JOINT CIRCULAR

OF MINISTRY OF INDUSTRY AND TRADE - MINISTRY OF FINANCE - MINISTRY OF TRANSPORT - MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT - MINISTRY OF HEALTH - STATE BANK OF VIETNAM

AGRICULTURE DEVELOPMENT OF RURAL AREAS - MINISTRY OF HEALTH - STATE BANK

VIETNAM NUMBER 01/2008/JOINT-CIRCULAR-MOIT-MOF-MOTTRAN-MARD-MOH-SBV

JANUARY 31, 2008

GUIDELINES FOR IMPLEMENTING DECISION NO. 254/2006/QD-TTg

OF NOVEMBER 7, 2006 ISSUED BY THE PRIME MINISTER ON BORDER TRADE MANAGEMENT WITH NEIGHBORING COUNTRIES

BORDER TRADE ACTIVITIES WITH NEIGHBORING COUNTRIES

Pursuant to Decision No. 254/2006/QD-TTg dated November 7, 2006 of the Prime Minister on border trade management with neighboring countries;

The Ministry of Industry and Trade, the Ministry of Finance, the Ministry of Transport, the Ministry of Agriculture and Rural Development, the Ministry of Health, and the State Bank of Vietnam hereby issue guidelines for implementing Decision No. 254/2006/QD-TTg dated November 7, 2006 of the Prime Minister on border trade management with neighboring countries as follows:

I. GENERAL PROVISIONS

1. Scope of application

1.1. The terms used in this Circular shall be understood as follows:

a) "Non-international practice method" means that the buyer and seller do not agree on any provision regarding the application of international practices in the contract. International practices in international trade are understood as customs, repeated practices in international trade and recognized by relevant international organizations, such as the General Rules for the Interpretation of Trade Terms (INCOTERMS).

b) "Goods produced by residents of neighboring countries" means goods of origin from neighboring countries land-bordering with Vietnam.

c) "Border area adjacent to neighboring countries" means the border area comprising communes, wards, towns where part of the administrative boundary coincides with the national border on land.

d) "Border region" includes provinces where part of the administrative boundary coincides with the national border on land.

đ) "Other points of entry within the border economic zone established by the Government of Vietnam" means points of entry recorded in the Prime Minister's Decision on the issuance of the Border Economic Zone Operation Regulations or authorized agencies allowing the clearance of goods.

1.2. Border trade activities specified in this Circular include:

a) Purchasing and exchanging goods by border residents are activities exclusively for border residents in accordance with the provisions of Article 2, Clause 2, Article 5 and Article 6 of Decision No. 254/2006/QD-TTg dated November 7, 2006 of the Prime Minister on border trade management with neighboring countries.

b) Trading at border markets, gate markets, and markets within border economic zones.

c) Purchasing and exchanging goods across borders conducted by subjects specified in Clause 1, Section II and Clause 1, Section III of this Circular according to non-international practice methods.

2. Border trade goods

Goods purchased, exchanged, exported, and imported under the form of border trade shall be carried out in accordance with the provisions of Decree No. 12/2006/NĐ-CP dated January 23, 2006 of the Government detailing the implementation of the Law on Trade regarding international trade activities and foreign agency buying, selling, processing, and transiting goods.

3. Quality of border trade goods

a) Regarding border health quarantine:

- All goods traded and transported across the border must declare to the Border Health Quarantine Authority (The actual inspection and health quarantine handling will only be implemented for goods carrying vectors, infectious diseases, and factors threatening public health as notified and designated by the Ministry of Health).

- The Vietnam National Center for Hygiene and Environment is the agency under the Ministry of Health responsible for implementing border health quarantine activities nationwide in accordance with current laws on health quarantine. The organization of the Vietnamese border health quarantine authority system is carried out in accordance with the Prime Minister's regulations.

- Procedures for actual inspection and health quarantine handling are carried out according to the current border health quarantine procedures of the Socialist Republic of Vietnam.

