Circular No. 117/2011/TT-BTC guides customs procedures for processed goods traded with foreign traders.

CIRCULAR

Guidelines on customs procedures for processed goods with foreign traders

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Pursuant to the Customs Law No. 29/2001/QH10 dated June 29, 2001 and the Law No. 42/2005/QH11 dated June 14, 2005 amending and supplementing certain articles of the Customs Law;

Pursuant to the Law on Export Tax and Import Tax No. 45/2005/QH11 dated June 14, 2005; the Law on Tax Administration No. 78/2006/QH11 dated November 29, 2006;

Pursuant to the Decree No. 154/2005/NĐ-CP dated December 15, 2005 of the Government detailing certain provisions of the Customs Law on customs procedures, inspection, and supervision;

Pursuant to 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 agency buying, selling, processing, and transiting goods with foreign countries;

Pursuant to Decree No. 87/2010/NĐ-CP dated August 13, 2010 of the Government detailing certain provisions of the Law on Export Tax and Import Tax;

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Implementing Resolution No. 25/NQ-CP dated June 2, 2010 of the Government on simplifying 258 administrative procedures within the scope of management functions of Ministries and sectors, and Resolution No. 68/NQ-CP dated December 27, 2010 of the Government on simplifying administrative procedures within the scope of management functions of the Ministry of Finance;

The Ministry of Finance issues guidelines on customs procedures for processed goods with foreign traders as follows:

Section 1

GENERAL PROVISIONS

Article 1. Interpretation of terms

1. “Processing materials"including main materials and auxiliary materials:"

a) "Main materials" are materials that form the main component of the product.

b) "Auxiliary materials" are materials participating in forming the processed product but not the main component of the product.

2. “Processed supplies"are types of products, semi-finished products participating in the production process of processed products but not directly constituting the processed product. Processed supplies include packaging or packaging materials containing processed products.

3. “Processing waste"are raw materials, supplies, machinery, equipment removed during the processing process and recovered for use as raw materials for another production process.

4. “Processing waste"are raw materials, supplies removed during the processing process and no longer have any value for use.

5. “Processing by-products"are products not meeting technical standards (specifications, dimensions, quality, etc.) according to the agreement in the processing contract or its annexes, removed during the processing process.

6. “Production quota for processed products as agreed in the contract"includes:"

a) "Raw material usage quota" is the reasonable amount of raw materials required to produce one unit of processed product;

b) "Supply consumption quota" is the amount of supplies consumed in producing one unit of processed product;

c) "Loss rate of raw materials or supplies" is the amount of raw materials or supplies lost including natural loss, loss due to becoming scrap, by-products, processing waste (excluding scrap and waste already included in the usage quota), expressed as a percentage of the raw material usage quota or supply consumption quota.

7. “Raw material component separation quota from initial raw material"is the quantity of raw material components separated from an initial raw material;"

For raw material components separated from initial raw material, the loss rate is the percentage of initial raw material lost when going through the process of separating into raw material components.

8. “Machinery, equipment, tools directly serving processing"are machines, equipment, tools within the production technology chain of processed products, leased or borrowed by the party placing the order for processing to the party undertaking the processing contract."

9. “Processed goods"as stipulated in Article 29 of Decree No. 12/2006/NĐ-CP dated January 23, 2006 of the Government are finished products of a production, processing, and manufacturing process that meet the requirements of the party placing the order for processing as agreed in the processing contract."

Article 2. Forms of Processing Contract

1. A processing contract may be established in writing or in other forms having equivalent value to a written form, including telegrams, telexes, faxes, data messages, and other forms prescribed by law.

2. Regarding signatures and seals on the contract:

For foreign traders, there must be signatures; for Vietnamese traders, they shall sign and affix seals in accordance with Vietnamese law; for individual business households, they shall sign and clearly write their full name, identification card number, date of issuance, and issuing authority.

3. Any accompanying documents issued electronically by foreign traders shall be signed and sealed by Vietnamese traders to confirm.

For Vietnamese individual business households, this provision shall apply as stipulated in Clause 2 of this Article.

Article 3. Contents of Processing Contract

The contents of a processing contract shall be implemented in accordance with Article 30 of Decree No. 12/2006/NĐ-CP dated January 23, 2006, of the Government.

In cases where transactions between the commissioning party and the processing party occur through a third party, such transactions must be reflected in the contract, annexes, or related documents to provide evidence.

Article 4. Annexes to Processing Contracts

1. An annex to a processing contract is an inseparable part of the processing contract.

2. Any changes, supplements, or adjustments to the terms of a processing contract (including contract extensions) must be reflected in an annex to the processing contract before the contract expires and such annex must be notified to the customs authority prior to or at the same time as the Vietnamese trader (hereinafter referred to as the trader) processes the first shipment under the annexed contract. The annex to the processing contract must have complete signatures and seals as required by Article 2 of this Circular.

Specifically, if the value of imported raw materials and components changes or is supplemented, the value recorded on the commercial invoice of the import documentation will be accepted, without the necessity of creating an adjustment annex.

3. If a processing contract has a validity period exceeding one year, it may be divided into multiple annexes for implementation. Each annex's execution period shall not exceed one year. In special cases where the processing time for a product exceeds one year, the processing contract/annex shall be executed on a per-product basis (such as shipbuilding, marine vessel repair, etc.).

Article 5. Place for Customs Procedures

The implementation of customs procedures for a processing contract (including contract acceptance, quota acceptance, customs clearance for each export and import shipment under the contract, and contract settlement) shall be carried out at a Customs Sub-Department under a Provincial or Municipal Customs Department chosen by the trader; specifically:

1. At the Customs Sub-Department where the trader has a production facility to implement the processing contract (including subcontracting facilities), or

2. At the Customs Sub-Department where the trader has its headquarters (main office or branch office established in accordance with the law),

3. In cases where there is no customs organization at the location of the production facility or the main office or branch office of the trader, the trader may choose a convenient Customs Sub-Department to register for customs procedures.

Article 6. Responsibilities of traders and customs authorities

1. For traders:

The legal representative of the trader shall directly bear legal responsibility for:

Using raw materials and components for processing in accordance with the purpose and quota as prescribed in Article 31 of Decree No. 12/2006/NĐ-CP dated January 23, 2006 of the Government;

Notifying the processing contract; handling import procedures for raw materials and components; notifying and adjusting quotas; handling procedures for subsequent processing; handling export procedures for processed products; liquidating and settling the processing contract and other procedures related to the processing contract with the customs authority.

Cooperating with the customs authority in applying information technology to manage and settle the processing contract and handle import and export procedures for processed goods.

2. For the customs authority:

Handling customs procedures, monitoring and inspecting the implementation of the processing contract by the trader.

Applying information technology to facilitate and strictly manage the implementation of the processing contract by the trader.

Section 2

CUSTOMS PROCEDURES FOR GOODS RECEIVED FOR PROCESSING IN VIETNAM FOR FOREIGN TRADERS

Article 7. Procedures for notifying the processing contract

1. Responsibilities of traders:

At least one day before handling the import procedures for the first consignment of goods under the processing contract, the trader shall notify the processing contract to the customs authority. The dossier includes:

a) Processing contract and its annexes (if any): submit two original copies (one copy retained by Customs and one copy returned to the trader after receiving the contract) and one Vietnamese translation copy (if in a foreign language except English).

b) Business registration certificate or investment license or investment certificate for foreign-invested enterprises (if registering for the first time): submit one certified copy by the trader.

c) Tax registration certificate (if registering for the first time): submit one certified copy by the trader.

d) Permit from the Ministry of Industry and Trade for processed products listed in the export and import permit list: submit one certified copy by the trader, present the original for verification.

đ) Certificate confirming eligibility to import scrap material (for cases where scrap material is imported as raw material for processing) in accordance with the law: submit one certified copy by the trader, present the original for verification.

e) Explanation and proof of production facilities for traders receiving processing for the first time: clearly state the address of the trader's headquarters, the address of the production facility, product types, production lines (including types and quantities of existing machinery and equipment), designed capacity, manpower situation... (including cases of subcontracting); bank account number and name: submit one original copy.

The trader only needs to explain once and provide additional explanations when there are changes to the previously explained contents. In case of changes in legal entity, office address, production facility address (from the date of submitting the processing contract to the completion of the contract settlement), the trader must promptly notify the customs office managing the contract in writing.

g) Subcontracting contract (for cases of subcontracting the entire processed product): submit one certified copy by the trader, present the original for verification.

