Circular No. 109/2014/TT-BTC guiding the implementation of certain provisions of Decision No. 72/2013/QĐ-TTg dated November 26, 2013 of the Prime Minister on financial mechanisms and policies for border economic zones.

CIRCULAR

Guidelines for implementing certain provisions of Decision No. 72/2013/QĐ-TTg dated November 26, 2013 of the Prime Minister on mechanisms and financial policies for border economic zonesPursuant to Decree No. 29/2008/NĐ-CP dated March 14, 2008 of the Government on industrial zones, export processing zones, and economic zones; Decree No. 164/2013/NĐ-CP dated November 12, 2013 of the Government amending and supplementing certain provisions of Decree No. 29/2008/NĐ-CP dated March 14, 2008;Pursuant to Decision No. 72/2013/QĐ-TTg dated November 26, 2013 of the Prime Minister on mechanisms and financial policies for border economic zones;

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Implementing the guidance of the Prime Minister as stated in Circular No. 5776/VPCP-KTTH dated July 30, 2014 of the Government Office regarding the implementation of Decision No. 72/2013/QĐ-TTg;

The Minister of Finance issues this Circular guiding the implementation of certain provisions of Decision No. 72/2013/QĐ-TTg dated November 26, 2013 of the Prime Minister on mechanisms and financial policies for border economic zones (hereinafter referred to as Decision No. 72/2013/QĐ-TTg).

Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Article 1. Duty-free zones within border economic zones

At the proposal of the Director of the Tax Policy Department;

In accordance with Clause 2, Article 3 of Decision No. 72/2013/QĐ-TTg, special economic zones, industrial trade zones, free trade zones, and other areas with similar names shall be considered duty-free zones within border economic zones if they meet the following conditions:

1. Established by a Decision of the Prime Minister;

2. A geographical area with defined boundaries;

3. Separated from foreign territory by a solid fence (except for the Special Economic Zone - Trade Zone Lao Bao, Quang Tri Province and the International Border Economic Zone - Trade Zone Cau Treo, Ha Tinh Province);

4. Equipped with gates and entrances that ensure conditions for customs inspection and supervision by relevant authorities, including a customs organization responsible for inspecting and supervising goods and vehicles entering and exiting the zone.

Article 2. Corporate income tax incentives

Corporate income tax incentives for businesses operating in border economic zones shall be implemented according to the regulations applicable to economic zones under the Law on Corporate Income Tax No. 14/2008/QH12, the Law Amending and Supplementing Certain Provisions of the Law on Corporate Income Tax No. 32/2013/QH13, and related guiding documents.

Article 3. Personal income tax incentives

Vietnamese and foreign individuals directly working and producing in border economic zones, earning income from their work and production in these zones, shall be subject to personal income tax according to the provisions of the Law on Personal Income Tax, with a reduction of 50% of the tax payable, as guided by Circular No. 176/2009/TT-BTC dated September 9, 2009 of the Ministry of Finance on reducing personal income tax for individuals working in economic zones.

Article 4. Value-added tax incentives

1. Goods and services from duty-free zones within border economic zones exported to foreign countries are exempt from value-added tax.

2. Goods and services produced and consumed within duty-free zones within border economic zones are exempt from value-added tax.

3. Goods and services traded between duty-free zones within border economic zones are exempt from value-added tax.

4. Goods and services imported from abroad and consumed within duty-free zones within border economic zones are exempt from value-added tax, except for goods listed in the category of items subject to import duties immediately upon entry into duty-free zones within border economic zones as specified in Section II of Appendix II attached hereto.

5. Goods and services from other functional zones within border economic zones and goods and services from domestic Vietnam exported into duty-free zones within border economic zones shall apply a zero percent value-added tax rate, except in the following cases:

a) Goods and services not eligible for a zero percent value-added tax rate as provided for in Clause 1, Article 8 of the Law on Value-Added Tax No. 13/2008/QH12 (amended and supplemented at Clause 3, Article 1 of the Law Amending and Supplementing Certain Provisions of the Law on Value-Added Tax No. 31/2013/QH13) and related guiding documents.

b) Goods not undergoing customs procedures when exported from other functional zones within border economic zones and from domestic Vietnam into duty-free zones that are not separated from foreign territory by a solid fence.