- When there is an outbreak of infectious disease in the border area of neighboring countries as reported by the Ministry of Health, the Provincial Department of Health directs the health quarantine authority to implement health quarantine activities in the crossing area to inspect, monitor, and promptly take health measures to ensure that goods do not spread the disease.

b) Animal quarantine, plant quarantine, aquatic product quarantine:

- Only goods listed in the catalog of export and import goods subject to animal quarantine, plant quarantine, and aquatic product quarantine announced by the Minister of Agriculture and Rural Development need to go through quarantine procedures.

- The catalog of export and import goods subject to animal and plant quarantine is announced periodically by the Minister of Agriculture and Rural Development.

c) Regarding food safety control:

Exported and imported food goods must comply with the Food Safety Ordinance.

d) Regarding quality control:

Goods of the following entities do not require state quality inspection:

Goods purchased and exchanged by border residents; goods brought into border markets, gate markets, and markets within border economic zones. Except for health quarantine, when there is an epidemic and goods that may transmit the disease as notified by authorized agencies.

đ) Regarding forest protection work: Implemented in accordance with Decree No. 82/2006/NĐ-CP dated August 10, 2006 of the Government on the management of export, import, re-export, import from sea, transit, breeding, growing, and planting artificial trees of endangered wild animals and plants; Decree No. 32/2006/NĐ-CP dated March 30, 2006 of the Government on the management of wild plants and endangered, precious animals; and Decision No. 54/2006/QĐ-BNN dated July 5, 2006 of the Ministry of Agriculture and Rural Development on announcing the list of wild animals and plants specified in the Appendices of the Convention on International Trade in Endangered Species of Wild Fauna and Flora.

e) For drugs: implement according to the Drug Law number 34/2005/QH11 dated June 14, 2005, and guiding documents for the implementation of this Law.

f) For cosmetics: implement according to Decision number 35/2006/QĐ-BYT dated November 10, 2006, issued by the Minister of Health on promulgating the Regulations on cosmetic management.

4. Payment for goods

a) Payment in trade and exchange of goods by border residents, payment in trade of goods at border markets, border gate markets, and markets within border economic zones shall be made in Vietnamese Dong (VND) and the currency of neighboring countries. In cases where foreign currencies freely convertible are used for payment, such transactions can only be conducted by entities authorized to collect foreign currencies according to the regulations of the State Bank of Vietnam.

Export and import payments through the border using non-international practice methods shall be made in foreign currencies freely convertible, Vietnamese Dong, or the currency of neighboring countries.

b) The method of payment in cash or non-cash shall be agreed upon by the parties involved in accordance with the regulations on foreign exchange management of Vietnam and neighboring countries.

c) Carrying Vietnamese Dong and cash of neighboring countries across border gates for payment purposes as stipulated in point a, Clause 4 above must comply with current regulations of the State Bank of Vietnam regarding carrying foreign currency cash and Vietnamese Dong cash when entering and exiting the country.

d) Parties engaged in trade, exchange, export, and import of goods through the border may choose payment methods in accordance with current regulations of the State Bank of Vietnam.

5. Tax and fee policies

a) For goods traded across the border: Taxes and fees (if applicable) must be paid according to the provisions of the law.

b) The tax exemption quota for imported goods not exceeding 2,000,000 VND/person/day applies to individuals meeting the following criteria:

- Being a resident of the border area of Vietnam or a resident of the three neighboring countries (China, Laos, Cambodia) crossing the border and presenting a border identity card or border travel permit issued by the competent authority of both countries.

- Goods produced in neighboring countries. Goods produced in third countries do not qualify for this tax exemption quota.

c) Tax policies for goods purchased by border residents in special economic zones shall be implemented according to the regulations of those special economic zones.

d) If the value of indivisible products exceeds the quota, taxes on the excess amount must be paid (including whole animals, whole items, whole units, and complete sets).

