Circular No. 1102-TCT/NV3 regarding exemption from import tax and value-added tax for imported equipment constituting fixed assets

LETTER

OF THE GENERAL DEPARTMENT OF TAXATION NO. 1102 TCT/NV3 DATED APRIL 4, 2001
REGARDING EXEMPTION FROM IMPORT TAX AND VALUE-ADDED TAX
FOR FIXED ASSET IMPORTED EQUIPMENT

Dear: Tri Au Private Limited Hospital Company,

The General Department of Taxation has received Letter No. 63/BVTA-CV dated January 15, 2001 from the Tri Au Private Limited Hospital Company regarding exemption from import tax and value-added tax (VAT) for imported equipment that forms fixed assets under a project. Regarding this matter, the General Department of Taxation provides the following opinions:

1. On VAT: Based on Point 4, Section II, Part A Circular No. 89/1998/TT-BTC dated June 27, 1998 and Point 1.a, Circular No. 49/2000/TT-BTC dated May 31, 2000 of the Ministry of Finance; Decision No. 214/1999/QĐ-BKH dated April 26, 1999 of the Ministry of Planning and Investment regarding the issuance of a list of types of machinery, equipment, and specialized transportation vehicles domestically produced as the basis for implementing the Law on VAT, then:

Machinery and equipment that are not yet domestically produced when imported to form fixed assets of enterprises under investment projects fall within the category exempt from VAT.

The General Department of Taxation requests the Tri Au Private Limited Hospital Company to directly contact the customs authority handling import procedures for goods. Compare the number of equipment imported by the company in Import Declaration No. 25493/NKD/KV1 dated December 4, 2000 and No. 27201/NKD dated December 19, 2000 issued by the Ho Chi Minh City Customs Department with the list of types of machinery, equipment, and specialized transportation vehicles domestically produced as stipulated in Decision No. 214/1999/QĐ-BKH dated April 26, 1999 of the Ministry of Planning and Investment. If the imported machinery and equipment forming fixed assets under investment projects are not included in this list, they fall within the category exempt from VAT.

2. On import tax:

- Based on Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government detailing and guiding implementation of the Law on Encouragement of Domestic Investment; Circular No. 146/1999/TT-BTC dated December 17, 1998 of the Ministry of Finance, then: machinery and equipment imported to be exempt from import tax must be included in a list of specialized machinery, equipment, and transportation vehicles (part of production lines), and transportation means used for picking up and dropping off workers which have been confirmed by the authority issuing investment incentives. Investors must register with the customs authority at the port of entry where these machines, equipment, and transportation vehicles are imported so that the customs authority can implement exemption from import tax when actually importing.

- For three items: drug trolleys, oxygen cylinder carriers, and baskets for medical supplies on wheels which fall outside the list confirmed by the authority issuing investment incentives, then upon importation they must pay import tax as prescribed (at the current tariff rate).

- Based on Decision No. 41/2000/QĐ-BTC dated March 17, 2000 of the Minister of Finance regarding amendments and supplements to the names and rates of certain groups of goods in the List of Preferential Import Tariffs; Circular No. 37/1999/TT-BTC dated April 7, 1999 of the Ministry of Finance on guiding classification of goods according to the List of Export Tax Rates and the List of Import Tax Rates; referring to the Harmonized System Explanatory Notes of the World Customs Organization, then: drug trolleys with wheels (special name: drug trolley used in hospitals), oxygen cylinder stands mounted on wheels (special name: oxygen cylinder carrier used in hospitals), baskets for medical supplies with wheels (special name: basket for medical supplies used in hospitals) belong to tariff item 94029010, preferential import tax rate of 0%.

The General Department of Taxation replies so that the Tri Au Private Limited Hospital Company is informed and can implement accordingly.