2. Tasks of the customs authority when handling the acceptance of the processing contract:

a) For cases where the production facility is not inspected before accepting the processing contract:

a1) Verify the conditions for accepting the processing contract;

a2) Verify the completeness, consistency, and validity of the processing contract;

a3) Enter relevant information about the processing contract into the computer; return one original copy of the processing contract and any original documents presented to the trader;

a4) If the dossier is incomplete or invalid, the customs authority shall immediately notify the trader using a Business Request Form to complete the dossier. If multiple dossiers are received at the same time and cannot be notified immediately, the customs authority shall notify the trader using a Business Request Form within no more than two working hours from the time of receipt.

a5) Within no more than eight working hours from the time the trader submits a complete and valid dossier, the customs authority shall complete the acceptance procedures for the processing contract.

b) For cases where the production facility is inspected before accepting the processing contract:

b1) Perform the tasks specified in points a1, a2, a3, and a4 of this clause;

b2) Within no more than five working days from the time the trader submits a complete and valid dossier, the customs authority shall complete the inspection of the production facility and accept the processing contract (or reject it using a Business Request Form if the conditions are not met).

For cases where the trader's production facility is located in a different province or city from the place where the processing contract is notified, within no more than eight working days from the time the trader submits a complete and valid dossier, the customs authority shall complete the inspection of the production facility and accept the processing contract (or reject it using a Business Request Form if the conditions are not met).

The inspection of the production facility shall be carried out in accordance with the provisions of Article 8 of this Circular.

c) If the customs authority does not provide feedback within the time limit stipulated in Clause 2 of this Article, the trader shall be deemed to have permission to implement the processing contract.

3. Tasks of the customs authority when handling the acceptance of annexes to the processing contract:

For annexes to the processing contract, the customs authority shall verify and compare the contents of the annex with the main contract. If the terms of the annex are consistent with the terms of the main contract, the annex to the processing contract shall be accepted. Enter the information notified in the annex into the computer; return one original copy of the annex to the processing contract and any original documents presented (if any).

Article 8. Inspection of production facilities

1. Cases for inspecting production facilities:

a) When a trader reports the first implementation of a processing contract with the customs authority;

b) When a trader accepts processing but does not implement it and instead subcontracts the entire processing contract/addendum to another trader;

c) More than three months (or more than the production cycle of a product for special processing such as shipbuilding, machinery...) from the completion of the initial import procedures for raw materials and supplies of the processing contract/addendum, but there are no exported products.

d) The customs authority conducts inspections based on risk management results and random checks to assess traders' compliance with the law.

2. Time for inspecting production facilities:

a) After the trader submits all notification documents for the processing contract, or

b) During the period when the trader is producing the product.

3. Authority to decide on inspecting production facilities of traders is the leader of the Customs Sub-Department managing the processing contract and must notify the specific inspection contents to the trader in writing at least three working days in advance.

4. Contents of inspecting production facilities:

a) Inspect the legal rights to use and ownership of the production facility's factory buildings, machines, and equipment:

If there is no confirmation from the agency issuing the business registration certificate regarding the legal rights to use and ownership of the production facility's factory buildings, machines, and equipment, the customs authority will directly inspect:

a1) Inspect documents proving the legal right to use the factory buildings and production premises. If it is a lease contract for factory buildings and production premises, the validity period of the lease contract must be equal to or longer than the validity period of the processing contract;

a2) Inspect the ownership and usage rights of machines and equipment at the production facility according to the trader's declaration in the explanatory document to determine the actual ownership or usage rights of the trader over the machines and equipment at the production facility. Content of inspection: inspect import declarations (if imported); invoices and purchase documents for machines and equipment (if purchased domestically); financial lease contracts (if leased). For financial lease contracts, the validity period of the lease contract must be equal to or longer than the validity period of the processing contract;

b) Inspect the workforce situation implementing the processing contract:

If unable to verify through information provided by the Department of Labor, Invalids, and Social Affairs, the customs authority will inspect as follows:

b1) For traders who have been operating for two months or more:

b1.1) Inspect labor contracts; or

b1.2) Inspect the most recent payroll for workers before the inspection period; or

b1.3) Inspect the list of workers enrolled in insurance with confirmation from the insurance agency for the month closest to the inspection period.

b2) For new traders starting production but less than two months: the inspection of the workforce situation will be conducted during the production process of the processed goods.

5. Drafting the Inspection Record of Production Facilities:

At the end of the inspection, customs officials draft the Inspection Record of Production Facilities according to the inspected contents. The Inspection Record of Production Facilities reflects the actual inspection situation fully and truthfully, signed by the customs official conducting the inspection and the legal representative of the inspected trader. The format of the Inspection Record of Production Facilities is guided by the General Department of Customs.

6. Based on the Inspection Record of Production Facilities, draft the Conclusion of Inspection of Production Facilities (two copies). The Conclusion of Inspection of Production Facilities is signed by the leader of the Customs Sub-Department and sent one copy to the trader for implementation. The format of the Conclusion of Inspection of Production Facilities is guided by the General Department of Customs.

7. Handling the results of inspecting production facilities for cases that do not meet the conditions to implement the processing contract:

a) For cases where the contract has not yet been accepted: the customs authority returns the contract notification documents and specifies the reasons.

b) For cases where the customs authority has already accepted the processing contract:

In cases where there is a production facility but it does not meet the production conditions according to the production process, require the trader to submit a commitment letter to rectify within a specified time frame. Meanwhile, the customs authority temporarily suspends the import procedures for subsequent batches of raw materials and supplies under that processing contract until the trader ensures the production facility meets the requirements for the processed goods and provides explanations in the production facility explanation document.

In cases where there is no production facility, the customs authority stops the import procedures for raw materials and supplies to fulfill that processing contract; request the trader to provide explanations; depending on the nature and severity of the violation, transfer the file to the customs unit responsible for anti-smuggling control or post-clearance inspection for verification, investigation, and handling according to the law.

Article 9. Procedures for Notifying, Adjusting, and Inspecting Quotas

1. Notifying Quotas

a) The trader shall be responsible for submitting the quota usage table, consumption quotas, and material and supplies loss rates to the customs authority according to Form 03/TBDM-GC/2011-Annex I issued together with this Circular.

The notification of export product quotas shall be carried out separately for each product code. The quota for separating component materials from initial materials shall be notified separately for each initial material code.

In cases where one type of raw material produces multiple types of products, the raw material separated during the production of one type of product that is used as raw material for producing another exported product shall not be considered as waste, shall not be included in the loss rate, and shall be regarded as a component material.

For goods with multiple sizes, the quota shall be declared separately for each size or an average quota can be declared for each goods code. The method of calculating the average quota and the explanation of its implementation shall follow the guidance provided in Form 03/TBDM-GC/2011-Annex I issued together with this Circular.

b) In cases where the trader declares the quota of goods based on the average quota, but during the process of exporting processed products, there is a change in the quantity of exported products according to each size compared to the quantity of each size in the explanation of the calculation parameters for the average quota when initially declaring, then the trader shall recalculate the average quota based on the actual exported product quantities and notify the customs authority that initially received the initial quota.

c) The unit of measurement in the Quota Notification Table shall be implemented according to the unit of measurement in the Export and Import Goods Catalogue issued together with Decision No. 107/2007/QD-BTC dated December 25, 2007 of the Ministry of Finance and shall be consistent with the unit of measurement in the processing contract/agreement annex already declared.

In cases where the unit of measurement in the Quota Notification Table cannot be used according to the unit of measurement in the Catalogue issued together with Decision No. 107/2007/QD-BTC mentioned above, the trader shall be responsible for converting the quantity of goods on the export/import declaration form according to the unit of measurement in the Quota Notification Table.

2. Time for Notifying Quotas:

a) For goods exported once, exhausting the quantity of goods in the contract/agreement annex: at least 10 days before registering the export declaration form for the goods.

b) For goods exported multiple times, exhausting the quantity of goods in the contract/agreement annex: before or at the time of registering the first export declaration form for the goods.

3. Time for Adjusting Quotas:

a) For goods exported once, exhausting the quantity of goods in the contract/agreement annex: at least 5 days before registering the export declaration form.

b) For goods exported multiple times, exhausting the quantity of goods in the contract/agreement annex: at least 5 days before registering the last export declaration form for the goods (if adjusting the quota due to miscalculation) or at least 5 days before registering the export declaration form for the product with adjusted quota (if adjusting for reasons stated in point b, Clause 4 of this Article).

4. Cases for Adjusting Quotas:

a) Due to miscalculation (for example: error in calculation method; unit of measurement; decimal points; calculation result).

b) During the execution of the processing contract, if changes in the nature of raw materials, processing conditions, or export order requirements lead to changes in the actual quota (agreed upon in the processing contract annex), then the trader shall submit a new quota adjustment table for the goods along with a document clearly stating the reason sent to the Customs Sub-Department managing the processing contract for review and decision on each case.

5. The time for notifying the recalculated average quota according to point b, Clause 1 of this Article is at least 15 days after exporting all goods with the average quota.

6. When adjusting the quota of goods, the trader does not need to change the goods code already notified to the customs authority. The trader and the customs unit will supplement an additional sub-code for the goods code on the quota adjustment table and on the export declaration form for goods with adjusted quotas.

7. The trader's notified, adjusted, and recalculated quotas with the customs authority are the quotas for settling the processing contract.

