receive multiple times a day, week or month processed products imported on spot for use as raw materials to produce processed products for export, they may fill in a general on-spot import and export customs declaration on the basis of documents on delivery and receipt of products for each time, such as export invoices or added-value invoices and ex-warehousing-cum-internal transport cards, in a day, week or month. In case there is a change in the tax policy or exchange rate at the time of delivery and receipt of goods, they shall fill in a separate on-spot import and export declaration, not in the same declaration for documents issued when such change has not yet been made.

The time of registration of a general declaration made for a day is the last working hour of the day. The time of registration of a general declaration made for a week or month is the last working day of the week or month.

Physical inspection of goods in this case shall be conducted only when there is a doubt that the trader delivers and receives goods different from those stated in the on-spot import and export declaration. In case the trader has put goods into production, books and documents related to the trader’s receipt of goods shall be checked.

2. For completely processed products imported on spot for local sale:

a/ Place of customs clearance: At the district-level Customs Department managing the processed goods for on-spot export.

...

For goods subject to physical inspection, physical inspection shall be conducted only once at the time of carrying out on-spot import procedures.

c/ Completely processed goods imported on spot for local sale must comply with the Government’s Decree No. 89/2006/ND-CP of August 30, 2006, on goods labels.

3. On-spot import and export procedures applicable to traders undertaking processing for foreign traders which are also traders importing on spot processed products, these traders shall carry out both on-spot export and import procedures for these processed products.

4. For processed products used for paying processing charges:

Customs procedures shall be carried out as for on-spot import and export, with the sale and purchase contract replaced by the written agreement between the principal and the processor on the payment of processing charges in the form of processed products.

The traders shall fully comply with the policies on import and export management and taxation applicable to goods imported from abroad and the provisions of the Government’s Decree No. 89/2006/ND-CP of August 30, 2006, on goods labels. These processed products are allowed to be used for liquidating the processing contracts.

5. On-spot import and export declarations are valid for liquidation when:

a/ For exporting traders: The customs declaration has been fully filled in and bears the certification, signatures and seals of the four parties: exporting trader, importing trader, customs office carrying out export procedures and customs office carrying out import procedures.

b/ For importing traders: The customs declaration has been fully filled in and bears the certification, signatures and seals of the three parties: exporting trader, importing trader and customs office carrying import procedures.

...

Article 17. Customs procedures for hiring processing

Vietnamese traders that sign processing contracts with foreign traders but do not conduct the processing and hire other traders to do so (hiring of processing) under Point b, Clause 2, Article 33 of Decree No.12/2006/ND-CP of January 23, 2006, shall carry out procedures for export, import or liquidation of processing contracts with customs offices and take responsibility before law for the performance of these contracts. They shall also notify in writing the names and addresses of offices and production establishments of traders that undertake the processing to customs offices for inspection when necessary.

Customs procedures are not required for goods delivered and received between Vietnamese traders.

Article 18. Procedures for delivery and receipt of intermediary processed products

1. Responsibilities of traders:

a/ Based on designation documents of principals, traders that deliver intermediary processed products (deliverers) and traders that receive these products (recipients) shall organize by themselves the delivery and receipt under Clause 2 of this Article.

b/ At-law representatives of deliverers and recipients shall take responsibility before law for the delivery and receipt of products exactly being those stated in the declarations of intermediary processed products (below referred to as intermediary declarations).

c/ At-law representatives of deliverers shall take responsibility before law for the production of intermediary processed products from raw materials under processing contracts. At-law representatives of recipients shall take responsibility before law for the proper use of intermediary processed products for the processing purpose.

d/ If a processing contract involving intermediary processed products (deliverer’s processing contract) and a processing contract on the use of intermediary processed products as processing raw materials (recipient’s processing contract) are possessed by the same processing trader, such trader shall perform the tasks of both deliverer and recipient.

...

a/ The deliverer shall fill in the customs declaration and deliver goods to the recipient:

a1/ The deliverer shall fill in all items reserved for declaration by goods deliverer, sign and seal 4 declarations (form HQ/2011-GCCT-Appendix I).

a2/ It shall deliver products together with 4 declarations and the export or value-added invoice to the recipient; the delivery and receipt shall be conducted at the recipient’s processing establishment or warehouse.

b/ After fully receiving products, the invoice and 4 customs declarations already filled in, signed and sealed by the deliverer, the recipient shall:

b1/ Fully fill in all items reserved for goods recipient, sign and seal all 4 declarations.

b2/ Register the customs declarations with the recipient’s customs office; a registration dossier comprises:

b2.1/ Customs declaration: To submit 4 originals;

b2.2/ Document designating the receipt of goods, issued by the principal: To submit 1 copy and produce the original;

b2.3/ Export or value-added invoice: To submit 1 copy and produce the original;

...

b2.5/ Producing goods or records and documents related to the receipt of goods upon request of the customs office for examination.

