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THE GENERAL DEPARTMENT
OF CUSTOMS
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SOCIALIST REPUBLIC OF
VIET NAM
Independence - Freedom – Happiness
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No. 09/1998/TT-TCHQ
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Hanoi, November 18,
1998
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CIRCULAR
GUIDING THE IMPLEMENTATION OF GOVERNMENT DECREE No.
28/1998/ND-CP DETAILING THE IMPLEMENTATION OF THE LAW ON VALUE ADDED TAX ON
EXPORT AND IMPORT GOODS
Pursuant to Law on Valued Added Tax No.
02/1997/QH9 of May 10, 1997;
Pursuant to Article 22 of Decree No. 28/1998/ND-CP of May 11, 1998 detailing
the implementation of the Law on Value Added Tax;
The General Department of Customs hereby guides the implementation of the Law
on Value Added Tax on import goods as follows:
I. GENERAL PROVISIONS
1. Subjects liable to Value Added Tax at import
stage:
Value Added Tax is a kind of indirect tax
imposed on consumers. The tax is calculated on the added value of the goods and
services arising in the course of import, production, circulation and
consumption.
The subjects liable to Value Added Tax are goods
and services used for production, business and consumption in Vietnam except
for those exempted from tax as mentioned in Article 4, Chapter I of Decree No.
28/1998/ND-CP.
For import goods, the subjects liable to Value
Added Tax are import goods used for production, business and consumption in
Vietnam permitted to import via Vietnamese border or from export processing
zones into domestic market except for those as stipulated in Article 4, Chapter
I of Decree
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2. The subjects not liable to Value Added Tax on
export and import goods at import stage shall include:
2.1. The goods as humanitarian aid and
non-refundable aid, including aids from international organizations, foreign
States, Government, Associations and non-governmental organizations to the
Vietnamese Government or Vietnamese organizations, mass organizations or
associations.
a) The goods as humanitarian aids and
non-refundable aids must be accompanied with sufficient papers to be presented
to the customs as follows:
- Written certification by competent agencies
with identification of the agencies and organizations that give aids, that the
goods are humanitarian aids or non-refundable aids; and
- Other papers relating to the receipt of such
goods lots as prescribed for import goods.
b) The gifts to State bodies, political
organizations, socio-political organizations, social organizations, socio-
professorial organizations and People's Armed Forces' units.
The organs and organizations receiving the gifts
which are not liable to Value Added Tax shall prepare an official letter,
requesting the non-collection of Value Added Tax (attached with related papers
and certifications by competent agencies to the effect that the imported goods
are gifts) clearly stating the sources, quantity and category of the imported
goods.
c) The belongings of foreign organizations and
individuals under the diplomatic immunity quotas, the accompanied goods within
the tax-free luggage quotas and belongings of Vietnamese overseas bringing
along upon their return to the country.
The quantity and categories of the imported
goods in the cases mentioned in Points b and c above shall be determined
according to the regimes prescribed by the State.
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2.3. Kinds of imported raw materials used for:
- The production of export goods;
- The processing of export goods under
production and processing contracts signed with foreign countries.
2.4. Goods and services provided for the
following subjects and in the following cases shall not be liable to Value
Added Tax at import stage.
The import goods directly supplied to ships,
planes, trains and other means of transport leaving Vietnam for foreign
countries or from foreign countries to (via) Vietnam for an on going journey to
other foreign countries, such as the supply of petrol, oil, water and foods of
various kinds including meals catering for passengers, supply of repair
services, cleaning up of international means of transport used for the
transport of goods, passengers and luggage from Vietnam to foreign countries
and from foreign countries to Vietnam.
2.5. The kinds of goods imported for tax-free
sale at duty-free shops, international airports, ports, railways terminals and
border gates.
2.6. The gold imported in the form of ingots or
pieces and the kinds of gold not yet processed into an crafts, jewelry's or
other products.
The gold in the form of ingots, pieces and the
kinds of gold not yet processed shall be determined in conformity with the
international regulations.
2.7. The kinds of equipment, machinery and
specialized means of transport which cannot be produced at home and are
imported by the establishments having investment projects for use as fixed
assets under projects.
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Dossiers determining kinds of equipment,
machinery and specialized means of transport for which the importing
establishments shall not have to pay Value Added Tax at import stage shall
comprise the following categories:
- The investment projects approved or licensed
by the competent levels (for investment projects).
- Import contracts or plans, clearly stating the
import origins and kinds of equipment, machinery and specialized means of
transport imported for use as fixed assets under the investment projects.