8. Cases for Inspecting Quotas:

a) The trader notifies an increase in the quota,

b) There are signs of suspected quota fraud,

c) The trader has been penalized for quota fraud within 365 days from the date of the penalty decision. After this period, quota inspection shall be conducted according to the guidance in point a, b, Clause 8 of this Article.

9. Authority to Decide on Quota Inspection: The Head of the Customs Sub-Department managing the processing contract, the Post-Clearance Inspection Sub-Department, and the Post-Clearance Inspection Department.

10. Location for Inspecting Quotas:

a) Inspect at the customs office premises and/or

b) Inspect at the trader's production facility.

11. Method of Inspecting Quotas:

a) The customs authority conducts direct inspection,

b) Inspect through specialized appraisal organizations.

12. Time for Inspecting Quotas:

a) After the trader submits the Quota Notification Table or the quota adjustment notification form, or

b) When settling the processing contract, or

c) During post-clearance inspection.

13. Principles of Inspecting Quotas:

The inspection principles shall be implemented according to Article 3 of Decree No. 154/2005/NĐ-CP dated December 15, 2005 of the Government, the inspection shall be limited to a level appropriate to the results of information analysis, assessment of the importer's compliance with the law, and the risk level of violating customs laws.

14. Responsibilities of the Trader during Quota Inspection:

a) Provide detailed explanations about the basis and methods for establishing the quota of goods declared to the customs authority and attach sample products and technical design documents of the product (such as cutting diagrams for clothing items).

b) Present accounting books and records when requested by the customs authority and facilitate the customs authority's verification of quotas to be conducted quickly and accurately.

c) Implement decisions of the customs authority related to quota verification.

15. Duties of customs officials when verifying quotas:

a) Conduct verification according to procedure without causing undue inconvenience or hindrance to the business operator's production process;

b) Carry out verification within the prescribed time frame:

b1) For cases where verification is conducted on documents at the customs office: verification must be completed no later than eight working hours from the start of the verification.

In cases where a single contract or contract annex contains multiple items requiring quota verification, if it is not possible to complete the verification within eight working hours, it may be extended to the next working day but the extension period shall not exceed eight working hours from the start of the verification.

b2) For cases where verification involves both document review and on-site inspection at the business operator's production facility: verification must be completed no later than three working days from the start of the verification. If the product has special characteristics requiring coordination with specialized agencies, the verification period shall not exceed two working days from the receipt of the assessment results from the specialized agency.

c) Seal samples of products that have been verified for quotas and hand them over to the business operator for self-preservation, clearly noting the seal number on the Verification Report.

d) Prepare a Verification Report confirming the results upon completion of the verification. The report must accurately reflect the actual verification, signed by the customs officer conducting the verification and the legal representative of the business operator being verified. The format of the Verification Report is guided by the General Department of Customs.

đ) Based on the Verification Report, prepare a Verification Conclusion (two copies). The Verification Conclusion is signed by the head of the Customs Branch and one copy is sent to the business operator for implementation. The format of the Verification Conclusion is guided by the General Department of Customs.

e) Measures to address situations where the business operator's reported or adjusted quota does not match the actual situation (exceeding the actual quota):

e1) Prepare a Violation Report and impose administrative penalties as prescribed;

e2) If the processing contract or contract annex has not yet been settled: the verified quota serves as the basis for settlement;

e3) If the processing contract or contract annex has already been settled: the verified quota serves as the basis for tax recovery.

Article 10. Notification of Raw Material and Consumable Codes

1. For units using information technology to manage and settle processing contracts, before or at the same time as submitting import procedures for raw materials and consumables, the business operator must notify the raw material and consumable codes according to Form 01/TBNVL-GC/2011-Appendix I issued together with this Circular: submit two original copies.

In cases where an initial raw material is divided into multiple raw materials to produce various types of finished products, where the final complete product is derived from the component raw material itself or from the combination of the component raw material with other raw materials, both the initial raw material and the component raw material must be registered in the list of imported raw materials.

The Customs Branch managing the processing contract retains one copy of Form 01/TBNVL-GC/2011 according to the contract for convenient monitoring and management.

2. In cases where new codes are generated during the implementation of the processing contract or contract annex, the business operator must notify the customs authority of the additional codes.

3. For units not using information technology to manage and settle processing contracts, the business operator uses consecutive natural numbers starting from 01 to assign raw material and consumable codes.

Article 11. Import procedures for processing materials and components

1. For processing materials and components provided by the commissioning party from abroad:

a) Follow the guidance on customs procedures for imported goods for commercial purposes as stipulated in Part II of Circular No. 194/2010/TT-BTC dated December 6, 2010, issued by the Ministry of Finance, guiding customs procedures; customs inspection and supervision; export tax, import tax, and tax management for exported and imported goods (hereinafter referred to as Circular No. 194/2010/TT-BTC), but without declaring taxes or checking taxability.

b) For processing materials and components purchased by the commissioning party and designated for a third party to deliver to the processing party, the import declaration for the consignment must include a notification from the commissioning party informing the processing party about receiving the goods from the third party.

c) For finished products provided by the commissioning party to be attached or combined with processed products to form integrated items for export overseas, the customs procedures shall be carried out as for processing materials if the following conditions are met:

c1) The name of the finished product and the purpose of providing it to be attached or combined with processed products to form integrated items for export overseas must be clearly stated in the processing contract or its annexes.

c2) It is managed like imported materials and components for processing.

c3) When making the import declaration, the name and quantity of the finished product attached or combined with the processed product for export must be clearly stated on the import customs declaration form.

d) Sampling and retaining samples: Sampling, retaining samples, and retaining images of processing materials shall be carried out according to the provisions of Article 15 of Circular No. 194/2010/TT-BTC.

2. For processing materials and components provided by the commissioning party through the export-import at place procedure: customs procedures shall be carried out according to the provisions of Article 15 of Decree No. 154/2005/NĐ-CP dated December 15, 2005, issued by the Government, and the guidance provided in Article 41 of Circular No. 194/2010/TT-BTC.

3. In cases where processing materials and components are imported via express delivery services and the express delivery service operator has declared the customs declaration under the taxable category, based on the request of the consignor, the Customs Sub-department managing the processing contract shall re-register the customs declaration for the consignor based on the incorrect declaration form and issue a written notice to the Customs Sub-department managing the express delivery goods to process the refund of tax paid to the express delivery service operator (if applicable). The procedures and documents for refunding the tax paid to the express delivery service operator shall be carried out according to the guidance provided in Circular No. 194/2010/TT-BTC.

If the consignor knows in advance that the goods have arrived in Vietnam, they shall declare the customs declaration according to the correct category at the Customs Sub-department managing the processing contract, then transfer the documents to the express delivery service operator to continue the customs procedures with the Customs Sub-department managing the express delivery goods. The procedures for transferring the port of entry shall be carried out according to the regulations for express delivery goods. In cases where the imported consignment requires actual inspection, if the consignor requests an actual inspection of the goods at the express delivery inspection location, the Customs Sub-department managing the express delivery goods shall carry out the inspection according to the request of the express delivery service operator and the Customs Sub-department managing the processing contract.

Article 12. Customs procedures for raw materials and supplies provided by the processing party itself for processing contracts

1. For raw materials and supplies produced by the processing party itself or purchased from the domestic market:

a) Must be agreed upon in the processing contract or its annex regarding the name, quota, loss rate, quantity, unit price, payment method, and payment deadline.

Raw materials and supplies listed in the prohibited export goods list or temporarily suspended from export shall not be supplied.

b) For self-provided raw materials and supplies listed in the export goods list requiring permits: submit one copy of the permit, present the original permit for verification.

c) Customs procedures:

The processing party must handle customs procedures for self-provided raw materials and supplies sourced from production by the processing party itself or purchased from the domestic market (including imported raw materials and supplies with export duties and permits). When handling export procedures for processed products, the processing party declares and calculates export duties (if applicable) on the annex of the Export Goods Declaration Form (PLTK/2002-XK model). The customs authority does not settle accounts for self-provided raw materials and supplies sourced from production by the processing party itself or purchased from the domestic market, but when exporting processed products, the trader must declare according to form 02/NVLCƯ-GC/2011-Annex I issued together with this Circular and bear full responsibility under the law for the declared figures. Tax policies are implemented in accordance with Decree No. 87/2010/NĐ-CP dated August 13, 2010 of the Government and Article 113 of Circular No. 194/2010/TT-BTC.

2. For raw materials and supplies directly purchased from abroad by the processing party to supply for the processing contract:

a) Must be agreed upon in the processing contract or its annex regarding the name, quota, loss rate, quantity, unit price, payment method, and payment deadline.

b) Must obtain permission from the competent authority if the supplied raw materials and supplies belong to the export goods list requiring permits; raw materials and supplies listed in the prohibited import/export, temporarily suspended import/export goods lists shall not be supplied.

c) Customs procedures, tax policies, and refund procedures are carried out as follows:

c1) For self-provided raw materials and supplies imported after agreement in the processing contract or its annex: register the import declaration under the processing category; the entry on the import declaration form should be as follows: Import Declaration No. ... /NK/GC-CƯ/...