đ) Goods listed under tariff quotas produced in neighboring countries, if exchanged or sold by border residents, also qualify for the aforementioned tax exemption quota.

e) Other related tax policies shall be implemented according to the current regulations of the Ministry of Finance.

II. Trade and Exchange of Goods by Border Residents

1. Subjects eligible to trade and exchange goods across the border

Citizens with permanent residence registration in border areas of Vietnam and China, Laos, and Cambodia are allowed to trade and exchange goods suitable for cross-border trade as specified in Clause 2, Section I of this Circular and are entitled to the tax exemption quota as stated in point b, Clause 5, Section I above.

2. Border gates and locations for trading and exchanging goods across the border

Implement according to Decision number 254/2006/QĐ-TTg dated November 7, 2006, issued by the Prime Minister on managing border trade activities with neighboring countries.

3. Customs procedures for goods traded and exchanged by border residents: Implement according to the provisions of the Customs Law

a) Customs documents:

- The consignor presents a border identity card or border travel permit issued by the competent authority of neighboring countries to enjoy the tax exemption quota.

- Goods traded and exchanged by border residents within the quota specified in point b, Clause 5, Section I of this Circular do not require declaration on the customs declaration form; for goods exceeding the quota, a declaration must be made on the non-trade section of the customs declaration form for the excess amount.

- For goods traded and exchanged by border residents that exceed the quota, the Customs Authority will directly collect taxes on the customs declaration form for exported/imported non-trade goods for the excess amount.

- Goods traded and exchanged by border residents do not need to submit a Certificate of Origin (C/O). The determination of origin for these goods is based on the actual inspection by customs officials.

b) Actual inspection of goods:

- Inspection is only conducted when there is a possibility of exceeding the tax-exempt quota or smuggling detected through supervision. The basis for calculating the value of goods is the market price in the border region at that time.

- For shipments declared on the non-trade export/import customs declaration form, the actual inspection of goods must be carried out according to current laws.

c) Where there is no Customs presence, the Border Guard shall implement the provisions of Clause 3 above.

III. Export and Import of Goods Across the Border

1. Vietnamese subjects eligible for export and import of goods across the border

a) Vietnamese traders.

b) Business households in border provinces established and registered according to Decree number 88/2006/NĐ-CP dated August 29, 2006, of the Government on business registration.

2. Border gates for export and import of goods across the border

a) International border gates open for people, means of transport, and goods of Vietnam, neighboring countries, and third countries crossing the national border.

b) Main border gates open for people, means of transport, and goods of Vietnam and neighboring countries crossing the national border.

c) Border gates and other points of entry within border economic zones established with permission from the Government of Vietnam.

d) Auxiliary border gates open for people, means of transport, and goods of Vietnam and neighboring countries in border areas and border regions crossing the national border.

d) In the case where goods under commercial and non-commercial contracts of a third country or a neighboring country wish to be exported or imported through a secondary border gate or a customs checkpoint outside the border economic zone, the consignor or their representative must submit a written request to the Chairman of the People's Committee of the border province for a decision permitting such clearance if it meets the following criteria:

- There must be specialized functional forces of Customs, Border Guard, and Quarantine.

- This decision shall only apply to each consignment and each contract and shall have a specified duration.

- The decision shall be sent to the Ministry of Industry and Trade, the Ministry of Finance, and relevant ministries and sectors.

3. Customs procedures for goods exported and imported across the border: Shall be carried out in accordance with the provisions of the Customs Law.

a) For imported goods:

- Customs declaration form: Use the import goods declaration form according to the Customs Declaration Form prescribed by the Ministry of Finance.

- Other documents regarding the customs file and customs procedure for export and import goods under purchase and sale contracts as prescribed by the Ministry of Finance, except for the bill of lading and commercial contract.

- Must have a Health Quarantine Certificate issued by the health quarantine authority (for goods subject to health quarantine); and a State Quality Inspection Registration Certificate for goods required to undergo state quality inspection.

