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THE MINISTRY OF FINANCE
THE MINISTRY OF INDUSTRY
THE GENERAL DEPARTMENT OF CUSTOMS
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No.176/1998/TTLT/BTC-BCN-TCHQ
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Hanoi, December 25, 1998
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INTER-MINISTERIAL
CIRCULAR
GUIDING THE IMPLEMENTATION OF THE TAX POLICY
PER RATE OF DOMESTIC MANUFACTURE FOR PRODUCTS AND SPARE PARTS OF
ENGINEERING-ELECTRICITY- ELECTRONICS INDUSTRIES
In furtherance of the opinions of the Prime
Minister in Official Dispatches No.4830/KTTH of September 24, 1997,
No.1440/CP-KTTH of November 7, 1998 and No.2687/VPCP -KTTH of July 15, 1998 of
the Government Office on the tax policy per rate of domestic manufacture of
products;
The Ministry of Finance, the Ministry of
Industry and the General Department of Customs jointly provide the following
unified guidance for implementation:
1. Subject to regulation:
The import tax rate per rate of domestic
manufacture shall apply to the Vietnamese enterprises and foreign-invested
enterprises (hereafter called enterprises for short) operating in the following
domains:
- Production and assembly of finished products
of the engineering, electricity and electronics industries (with import tax
rate of from 30 per cent upward).
- Production and assembly of spare pans of the
above said finished products (with import tax rate of from 30 per cent upward).
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2.1. Domestic manufacture is the process of
production and assembly in the country to replace imports.
2.2. Details are components before primary
assembly (or that cannot bc taken apart or further divided).
2.3. Group of details is an ensemble of many
details assembled together.
2.4. Part is an ensemble of many details or
groups of details assembled together to perform a certain function of the
finished product.
2.5 Spare parts is the general designation of
the above mentioned details, groups of details or parts.
2.6. Semi-finished product is a detail which has
not finished the production stage as designed.
2.7. Product is the general designation of any
machinery, equipment, tool, utensils, means of transport...
3. Conditions for application of import tax
per rate domestic manufacture:
In order to enjoy the import tariff per rate of
domestic manufacture, the enterprises must have the following conditions:
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3.2. The products and spare parts manufactured
by them must have a certificate of quality registration issued by the quality
criteria measurement agency.
3.3. They must register their plans of domestic
manufacture of products.
4. Rate of domestic manufacture:
The domestic manufacture rate is determined
according to the following formula:
N =
Z - I
x 100% = ( 1 -
I
) x 100%
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Z
* In which:
- N (%) is the rate of domestic manufacture kind
of product or spare parts.
- Z: The import value (OF) of the whole single
product or spare part produced or assembled by the enterprise (unit: US$)
- I: Import value (CIF) of the semi-finished
product, detail, group of details or part directly imported or imported by
authorization or bought from imports of other enterprises (unit: US$).
* For products or spare parts designed and
produced by Vietnamese enterprises themselves, Z is the selling price according
to the voucher of that product or spare part minus the non-production expenses
such as advertisement cost, sale promotion, purchase bonus, commission for
agents and indirect taxes to be paid under the prescribed regime.
* For products or spare parts which have N , O,
the semi-finished products, details, groups of details and parts imported for
production or assembly of these products or spare parts shall have to pay tax
according to the tax rates prescribed at the Import Tariff.
5. Import tariff per rate of domestic
manufacture:
5.1. Semi-finished products, details, groups of
details and parts imported for the production of products or spare parts shall
enjoy import tariff per rate of domestic manufacture prescribed by the Ministry
of Finance.
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- Import tariff per rate of domestic manufacture
of products or parts. (In this case, all the raw materials and material s must
apply a common tariff per rate of domestic manufacture of the products or
parts).
- Import tariff for each kind of raw materials
as prescribed at the Import Tariff. (In this case, all the imported materials
shall apply the tariff prescribed for each kind in the Import Tariff, even if
the raw material has a tariff higher than the tariff per rate of domestic
manufacture).