When handling import procedures, the processing party submits one copy of the goods purchase contract; tax policies are implemented according to the processing category.

c2) For raw materials and supplies imported under the import for production and export category before signing the processing contract: the trader may use them to supply for the processing contract, tax policies, and refund procedures are implemented according to the import raw materials for production and export category as guided in Circular No. 194/2010/TT-BTC if all the following conditions are met:

c2.1) Consistent with the quantity, specifications, and types of raw materials and supplies agreed upon in the processing contract or its annex.

c2.2) The import time does not exceed two years from the date of registering the import declaration to the date of registering the export declaration using the supplied raw materials and supplies.

d) When handling export procedures for processed products, the processing party declares according to form 02/NVLCƯ-GC/2011-Annex I issued together with this Circular; this form is kept with the export declaration.

3. For cases involving the sale of goods between domestic entities and export processing zones to supply: customs procedures are carried out according to the guidance in Article 45 of Circular No. 194/2010/TT-BTC and points a, b, d, Clause 2 of this Article.

3. In cases of domestic trade in goods between domestic areas and export processing zones for supply purposes, customs procedures shall be carried out in accordance with the guidance provided in Article 45 of Circular No. 194/2010/TT-BTC and points a, b, d of Clause 2 of this Article.

Article 13. Customs procedures for machinery and equipment imported to implement processing contracts

1. The importation of machinery and equipment on lease or loan to implement processing contracts must comply with regulations on export and import management policies.

2. The importation of machinery and equipment on lease or loan to implement processing contracts by foreign-invested traders shall be carried out in accordance with the guidance provided in Circular No. 04/2007/TT-BTM dated April 4, 2007, of the Ministry of Trade (now the Ministry of Industry and Trade).

3. Customs procedures:

a) For machinery and equipment leased or borrowed directly to serve processing that are exempt from import duties, customs procedures shall be conducted under the temporary import-re-export scheme and processed at the Customs Branch managing the processing contract.

b) For machinery and equipment leased or borrowed by the party placing the processing contract but not directly serving processing, customs procedures shall be conducted under the temporary import-re-export scheme, with payment of taxes; tax policy shall be implemented according to the guidance provided in Circular No. 194/2010/TT-BTC.

Article 14. Customs procedures for goods exported and imported as samples for processing (samples without payment)

1. Customs procedures for goods exported and imported as samples for processing shall be carried out in accordance with the regulations on goods exported and imported for non-commercial purposes as stipulated in Part III of Circular No. 194/2010/TT-BTC.

2. Processing samples must meet the following conditions:

a) They can only be used as samples for processing and have no commercial value (for example: items with holes drilled or marked "sample", one shoe, one sleeve of a shirt);

b) The consignment documentation must indicate that they are samples;

c) Each sample item code may only be exported/imported up to five units.

Article 15. Export procedures for processed products to foreign countries

1. Customs Documents:

a) Customs declaration: submit two original copies;

b) Detailed list of goods for cases where there are multiple types of goods or different packaging: submit one original copy;

c) Export permit for goods requiring an export permit under the law: submit one original copy if exporting once or a copy when exporting multiple times and present the original for comparison and issue a tracking slip;

d) Other relevant documents as prescribed by law: submit one original copy.

2. Customs procedures shall be carried out in accordance with the customs procedures for commercially exported goods as stipulated in Part II of Circular No. 194/2010/TT-BTC, but tax declaration and tax verification for exported products shall not be performed; in addition, the following additional procedures shall be implemented:

a) If the exported processed product uses self-supplied raw materials and components, customs procedures shall be carried out in accordance with the provisions of Article 12 of this Circular.

b) If the processing contract or its annexes use fully processed imported products incorporated into the exported processed product, this must be clearly stated on the export customs declaration form.

c) In cases where the exported processed product is delivered to a third party but the processing contract does not specifically mention the name and address of this third party, when registering the export declaration form, the trader shall submit to the customs authority a copy of the document issued by the party placing the processing contract designating delivery to the third party.

d) For consignments subject to actual inspection, the trader shall present the retained sample of raw materials (if sampling was done) and the declared standard when requested by the customs authority.

In cases where the trader loses the retained sample or questions whether the exported product was produced from imported raw materials, customs officers shall take a sample of the exported product for examination (except for special products where sampling is not possible, photographs may be taken for review).

đ) The customs authority will only register the export declaration form for item codes that have been notified with standards.

3. Customs procedures for processing consignments exported through border gates shall be carried out in accordance with the customs procedures for goods transferred through border gates as stipulated in Articles 16 and 18 of Decree No. 154/NĐ-CP dated December 15, 2005, of the Government and the guidance provided in Article 57 of Circular No. 194/2010/TT-BTC.

4. Customs procedures for processed products returned for repair or recycling after being exported shall be carried out in accordance with the guidance provided in Article 51 of Circular No. 194/2010/TT-BTC.

Article 16. Customs procedures for export and import in place for processed products

Conditions for export and import in place shall be implemented in accordance with the provisions of Government Decree No. 12/2006/NĐ-CP dated January 23, 2006. Specific customs procedures are as follows:

1. For processed products imported in place to be used as raw materials for production:

a) Customs procedures for import in place:

a1) For exporters:

a1.1) Fully declare all criteria reserved for exporters on four export-import declaration forms in place, sign and stamp;

a1.2) Hand over four export-import declaration forms in place, goods, and export invoices or VAT invoices to the importer.

a2) For importers:

a2.1) Fully declare all criteria reserved for importers on four export-import declaration forms in place;

a2.2) Receive goods from the exporter in place;

a2.3) Submit customs documents including: Export-import declaration form in place, purchase contract with the commissioning party containing terms of delivery from the processing party, present export invoices or VAT invoices of the exporter, other documents required for each type of import (except waybills) and show samples of imported goods in place (if imported in place as raw materials for export production) to the Customs Sub-Department where the importer handles import procedures in accordance with regulations, suitable for each type of import;

a2.4) After completing the import in place procedures, the importer retains one declaration form; transfer two remaining declaration forms to the exporter.

a3) Customs procedures for import in place:

a3.1) Accept and register declarations, tax assessment (for taxable goods); only physically inspect goods when there are signs of violation;

a3.2) Confirm completion of customs procedures, sign and stamp the official seal on four export-import declaration forms in place;

a3.3) Retain one declaration form and commercial documents submitted by the trader, return three declaration forms and presented documents to the importer;

a3.4) Notify in writing the direct tax management agency of the importer in place or send notification through the network if the Customs Sub-Department handling import procedures and the local tax authority are connected.

b) Customs procedures for export in place:

b1) The trader handling export in place:

Submit customs documents to the Customs Sub-Department handling export in place including: two export-import declaration forms in place confirmed by the Customs Sub-Department handling import procedures; delivery instructions from the commissioning party; export permit (if the exported item requires a permit).

b2) Customs procedures for export in place:

b2.1) Accept customs export in place documents;

b2.2) Register declarations according to regulations, assess taxes on self-supplied raw materials (if applicable). Confirm completion of customs procedures, sign and stamp the official seal on the customs declaration form;

b2.3) Retain one declaration form and submitted documents, return one declaration form and presented documents to the trader.

c) In cases where traders deliver and receive processed products imported in place to be used as raw materials for export processed products multiple times within a day, week, or month, they may declare collectively on one export-import declaration form in place based on individual delivery and receipt documents such as export invoices or VAT invoices, internal dispatch and transportation slips, provided that the aggregated export invoices or VAT invoices, internal dispatch and transportation slips are limited to the day, week, or month of the declaration form. If there is a change in tax policy or exchange rate at the time of delivery and receipt, declare separately on a specific export-import declaration form in place, not combined with documents without changes in tax policy or exchange rate.

The registration time for collective declaration forms in place by day is the last working hour of the day. The registration time for collective declaration forms in place by week or month is the last working day of the week or month.

Physical inspection of goods in this case will only be conducted when there is suspicion that the trader's delivery and receipt of goods do not match the declaration on the export-import declaration form in place; if the trader has already put the goods into production, inspect related books and documents regarding the receipt of goods.

2. For completed processed products imported in place for domestic trade:

a) Place for customs procedures: at the Customs Sub-Department managing processed goods with products exported in place.

b) Customs documents and procedures: follow the guidance in Article 41 of Circular No. 194/2010/TT-BTC. Tax policies and import policies for goods are implemented according to current regulations.

If goods require physical inspection, it will only be conducted once during the import in place procedure.

c) Completed processed products imported in place for domestic trade shall comply with the provisions of Government Decree No. 89/2006/NĐ-CP dated August 30, 2006 on product labeling.

3. Customs procedures for export and import in place for cases where the trader accepts processing for foreign traders while also importing processed products in place: the trader shall handle both export and import in place procedures for processed products.

4. For processed products used to settle processing fees:

Customs procedures shall be carried out under the in-place export and import form. Purchase contracts are replaced by an agreement between the commissioning and processing parties regarding settlement of processing fees with processed products.