- Certification by the ministries, specialized
management bodies or specialized provincial management agencies of the kinds of
equipment, machinery and specialized means of transport imported by
establishments for use -as fixed assets which cannot be produced at home.
The importing establishments shall prepare and
forward the above-said dossiers to Customs Offices when making declarations at
the latter to serve as the basis for determining the import items not liable to
Value Added Tax. Customs Offices shall base themselves on the goods items
actually imported and the dossiers of the business establishments to determine
specifically the imported items not liable to Value Added Tax.
2.8. Arms and weapons of specialized use in
service of national defense and public security, the lists of which shall be
specifically determined by the Ministry of Defense and the Ministry of Public
Security after consulting and reaching agreement with the Ministry of Finance
which shall make a written confirmation thereof.
2.9. Technological transfer shall be determined
according to the stipulations in Chapter III "Technology Transfer" of
the Civil Code of the Socialist Republic of Vietnam and the documents guiding
the implementation thereof. For technological transfer contracts accompanied by
machinery and equipment, the non-collection of the tax shall be applied only to
the part of the transferred technology value.
2.10. The imported goods subject to Special
Consumption Tax at import stage shall not be liable to Value Added Tax.
2.11. Export products which are the exploited
mineral resources and not yet processed into other products, namely:
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- Manganese, tint, iron, chromate, hematite and
appetite ores.
3. Payers of Value Added Tax on import goods.
The payers of Value Added Tax according to the
stipulations in Article 3 of the Law on Value Added Tax are organizations and
individuals engaged in the import of goods and services subject to taxes in
Vietnam, irrespective of their business lines and trades, forms of business
organization and other organizations and individuals importing taxable goods
(hereafter commonly called importers).
II. BASIS FOR CALCULATION OF
TAX ON IMPORT GOODS
The bases for calculation of Value Added Tax are
tax calculation prices and tax rates.
1. The prices for calculation on the Value Added
Tax on import goods
The prices for calculation of Value Added Tax on
import goods are import prices at the border-gates plus (+) import tax.
The border-gate import prices serving as the
bases for Value Added Tax calculation shall be determined according to the
regulations on prices for calculation of tax on import goods.
For example: The price for calculation of the
import tax for importing a TV set in CBU (completely- built-up) form is VND
2,000,000 per unit
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- The Value Added Tax rate is 10% (ten per cent)
- The import tax to be paid is:
VND 2,000,000 x 30% = VND 600,000
The price for calculation of Value Added Tax is:
VND 2,00,000 + VND 600,000 = VND 2,600,000
The Value Added Tax to be paid is :
VND 2,600,000 x 10% = VND 260,000
- Where the import goods are totally exempt from
import tax, the prices for calculation of the Value Added Tax on the import
goods shall be the prices determined for the calculation of import tax.
- Where import goods are partially exempt from
import tax, the prices for calculation of the Value Added Tax shall be those
determined as the prices for calculation of import tax plus the part of import
tax to be paid (after subtracting the part of the import tax which has been
reduced).
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The import tax to be paid shall be:
VND 200,000,000 x 40% = VND 80,000,000
The import tax is exempt by 20% (per cent) and
the remaining payable amount shall be:
VND 80,000,000 x 80% = VND 64,000,000
The Value Added Tax to be paid shall be:
(VND 200,000,000 + VND 64,000,000) x 10% = VND
26,000,000
Goods subject to the collection of import tax
arrears and at the same time also of Valued Added Tax arrears (as mentioned in
section VI, Circular
No. 72A-TC/TCT guiding the implementation of
Decree No. 54/CP on export-import taxes).
- The goods being presents and gifts that exceed
the limits prescribed for tax exemption and are imposed with import tax on the
excessive portions, the price for calculation of Value Added Tax shall be
determined according to the formula set out above.
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The Value Added Tax rates shall comply with the
stipulations in Article 8 of the Law on Value Added Tax and Article 7 of Decree
No. 28/1998/ND-CP which are specified in the Table guiding the Value Added Tax
rates applicable to import goods, promulgated by the General Department of
Customs after consulting with the Ministry of Finance.
III. METHODS FOR CALCULATING
VALUE ADDED TAX ON IMPORT GOODS
General provisions on methods for calculating
Value Added Tax
1. Methods for calculating Value Added Tax on
import goods
General formulary:
Payable The value for Import Value
Value Added = calculation of + Tax x Added
Tax the imported Tax rate goods liable to Value
Added Tax
The tax calculation value of imported goods for
calculating import tax is also used for the calculation of Valued Added Tax.
Where in a lot of goods, the goods items pose different Value Added Tax rates,
the Value Added Tax shall be calculated separately for each item, then making
the total Value Added Tax for the whole lot.