c/ The recipient’s customs office shall:

c1/ Receive the customs dossier and samples of intermediary processed products;

c2/ Register the declaration; make a sampling card and seal up sample goods under regulations;

c3/ Physically inspect goods: only when doubting that traders deliver and receive goods other than those declared on the intermediary processing declaration; if the trader has put goods into production, examine records and documents related to the trader’s receipt of the goods;

c4/ Certify the customs clearance, sign and seal all 4 declarations;

c5/ Keep 1 declaration and copies of documents; return 3 declarations and the originals to the recipient; hand over sealed goods samples to the recipient for preservation and production to the customs office when carrying out procedures for exporting processed products or in other cases at the customs office’s request.

d/ After receiving back 3 customs declarations bearing the customs clearance certification from the recipient’s customs office, the recipient shall keep 1 declaration and transfer the other two to the deliverer.

e/ Immediately after receiving 2 customs declarations (already completely filled in, signed and sealed by the recipient and the recipient’s customs office) from the recipient, the deliverer shall register the customs declaration with its customs office. A registration dossier comprises:

...

e2/ Document designating the delivery: To submit 1 copy and produce the original;

e3/ Export or value-added invoice: To submit 1 copy and produce the original.

f/ The deliverer’s customs office shall:

f1/ Receive the customs dossiers;

f2/ Register the declarations; certify the customs clearance; and sign and seal both declarations;

f3/ Return to the deliverer 1 declaration and original documents; and keep 1 declaration and copies of documents.

If the deliverer’s processing contract and recipient’s processing contract are managed by the same district-level Customs Department, such Customs Department shall perform the tasks of both deliverer’s customs office and recipient’s customs office.

The above procedures for delivering and receiving intermediary processed products also apply to cases in which the principals are different.

3. Intermediary processing declarations may be used as payment documents for liquidating processing contracts if meeting the following conditions:

...

a1/ All items in the declaration are filled in, no erasure is permitted; the declaration bears the certification, signatures and seals of all 4 parties: recipient; deliverer; customs office managing the delivery processing contract (deliverer’s customs office); and customs office managing the receipt processing contract (the recipient’s customs office);

a2/ The deliverer comes to its customs office to carry out customs procedures when the deliverer’s processing contract remains valid and within 15 days from the date the recipient’s customs office signs and certifies the customs clearance on the declaration. Past this time limit, if the declaration bears the customs clearance certification of the recipient’s customs office, the customs office shall make a record of the violation for handling under regulations before further carrying out customs procedures without destroying the declaration.

b/ For the recipient’s processing contract:

b1/ All items in the declaration are filled in; no erasure is permitted; the declaration bears the certification, signatures and seals of 3 parties (excluding the deliverer’s customs office);

b2/ The recipient comes to its customs office to carry out customs procedures when the recipient’s processing contract remains valid and within 15 days from the date the deliverer signs the intermediary processing declaration.

Article 19. Procedures for transfer of raw materials, supplies; machines and equipment leased or borrowed according to designation by principals from a processing contract to another during the performance of the processing contract

1. Cases in which transfer is allowed:

a/ Machines and equipment which have been used to complete a stage of a processing contract may be transferred for performing a stage of a subsequent processing contract or to another processor or principal of the same contract;

b/ Raw materials and supplies which have been imported for a processing contract but are found unsuitable for the performance of this processing contract (due to a change in product model), may be transferred for performing another processing contract with the same or different processor or principal at the request of the principal;

...

d/ Other cases in which traders give in writing plausible reasons for the transfer and directors of district-level Customs Departments managing processing contracts consider and approve the transfer, except the cases specified at Point c4, Clause 2, Article 23 of this Circular.

2. Customs procedures:

Customs procedures for transfer specified in this Article are similar to those for delivery and receipt of intermediary processed products guided in Article 18 of this Circular, except for requesting production of export or value-added invoices by traders.

Article 20. Procedures for re-exporting processing raw materials and supplies overseas during the performance of processing contracts

1. A customs dossier comprises:

a/ The customs declaration: To submit 2 originals;

b/ The trader’s written explanation (stating the reason for re-export; numbers and dates of the import declaration and the processing contract involving returned goods): To submit the original enclosed with a copy of the corresponding import declaration;

c/ The principal’s written request for the return of goods: To submit the original.

2. Customs procedures: similar to those applicable to re-export of redundant processing raw materials and supplies guided at Point b, Clause 2, Article 23 of this Circular.

...