The trader must fully comply with import management policies, tax policies as for imports from abroad, and the provisions of Government Decree No. 89/2006/NĐ-CP dated August 30, 2006 on product labeling. These processed products are used to settle processing contracts.

5. Export-import declaration forms in place have value for settlement when:

a) For exporters: the customs declaration must be fully completed, confirmed, signed, and stamped by four parties: the exporter, the importer, the customs office handling export procedures, and the customs office handling import procedures.

b) For importers: the customs declaration must be fully completed, confirmed, signed, and stamped by three parties: the exporter, the importer, and the customs office handling import procedures.

c) In cases where both the local exporter and the local importer handle their procedures at the same Customs Branch, this branch shall confirm both the export customs procedures and the import customs procedures.

Article 17. Customs Procedures for Subcontracting Cases

Where a Vietnamese trader enters into a processing contract with a foreign trader but does not directly process the goods themselves but instead subcontracts another trader to process (subcontracting), as stipulated in point b, Clause 2, Article 33 of Decree No. 12/2006/NĐ-CP dated January 23, 2006 of the Government, the trader who signs the processing contract with the foreign trader shall be responsible for handling export and import procedures, settling the processing contract with the customs authority, and bearing legal responsibility for the implementation of the processing contract. The trader signing the processing contract with the foreign trader has the responsibility to notify in writing the name, address of the headquarters, and production facility address of the subcontracted trader so that the customs authority can inspect when necessary.

Goods exchanged between Vietnamese traders do not require customs procedures.

Article 18. Procedures for Handover of Intermediate Products in Processing Contracts

1. Responsibilities of traders:

a) Based on the written designation of the parties placing the processing orders, the trader handing over intermediate products (the Deliverer) and the trader receiving intermediate products (the Receiver) organize the handover and receipt of goods according to the provisions of Clause 2 of this Article.

b) The legal representative of the Deliverer and the Receiver shall bear legal responsibility for the accurate handover and receipt of intermediate products as declared on the intermediate product customs declaration form (hereinafter referred to as the transfer declaration form).

c) The legal representative of the Deliverer shall bear legal responsibility for ensuring that the intermediate products are produced from materials under the processing contract. The legal representative of the Receiver shall bear legal responsibility for using the intermediate products for the intended processing purpose.

d) If the processing contract includes intermediate products (delivery contract) and a processing contract using intermediate products as raw materials (receiving contract) with the same receiving processor, then the trader will undertake the roles of both the Deliverer and the Receiver.

2. Customs procedures:

a) The Deliverer declares the customs declaration and delivers goods to the Receiver:

a1) The Deliverer completes all criteria designated for the declarant, signs, and stamps on all four customs declarations (Model HQ/2011-GCCT-Annex I).

a2) Delivers the products along with four customs declarations and the export invoice or VAT invoice to the Receiver; the handover takes place at the processing facility or the Receiver's warehouse.

b) After receiving the products, invoices, and four fully completed and signed customs declarations from the Deliverer, the Receiver proceeds with the following tasks:

b1) Completes all criteria designated for the recipient, signs, and stamps on all four customs declarations.

b2) Registers the customs declaration with the receiving customs office; the registration dossier includes:

b2.1) Four original customs declarations;

b2.2) A copy of the written designation for receiving goods from the party placing the processing order, presenting one original;

b2.3) A copy of the export invoice or VAT invoice, presenting one original;

b2.4) Samples of the intermediate processed goods;

b2.5) Presents the goods or relevant books and documents for inspection upon request.

c) Responsibilities of the Receiving Customs Office:

c1) Accepts the customs declaration dossier and samples of intermediate processed goods;

c2) Registers the customs declaration; prepares a sample collection form and seals the sample goods according to regulations;

c3) Conducts physical inspections of the goods: only conducts physical inspections if there are doubts about the accuracy of the handover and receipt as declared on the transfer declaration form; if the goods have been put into production, inspects the books and documents related to the receipt of goods by the trader;

c4) Confirms completion of customs procedures, signs, and stamps on all four customs declarations;

c5) Keeps one customs declaration and copies of the documents; returns three customs declarations and original documents to the Receiver; hands over sealed samples to the Receiver for self-storage until required for export procedures or other situations requested by customs.

d) After receiving three customs declarations with confirmation of completed customs procedures from the Receiving Customs Office, the Receiver retains one customs declaration and immediately transfers the remaining two to the Deliverer.

f) Upon receiving the two customs declarations (fully completed, signed, and stamped by the Receiver and the Receiving Customs Office), the Deliverer registers the customs declaration with the Delivering Customs Office, including:

f1) Two original customs declarations received from the Receiver;

f2) A copy of the written designation for delivering goods, presenting one original;

f3) A copy of the export invoice or VAT invoice, presenting one original.

e) Responsibilities of the Delivering Customs Office:

e1) Accepts the customs declaration dossier;

e2) Registers the customs declaration; confirms completion of customs procedures; signs and stamps on both customs declarations;

e3) Returns one customs declaration and original documents to the Deliverer; keeps one customs declaration and copies of the documents.

If both the delivery and receiving processing contracts are managed by the same Customs Branch, this branch shall undertake the responsibilities of both the Delivering and Receiving Customs Offices.

The above procedures for handover of intermediate products in processing contracts apply to other subcontracting cases.

3. The transfer declaration form may be used as evidence for settling the processing contract if it meets the following requirements:

a) For the delivery processing contract:

a1) The criteria on the declaration form are fully declared without erasure; there is confirmation, signature, and stamp from all four parties: the Delivering Party; the Receiving Party; the Customs managing the processing contract delivery party (Customs of the delivering party); Customs managing the processing contract receiving party (Customs of the receiving party).

a2) The time when the Delivering Party comes to the Customs of the delivering party to handle customs procedures must be within the validity period of the processing contract delivery and not more than fifteen days from the date the Customs of the receiving party signs to confirm completion of customs procedures on the declaration form. If this deadline is exceeded, if the declaration form has been confirmed by the Customs of the receiving party for completion of customs procedures, then a violation record shall be established for handling according to regulations and continue with the customs procedures, without canceling the declaration form.

b) As for the processing contract receiving:

b1) The criteria on the declaration form are fully declared without erasure; there is confirmation, signature, and stamp from three parties (excluding the Customs of the delivering party).

b2) The time when the Receiving Party comes to the Customs of the receiving party to handle customs procedures must be within the validity period of the processing contract receiving and not more than fifteen days from the date the Delivering Party signs confirmation on the transfer declaration form.

Article 19. Procedures for transferring raw materials, components; leased or borrowed machinery and equipment as directed by the commissioning party to another processing contract during the execution of the processing contract.

1. Cases where transfer is allowed:

a) Machinery and equipment that have completed their process stage under the previous processing contract can be transferred to perform the next process stage under the subsequent processing contract with the same or different receiving and commissioning parties.

b) Raw materials and components imported for the current processing contract but are unsuitable for its execution (due to changes in product design), the commissioning party requests to transfer them to execute another processing contract with the same or different receiving and commissioning parties.

c) Raw materials and components of this processing contract/agreement but mistakenly delivered by the commissioning party to another processing contract/agreement with the same commissioning party.

d) Other cases if the trader provides a written explanation of valid reasons, the Head of the Customs Branch managing the processing contract will consider and approve the transfer, except for the case mentioned in point c4, Clause 2, Article 23 of this Circular.

2. Customs procedures:

Apply the procedures for transferring processed products as guided in Article 18 of this Circular, except for requiring the trader to present export invoices or VAT invoices.

Article 20. Procedures for exporting raw materials and components back to overseas during the execution of the processing contract.

1. Customs Documents:

a) Export goods declaration form: submit two original copies.

b) Explanation letter from the trader (specifying the reason for re-export; number, date, month, year of the import declaration form and the processing contract containing the returned goods): submit one original copy along with a copy of the corresponding import declaration form.

c) Request letter for returning goods from the commissioning party: submit one original copy.

2. Customs procedures: follow the procedures for exporting excess raw materials and components as guided in point b, Clause 2, Article 23 of this Circular.

Article 21. Procedures for settling the processing contract.

1. Settlement documents:

a) Summary table of imported raw materials and components according to Model 01/HSTK-GC/2011-Appendix II issued together with this Circular: submit one original copy.

b) Summary table of exported processed products according to Model 02/HSTK-GC/2011-Appendix II issued together with this Circular: submit one original copy.

c) Declaration form summary of exported processed products (including both export/import declaration forms at the place of origin and declaration forms for transferring processed products) which have completed customs procedures and sufficient basis to determine the exported goods as guided in Article 26 of Circular No. 194/2010/TT-BTC, according to Model 09/HSTK-GC/2011-Appendix II issued together with this Circular: submit one original copy.

d) Summary table of raw materials and components re-exported abroad and transferred to another processing contract during the execution of the current contract according to Model 03/HSTK-GC/2011-Appendix II issued together with this Circular: submit one original copy.