- Imported goods crossing the border may enjoy preferential import duties if they meet the conditions stipulated in the bilateral agreement between the Government of Vietnam and the Government of the neighboring country; the customs declaration and submission of the Certificate of Origin (C/O) for goods enjoying preferential import duties shall be implemented in accordance with Circular No. 59/2007/TT-BTC dated June 14, 2007 of the Ministry of Finance guiding the implementation of export and import taxes, and Circular No. 45/2007/TT-BTC dated May 7, 2007 of the Ministry of Finance guiding the implementation of special preferential import tax rates. In cases where the special preferential tax rate applies, the importer must present the Certificate of Origin (C/O) (except in cases where the total value of the consignment (FOB) does not exceed 200 USD).

- Physical inspection of goods shall be carried out in accordance with current customs laws.

b) For exported goods:

- Customs declaration form:

+ In the case of goods exported under a purchase and sale contract: Use the Customs Declaration Form prescribed by the Ministry of Finance.

+ In the case of goods exported without a purchase and sale contract: Use the Border Export Goods Declaration Form prescribed by the Ministry of Finance.

- Other documents regarding the customs file and customs procedure for export and import goods under purchase and sale contracts shall be implemented in accordance with current customs laws.

- Must have a Health Quarantine Certificate issued by the health quarantine authority for goods that require health quarantine according to the importing country's requirements or the consignor's requirements.

- Exported goods crossing the border may enjoy preferential export duties according to the bilateral agreement between the Government of Vietnam and the Government of the neighboring country.

IV. PURCHASE AND SALE OF GOODS AT BORDER MARKETS, GATEWAY MARKETS, AND MARKETS WITHIN THE BORDER ECONOMIC ZONE

BORDER MARKETS, GATEWAY MARKETS, AND MARKETS WITHIN THE BORDER ECONOMIC ZONE

1. Border markets, gateway markets, and markets within the border economic zone

a) A border market is a market established in the border area on land territory of Vietnam but not included in the markets mentioned in points b and c below.

b) A gateway market is a market established in the border area on land territory of Vietnam attached to export and import gateways but not within the border economic zone.

c) A market within the border economic zone is a market established within the border economic zone pursuant to Decision No. 53/2001/QĐ-TTg dated April 19, 2001 of the Prime Minister on policies for border economic zones.

2. Business subjects at border markets, gateway markets, and markets within the border economic zone

a) Vietnamese enterprises and business households with a business registration certificate issued by competent state authorities are permitted to organize business activities at border markets, gateway markets, and markets within the border economic zone.

b) Enterprises and business households from neighboring countries must comply with the provisions of Decree No. 34/2000/NĐ-CP dated August 18, 2000 of the Government on the Regulations on the Land Border of the Socialist Republic of Vietnam and related regulations on travel, residence, and business activities in the border area:

- Are permitted to conduct business at gateway markets and border markets when granted a business license by the provincial trade management department.

- Are permitted to organize and conduct business at markets within the border economic zone when granted a business license by the border economic zone management board.

c) Citizens of neighboring countries who are permitted to conduct business at border markets, gateway markets, and markets within the border economic zone and hold valid business licenses at these markets may, if they need temporary residence in Vietnam, be considered for issuance of a temporary residence certificate or a temporary residence card by the competent Vietnamese authority in accordance with the guidelines of the Ministry of Public Security.

3. Management of border markets, gateway markets, and markets within the border economic zone

a) The decision to establish (or dissolve) and define the functions, tasks, and powers of the market management agency (or types of market business organizations) for border markets and gateway markets shall be implemented according to the分级授权规定于政府令第02/2003/NĐ-CP号2003年1月14日关于市场发展和管理的规定，以及相关部委关于市场管理机构（或市场经营组织类型）职能、任务、权力和组织的决定和通函。

b) Markets within the border economic zone shall be established (or dissolved) and the functions, tasks, and powers of the market management agency (or types of market business organizations) defined by the Head of the Border Economic Zone Management Board in accordance with the provisions of Government Decree No. 02/2003/NĐ-CP dated January 14, 2003 on the development and management of markets, and the Circulars and Decisions of relevant ministries and sectors regarding the functions, tasks, powers, and organization of the market management board (or types of market business organizations).