1. A liquidation dossier comprises:

a/ A general table of imported raw materials and supplies, made according to form 01/HSTK-GC/2011-Appendix II to this Circular: To submit the original;

b/ A general table of exported processed products, made according to form 02/HSTK-GC/2011-Appendix II to this Circular: To submit the original.

c/ A list of export declarations of processed products (including the on- spot export declaration and declaration of delivery and receipt of intermediary processed products), for which customs procedures have been completed and which have sufficient grounds for determining that goods have been actually exported under the guidance in Article 26 of Circular No. 194/2010/TT-BTC, made according to form 09/HSTK-GC/2011- Appendix II to this Circular: To submit the original;

d/ A general table of raw materials and supplies re-exported back to the foreign partner and transferred to another processing contract during the performance of the processing contract, made according to form No.03/HSTK-GC/2011-Appendix II to this Circular: To submit the original;

e/ A general table of raw materials and supplies supplied by the processor (if any), made according to form No. 04/HSTK-GC/2011-Appendix II to this Circular: To submit the original;

In case the customs office doubts that the declaration of raw materials domestically purchased for supply is untruthful, it shall request production of purchase invoices and payment documents for raw materials supplied by the principal;

f/ A general table of raw materials and supplies already used to produce exported products, made according to form No. 05/HSTK-GC/2011- Appendix II to this Circular: To submit the original;

g/ A processing contract liquidation sheet, made according to form No.06/HSTK-GC/2011-Appendix II to this Circular: To submit 2 originals (one to be returned to the trader after liquidation);

...

i/ The declaration of temporary import of leased or borrowed machines and equipment; the declaration of receipt of machines and equipment from another processing contract (if any); the declaration of re-export of machines and equipment: To produce the original (kept by the customs declarant);

j/ A list of finished products imported for attachment to or packaging together with exported processed products (if any), made according to form No. 08/HSTK-GC/2011-Appendix II to this Circular: To submit 2 originals (one to be returned to the trader after liquidation);

The trader’s at-law representative shall sign and seal (for private business households, sign and write their full names and number and place of issue of their identity cards) the above tables and sheet and take responsibility before law for the accuracy and truthfulness of liquidation data.

2. Time limit and extension of time limit for submission of liquidation dossiers:

a/ Time limit for submission of liquidation dossiers:

Within 45 working days, counting from the date of completion or expiration of a processing contract (or its annex), the trader shall submit a complete processing contract liquidation dossier (comprising also a plan to dispose of redundant raw materials and supplies, temporarily imported machines and equipment, scraps, defective products and discarded products) to the district-level Customs Department managing the processing contract.

For a processing contract with different annexes to be performed separately, the time limit for submission of the liquidation dossier for each annex is the same as for submission of the processing contract liquidation dossier.

b/ Extension of the time limit for submission of liquidation dossiers:

b1/ Cases eligible for extension of the time limit for submission of liquidation dossiers:

...

b1.2/ There is a dispute related to the processing contract between the principal and processor;

b1.3/ Cases in which the trader, for force majeure reasons, fails to conduct the liquidation on time.

b2/ Competence to extend the time limit and extended time limit:

Based on the trader’s written explanation, the director of the district-level Customs Department managing the processing contract shall consider and extend the time limit for submission of the liquidation dossier guided at Point a, Clause 2 of this Article. The time limit may be extended only once for not more than 30 days.

3. Method of examining and comparing liquidation dossiers:

a/ Examination and preliminary comparison may apply to traders that have strictly observed the customs law: examination of the completeness, consistency and validity of liquidation dossiers; preliminary comparison of liquidation tables and sheets (made according to forms No. 06/HSTK- GC/2011, No. 07/HSTK-GC/2011, and No. 08/SPHC-GC/2011-Appendix II to this Circular) submitted by traders with electronic files.

Criteria for traders to be determined as having strictly observed the customs law for the purpose of classifying liquidation dossiers are as follows:

a1/ Having strictly observed the customs law under the guidance in Article 3 of Circular No. 194/2010/TT-BTC;

a2/ Having no processing contract/annex overdue for liquidation at the time of submission of the liquidation dossier;

...

b/ Examination and detailed comparison of liquidation dossiers apply to the following cases:

b1/ Liquidation dossiers of traders that have not strictly observed the customs law.

b2/ Liquidation dossiers of traders that have strictly observed the customs law but show suspicious signs (of import of raw materials, supplies, norms, export of products and suspicious signs detected through preliminary comparison of liquidation dossiers).

b3/ Probability examination of 5% of processing contracts of traders that have strictly observed the customs law (excluding dossiers which have been examined in detail mentioned at Item b2, Point b, Clause 3 of this Article) to assess traders’ law observance. The percentage of 5% of contracts to be examined shall be based on the total number of liquidated processing contracts of the trader that strictly observed the customs law in the preceding year. If the number of contracts taken for examination is under 1, it shall be rounded up to 1.

b4/ For the cases specified at Items b1 and b2, Point b, Clause 3 of this Article, traders shall produce original export declarations (kept by customs declarants) and bills of lading/transportation documents (copies certified by traders and enclosed originals for comparison) to indicate that goods have been loaded onto means of transport and left the country, for examination and comparison by the customs office against the list of export declarations.