đ) Summary table of raw materials and components provided by the receiving party (if any) according to Model 04/HSTK-GC/2011-Appendix II issued together with this Circular: submit one original copy.

In case the customs authority doubts the declaration of domestic raw material purchases for supply, it may require the trader to present purchase invoices and payment documents for supplied raw materials from the commissioning party.

e) Summary table of raw materials and components used to produce exported products according to Model 05/HSTK-GC/2011-Appendix II issued together with this Circular: submit one original copy.

g) Processing contract settlement table according to Model 06/HSTK-GC/2011-Appendix II issued together with this Circular: submit two original copies (return one copy to the trader after settlement).

h) Summary table of temporarily imported and re-exported machinery and equipment according to Model 07/HSTK-GC/2011-Appendix II issued together with this Circular: submit two original copies (return one copy to the trader after settlement).

i) Declaration form for temporarily imported machinery and equipment; declaration form for receiving machinery and equipment from another processing contract (if any); declaration form for re-exporting machinery and equipment: present the original copy (retained by the declarant).

k) Statistical table of finished products imported for assembly or combination with exported processed products (if any) according to Model 08/SPHC-GC/2011-Appendix II issued together with this Circular: submit two original copies (return one copy to the trader after settlement).

The legal representative of the trader signs and stamps (if it is an individual business household, sign and write full name; ID number, issuance date, issuing authority) on the above tables and assumes legal responsibility for the accuracy and truthfulness of the settlement figures.

2. Deadline for submission and extension of settlement documents:

a) Deadline for submitting settlement documents:

Within forty-five working days from the end date or expiration of the processing contract (or processing contract annex), the trader must submit complete settlement documents for the processing contract (including surplus raw materials and components, temporarily imported machinery and equipment, waste, scrap, and residue disposal plans) to the Customs Branch managing the processing contract.

For processing contracts that are divided into multiple appendices for implementation, the deadline for submitting settlement documentation for each appendix of the processing contract shall be the same as the deadline for submitting settlement documentation for the processing contract.

b) Extension of the deadline for submitting settlement documentation:

b1) Cases where the extension of the deadline for submitting settlement documentation is allowed:

b1.1) A trader simultaneously implements several processing contracts, all of which become ineffective at the same time, making it impossible to prepare the documentation on time;

b1.2) There is a dispute between the commissioning party and the processing party related to the processing contract;

b1.3) Other force majeure reasons preventing the trader from meeting the settlement deadline.

b2) Authority and deadline for extension:

Based on the explanatory document submitted by the trader, the Director of the Processing Contract Management Customs Branch shall examine and extend the deadline for submitting settlement documentation as stipulated in point a, Clause 2, Article of this Regulation. The extension can only be granted once and must not exceed 30 days.

3. Method of inspecting and verifying settlement documentation:

a) Preliminary inspection and verification applies to traders who comply well with customs laws: checking the completeness, consistency, and validity of the settlement documentation set; conducting a preliminary comparison of the settlement tables (Form 06/HSTK-GC/2011, Form 07/HSTK-GC/2011, Form 08/SPHC-GC/2011-Appendix II issued together with this Circular) submitted by the trader with the settlement tables on the computer.

Criteria for determining traders who comply well with customs laws to classify settlement documentation include the following conditions:

a1) Compliance with customs laws as guided in Article 3 of Circular No. 194/2010/TT-BTC;

a2) At the time of submitting settlement documentation, there are no overdue processing contracts/sub-contracts that have not been settled;

a3) The trader has not been penalized for failing to settle processing contracts within the period from the date of registering the last export declaration of the contract/sub-contract to the settlement date of the processing contract/sub-contract.

b) Detailed inspection and verification of settlement documentation apply in the following cases:

b1) Settlement documentation of traders who do not comply well with customs laws.

b2) Settlement documentation of traders who comply well with customs laws but show suspicious signs (regarding imported raw materials and supplies, quotas, exported products, suspicions discovered through preliminary settlement documentation comparison).

b3) Randomly inspect 05% of processing contracts of traders who comply well with customs laws (excluding those already inspected in detail under item b2, point b, Clause 3, Article of this Regulation) to assess compliance with the law. The calculation of 05% is based on the total number of settled processing contracts of traders who comply well with customs laws in the previous year, if the result is less than 01 contract, then round up to 01 contract.

b4) In the case mentioned in item b1, b2, point b, Clause 3, Article of this Regulation, the trader presents the original export declaration form (the declarant's copy) and transport documents/cargo documents (a certified copy by the trader, presenting the original for comparison) to confirm that the goods have been loaded onto the export transportation means for the customs authority to compare with the export declaration list.

4. Deadline for receiving, inspecting, and verifying settlement documentation:

a) For contracts/sub-contracts subject to preliminary inspection:

Within the latest 07 working days from the date the trader submits complete and valid settlement documentation, the customs officer completes the preliminary comparison and confirms settlement for the trader; if suspicious signs are found during preliminary inspection as specified in item b2, point b, Clause 3, Article of this Regulation, then proceed to detailed inspection of settlement documentation and inform the trader of the specific reasons in the Business Request Form;

Prioritize receiving, inspecting, and verifying for traders who apply information technology to manage and monitor processed goods and connect with the customs authority.

b) For contracts/sub-contracts subject to detailed inspection and verification:

Within the latest 30 working days from the date the trader submits complete and valid settlement documentation, the customs officer completes the reception, detailed inspection, and verification of settlement documentation.

c) The inspection of settlement documentation submitted and presented as stipulated in points a and b, Clause 4, Article of this Regulation shall be conducted at the customs office. If the volume of settlement documentation is large and the trader requests inspection at their premises, the Head of the Processing Contract Management Customs Branch shall consider and decide.

5. Deadline for customs procedures for excess raw materials and supplies; temporarily imported machinery and equipment; waste, scrap, and waste products:

Within the latest 30 working days from the date the customs authority completes the inspection and verification of settlement documentation, the trader shall handle customs procedures to dispose of excess raw materials and supplies; temporarily imported machinery and equipment; waste, scrap, and waste products (if any).

6. Confirmation of completion of settlement procedures:

a) For contracts/sub-contracts without excess raw materials and supplies; rented or borrowed machinery and equipment; waste, scrap:

Within the latest 01 working day (for settlement documentation subject to preliminary inspection) or 03 working days (for settlement documentation subject to detailed inspection) after completing the inspection and verification of settlement documentation, the Head of the Branch shall confirm the completion of settlement procedures on the Processing Contract Settlement Table Form 06/HSTK-GC/2011-Appendix II, Machinery and Equipment Temporary Import Re-export Settlement Table Form 07/HSTK-GC/2011-Appendix II, Complete Product Statistics Table for Imported Products Attached to Exported Processed Goods Form 08/SPHC-GC/2011-Appendix II issued together with this Circular.

b) For contracts/sub-contracts with excess raw materials and supplies; rented or borrowed machinery and equipment; waste products:

Within at most one working day (for settlement files subject to preliminary review) or three working days (for settlement files subject to detailed review) after completing customs procedures for surplus raw materials, components, rented or borrowed machinery and equipment, scrap, waste products, waste, the head of the Customs Branch shall confirm the completion of the settlement process on the Settlement Form for Processing Contracts Model 06/HSTK-GC/2011-Appendix II, the Machinery and Equipment Temporary Import and Re-export Settlement Form Model 07/HSTK-GC/2011-Appendix II, and the Statistics Form for Imported Finished Products to be Attached or Assembled with Exported Processing Contract Products Model 08/SPHC-GC/2011-Appendix II issued together with this Circular.

Article 22. Handling of Overdue Submission of Settlement Files and Exceeding Time Limits for Raw Materials, Components Surplus and Rented or Borrowed Machinery and Equipment Procedures:

1. Handling of Overdue Submission of Settlement Files:

a) Within ninety days from the expiration date of the submission of the settlement file (including any extension period), the Customs Branch managing the processing contract shall perform the following tasks:

a1) Issue a written invitation for the trader to come to the customs office to establish a violation record for handling according to regulations: invite twice;

a2) Implement measures to track down and request the trader to complete the processing contract settlement.

b) In case the trader does not submit the settlement file within ninety days from the expiration date of the submission of the settlement file, the customs authority shall calculate taxes, determine the amount of tax payable, and the late payment penalty for raw materials, components, machinery, and equipment under the un-settled processing contract from the date of registering the import declaration for raw materials and components, in accordance with Circular No. 194/2010/TT-BTC.

2. Handling of Exceeding Time Limits for Procedures Related to Raw Materials, Components Surplus and Rented or Borrowed Machinery and Equipment:

a) The customs authority managing the processing contract:

a1) Establish a violation record for handling according to regulations;

a2) Calculate taxes and determine the amount of tax for the surplus raw materials, components, rented or borrowed machinery and equipment under the un-settled processing contract from the date the customs authority completes the settlement comparison procedure.

3. The trader is responsible for paying the import tax into the temporary collection account and the value-added tax into the dedicated collection account as determined by the customs authority and implementing the administrative violation penalty decision according to the law.