c) Other contents related to border markets, customs clearance markets, and markets within economic zones at border gates not mentioned in this Circular shall be implemented in accordance with the provisions of Government Decree No. 02/2003/NĐ-CP dated January 14, 2003 on the development and management of markets, and the Circulars and Decisions of relevant ministries and sectors regarding the functions, tasks, powers, and organizational structure of market management boards (or other types of market business organizations).

d) Provisions concerning border markets, customs clearance markets, and markets within economic zones at border gates set forth in this Circular, if they differ from bilateral agreements between the Government of the Socialist Republic of Vietnam and the Government of neighboring countries, shall be implemented according to such bilateral agreements already signed between the two Governments.

4. Customs procedures for goods bought and sold, exchanged at border markets, customs clearance markets, and markets within economic zones at border gates.

Customs procedures for imported goods brought into border markets, customs clearance markets, and markets within economic zones at border gates shall be carried out in accordance with the customs procedures for imported goods through the border as stipulated in Clause 3, Section III of this Circular.

V. EXIT AND ENTRY OF PERSONS AND RELATED MEANS OF TRANSPORTATION IN CONNECTION WITH CROSS-BORDER TRADE

REGARDING CROSS-BORDER TRADE

1. Persons and means of transportation of Vietnam

a) The consignor, the person in charge of the transport vehicle carrying goods, and the service personnel on the vehicle, ship, or boat must have one of the following valid documents: passport, border area identity card, border pass, (crew list or crew book for ships or boats), or other border crossing documents as prescribed by law. In addition to the aforementioned documents, the person in charge of the transport vehicle must also have a driving license appropriate to the type of vehicle being operated.

b) The owner of the transport vehicle and the person in charge of the transport vehicle carrying goods must present or submit the required documents when entering the designated locations in the border area.

c) The person in charge of the transport vehicle entering and exiting border markets, customs clearance markets, and markets within economic zones at border gates shall be subject to inspection and control by specialized state management agencies at the border gate; if entering deeper inland areas, they must complete exit and entry formalities.

d) Health quarantine upon entry and exit: persons, vehicles entering and exiting must undergo health quarantine at the border as prescribed by the current regulations of the Ministry of Health on health quarantine at the border.

đ) For Vietnamese motor vehicles passing through the border to deliver export goods, receive import goods, and then return to Vietnam on the same day, and foreign motor vehicles entering the Vietnamese border area to deliver import goods or receive export goods and then return to their country on the same day, there is no requirement to declare and submit the aforementioned documents.

e) Customs procedures for means of transportation for import and export, transit through land border gates:

- For motor vehicles transporting goods for departure, arrival, or transit: shall be carried out in accordance with the regulations of the Ministry of Finance.

- For temporary import for re-export, temporary export for re-import with a time limit: shall be carried out in accordance with the guidance of the Ministry of Finance.

f) Means of transportation for goods and the subjects specified in point a of this clause who wish to enter the cargo transfer points specified in the Transport Agreement between the Government of Vietnam and neighboring countries or other points outside the border area and economic zones at border gates to deliver or receive goods must comply with the provisions of the Agreement, Protocol, and other agreed documents signed between the Socialist Republic of Vietnam and neighboring countries regarding entry and exit and cargo transportation.