The list of goods not undergoing customs procedures and the list of goods subject to pre-export tax refund verification apply to the goods mentioned in this clause and are specified in Appendix I attached hereto.

6. Goods and services from duty-free zones within border economic zones brought into consumption in other functional zones within border economic zones or brought into consumption in domestic Vietnam must be subject to value-added tax according to the provisions of the law.

The list of goods that do not undergo customs procedures and the list of goods subject to pre-withholding tax inspection before VAT refund for the goods mentioned in this clause are specified in Appendix I attached to this Circular.

6. Goods and services from duty-free zones within border economic zones brought into consumption in other functional areas within border economic zones or brought into consumption in the domestic market of Vietnam shall be subject to VAT in accordance with the provisions of the law.

Article 5. Regarding Special Consumption Tax

1. Goods from duty-free zones within border economic zones exported to foreign countries are not subject to special consumption tax.

2. Goods produced and consumed within duty-free zones within border economic zones are not subject to special consumption tax, except for the following cases:

a) Passenger cars with less than 24 seats;

b) Goods produced and consumed within duty-free zones that are not separated from external territory by a solid fence.

3. Goods traded between duty-free zones within border economic zones are not subject to special consumption tax, except for the following cases:

a) Passenger cars with less than 24 seats;

b) Goods traded with duty-free zones that are not separated from external territory by a solid fence.

4. Goods imported from abroad and consumed within duty-free zones within border economic zones are not subject to special consumption tax, except for:

a) Passenger cars with less than 24 seats;

b) Goods imported from abroad into duty-free zones that are not separated from external territory by a solid fence;

c) Goods listed in the category of items subject to special consumption tax upon importation from abroad into duty-free zones within border economic zones as specified in Section II of Appendix II issued together with this Circular.

5. Goods from other functional areas within border economic zones and goods from domestic Vietnam exported into duty-free zones within border economic zones are not subject to special consumption tax, except for the following cases:

a) Passenger cars with less than 24 seats;

b) Goods from domestic Vietnam exported into duty-free zones that are not separated from external territory by a solid fence.

6. Goods from duty-free zones within border economic zones brought into consumption at other functional areas within border economic zones or brought into consumption within domestic Vietnam are subject to special consumption tax, except for goods that have already been subject to special consumption tax as stipulated in Clauses 2, 3, 4, and 5 of this Article.

7. The deduction, refund of special consumption tax, and other related matters concerning goods and services subject to special consumption tax shall be implemented in accordance with the Law on Special Consumption Tax and guiding documents.

Article 6. Export Tax and Import Tax Preferences

1. Goods imported to form fixed assets of investment projects within border economic zones (excluding duty-free zones) are exempt from import tax, including:

a) Equipment and machinery if they meet all of the following conditions:

a.1) Suitable for the field of investment, objectives, and scale of the investment project;

a.2) Complying with the regulations on fixed assets as stipulated in Circular No. 45/2013/TT-BTC dated April 25, 2013, issued by the Ministry of Finance, guiding the management, use, and depreciation of fixed assets.

b) Special-purpose transportation means within production lines that are not yet manufactured domestically, including vehicles for transporting and picking up workers such as buses with 24 seats or more and watercraft. Among these:

b.1) Domestic-made special-purpose transportation means serving as the basis for implementing the exemption of taxes mentioned herein shall be carried out according to the provisions of Circular No. 04/2012/TT-BKHĐT dated August 13, 2012, issued by the Ministry of Planning and Investment, listing machinery, equipment, spare parts, special-purpose transportation means, raw materials, materials, semi-finished products domestically produced.

b.2) Special-purpose transportation means within production lines serving as the basis for implementing the exemption of taxes mentioned herein shall be carried out according to the provisions of Circular No. 01/2014/TT-BKHCN dated February 18, 2014, issued by the Ministry of Science and Technology, guiding the determination of special-purpose transportation means within production lines.

c) Components, parts, sub-assemblies, spare parts, fixtures, molds, accessories imported to assemble and integrate with equipment, machinery, and special-purpose transportation means as stipulated in points a and b of this clause, if they meet either of the following conditions:

c.1) They are components, parts, or sub-assemblies of equipment, machinery, or special-purpose transportation means imported in unassembled form;

c.2) They are components, parts, sub-assemblies, spare parts, fixtures, molds, or accessories imported to assemble and connect machines and equipment together to ensure normal operation of the machine system.

d) Raw materials and materials not yet produced domestically used to manufacture equipment and machinery within production lines or to manufacture components, parts, sub-assemblies, spare parts, fixtures, molds, and accessories to integrate with equipment and machinery as stipulated in point a of this clause. Among these, raw materials and materials domestically produced to serve as the basis for implementing the provisions of Circular No. 04/2012/TT-BKHĐT dated August 13, 2012, issued by the Ministry of Planning and Investment, listing machinery, equipment, spare parts, special-purpose transportation means, raw materials, materials, semi-finished products domestically produced.