If the trader fails to pay the tax within the deadline as determined by the customs authority, coercive measures will be applied according to the regulations.

Article 23. Customs Procedures for Handling Surplus Raw Materials, Components; Scrap, Waste Products, Rented or Borrowed Machinery and Equipment

1. Forms of Handling:

Depending on the agreement in the processing contract and the provisions of Vietnamese law, surplus raw materials, components, scrap, waste products, rented or borrowed machinery and equipment for processing shall be handled as follows:

a) Selling in the Vietnamese market (implemented according to the export, import in place method);

b) Exporting back out of the country;

c) Transferring to another processing contract in Vietnam;

d) Giving away or donating in Vietnam;

e) Destroying in Vietnam.

2. Customs procedures:

a) Customs procedures for selling surplus raw materials, components, scrap, waste products, rented or borrowed machinery and equipment in the Vietnamese market shall be carried out according to the export, import in place method as guided in Article 16 of this Circular.

b) Customs procedures for exporting back out of the country upon the instruction of the party placing the processing order shall be conducted like commercial export shipments. When handling customs procedures, customs officers shall inspect the actual goods, compare exported materials with samples taken when imported (if samples were taken); compare the type, serial number, and model of machinery and equipment declared on the temporary import declaration with the machinery and equipment being exported.

c) Customs procedures for transferring surplus raw materials, components, rented or borrowed machinery and equipment to another processing contract upon the instruction of the party placing the processing order shall be conducted like the customs procedures for transferring processed products as guided in Article 18 of this Circular, except that the trader is not required to present an export invoice or VAT invoice, while performing the following tasks:

c1) The customs procedures for transferring surplus raw materials, components; rented or borrowed machinery and equipment to another processing contract shall be carried out after the head of the Customs Branch managing the processing contract has confirmed the trader's request when settling the processing contract.

c2) In case transferring surplus raw materials, components; rented or borrowed machinery and equipment to another processing contract executed by another trader:

c2.1) The receiving party: notify the time, location, and present the raw materials received from another contract and the sample taken when importing for the receiving customs office to check before putting the raw materials into production.

c2.2) The receiving customs office: within at most three working days from receiving the trader's notification, the receiving customs office shall complete the comparison of the imported material sample with the transferred material, if consistent, proceed to take new samples for the receiving contract (the sample comparison and taking new samples shall be conducted at the trader's production facility). During the sample comparison, if signs of fictitious transfer or insufficient transfer of goods compared to the declaration on the transfer declaration are found, the entire shipment shall be inspected and any violations (if any) shall be handled according to the law.

For rented or borrowed machinery and equipment or raw materials and components without obtainable samples, the receiving customs office shall conduct an actual inspection of the goods if there are signs of fictitious transfer or insufficient transfer of goods compared to the declaration on the transfer declaration. The head of the receiving Customs Branch shall decide on specific inspections.

c3) In case transferring surplus raw materials, components, rented or borrowed machinery and equipment from this processing contract to another processing contract executed by the same trader:

c3.1) When handling customs procedures for transferring surplus raw materials from this processing contract to another processing contract, the trader shall present the sample of the raw materials of the processing contract being transferred.

c3.2) The Customs Branch managing the processing contract shall transfer the sample of raw materials and components to be used for a new processing contract by establishing a new sampling form and sealing the raw material and component samples together with this new sampling form.

c3.3) The Customs Branch managing the processing contract shall inspect at the production facility of the trader when there are signs indicating that the declaration of raw materials and components on the customs declaration is not truthful.

c4) Raw materials and components may not be transferred to another processing contract in the following cases:

c4.1) The trader imports raw materials and components but does not execute the processing contract and requests to transfer all these raw materials and components to another trader.

c4.2) The trader receives raw materials and components from a previous processing contract but does not continue processing them and instead requests to transfer them to another processing contract; if the raw materials and components received from the previous processing contract have been put into production but are not fully utilized for this contract, they can be transferred and used in subsequent contracts, but further transfers to subsequent contracts are not allowed.

d) Customs procedures for gifts, donations of leased or borrowed machinery and equipment; surplus raw materials and components; waste and by-products:

The customs declaration documents include:

d1) Customs declaration form (using the non-trade goods declaration form): clearly state "goods under processing contract number ... dated ... month ... year .... Processing trader ...": submit two original copies.

d2) Gift or donation letter from the party placing the processing order: submit one original copy;

d3) Approval document from the Ministry of Industry and Trade if the gifted or donated goods fall within the Import License List of the Ministry of Industry and Trade or permission document from the specialized management agency if the imported goods require a permit from a specialized management agency: submit one original copy.

Customs procedures and tax policies shall be implemented according to regulations applicable to gifts and donations. After completing the customs procedures, the customs authority shall make two copies of the declaration form, one copy to be kept with the processing contract, and one copy to be handed over to the processing trader (if the recipient of the gift or donation is not the processing trader).

đ) Customs procedures for supervising the destruction of waste and by-products in Vietnam:

đ1) The destruction of waste and by-products shall be carried out during the execution or after the completion of the processing contract or its annex.

đ2) Customs procedures for supervising the destruction:

đ2.1) The trader must send a written notice to the Customs Branch managing the processing contract informing the time and location of the destruction, accompanied by an agreement document from the party placing the processing order and an approval document from the competent authority regarding environmental management if the trader directly destroys the waste and by-products.

In case the trader hires another trader with the function of handling waste and by-products, a destruction contract (one original copy) and an authorization document from the competent authority for this trader (one copy) must be provided.

đ2.2) The trader shall proactively organize the destruction process and bear legal responsibility for the impact of the entire destruction process on the environment.

đ2.3) The Customs Branch managing the processing contract shall dispatch two customs officers to supervise the destruction process.

đ2.4) Upon completion of the destruction, the parties shall establish a confirmation record in accordance with the prescribed regulations. This record must include the signature of the legal representative of the trader, the seal of the trader having the destroyed goods, the name and signature of the customs officer supervising the destruction, and the name and signature of the person designated by the legal representative to participate in the destruction process.

3. For surplus raw materials and components supplied by the trader through self-importation from abroad under the processing trade model:

If the party placing the order has already paid for the raw materials and components: follow the guidance provided in Clause 1 and Clause 2 of this Article.

If the party placing the order has not yet paid for the raw materials and components: they may be transferred to supply the next processing contract if they meet the supply conditions specified in Clause 2 of Article 12 of this Circular.

4. For processing contracts with the same ordering party and the same processing party, the trader may offset raw materials of the same type, specification, quality, and unit price.

Article 24. Handling of surplus raw materials and supplies; leased or borrowed machinery and equipment; unexportable processed products due to the commissioning party's abandonment

The processing contractor shall be responsible for paying domestic consumption tax on surplus raw materials and supplies; leased or borrowed machinery and equipment; unexportable processed products due to the commissioning party's abandonment, or to follow the procedures for destruction as stipulated at Point d, Clause 2, Article 23 of this Circular. The basis for calculating the tax shall be determined at the time of changing the purpose of use according to Circular No. 194/2010/TT-BTC.

Section 3

CUSTOMS PROCEDURES FOR GOODS

COMMISSIONED PROCESSING ABROAD

Article 25. Notification Procedures for Processing Contracts

1. Responsibilities of traders:

Before proceeding with export customs clearance for the first shipment under a processing contract, the trader must notify the contract. The dossier includes:

a) Processing contract and its annexes (if any): submit two original copies;

b) Business registration certificate or Investment License or Investment Certificate (if it is the first-time procedure): submit one copy;

c) Tax registration certificate (if it is the first-time procedure): submit one copy;

d) Permit from the competent authority if the exported goods and imported processed products fall within the list of goods requiring permits for export and import: submit one copy, present the original.

2. Customs duties of the customs office: carried out according to the guidance at Clause 2, Article 6 of this Circular, except for production facility inspection.

Article 26. Export Customs Procedures for Raw Materials and Supplies for Producing Goods Commissioned for Processing Abroad

1. Customs documents are similar to those for exporting processed product shipments; additionally, if the exported raw materials and supplies fall within the list of goods requiring permits for export issued by the Ministry of Industry and Trade or specialized management agencies, then submit the permit from the competent authority for the customs office to deduct.

2. Customs procedures are conducted similarly to commercial export goods as guided in Part II of Circular No. 194/2010/TT-BTC, except for declaration of taxes, tax verification, but sample collection for comparison upon importation of processed products is implemented. Sampling, sample storage, and image storage are carried out according to the guidance in Article 15 of Circular No. 194/2010/TT-BTC.

Article 27. Notification, Adjustment, and Verification Procedures for Quotas

1. Notifying Quotas

a) The trader is responsible for submitting the usage quota table, consumption quota, and raw material and supply loss rate to the customs office according to Model 03/TBDM-GC/2011-Annex I attached to this Circular (but not implementing average quota declaration).

b) The unit of measurement in the quota table follows the unit of measurement in the List of Export and Import Goods of Vietnam issued together with Decision No. 107/2007/QD-BTC dated December 25, 2007 of the Ministry of Finance and is consistent with the unit of measurement in the notified processing contract or its annex.