2. Persons and means of transportation of neighboring countries

a) Permitting means of transportation for goods of neighboring countries to pass through the border gates specified in points a, b, c, d, đ of Clause 2, Section III of this Circular to enter the designated locations for delivering and receiving goods in the border area as prescribed by the competent authority of Vietnam.

b) Only permitting means of transportation for animals and animal products that require quarantine to pass through border gates after undergoing disinfection and sterilization as prescribed.

c) Foreign citizens of neighboring countries who are consignors or authorized by the consignor, the person in charge of the transport vehicle, and service personnel on the transport vehicle of neighboring countries may travel through the border gates specified in points a, b, c, d, đ of Clause 2, Section II of this Circular to enter the designated locations for delivering and receiving goods using passports, crew books, border area identity cards, or border passes issued by the competent authority of the neighboring country.

d) Means of transportation and foreign citizens of neighboring countries who are the person in charge of the transport vehicle for goods of businesses of neighboring countries when entering and exiting border markets, customs clearance markets, and markets within economic zones at border gates to transport goods are exempted from visa requirements for entry and exit to Vietnam and are subject to inspection and control by specialized state management agencies at the border gate; when they need to go beyond the scope of border markets, customs clearance markets, and markets within economic zones at border gates into deeper inland areas of Vietnam, they must complete entry and exit formalities for persons and means of transportation in accordance with the provisions of Vietnamese law. The Exit and Entry Management Authority (Ministry of Public Security) will issue visas immediately at the economic zone at the border gate.

đ) In cases where means of transportation for goods and the subjects specified in points a and c of this clause wish to enter other locations outside the border area and economic zones at border gates to deliver or receive goods, they must comply with the provisions of the Agreement, Protocol, and other agreed documents signed between the Socialist Republic of Vietnam and neighboring countries regarding entry and exit and cargo transportation.

e) Quarantine for foreigners:

- Persons entering Vietnam from areas requiring quarantine or dangerous infectious diseases must declare their health status to the Border Health Quarantine Authority. The Ministry of Health will specify the content and procedures for declaring health status.

- When there is a need for quarantine due to infectious diseases or when dangerous infectious diseases spread at Vietnamese border gates, the Border Health Quarantine Authority must vaccinate foreign individuals upon their request.

VI. IMPLEMENTATION

1. Handling Violations

Violations in cross-border trade activities shall be handled based on the provisions of the Government Decree on administrative penalties in the field of trade and other relevant legal regulations of Vietnamese law.

2. Responsibilities of the Ministry of Industry and Trade

The Ministry of Industry and Trade shall take the lead and coordinate with related ministries, sectors, and People's Committees of border provinces, based on Decision No. 254/2006/QĐ-TTg dated November 7, 2006, issued by the Prime Minister, this Circular, and other relevant legal regulations of Vietnam, to guide and direct the management and operation of cross-border trade activities.

3. Responsibilities of Relevant Ministries and Sectors

a) Strictly implement Decision No. 254/2006/QĐ-TTg dated November 7, 2006, issued by the Prime Minister, and the guiding provisions of this Circular.

b) Appoint representatives to participate in the Cross-Border Trade Steering Committee under the Ministry of Industry and Trade.

c) Regularly inspect and urge the implementation of Decision No. 254/2006/QĐ-TTg dated November 7, 2006, issued by the Prime Minister, and this guiding Circular, and cooperate in handling issues arising during the implementation process.

4. Responsibilities of People's Committees of Border Provinces

a) Be responsible for organizing and managing all cross-border trade activities within the border areas under their jurisdiction; strictly enforce inter-sectoral coordination mechanisms for the management and operation of cross-border trade activities.

b) Delegate the specialized management agency for trade activities in the province to serve as the main agency assisting the provincial People's Committee in border trade management.

c) Be subject to guidance on border trade management by the Cross-Border Trade Activities Steering Committee and related ministries and sectors.

VII. EFFECTIVE DATE

This Circular shall take effect fifteen days from the date of publication in the Official Gazette.

Repeal Circular Jointly Issued No. 05/2004/TTLT-BTM-BTC-BGTVT-BNN&PTNT-BYT-BTS-NHNN dated August 17, 2004, and any provisions issued by ministries/sectors and localities that contradict Decision No. 254/2006/QĐ-TTg dated November 7, 2006, issued by the Prime Minister, and the provisions of this Circular.