đ) Construction materials not yet produced domestically. Among these, construction materials domestically produced to serve as the basis for implementing the exemption of import tax mentioned herein shall be carried out according to the provisions of Circular No. 04/2012/TT-BKHĐT dated August 13, 2012, issued by the Ministry of Planning and Investment, listing machinery, equipment, spare parts, special-purpose transportation means, raw materials, materials, semi-finished products domestically produced.

The exemption of import tax for goods imported as stipulated in this clause applies to both expanded project scales, technology replacement, and technological innovation.

2. Raw materials, materials, and components not yet produced domestically imported for production of investment projects within border economic zones (excluding projects producing products subject to special consumption tax, electronic products, refrigerators, and other items as decided by the Prime Minister) are exempt from import tax for a period of 05 (five) years, starting from the date of commencement of production.

The identification of raw materials, materials, and components not yet produced domestically serving as the basis for tax exemption shall be carried out according to the provisions of Circular No. 04/2012/TT-BKHĐT dated August 13, 2012, issued by the Ministry of Planning and Investment, listing machinery, equipment, spare parts, special-purpose transportation means, raw materials, materials, semi-finished products domestically produced.

3. For goods exported, imported, produced, processed, recycled, or assembled in the duty-free zone within the border economic zone,

a) Goods exported from the duty-free zone within the border economic zone to foreign countries are subject to exemption from export tax.

b) Goods produced and consumed within the duty-free zone within the border economic zone are exempt from taxes.

c) Goods traded between duty-free zones within the border economic zone are exempt from taxes.

d) Goods imported from abroad and consumed within the duty-free zone within the border economic zone are exempt from import tax, except for goods listed in the category of items subject to import tax upon entry from abroad into the duty-free zone within the border economic zone as specified in Section II of Appendix II attached to this Circular.

đ) Goods from other functional zones within the border economic zone and goods from the domestic territory of Vietnam exported into the duty-free zone within the border economic zone are subject to export tax, except for the following cases:

d.1) Building materials from the domestic territory of Vietnam or from other functional zones within the border economic zone brought into the duty-free zone within the border economic zone for construction, repair, and maintenance of common technical infrastructure and social infrastructure within the duty-free zone are exempt from export tax.

d.2) Goods and services originating from the domestic territory of Vietnam exported into and only used within the special economic and trade zone of Lao Bao in Quang Tri Province and the international border economic zone of Cau Treo in Ha Tinh Province are exempt from export tax.

e) Goods from the duty-free zone within the border economic zone brought into consumption at other functional zones within the border economic zone or brought into consumption in the domestic territory of Vietnam are subject to import tax according to current regulations, except for goods that have already been subject to import tax as stipulated in point d of this clause.

g) Goods produced, processed, recycled, or assembled in the duty-free zone without using imported raw materials or components from abroad when imported into the domestic territory of Vietnam are exempt from import tax; if imported raw materials or components from abroad are used, then when imported into the domestic territory of Vietnam, only the import tax on the portion of imported raw materials or components constituting the goods must be paid (except for goods produced, processed, recycled, or assembled in projects with total investment exceeding 20 billion VND in the international border economic zone of Cau Treo in Ha Tinh Province and the special economic and trade zone of Lao Bao, which use imported raw materials or components from abroad, and when imported into the domestic territory of Vietnam, they are exempt from import tax for five years from the start of production). The determination of the import tax payable on the portion of imported raw materials or components from abroad constituting the goods imported into the domestic territory of Vietnam shall be carried out as follows:

g.1) In the case where organizations or individuals engaged in production and business in the duty-free zone have registered with the customs authority regarding the list of imported goods used as raw materials or components for producing goods imported into the domestic territory and the quota of raw materials or components used to produce goods before importing them into the domestic territory of Vietnam, the determination of the import tax payable is based on the quantity, tariff rate of the imported goods into the domestic territory of Vietnam, and the taxable value calculated on the portion of imported raw materials or components from abroad constituting the goods imported into the domestic territory of Vietnam;

g.2) In the case where the taxable value cannot be determined as prescribed in point g.1 of this clause, the customs authority shall determine the tax on the portion of raw materials or components constituting the imported goods into the domestic territory of Vietnam according to the provisions of the law on tax management and customs valuation.