4. Time limit for receiving, examining and comparing liquidation dossiers:

a/ For contracts/annexes subject to preliminary examination:

Within 7 working days after a trader submits a complete and valid liquidation dossier, the customs officer shall complete the preliminary comparison and certification of the liquidation for the trader. If detecting a suspicious sign specified at Item b2, Point b, Clause 3 of this Article through preliminary examination, the customs officer shall proceed to detailed examination of the liquidation dossier and clearly notify the reason in an operational requirement card to the trader;

Receipt, examination and comparison of liquidation dossiers shall be conducted first for traders that apply information technology in the management and monitoring of processed products and are connected to customs offices.

...

Within 30 working days after a trader submits a complete and valid liquidation dossier, the customs officer shall complete the receipt, detailed examination and comparison of the liquidation dossier.

c/ The examination of liquidation dossiers submitted or produced by traders specified at Points a and b, Clause 4 of this Article shall be conducted at customs offices. In case liquidation dossiers are many and traders request in writing to have their liquidation dossiers examined at their offices, leaders of the district-level Customs Department managing processing contracts shall consider and decide.

5. Time limit for carrying out customs procedures for redundant raw materials and supplies; temporarily imported machines and equipment; scraps, defective products and discarded products:

Within 30 working days after the customs office completes the examination and comparison of a liquidation dossier, the trader shall carry out customs procedures for disposing of redundant raw materials and supplies; temporarily imported machines and equipment; scraps, defective products and discarded products (if any).

6. Certification of completion of liquidation procedures:

a/ For processing contracts/annexes which have no redundant raw materials and supplies; leased or borrowed machines and equipment; scraps and discarded products:

Within 1 working day (for liquidation dossiers subject to preliminary examination) or 3 working days (for liquidation dossiers subject to detailed examination) after the completion of the examination and comparison of liquidation dossiers, leaders of the district-level Customs Department shall certify the completion of liquidation procedures in the processing contract liquidation sheet made according to form No. 06/HSTK-GC/2011-Appendix II, the table for liquidation of machines and equipment temporarily imported for re-export made according to form No. 07/HSTK- GC/2011-Appendix II, the statistical table of finished products imported for attachment to or packaging together with export processed products made according to form No. 08/SPHC-GC/2011-Appendix II to this Circular.

b/ For processing contracts/annexes which have redundant raw materials and supplies; leased or borrowed machines and equipment; scraps and discarded products:

Within 1 working day (for liquidation dossiers subject to preliminary examination) or 3 working days (for liquidation dossiers subject to detailed examination) after the completion of customs procedures for redundant raw materials and supplies; leased or borrowed machines and equipment; scraps, defective products and discarded products, leader of the district- level Customs Department shall certify the completion of liquidation procedures in the processing contract liquidation sheet made according to form No. 06/HSTK-GC/2011-Appendix II, the table for liquidation of machines and equipment temporarily imported for re-export made according to form No. 07/HSTK-GC/2011-Appendix II, the statistical table of finished products imported for attachment to or packaging together with export processed products, made according to form No. 08/SPHC-GC/2011-Appendix II to this Circular.

...

1. Handling of cases of late submission of liquidation dossiers:

a/ Within 90 days from the expiration of the time limit for submission of liquidation dossiers (including the extension), the district-level Customs Department managing the processing contract shall:

a1/ Send an invitation to the trader to come to the customs office for making a record of the violation for handling under regulations: To send the invitation twice;

a2/ Take measures to find and request the trader to liquidate the processing contract.

b/ Past 90 days from the expiration of the time limit for submission of liquidation dossiers, if the trader fails to submit a liquidation dossier, the customs office shall calculate and assess a payable tax amount and a fine for late submission for raw materials, supplies, machines and equipment under the processing contract not yet liquidated, counting from the date of registration of the declaration of imported raw materials and supplies under the guidance in Circular No. 194/2010/TT-BTC.

2. Handling of cases of failure to carry out procedures for redundant raw materials and supplies and temporarily imported machines and equipment:

a/ The customs office managing the processing contract shall:

a1/ Make a record of the violation for handling under regulations;

a2/ Calculate and assess a payable tax amount for redundant raw materials and supplies and temporarily imported machines and equipment under the processing contract not yet liquidated, counting from the date the customs office completes liquidation comparison procedures.

...

Past the tax payment deadline, the trader that fails to pay tax assessed by the customs office shall be subject to prescribed coercive measures.

Article 23. Customs procedures for disposing of redundant raw materials and supplies; scraps, defective products and discarded products, leased or borrowed machines and equipment

1. Forms of disposal:

Pursuant to agreements in the processing contract and Vietnamese laws, redundant raw materials and supplies, scraps, defective products, discarded products, leased or borrowed machines and equipment for processing shall be disposed of as follows:

a/ Sale on the Vietnamese market (on-spot import and export);

b/ Re-export to foreign parties;

c/ Transfer to another processing contract in Vietnam;

d/ Donation in Vietnam;

e/ Destruction in Vietnam.