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Step 1 : Determination of import items liable to
Value Added Tax for calculating import tax first to serve as the basis for
calculating Value Added Tax. Following are the concrete cases:
+ Where the whole lot of imported goods liable
to both import tax and Value Added Tax, the import tax shall be calculated
first which shall serve as the basis for calculating the Value Added Tax
according to the above-said formula.
+ Where the lot of imported goods contains only
in number of items liable to Value Added Tax, the import tax shall be
calculated for the lot, before determining the for calculating Valued Added Tax
for those items liable to such tax and calculating the Value Added Tax for such
items.
+ Where the whole lot of imported goods contains
items eligible for import tax exemption or reduction but not for the Value
Added Tax exemption or
reduction, the prices for tax calculation shall
be determined as mentioned in Point 1, Section II "Basis for Tax
Calculation" hereof.
Step 2: Calculation of Value Added Tax:
+ Determination of the calculation value of the
import goods liable to value Added Tax.
+ Accurate determination of the payable import
tax amount for the goods liable to Value Added Tax;
+ Determination of Valued Added Tax rates
applicable to those goods items;
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Step 3: Tax notice and the period for tax
calculation:
The period for calculation of Value Added Tax
and tax notice shall be the same as stipulated for export-import taxes.
A tax notice must clearly state the payable tax
amount for each kind of tax and the time limit for tax payment.
2. Use of Value Added Tax collection receipts
and the way to make inscriptions on the receipts
- The use of export- import tax receipts and
receipts CTT52 for Value Added Tax on import goods shall commence from January
1, 1999 as stipulated by the Ministry of Finance.
- Clear and separate inscription of each kind of
tax-import, special consumption and Value Added Tax-must be made on receipts,
and
- Tax receipts shall be issued to tax payers to
serve as the basis for making final settlement, deduction and reimbursement of
the Value Added Tax at the subsequent production and consumption stages at
home.
IV. CUSTOMS DECLARATIONS AND
PAYMENT OF VALUE ADDED TAX ON IMPORT GOODS
1. Provisions on customs declarations:
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- The declarations of export and import goods
and other papers used in customs declaration shall comply with the stipulation
in the Export - Import Tax Law and the Customs�
regulation.
- Where import goods are not liable to Value
Added Tax importers shall submit papers serving as proof in accordance with the
procedures prescribed
herein and other documents of the Ministry of
Finance and the General Department of Customs.
2. Provisions on the payment of Value Added Tax:
- The time limit for payment of Value Added Tax
shall be the same as that prescribed for payment of export-import taxes
according to the current law on export- import taxes
- For goods exported and imported by entry, exit
and non-commercial channel and imported via land borders, which do not fail
into the category of export-import on official scale and import goods which are
consumer ones, the Value Added Tax must be paid immediately upon their import.
- Value Added Tax shall be paid to the State
Budget in VND. Where tax payers make payment in foreign currencies, the tax
money shall be converted into VND at the average buying rate of exchange
announced by the State Bank at the time of tax calculation.
- Where enterprises make direct payment of tax
to the State budget in VND, such payment shall be made in strict conformity
with the Chapters, Categories, Items, Grades and Entries of the Indexes of the
State Budget. Where the Custom make direct collection of Value Added Tax, the
tax must be paid to the State Treasuries in VND and entered in the specialized
collection accounts of the Customs opened at the State Treasuries. The
procedures and time limit for payment of such tax shall be the same as
stipulated for export-import taxes.
V. HANDLING OF TAX VIOLATIONS
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a) If failing to comply with the provisions on
the procedures for customs registrations and declarations they shall, depending
on the seriousness of violations, be subject to warning or pecuniary fines as
prescribed in the Ordinance on the Handling of Administrative Violations.
b) If delaying payment of tax or fines stated in
tax notices, tax-collecting orders or sanction decisions, they shall, besides
having to pay in full the taxes or fines as stipulated by law, be subject to a
fine equal to 0.1% (one- thousandth) of the late payment sum for each day of
late payment.
c) If falsely declaring or evading taxes, they
besides having to pay in full the taxes as stipulated, shall be liable to
pecuniary fines equal from 1 to 5 times the tax amount falsely declared or
evaded. Where the tax evasion amount is large or a serous violation is
committed despite previous sanction for administration violation, they shall be
examined for penal liability according to law.
d) If failing to pay tax or fines, they shall be
handled as follows:
- To deduct their deposits at banks, treasuries
or credit organizations for the payment of tax or fines;
The banks, treasuries or credit organizations
shall have to deduct money from the tax payers' accounts in order to make
payment of tax or fines to the State Budget in accordance with the stipulations
on tax handling by tax offices or competent agencies before collecting debts;
- To seize goods and exhibits as a guarantee for
collection in full of the tax and fines;
- To make inventory of properties in compliance
with the provisions of law as a guarantee for collection in full of the
outstanding tax and fine amounts.