i) For goods produced, processed, recycled, or assembled in the duty-free zone within the border economic zone, if they meet the conditions for applying preferential import tax rates or special preferential import tax rates, they shall be subject to such tax rates according to the provisions of the law on export tax and import tax.

k) Customs procedures and tax administration for goods exported or imported into the duty-free zone within the border economic zone shall be implemented in accordance with the guidance provided in Circular No. 128/2013/TT-BTC dated September 10, 2013, issued by the Ministry of Finance, guiding customs procedures; customs inspection and supervision; export tax, import tax, and tax administration for exported and imported goods (hereinafter referred to as Circular No. 128/2013/TT-BTC).

Article 7. Preferential treatment for land rent, water surface rent, and land use fee

Investment projects within border economic zones shall be exempted or granted reductions on land rent, water surface rent, and land use fee according to the provisions of Article 13 and Article 14 of Decision No. 72/2013/QĐ-TTg, wherein the list of special fields encouraged or given preferential investment and the fields encouraged or given preferential investment shall be implemented according to the regulations stipulated in Decree No. 108/2006/NĐ-CP dated September 22, 2006 of the Government detailing and guiding the implementation of certain articles of the Investment Law.

Article 8. Collection of Fees and Charges

1. For works and services that collect fees and charges which the Border Economic Zone Management Board is authorized to implement: The Border Economic Zone Management Board shall collect, remit, manage, and utilize the collected fees and charges according to the provisions set forth in the documents issued by the competent authority for each specific fee or charge.

2. Works and services authorized to collect fees and charges included in the detailed list of fees and charges promulgated together with Decree No. 24/2006/NĐ-CP dated March 6, 2006 of the Government amending and supplementing several articles of Decree No. 57/2002/NĐ-CP dated June 3, 2002 of the Government detailing the implementation of the Fee and Charge Ordinance, and Decree No. 115/2011/NĐ-CP dated December 14, 2011 of the Government amending and supplementing Point 2, Section IV Part B of the detailed list of fees and charges promulgated together with Decree No. 24/2006/NĐ-CP but without guidance documents or with guidance documents not suitable to the actual conditions of the border economic zone, the Border Economic Zone Management Board shall develop a collection plan (including both the collection rate and the management and utilization content of the collected fees and charges according to the guidance provided in Circular No. 63/2002/TT-BTC dated July 24, 2002 and Circular No. 45/2006/TT-BTC dated May 25, 2006 amending and supplementing Circular No. 63/2002/TT-BTC dated July 24, 2002 of the Ministry of Finance guiding the implementation of laws on fees and charges) and submit it to the competent authority for examination and issuance for implementation.

Article 9. Infrastructure Usage Fee

1. The infrastructure usage fee is a revenue aimed at compensating for the costs of construction, maintenance, repair, and maintenance conditions serving or recreating technical and social infrastructure works.

2. Investors with production and business projects in border economic zones who use technical infrastructure and social infrastructure within the zone must pay the infrastructure usage fee.

3. As for the infrastructure constructed by businesses engaged in the operation of technical and social infrastructure within the border economic zone:

a) Businesses engaged in the operation of technical and social infrastructure within the border economic zone may organize the management, exploitation, and collection of the infrastructure usage fee from investors within the border economic zone according to the law.

b) The level of the infrastructure usage fee for technical and social infrastructure constructed by businesses engaged in the operation of technical and social infrastructure within the border economic zone shall be determined by such businesses and calculated as a percentage of one of the following indicators:

b.1) Total export revenue.

b.2) Total production and service activity revenue.

b.3) Total amount of land rental with existing infrastructure.