...

a/ Customs procedures for selling redundant raw materials and supplies, scraps, defective products, leased or borrowed machinery and equipment in the Vietnamese market are the same as those applicable to on-spot import and export under the guidance in Article 16 of this Circular.

b/ Customs procedures for re-export according to the principal’s designation are the same as those applicable to commercial export lots.

When carrying out customs procedures, customs officers shall physically inspect goods lots, compare raw materials re-exported overseas with the samples taken upon importation (if samples were previously taken); and compare categories and codes of machines and equipment shown on the temporary import declaration, for re-exported machines and equipment.

c/ Customs procedures for transferring redundant raw materials and supplies and leased or borrowed machines and equipment to another processing contract according to the principal’s designation are the same as those applicable to the delivery and receipt of intermediary processed products guided in Article 18 of this Circular, except requesting the trader to produce export or value-added invoices, and at the same time the following shall be performed:

c1/ Procedures for transferring redundant raw materials and supplies and leased or borrowed machines and equipment to another processing contract may be carried out after a leader of the district-level Customs Department managing the processing contract gives certification in the trader’s written request upon the processing contract liquidation.

c2/ In case of transfer of redundant raw materials and supplies and leased or borrowed machines and equipment to another processing contract performed by another trader:

c2.1/ The recipient shall send a notice of the time and place of receipt and produce raw materials received from another processing contract and their samples taken upon importation to the recipient’s customs office for comparison before putting raw materials and supplies into production.

c2.2/ The recipient’s customs office shall, within 3 working days after receiving the trader’s notice, complete the comparison of raw material samples taken upon importation with transferred raw materials. If they are the same, it shall take new samples for the raw material-receiving contract (the sample comparison and sample taking will take place at the trader’s production establishment). In the course of comparison, if detecting signs of sham delivery and receipt or delivery of insufficient raw materials compared to data on the intermediary processing declaration, it shall examine the whole goods lot and handle violations (if any) under law.

For leased or borrowed machines and equipment or raw materials and supplies without samples taken, the recipient’s customs office shall physically inspect the goods when detecting signs of sham delivery and receipt or delivery of insufficient raw materials compared to data on the intermediary processing declaration. Leaders of the recipient’s district- level Customs Department shall decide on cases subject to inspection.

...

c3.1/ When carrying out customs procedures for transferring redundant raw materials and supplies from one processing contract to another, the trader shall produce the raw material samples under the deliverer’s processing contract;

c3.2/ The district-level Customs Department managing the processing contract shall transfer these samples to the new processing contract by making a new sample-taking card and seal up the transferred samples together with this card;

c3.3/ The district-level Customs Department managing the processing contract shall inspect the trader’s production establishment when detecting signs of untruthful transfer of raw materials and supplies stated on the customs declaration.

c4/ Transfer of raw materials and supplies to another processing contract is disallowed in the following cases:

c4.1/ The trader has imported raw materials and supplies but does not perform any processing contract and applies for permission to transfer these raw materials and supplies to another trader;

c4.2/ The trader has received raw materials and supplies from the previous processing contract but does not put them into processing and further applies for permission to transfer them to another processing contract. In case raw materials and supplies received from the previous processing contract have been put into processing but not yet been used up for the previous processing contract, they may be further transferred for use under a subsequent processing contract but are not allowed to be further transferred to another processing contract.

d/ Customs procedures for donation of leased or borrowed machines and equipment; redundant raw materials and supplies; scraps and defective products:

A customs dossier comprises:

d1/ The customs declaration (made according to the non-commercial goods declaration form), clearly stating “goods are under processing contract No.... dated.... processing trader....”: To submit 2 originals;

...

d3/ The Industry and Trade Ministry’s written consent, if the donated goods are on the list of imports subject to the Ministry’s permit, or a specialized agency’s permit, if the imported goods are subject to such agency’s permit: To submit the original.

The customs procedures and tax policy are the same as those applicable to donated goods. After completing customs procedures for a goods lot, the customs office shall duplicate the declaration, keep one duplicate and hand over another to the processing trader (if the donee is not the processor).

e/ Customs procedures for supervising the destruction of scraps and defective products in Vietnam:

e1/ The destruction shall be conducted during the performance or after the expiration of the processing contract/annex.

e2/ Customs procedures for supervising the destruction:

e2.1/ The trader shall send to the district-level Customs Department managing the processing contract a notice of the destruction time and place, enclosed with a written agreement of the principal and, if the trader directly destroys its products, a written approval of a competent environmental management agency.

If the trader hires another trader with the function of disposing of scraps and discarded products, there must be a destruction contract (original) and a competent agency’s written permission of this trader (1 copy).

e2.2/ The trader shall take the initiative in organizing the destruction and take responsibility before law for any environmental impacts during the destruction process.

e2.3/ The district-level Customs Department managing the processing contract shall send two customs officers to supervise the destruction process.

...

3. For redundant raw materials and supplies supplied by traders themselves by mode of importation from overseas according to types of processing:

In case the principal has paid for these raw materials and supplies, the guidance in Clauses 1 and 2 of this Article shall be complied with.