The handling of Value Added Tax violations
mentioned above shall comply with the procedures defined in legal documents on
handling of tax violations.
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Where the Customs Authorities discover
violations of tax law by exporters and/or importers, inspection must be made to
determine clearly the acts of violation, their seriousness and causes, the
responsibilities of the organizations and individuals committing acts of
violation and dossiers must be compiled as stipulated.
The Customs shall base themselves on the
stipulations and levels of sanctions against administrative violations in the
field of taxation and on the competence to issue sanctioning decisions as
stipulated in Decree No. 16/CP guiding the implementation of the Ordinance on
Sanctions Against Administrative Violations in the Field of Customs and Decree
No. 22/CP on Sanction Against Administrative Violations in the Field of
Taxation.
VI. COMPLAINTS AND STATUTE OF
LIMITATION FOR IMPLEMENTATION
1. Rights and responsibilities of tax payers.
According to Article 23 of the Law on Value
Added Tax, organizations and individuals shall have the right to lodge
complaints against customs officials incorrect implementation of the Value
Added Tax Law on establishments.
Written complaints shall be forwarded to the
Customs Offices that issued tax notices or handling decisions within 30 days
from the date of receipt of tax-collecting orders or handling decisions Pending
a resolution, the complainant must pay in full and in due time the tax and/or
fine amounts already notified.
If the complaining organizations or individuals
disagree with the decisions by the tax offices settling the complaints or do
not receive resolutions after 30 days from date of sending such complaints,
they may lodge claims to the superior tax offices or initiate a lawsuit at
courts as prescribed by law.
The procedures, the order of making complaints
or initiating lawsuits and examination and resolution must comply with the
provisions of the laws in force.
2. Liabilities and power of tax offices
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- Those tax offices which, through inspection,
detect and conclude that there are false declarations or evasion of tax or
mistaken taxation, such offices shall be liable for collecting the tax arrears
or making reimbursement of the tax or fine amounts mistakenly imposed in a
5-year period from the date of inspection and discovery of such false
declarations or evasion of tax or mistaken taxation.
VII. ORGANIZATION OF
IMPLEMENTATION
1. Effect of implementation:
The Law on Value Added Tax shall take effect
from January 1st, 1999, From January 1st, 1999, the Customs shall collect the
Value Added Tax on import goods liable to the Value Added Tax.
2. Organization of implementation
It is stipulated in Article 22 of Decree
No.28/CP that:
- The General Department of Customs shall be
liable for organizing the collection of Value Added Tax on import goods; which
are subject to Value Added Tax.
- The General Department of Taxation and the
General Department of Customs shall have to coordinate in the control of the
collection of Value Added Tax throughout the country.
As from January 1st, 1999, the General
Department of Customs shall apply the Customs declarations according to the new
form which includes the declarations for calculation of Value Added Tax. The
time for determination of the import goods and declaration for payment of Value
Added Tax shall be applicable to all the import declarations registered with
the Customs Offices from January 1st, 1999 onwards.
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For non-commercial goods, goods imported via
land borders (other than export and import on official scale) and import goods
which are consumer ones, the Customs Offices shall carry out the export and/or
import procedures, calculate and collect tax before releasing the goods.
For export goods liable to Value Added Tax at
the tax rate of 0% (zero per cent), in order to provide the grounds for tax
offices to inspect the settlement of Value Added Tax on enterprises having
goods for export, the Customs Offices shall have to inspect the goods in order
to confirm precisely the quantity of goods actually exported for reflection on
the export declarations.
On the import goods declaration forms and tax
receipts, the calculation of Value Added Tax and the amounts of Value Added Tax
must be separated to serve as the basis for enterprises and the tax-collecting
offices to deduct the input Value Added Tax.
The Customs Offices shall have to manage the
dossiers of declarations for Value Added Tax calculation, account the Value
Added Tax, and abide by the system of accounting and statistic reporting to
promptly serve the inspection and handling of violations of the tax law and the
management of collection of Value Added Tax nationwide.
Any difficulties that arise in the course of
implementation of this Circular shall be reported to the General Department of
Customs for study and additional guidance.
GENERAL DIRECTOR
CUSTOMS
Phan Van Dinh