4. As for the infrastructure not constructed by businesses engaged in the operation of technical and social infrastructure within the border economic zone:

a) The Border Economic Zone Management Board shall be responsible for organizing the management, exploitation, maintenance, and collection of the infrastructure usage fee from investors within the zone to invest in the maintenance and upkeep of these infrastructure facilities and to implement management according to the law.

b) The general level of the infrastructure usage fee for technical and social infrastructure within the border economic zone not constructed by businesses engaged in the operation of technical and social infrastructure shall be determined by the provincial People's Committee according to the Price Law and other relevant laws. The provincial People's Committee shall decide on pricing methods that are appropriate to local socio-economic conditions and national policies.

5. Businesses engaged in the operation of technical and social infrastructure and the Border Economic Zone Management Board shall manage and utilize the entire collected amount to offset costs according to the guidance provided in Clause 1, Clause 3, and Clause 4 of this Article and fulfill tax obligations according to the law. When collecting the infrastructure usage fee, businesses engaged in the operation of technical and social infrastructure and the Border Economic Zone Management Board must issue and deliver invoices to the payer; separately account for and manage and utilize the entire collected amount according to the law. Invoices for the infrastructure usage fee issued by businesses engaged in the operation of technical and social infrastructure and the Border Economic Zone Management Board to the payer are valid documents, recorded as production and business expenses and eligible for value-added tax deduction when determining tax liabilities according to the law.

Article 10. Fees for using infrastructure works (collected from vehicles entering and exiting border gates), service facilities and public utility works in border economic zones

Clause 1. Fees for using infrastructure works (collected from vehicles entering and exiting border gates), service facilities and public utility works in border economic zones are revenues aimed at compensating for maintenance, repair, upkeep, or renewal costs of technical and social infrastructure works, service facilities and public utility works.

Clause 2. Organizations and individuals with vehicles entering and exiting border gates are the fee payers for using infrastructure works (collected from vehicles entering and exiting border gates); organizations and individuals using other service facilities and public utility works in border economic zones (excluding investors with production and business projects in border economic zones who pay infrastructure usage fees according to Article 9 of this Circular) are the fee payers for using service facilities and public utility works.

Clause 3. Enterprises investing in technical and social infrastructure within border economic zones are the entities organizing the collection of fees for using infrastructure works (collected from vehicles entering and exiting border gates), service facilities and public utility works in border economic zones. For border economic zones without enterprises investing in technical and social infrastructure, based on the provisions of Article 4 of Decree No. 57/2002/NĐ-CP dated June 3, 2002 of the Government detailing the implementation of the Ordinance on Fees and Charges, the People's Committee of the province with border economic zones shall submit to the People's Council of the province for authorization to collect fees through other organizations until there is an enterprise investing in technical and social infrastructure in the border economic zone.

Clause 4. The level of fees for using infrastructure works (collected from vehicles entering and exiting border gates), service facilities and public utility works in border economic zones: The People's Committee of the province with border economic zones shall base on the actual conditions of the locality and the extent of compensation for maintenance, repair, upkeep, or renewal costs of infrastructure works to submit to the People's Council of the province for a specific decision on the level of collection, ensuring compliance with the principle of determining the level of fees stipulated in Article 8 of Decree No. 57/2002/NĐ-CP dated June 3, 2002 of the Government detailing the implementation of the Ordinance on Fees and Charges and guiding documents.

Clause 5. Regarding management and use of collected fees:

Point a. Fees collected from facilities and utilities invested by the State are revenues belonging to the state budget. In cases where the organization collecting fees has been guaranteed funding by the state budget for fee collection activities according to annual plans, the organization collecting fees must deposit all collected fees into the state budget. In cases where the organization collecting fees has not been guaranteed funding by the state budget for fee collection activities or has been authorized to collect fees outside its regular functions and responsibilities, the organization collecting fees may retain a portion of the collected fees to cover expenses for fee collection activities in accordance with the Ordinance on Fees and Charges and guiding documents; the remaining portion of the fees must be deposited into the state budget.

Point b. Fees collected from facilities and utilities not invested by the State are revenues not belonging to the state budget. The amount of collected fees is the revenue of the organization collecting fees; the organization collecting fees has the obligation to pay taxes according to current regulations of the State on the results of fee collection.

Clause 6. The People's Council of the province with border economic zones decides specifically on the level of collection and management and use of fees for using infrastructure works (collected from vehicles entering and exiting border gates), service facilities and public utility works in border economic zones submitted by the People's Committee of the province in accordance with the guidance provided in this Article and the regulations on fees and charges.