In case the principal has not yet paid for these raw materials and supplies, these raw materials and supplies may be supplied for a subsequent processing contract if the supply conditions guided in Clause 2, Article 12 of this Circular are satisfied.

4. For processing contracts with the same principal and processor, the trader may clear raw materials of the same type, specifications, properties or unit prices.

Article 24. Disposal of redundant raw materials and supplies; leased or borrowed machines and equipment; or processed products which cannot be re-exported because they are abandoned by the principal

The processing trader shall pay taxes for domestic sale on redundant raw materials and supplies; leased or borrowed machines and equipment; or processed products which cannot be re-exported because they are abandoned by the principal, or carry out procedures for their destruction as guided at Point e, Clause 2, Article 23 of this Circular. Tax bases shall be determined at the time of change of the use purpose under Circular No.194/2010/TT-BTC.

Section 3: CUSTOMS PROCEDURES FOR GOODS ORDERED FOR PROCESSING OVERSEAS

Article 25. Procedures for notifying processing contracts

1. Responsibilities of traders:

...

a/ The processing contract and annexes (if any): To submit 2 originals;

b/ The business registration certificate or investment license or investment certificate (in case procedures are carried out for the first time): To submit 1 copy;

c/ The tax identification number registration certificate (in case procedures are carried out for the first time): 1 copy;

d/ The permit of a competent agency, if the goods exported for the performance of the processing contract and the imported processed products are on the list of imports and exports subject to permit: To submit 1 copy and produce the original.

2. Tasks of the customs office: As guided in Clause 2, Article 6 of this Circular, except inspecting production establishments.

Article 26. Procedures for exporting raw materials and supplies for production of goods ordered for processing overseas

1. Customs dossiers are the same as those of exported processed products.

In addition, if raw materials and supplies are on the list of exports subject to permits of the Ministry of Industry and Trade or a specialized management agency, a permit of the relevant competent agency must be produced to the customs office for the reconciliation purpose.

2. The customs procedures are the same as those applicable to commercial exports guided in Part II of Circular No. 194/2010/TT-BTC, except for tax declaration and tax calculation inspection, for which samples shall be taken for preservation and comparison upon importation of products. The sample taking and preservation and photo keeping comply with the guidance in Article 15 of Circular No. 194/2010/TT-BTC.

...

1. Notification of norms

a/ The trader shall submit to customs offices the table of use norms, consumption norms and wastage percentages of raw materials and supplies, made according to form No. 03/TBDM-GC/2011-Appendix I to this Circular (without having to declare average norms).

b/ Units of calculation in the table of norms are those used in the list of Vietnam’s exports and imports promulgated together with the Ministry of Finance’s Decision No. 107/2007/QD-BTC of December 25, 2007, and consistent with those in the notified processing contract/annex.

In case units of calculation in the notified table of norms cannot be those used in list promulgated together with Decision No. 107/2007/QD-BTC of December 25, 2007, the trader shall convert the quantity of goods in the export or import declaration to the units of calculation in the notified table of norms.

2. Time of notification and adjustment of norms:

a/ Time of notification of norms:

a1/ At least 10 days before the registration of the declaration for carrying out import procedures for the first goods lot of the processing contract.

a2/ For processed products to be sold overseas, the trader shall notify norms before the liquidation of the processing contract.

b/ Adjustment of norms:

...

b2/ Cases of adjustment of norms:

In the course of performance of the processing contract, if a change in properties of raw materials or processing conditions leads to a change in actual norms (as agreed in the processing contract annex), the trader shall submit a table of adjusted norms of goods categories enclosed with a document clearly stating the reason to the district-level Customs

Department managing the processing contract for consideration and decision on a case-by-case basis.

c/ Upon adjusting norms of goods categories, the trader is not required to change goods headings already notified to the customs office. The trader and the customs office carrying out procedures for the processing contract shall reach agreement on adding sub-headings for these goods categories in the table of adjusted norms and the import declaration for such goods with adjusted norms.

3. Norms already notified to the customs office or adjusted by the trader shall be used for liquidation of the processing contract.

4. Cases of inspection of norms:

a/ The trader notifies an increase in norms;

b/ There is a suspicious sign of norm fraud;

c/ Within 365 days after the sanctioning decision is issued, for the traders having been sanctioned by the customs office for a norm fraud. Past this time limit, the inspection of norms shall be conducted under the guidance at Points a and b, Clause 4 of this Article.

...

a/ Inspection at customs offices and/or b/ Inspection at traders’ offices.

6. Method of inspection:

a/ Direct inspection by customs offices;

b/ Inspection by specialized assessment organizations.

7. Time of inspection of norms:

a/ After the trader submits a table of adjusted norms, or

b/ Upon liquidation of the processing contract, or c/ Upon post-customs clearance inspection.

