Circular No. 01/2005/TT-BTM guiding the liquidation of machinery, equipment, transportation means, materials, and raw materials of foreign-invested enterprises

CIRCULAR

Guidelines for the liquidation of machinery, equipment, transportation means, materials, and raw materials of foreign-invested enterprises materials and raw materials of foreign-invested enterprises

Pursuant to Decree No. 24/2000/ND-CP dated July 31, 2000 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

After consultation with People's Committees of provinces and centrally governed cities and Management Boards of High-Tech Zones in provinces and centrally governed cities;

The Ministry of Trade provides detailed guidelines on the liquidation of machinery, equipment, transportation means, materials, and raw materials of foreign-invested enterprises as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. Scope of Application and Regulatory Scope

Joint ventures, wholly foreign-owned enterprises, export processing zones, and joint business operators under cooperation contracts (hereinafter referred to collectively as foreign-invested enterprises) may liquidate machinery, equipment, transportation means, materials, and raw materials owned by foreign-invested enterprises according to the forms and contents stipulated in this Circular.

2. Forms of Liquidation

a. Sale at the domestic market;

b. Export;

c. Donation or gift;

d. Destruction.

3. Contents of Liquidation

a. Surplus materials and equipment after completing basic construction to form foreign-invested enterprises;

b. Assets of foreign-invested enterprises after ceasing operations and dissolution;

c. Machinery, equipment, transportation means, materials, and raw materials when foreign-invested enterprises are still operating.

4. Conditions for Liquidation

a. Foreign-invested enterprises can only liquidate according to the forms and contents stipulated in this Circular after obtaining written approval from the Ministry of Trade or authorized agencies and must fulfill all financial obligations related to the liquidated assets in accordance with the Law on Import and Export Tax and other relevant laws.

b. For foreign-invested enterprises that are still operating, in addition to complying with the provisions of this clause, they must also meet the following conditions:

- Only liquidate machinery, equipment, and transportation means in one of the following cases:

+ Expiration of depreciation period;

+ Damage;

+ Incompatibility with the enterprise's production and business activities;

+ To reduce production or change business objectives;

+ To replace with more advanced machinery, equipment, and transportation means.

- Only liquidate materials and raw materials in one of the following cases:

+ Surplus and inventory;

+ Non-compliance with quality standards;

+ Incompatibility with the enterprise's production and business activities.

II. PROCEDURES FOR THE LIQUIDATION OF MACHINERY, EQUIPMENT, TRANSPORTATION MEANS, MATERIALS, AND RAW MATERIALS

1. Liquidation Documents

a. Documents for the liquidation of surplus materials and equipment after the completion of basic construction by foreign-invested enterprises include:

- A letter requesting liquidation from the enterprise specifying the form of liquidation and the List of materials and equipment proposed for liquidation according to Model No. 1 attached to this Circular;

- A final settlement report on construction projects including the settlement of imported materials and equipment, and proposals for handling surplus materials and equipment after the completion of construction works.

b. Documents for the liquidation of assets when foreign-invested enterprises cease operations include:

- A letter requesting liquidation from the asset liquidation committee of the enterprise specifying the form of liquidation and the List of machinery, equipment, transportation means, materials, and raw materials proposed for liquidation according to Model No. 2 attached to this Circular;

- A decision from the investment permit issuing authority approving the cessation of operations by the enterprise;

- A decision establishing the asset liquidation committee by the board of directors of joint ventures or the foreign investor (for wholly foreign-owned enterprises) or joint business operators, except in cases where the establishment of such a committee is not required as stipulated in Article 47 of Circular No. 12/2000/TT-BKH dated September 15, 2000 issued by the Ministry of Planning and Investment guiding foreign investment activities in Vietnam;

- An approved liquidation plan by the board of directors of joint ventures or the foreign investor (for wholly foreign-owned enterprises) or joint business operators.

c. Documents for the liquidation of machinery, equipment, and transportation means while foreign-invested enterprises are still operating include:

- A letter requesting liquidation from the enterprise specifying the reasons for liquidation, the form of liquidation, and the List of machinery, equipment, and transportation means proposed for liquidation according to Model No. 3 attached to this Circular;

- A depreciation schedule for machinery, equipment, and transportation means being liquidated upon expiration of the depreciation period;

- An inspection report on damaged machinery, equipment, and transportation means being liquidated due to damage;

- Approval from the investment permit issuing authority in cases of liquidation to reduce operational costs, update technology, or change business objectives.

d. Documents for the liquidation of materials and raw materials while foreign-invested enterprises are still operating include:

- A letter requesting liquidation from the enterprise specifying the reasons for liquidation, the form of liquidation, and the List of materials and raw materials proposed for liquidation according to Model No. 4 attached to this Circular;

- A quality inspection certificate from a commodity inspection service provider regarding substandard raw materials and materials not meeting production standards, as stipulated in Decree No. 20/1999/NĐ-CP dated April 12, 1999 of the Government on commodity inspection services and Circular No. 33/1999/TT-BTM dated November 18, 1999 of the Ministry of Trade guiding the implementation of Decree No. 20/1999/NĐ-CP mentioned above.

2. Procedures for the liquidation of machinery, equipment, transportation means, materials, and raw materials of export processing zone enterprises

The liquidation of machinery, equipment, transportation means, materials, and raw materials of export processing zone enterprises must comply with the provisions of this Circular and regulations on transactions between export processing zone enterprises and domestic enterprises.

3. Time Limit for Responding to Liquidation Documents

Within fifteen days from the date of receiving complete and valid files, the Ministry of Commerce or the agency authorized by the Ministry of Commerce shall issue a written response regarding the liquidation. In case of non-acceptance of the liquidation, the Ministry of Commerce or the agency authorized by the Ministry of Commerce must clearly state the reasons in the written response to the foreign-invested enterprise.

III. RESPONSIBILITIES OF THE MINISTRY OF COMMERCE AND THE AGENCIES AUTHORIZED BY THE MINISTRY OF COMMERCE IN REVIEWING AND APPROVING LIQUIDATION

1. Responsibilities of the Ministry of Commerce

The Ministry of Commerce is responsible for reviewing and approving the liquidation of machinery, equipment, transportation means, materials, and raw materials for the following projects:

a. Projects for exploration and exploitation of oil and gas;

b. Projects that have been granted an Investment License but have multiple independent accounting production units in different provinces;

c. Projects for operating duty-free shops;

d. Banking investment projects licensed by the State Bank;

đ. Projects for operating gaming with rewards.

2. Responsibilities of the agencies authorized by the Ministry of Commerce

The agencies authorized by the Ministry of Commerce are responsible for reviewing and approving the liquidation of machinery, equipment, transportation means, materials, and raw materials of foreign-invested enterprises outside the projects mentioned in Clause 1, Section III of this Circular.

IV. IMPLEMENTATION

1. Quarterly, the agencies authorized by the Ministry of Commerce report to the Ministry of Commerce on the implementation of the liquidation of machinery, equipment, transportation means, materials, and raw materials of enterprises with foreign investment within the scope of their authorization.

2. The Department of Planning and Investment will periodically inspect the liquidation of machinery, equipment, transportation means, materials, and raw materials of foreign-invested enterprises at the agencies authorized by the Ministry of Commerce.

V. EFFECTIVE DATE

1. This Circular takes effect fifteen days from the date of publication in the Official Gazette.

2. This Circular replaces the provisions in Section VIII; Point 4, Clause 1, Section IX of Circular No. 22/2000/TT-BTM dated December 15, 2000, issued by the Ministry of Commerce guiding the implementation of Decree No. 24/2000/NĐ-CP dated July 31, 2000, of the Government detailing the implementation of the Law on Foreign Investment in Vietnam concerning import and export activities and other commercial activities of foreign-invested enterprises, and Clause 3, Section I of Circular No. 26/2001/TT-BTM dated December 4, 2001, issued by the Ministry of Commerce amending and supplementing Circular No. 22/2000/TT-BTM referred to above.