Clause 7. Other contents related to the decision to collect fees, the scope and objects regulated by the fee collection, adjustment of the level of fees, collection, payment and management and use of collected fees, fee collection receipts, and publicizing the fee collection system not guided in this Article shall be implemented in accordance with the guidance provided in Circular No. 02/2014/TT-BTC dated January 2, 2014 of the Ministry of Finance on fees and charges under the authority of the Provincial People's Councils; Circular No. 63/2002/TT-BTC dated July 24, 2002 of the Ministry of Finance guiding the implementation of laws on fees and charges; Circular No. 45/2006/TT-BTC dated May 25, 2006 of the Ministry of Finance amending and supplementing Circular No. 63/2002/TT-BTC dated July 24, 2002; Circular No. 153/2012/TT-BTC dated September 17, 2012 of the Ministry of Finance guiding the printing, issuance, management, and use of various types of receipts for collecting fees and charges belonging to the state budget; Circular No. 156/2013/TT-BTC dated November 6, 2013 of the Ministry of Finance guiding the implementation of certain articles of the Law on Tax Administration; the Law Amending and Supplementing Certain Articles of the Law on Tax Administration and Decree No. 83/2013/NĐ-CP dated July 22, 2013 of the Government.

Article 11. On the sale of tax-free goods to tourists visiting duty-free zones within border economic zones

1. The sale of tax-free goods to tourists visiting duty-free zones within border economic zones shall be carried out at each duty-free zone within the border economic zone in accordance with the regulations stipulated in the Prime Minister's Decisions on the operational rules of each border economic zone. Tourists visiting duty-free zones within border economic zones may purchase imported tax-free goods for bringing into the domestic market with a value not exceeding VND 1,000,000 (one million) per person per day; in cases where the value of goods exceeds VND 1,000,000 per person per day, tourists must complete customs procedures and declare and pay import duties and value-added tax on the portion of goods exceeding the tax-free quota as prescribed in Circular No. 128/2013/TT-BTC.

2. The list of items not eligible for tax-free sales to tourists visiting duty-free zones and the list of items subject to immediate taxation upon importation from abroad into duty-free zones within border economic zones (including import duties, special consumption taxes (if applicable), and value-added tax) are specified in Appendix II issued together with this Circular.

3. Provincial People's Committees located in areas with border economic zones shall be responsible for:

a) Specifying conditions (investment capital scale, business land area for tax-free sales) and directing the management of tax-free sales to tourists visiting duty-free zones in accordance with local actual conditions, meeting the needs of provincial tourism development while ensuring strict management to prevent abuse of policies for smuggling and commercial fraud.

b) Based on referencing the Regulations on Tax-Free Sales Operations issued together with Decision No. 24/2009/QĐ-TTg dated February 17, 2009 of the Prime Minister, Decision No. 44/2013/QĐ-TTg dated July 19, 2013 on amending and supplementing certain provisions of the Regulations on Tax-Free Sales Operations issued together with Decision No. 24/2009/QĐ-TTg, and related implementing documents, the Provincial People's Committee in areas with border economic zones shall develop and issue Regulations on the purchase and sale of tax-free goods in duty-free zones within border economic zones under their jurisdiction. These regulations need to ensure the following contents and principles:

b.1) Clearly identifying the target group of tourists eligible for tax-free purchase policies.

b.2) Purchasing and selling tax-free goods according to the specified targets and quotas.

c) Building and organizing coordination among functional forces to implement measures to prevent and handle violations of illegal business activities, abuse of policies for smuggling and tax evasion; directing relevant agencies on the territory (Border Economic Zone Management Board, police, border guard, market management, tax, customs, finance) to strengthen cooperation to implement inspection and control measures to combat smuggling and commercial fraud in border economic zones.