8. Competence to decide on inspection of norms: Leaders of district-level Customs Departments managing processing contracts, Post-Customs Clearance Inspection Sub-Departments and the Post-Customs Clearance Inspection Department.

9. Responsibilities of the trader in the course of inspection of norms:

...

b/ To produce accounting books and documents upon request and create favorable conditions for the customs office to quickly and accurately inspect norms.

c/ To comply with the customs office’s decision on inspection of norms.

10. Tasks of inspecting customs officers:

a/ To conduct the inspection according to the set process without obstructing the trader’s operation.

b/ To complete the inspection within the specified time limit:

b.1/ For documentary examination at the customs office:

The inspection of norms shall be completed within 8 working hours after it begins.

In case a processing contract/annex contains many goods categories subject to inspection of norms and, therefore, the inspection cannot be completed within 8 working hours, the inspection may be prolonged to the subsequent working day but the prolonged time must not exceed 8 working hours.

b2/ For imported processing products of particular properties which require coordination with specialized agencies, the time limit for inspection must not exceed 2 working days after the assessment results are received from specialized agencies.

...

d/ To make a record certifying the result of inspection upon completion of the inspection. Such a record must record fully and truthfully actual results of the inspection, be signed by the inspecting customs officer and the legal entity representative of the trader subject to inspection. Records shall be made according to the form of record of norm inspection for traders undertaking processing for foreign traders as guided by the General Department of Customs.

e/ Based on the record of norm inspection, to make written conclusions on norm inspection (2 copies), which shall be signed by a leader of the district-level Customs Department and sent (one copy) to the trader for compliance. Written conclusions shall be made according to the form of written conclusions on norm inspection for traders undertaking processing for foreign traders as guided by the General Department of Customs.

11. Measures to be taken when it is concluded that norms notified or adjusted by the trader are not true to reality (higher than actual ones):

a/ Making a record of the violation and sanctioning the violation under regulations.

b/ In case the processing contract/annex is not yet liquidated: Using the norms identified through inspection as a basis for liquidation.

c/ In case the processing contract/annex has been liquidated: Using the norms identified through inspection as a basis for collection of tax arrears.

Article 28. Procedures for import of products ordered for processing overseas

1. Customs dossiers are the same as those required for commercial imports while customs declarations shall be registered like those required for goods imported for processing.

2. Customs procedures are the same as those applicable to commercial imports:

...

a1/ The determination of taxable prices, tax rates and origin of goods comply with the guidance at Point b, Clause 4, Article 101 of Circular No.194/2010/TT-BTC.

a2/ Based on norms already notified to the customs office and physical state of imports, the quantity of raw materials and supplies already exported from Vietnam for processing imported products shall be determined.

b/ Upon physical inspection of goods, preserved raw material samples taken upon exportation shall be compared with raw materials constituting products; if a suspicion of a norm fraud arises upon comparison of norms with imported products, samples shall be taken and sealed up for use as a basis for the inspection of norms and a record of sample taking shall be made.

Article 29. Procedures for temporary export of processed products overseas for reprocessing and subsequent re-import into Vietnam

1. Products eligible for temporary export for reprocessing and subsequent re-import into Vietnam:

a/ Processed products which are temporarily exported for reprocessing within three hundred and sixty five (365) days after the registration of the import declaration.

b/ Products which have not yet gone through production, processing repair or use in Vietnam.

2. Customs procedures shall be carried out at the district-level Customs Department managing the processing contract.

3. Procedures for temporary export of processed products for reprocessing:

...

a1/ A written request for temporary export of goods, clearly stating the import declaration of these goods, the reason for temporary export for reprocessing and reprocessing activities: The original;

a2/ The customs declaration of exports; a detailed list of goods as for commercial exports;

a3/ The customs declaration of imported processed products of the goods lot for reprocessing: 1 copy;

a4/ The foreign partner’s document on receipt of goods for reprocessing: The original.

b/ Customs procedures for temporary export of processed products for reprocessing are the same as those for commercial exports and require physical inspection of goods. Customs officers who conduct the physical inspection of goods shall take samples or photos (for goods which cannot be sampled) of processed products to be brought overseas for reprocessing for comparison upon carrying out re-export procedures;

c/ The time limit for reprocessing shall be registered by the trader with the customs office but must not exceed 275 days counting from the date of temporary export.

4. Procedures for re-import of reprocessed processed product:

a/ A customs dossier comprises:

a1/ The import declaration: 2 originals;

...

a3/ Customs procedures for re-import of reprocessed processed products are the same as those for commercial imports (except import permit, tax declaration and tax calculation inspection). For good lots subject to physical inspection, customs officers conducting the physical inspection of goods shall compare the physical state of re-imported goods with goods samples taken upon their temporary import (or photos taken upon carrying out procedures for temporary export);

In case reprocessed processed products are sold in an overseas market, the guidance in Clause 2, Article 32 of this Circular must be complied with.