6. Preferential index:
For the enterprises producing or assembling
products and parts where preferences shall apply the import tariff per rate of
domestic manufacture shall be reduced according to this formula:
Tk = Ts x (1 - k)
In which:
- Tk: Preferential import tariff
- Ts: Import tariff per rate of domestic
manufacture actually achieved
- k: Regulating coefficient (k ≤ 0.5 which means
tax reduction shall not exceed 50% of the tax to be paid)
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7. Organization of implementation:
7.1. Registration of dossier:
Enterprises producing or assembling products and
parts must submit to the Customs Office (where import procedures are carried out)
the registration dossier in order to enjoy the import tariff per rate of
domestic manufacture in the year, including:
- The register of the rate of domestic
manufacture for the products and parts and the certification by the Ministry of
Industry that the enterprise is qualified to carry out domestic manufacture of
products and parts at the registered rate.
- The list and norms for the quantity of the
semi- finished products, details, groups of details and components of a product
or a part. This list must be divided into lists of imported semi-finished
products, details; groups of details and parts together with their import
prices (OF) and lists of semi-finished products, details, groups of details and
parts produced in the country (for the spare parts bought from production and
assembly units in the country the supply units must be clearly specified). The
enterprises registering for payment according to the import tariff for raw
materials per rate of domestic manufacture shall have to supply the lists and
norms of the imported raw materials for production of these products and spare
parts;
The above said papers shall be registered only
once with the Customs Office and be valid for one year.
7.2. Monitoring and making final accounts of
imports:
7.2.1. Monitoring imports: When importing goods,
the enterprise shall have to declare fully the quantity of each kind of raw
material, semi-finished products, details, groups of details and parts and
their import prices. At the same time they shall have to open books to monitor
imports as directed by the Customs Office. The General Customs Department shall
guide the local Customs Offices to monitor imports in order to ensure
convenience for the unit while avoiding the misuse of the import for production
and assembly to evade import tax.
7.2.2. Final accounting of imports: By March 31st
of the subsequent year at the latest, the enterprise shall have to sum up the
situation and make the final account of the situation of import, production and
assembly in the previous year. Specifically:
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- The volume of import, the volume already used
in production and assembly; the quantity of products and spare parts produced;
the quantity carried over to the subsequent year; the quantity already assigned
or sold or are not used for production and assembly of products and spare
parts.
The data in the report must be certified by the
audit agency and sent to the Ministry of Industry and the Customs Office where
the unit fills in the import procedures.
On the basis of the report of the enterprise,
the Customs Office makes the final accounts for the enterprise. All cases of
non compliance with the regulations detected during the making of the final
accounts shall be dealt with through retroactive collection of import tax
strictly according to the tax rate prescribed at the Import Tariff and other
current regulations.
By the end of the 31st day of March
of the following year, if the enterprise fails to report the final accounts
(without plausible reason), the Customs Office shall temporarily suspend it
from the regime of import tariff per rate of domestic manufacture defined at
this decision for the subsequent lots of goods.
8. Other provisions:
8.1. For the products and spare parts with
import tariff less than 30% (thirty per cent) and which can already be produced
in the country but which are not yet able to raise the tax rate to the minimum
of 30% (thirty per cent) in order to enjoy the tax policy per rate of domestic
manufacture, the Ministry of Industry shall consider case per case which
deserve protection and shall coordinate with the Ministry of Finance in
handling each case.
8.2. This Circular takes effect from January 1st,
1999.
In the process of implementation should any
difficulty arises, the units should report in time to the inter-ministries for
study and settlement.
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FOR THE MINISTER OF
FINANCE
VICE MINISTER
Pham Van Trong
FOR THE GENERAL
DIRECTOR OF CUSTOMS
DEPUTY GENERAL DIRECTOR
Nguyen Ngoc Tuc