Article 12. Implementation Organization

1. Responsibilities of the Customs Authority:

a) The customs authority shall allocate personnel, equipment, and devices to inspect goods to meet the conditions for monitoring and controlling goods and transport vehicles entering and exiting duty-free zones within border economic zones to prevent smuggling and illegal cross-border transportation of goods. Organize physical inspections of all export and import goods eligible for tax benefits as stipulated in Decision No. 72/2013/QĐ-TTg and this Circular within its jurisdiction.

b) The General Department of Customs shall be responsible for guiding the Customs Departments to conduct post-clearance inspections annually for businesses with high turnover in tax-benefited goods and high risk management risks, reporting the results to the General Department of Customs for submission to the Ministry of Finance before March 30 of the following year.

c) Implement laws on taxation and customs for exported and imported goods, including goods purchased from stores and supermarkets in duty-free zones brought into the domestic market in accordance with the provisions and guidance in Circular No. 128/2013/TT-BTC.

d) Strengthen coordination with related functional agencies to prevent and handle fraudulent activities and abuse of policies for illegal business operations.

2. Responsibilities of the Tax Authority:

a) For goods and services from other functional zones within border economic zones or from the domestic market of Vietnam sold into duty-free zones within border economic zones with a zero percent VAT rate, the tax authority managing the seller shall conduct pre-inspection and post-refund of VAT as follows:

a.1) Classify refund applications for VAT related to the aforementioned goods and services into those requiring pre-inspection and post-refund.

a.2) Inspect the conditions for VAT deduction and refund for exported goods (export contracts, export goods declaration forms, bank payment receipts, sales invoices) in accordance with regulations.

a.3) Coordinate with the direct tax authority managing the border economic zone to inspect the buyer enterprises in duty-free zones within border economic zones (address, taxpayer code, operating status, etc.), specifically:

- The seller enterprise can only obtain VAT refunds for goods and services sold to buyer enterprises with headquarters located in duty-free zones within border economic zones and currently in operation.

- The seller enterprise can only obtain VAT refunds for goods and services sold into duty-free zones within border economic zones when the goods and services have been consumed (such as construction materials used for building projects, etc.) in duty-free zones within border economic zones or the buyer enterprise has declared VAT on the purchased goods and services with the tax authority managing the border economic zone.

a.4) In addition to the above VAT refund inspection content, the tax authority shall also carry out:

- Examine other economic transactions arising and related vouchers and books such as: Purchase, sale; export, import, inventory of goods; transportation costs, loading and unloading costs, business expenses; economic and technical norms of production and construction activities...

- Verify and reconcile input invoices, sales invoices.

b) In the case where the group of goods mentioned in point a above continues to be sold from the duty-free zone within the border economic zone to other functional zones within the border economic zone or to the domestic market, customs procedures must be carried out and value-added tax must be collected as for imported goods.

- Examine other economic transactions arising and related vouchers and books such as: Purchase, sale; export, import, inventory of goods; transportation costs, loading and unloading costs, business expenses; economic and technical norms of production and construction activities.

- Verify and reconcile input invoices, sales invoices; verify the office address, business address, taxpayer code, operational status of the buyer in the duty-free zone.

c) Report quarterly to the Ministry of Finance on the situation of refunding value-added tax according to the regulations stipulated in the Refund Process, including a comprehensive report detailing the results of refunding input VAT for exported goods into the border economic zone.

3. Responsibilities of enterprises engaged in duty-free sales in the duty-free zone within the border economic zone:

a) Merchants are only permitted to engage in duty-free sales for tourists in the duty-free zone when their stores are located within the detailed planning of functional areas approved, and they have a business license for duty-free sales issued by the competent authority in accordance with the regulations of the Provincial People's Committee.

b) Carry out duty-free sales in accordance with the provisions of the Regulation on Duty-Free Sales issued by the Provincial People's Committee and guided by Circular No. 128/2013/TT-BTC.

c) Enterprises engaged in duty-free sales and enterprises that purchase and sell goods eligible for duty-free treatment shall implement a computer system connected to the Tax Authority and Customs Authority to streamline administrative procedures and facilitate the management of duty-free sales in accordance with the regulations.

d) Report monthly on exported and imported goods during the period and on import-export-inventory to the Customs Authority managing the duty-free zone for inspection, monitoring, and management in accordance with the guidance provided in Circular No. 128/2013/TT-BTC.