Article 30. Procedures for overseas intermediary processing

For overseas intermediary processing, Vietnamese traders are not required to carry out intermediary processing procedures with Vietnamese customs offices.

Article 31. Procedures for liquidation of processing contracts

1. A liquidation dossier comprises:

a/ A list of export and import declarations : The original;

b/ A general table of exported raw materials and supplies: The original;

c/ A general table of imported processed products: The original;

...

e/ A general table of raw materials and supplies used for production of imported processed products: The original;

f/ A general table of raw materials purchased overseas (if any) for production of imported processed products: The original;

g/ A sheet of liquidation of the processing contract: 2 originals.

The contents of these tables and sheet are similar to those of corresponding tables and sheet of a dossier for liquidation of contracts on processing for foreign traders guided in Clause 1, Article 21 of this Circular.

2. Liquidation procedures:

The time limit and extension of the time limit for submission of liquidation dossiers; methods of examination and comparison of liquidation dossiers;

the time limit for examination and certification of liquidation dossiers; handling of cases of late submission of liquidation dossiers are the same as those for contracts on processing for foreign traders.

Article 32. Customs procedures for disposal of redundant raw materials and supplies; scraps, defective products and discarded products; machines and equipment temporarily exported for processing

1. Forms of disposal:

...

a/ Sale, donation, destruction in overseas markets;

b/ Import into Vietnam;

c/ Transfer to other processing contracts overseas;

2. Customs procedures:

a/ Customs procedures for sale, donation or destruction of redundant raw materials and supplies; scraps, defective products and discarded products; leased or borrowed machines and equipment in overseas markets comply with regulations of countries of processors; customs declarations will not be registered with Vietnamese customs but export duty (if any) shall be declared and paid for raw materials, supplies, machines and equipment brought overseas from Vietnam for processing.

b/ Customs procedures for re-import into Vietnam:

b1/ For redundant raw materials and supplies, machines and equipment exported from Vietnam; scraps and defective products derived from raw materials and supplies exported from Vietnam, re-import procedures shall be carried out;

b2/ For redundant raw materials and supplies, machines and equipment purchased overseas; scraps and defective products derived from raw materials and supplies purchased from overseas, customs procedures shall be carried out as for commercial imports;

b3/ Upon carrying out customs procedures, customs officers conducting physical inspection of goods lots shall compare imported raw materials with preserved samples of raw materials taken upon their exportation (in case samples have been taken); or compare types, codes and marks of machines and equipment indicated in temporary export declarations with re-imported ones.

...

c1/ The trader shall notify in writing the district-level Customs Department managing the processing contract of names and quality specifications of raw materials and supplies; quantities of redundant raw materials and supplies; leased or borrowed machines and equipment under a processing contract/annex (number and date) to another (number and date) signed with foreign partners (clearly stating the name of the overseas processor).

c2/ The trader may carry out procedures for transfer of redundant raw materials and supplies, leased or borrowed machines and equipment from one processing contract to another only after a leader of the district-level Customs Department managing the processing contract gives a certification in the trader’s written request upon liquidation of the processing contract/annex.

Section 4: ORGANIZATION OF IMPLEMENTATION

Article 33. Effect

1. This Circular takes effect 45 days after the date of its signing and replaces the Ministry of Finance’s Circular No. 116/2008/TT-BTC of December 4, 2008, Circular No. 74/2010/TT-BTC of May 14, 2010, and previous guiding documents which are contrary to this Circular.

2. Import declarations for goods imported for export production and supplied for processing contracts which are registered before the effective date of this Circular may be accepted for liquidation of processing contracts. Tax policies and tax refund procedures for these declarations comply with regulations on import for export production.

3. For processing contracts/annexes notified and received on the effective date of Circular No. 116/2008/TT-BTC of December 4, 2008, and Circular No. 74/2010/TT-BTc of May 14, 2010, but liquidated when this Circular takes effect, traders may choose to liquidate them under the guidance of 116/2008/TT-BTC of December 4, 2008, or Circular No. 74/2010/TT-BTC of May 14, 2010, or this Circular.

Article 34. Implementation responsibility

1. The General Director of Customs shall promulgate and guide customs offices in uniformly implementing customs procedures in pursuance to this Circular, without a view to concurrently facilitating and strictly managing export processing and import activities in accordance with law.

...

FOR THE MINISTER OF FINANCE
DEPUTY MINISTER

Do Hoang Anh Tuan

* All appendices to this Circular are not printed herein.

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Circular No. 117/2011/TT-BTC of August 15, 2008, guiding customs procedures for goods processed for foreign traders

Official number:	117/2011/TT-BTC	Legislation Type:	Circular
Organization:	The Ministry of Finance	Signer:	Do Hoang Anh Tuan
Issued Date:	15/08/2011	Effective Date:	Premium
Gazette dated:	Updating	Gazette number:	Updating
		Effect:	Premium

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Circular No. 117/2011/TT-BTC of August 15, 2008, guiding customs procedures for goods processed for foreign traders

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