Article 13. Effective Date

1. This Circular takes effect from October 1, 2014.

2. This Circular abolishes:

a) Circular No. 137/2009/TT-BTC dated July 3, 2009, of the Ministry of Finance guiding the implementation of certain provisions of Decision No. 33/2009/QĐ-TTg dated March 2, 2009, of the Prime Minister promulgating financial mechanisms and policies for border economic zones;

b) Circular No. 08/2010/TT-BTC dated January 14, 2010, of the Ministry of Finance guiding the implementation of Decision No. 93/2009/QĐ-TTg dated July 10, 2009, of the Prime Minister amending and supplementing Clause 4, Article 21 of Decision No. 33/2009/QĐ-TTg dated March 2, 2009, of the Prime Minister promulgating financial mechanisms and policies for border economic zones;

c) Circular No. 116/2010/TT-BTC dated August 4, 2010, of the Ministry of Finance amending and supplementing Circular No. 137/2009/TT-BTC dated July 3, 2009, of the Ministry of Finance guiding the implementation of certain provisions of Decision No. 33/2009/QĐ-TTg dated March 2, 2009, of the Prime Minister promulgating financial mechanisms and policies for border economic zones.

3. Financial policies not specified in this Circular shall be implemented in accordance with current guiding documents in each field.

4. In cases where the documents cited in this Circular are amended, supplemented, or replaced, they shall be implemented in accordance with the provisions of the amended, supplemented, or replacing documents.

5. Investment projects that have been granted Investment License or Investment Certificate before Decision No. 72/2013/QĐ-TTg took effect and are currently enjoying preferential policies higher than those stipulated in Decision No. 72/2013/QĐ-TTg shall continue to enjoy the preferential benefits recorded in the Investment License or Investment Certificate for the remaining time if they meet the conditions for preferential benefits as follows:

a) The Investment License or Investment Certificate remains valid and does not change the investment preference clauses;

b) The level of preference recorded in the Investment License or Investment Certificate is consistent with the legal provisions at the time of issuance of the Investment License or Investment Certificate.

6. Investment projects that have been granted Investment License or Investment Certificate before Decision No. 72/2013/QĐ-TTg took effect and the preferential benefits recorded in the Investment License or Investment Certificate are lower than those stipulated in Decision No. 72/2013/QĐ-TTg shall enjoy the preferential benefits prescribed in Decision No. 72/2013/QĐ-TTg for the remaining time of the project.

7. Investment projects that have been granted Investment License or Investment Certificate before Decision No. 72/2013/QĐ-TTg took effect and produce, process, recycle, or assemble goods in the duty-free zone using raw materials, components, semi-finished products imported from abroad, when imported into Vietnam’s domestic market, must pay import duties calculated based on the portion of imported raw materials, components, semi-finished products constituting the goods; enterprises with investment projects may choose one of the following two methods to determine the import duties payable on the portion of imported raw materials, components, semi-finished products from abroad constituting the goods imported into Vietnam’s domestic market for the remaining time of the project, and the enterprise must submit a letter requesting the choice of method for determining the import duties payable to the Customs Authority managing the duty-free zone.

a) Continue to implement in accordance with Clause 4, Article 13 of Decision No. 33/2009/QĐ-TTg as follows:

a.1) Determine the import tax payable based on the quantity, tariff rate, and taxable value of the raw materials, components, parts, and semi-finished products imported from abroad that constitute part of the goods, in cases where organizations or individuals importing into the domestic market have registered with customs authorities regarding the list of imported goods to be used as raw materials, components, parts, and semi-finished products for producing imported goods, and the quota of raw materials, components, and semi-finished products used for producing imported goods before their importation into Vietnam.

a.2) In cases where it is not possible to determine the import tax according to the provisions of point a.1 of this clause, the import tax shall be calculated based on the tariff rate and taxable value of the manufactured, processed, recycled, or assembled goods imported into the domestic market of Vietnam at the time of declaration to customs.

b) Implement in accordance with the provisions of Clause 6, Article 12 of Decision No. 72/2013/QĐ-TTg as follows:

b.1) Determine the import tax payable based on the quantity and tariff rate of the goods imported into the domestic market and the taxable value of the raw materials and components imported from abroad that constitute part of the goods imported into the domestic market of Vietnam.

b.2) In cases where it is not possible to determine the taxable value according to the provisions of point b.1 of this clause, the customs authority shall assess the tax on the raw materials and components constituting part of the goods imported into the domestic market of Vietnam in accordance with the laws on tax management and customs valuation.

8. During the implementation process, if there are any difficulties, organizations and individuals concerned are requested to promptly report them to the Ministry of Finance for appropriate amendments and supplements./.