In cases where the unit of measurement in the Quota Notification Table cannot be used according to the unit of measurement in the Catalogue issued together with Decision No. 107/2007/QD-BTC mentioned above, the trader shall be responsible for converting the quantity of goods on the export/import declaration form according to the unit of measurement in the Quota Notification Table.

2. Time for notification and adjustment of quotas

a) Time for notifying quotas:

a1) Not later than ten days before registering the declaration form for importing the first shipment under the processing contract.

a2) In cases where the processed products are sold abroad, the trader must notify the quotas before the contract settlement date.

b) Adjusting quotas:

b1) Time for adjusting quotas: not later than five days before registering the declaration form for importing the first shipment under the processing contract.

b2) Cases for adjusting quotas:

During the implementation of the processing contract, if changes in the nature of raw materials or processing conditions lead to actual quota changes (agreed in the processing contract annex), the trader must submit a new adjusted quota table for the goods code along with a document explaining the reasons sent to the Customs Sub-Department managing the processing contract for specific examination and decision-making for each case.

c) When adjusting the quota of a goods code, the trader does not need to change the previously notified goods code with the customs office. The trader and the customs department will supplement an additional sub-code for the goods code on the adjusted quota table and on the import declaration for goods with adjusted quotas.

3. The trader's notified and adjusted quotas with the customs office serve as the quotas for contract settlement.

4. Cases for quota verification:

a) The trader notifies an increase in the quota,

b) There are signs of suspected quota fraud,

c) The trader has been penalized by the customs office for quota fraud within 365 days from the penalty decision date. After this period, quota verification will be conducted according to the guidance at Points a and b, Clause 4 of this Article.

5. Inspection Location

a) Inspect at the customs office premises and/or

b) Inspection at the trader's headquarters.

6. Inspection Method

a) The customs office conducts direct inspections;

b) Inspect through specialized appraisal organizations.

7. Time for Quota Verification:

a) After the trader submits the quota adjustment notification table,

b) When settling the processing contract, or

c) During post-clearance inspection.

8. Authority to Decide on Quota Verification: The Head of the Customs Sub-Department managing the processing contract, the Post-Clearance Inspection Sub-Department, and the Post-Clearance Inspection Department.

9. Trader's Responsibilities during Quota Verification:

a) Provide detailed explanations about the method of establishing the quota for the notified goods code, accompanied by product samples and technical design documents (for example, cutting diagrams for garment items).

b) Present accounting books and vouchers when requested and facilitate the customs office's quota verification process to ensure it is swift and accurate.

c) Implement decisions of the customs authority related to quota verification.

10. Customs Officer's Duties during Quota Verification:

a) Conduct inspections according to regulations without causing undue inconvenience or hindrance to the trader's operations.

b) Carry out verification within the prescribed time frame:

b.1) For cases inspected through documents at the customs office headquarters:

Within eight working hours from the start of the inspection, the quota verification must be completed.

If multiple goods codes under one contract or annex require verification and cannot be completed within eight working hours, the inspection can be extended to the next working day, but the extension should not exceed eight working hours from the start of the inspection.

b.2) For cases involving processed products requiring cooperation with specialized agencies due to their unique characteristics, the inspection time should not exceed two working days from the receipt of the specialized agency's appraisal results.

c) Seal samples of products that have been inspected for quota control and hand over to the trader for self-preservation, clearly noting the seal number on the Quota Inspection Report.

d) Prepare a Record confirming the inspection results upon completion of the inspection. The Record must accurately reflect the actual inspection, signed by the customs officer conducting the inspection and the representative of the inspected trader. The format of the Record shall be consistent with the model Record for quota inspections for foreign traders as guided by the General Department of Customs.

đ) Based on the Quota Inspection Report, prepare the Quota Inspection Conclusion (two copies). The Quota Inspection Conclusion shall be signed by the head of the Customs Branch and one copy sent to the trader for implementation. The format of the Conclusion shall be consistent with the model Conclusion for quota inspections for foreign traders as guided by the General Department of Customs.

11. Measures to address cases where the trader's reported and adjusted quota does not match the actual situation (higher than the actual quota):

a) Prepare a violation record and impose penalties according to regulations.

b) If the processing contract/supplementary agreement has not yet been settled: the inspected quota serves as the basis for settlement.

c) If the processing contract/supplementary agreement has already been settled: the inspected quota serves as the basis for tax recovery.

Article 28. Import Procedures for Products Made Under Processing Contracts Overseas

1. Customs documents are similar to those for commercial imports; the customs declaration is registered under the processing import category.

2. Customs procedures are carried out similarly to those for commercial imports.

a) Tax calculation and tax verification:

a1) Determination of the taxable value, tax rate, and origin of goods shall be conducted in accordance with the guidance provided in point b, Clause 4, Article 101 of Circular No. 194/2010/TT-BTC.

a2) Based on the declared quota and the actual imported goods, determine the quantity of raw materials and components exported from Vietnam for processing into the imported product.

b) When inspecting the actual goods, compare the retained export sample of raw materials with the raw materials constituting the product; if there is suspicion of quota fraud, take samples, prepare a Sample Collection Record, seal the samples to serve as the basis for quota inspection.

Article 29. Temporary Export Procedures for Processing Products to Be Recycled Abroad and Re-imported into Vietnam

1. Conditions for temporarily exporting processing products abroad for recycling and re-importing back into Vietnam:

a) The processing product may be temporarily exported for recycling within a maximum period of three hundred sixty-five days (365) from the date of filing the import declaration.

b) The product has not undergone production, processing, repair, or use in Vietnam.

2. Place for customs procedures: at the Customs Branch managing the processing contract.

3. Temporary export procedures for processing products for recycling:

a) Customs documents include:

a1) A request for temporary export of goods, specifying which import declaration the goods belong to, the reason for temporary export for recycling, and details of the recycling process: submit one original copy;

a2) An export customs declaration for goods; a detailed list of goods as for commercial exports;

a3) An import customs declaration for the recycled batch of processing products: submit one copy;

a4) A document from the overseas partner accepting the goods for recycling: submit one original copy;

b) Customs procedures shall be applied as for commercial exports and must include physical inspection of the goods. The customs officer shall take samples or photograph (for goods that cannot be sampled) the processing products being exported for recycling for comparison during the re-import procedure;

c) The recycling period shall be registered by the trader with the customs authority but shall not exceed 275 days from the date of temporary export.

4. Re-import procedures for recycled processing products:

a) Customs documents include:

a1) An import declaration: submit two original copies;

a2) An export declaration (for recycling): submit one copy;

a3) Customs procedures shall be applied as for commercial imports (excluding import permits, tax declarations, and tax verification). For batches subject to physical inspection, the customs officer shall compare the actual re-imported goods with the samples taken at the time of temporary export (or photographs taken during the temporary export procedure);

In cases where the recycled processing products are sold in the overseas market, follow the guidance provided in Clause 2, Article 32 of this Circular.

Article 30. Procedures for Overseas Subcontracting Processing.

In cases of overseas subcontracting processing, Vietnamese traders are not required to handle subcontracting processing procedures with Vietnamese Customs authorities.

Article 31. Settlement procedures for processing contracts

1. Settlement documents shall include:

a) Export and import declaration form: submit one original copy;

b) Exported raw materials and supplies summary table: submit one original copy;

c) Imported processed products summary table: submit one original copy;

d) Summary table of processed products sold, given away, or destroyed (if any) abroad: submit one original copy;

đ) Raw materials and supplies usage summary table for producing imported processed products: submit one original copy;

e) Summary table of raw materials purchased abroad (if any) for producing imported processed products: submit one original copy;

g) Contract settlement statement: submit two original copies.

The contents of the above tables are similar to those of the settlement documents for contracts accepting foreign subcontracting processing as stipulated in Clause 1, Article 21 of this Circular.

2. Liquidation procedures:

The deadlines for submitting and extending the submission period of settlement documents; methods for checking and comparing settlement documents; deadlines for inspecting and confirming settlement documents; handling overdue submission of settlement documents shall be carried out in accordance with the procedures for contracts accepting foreign subcontracting processing.

Article 32. Customs Procedures for Excess Raw Materials and Supplies; Scrap, By-products, Waste; Machinery and Equipment Temporarily Exported for Processing.

1. Forms of Handling:

Depending on the agreement in the processing contract and the provisions of Vietnamese law, surplus raw materials, components, scrap, waste products, rented or borrowed machinery and equipment for processing shall be handled as follows:

a) Selling, giving away, or destroying at the foreign market;

b) Importing back to Vietnam;

c) Transferring to another processing contract abroad;

2. Customs procedures:

a) Customs procedures for selling, giving away, or destroying excess raw materials and supplies, scrap, by-products, rented or borrowed machinery and equipment at the foreign market shall be carried out according to regulations of the country accepting subcontracting processing; no declaration of customs clearance with Vietnamese Customs but tax declaration and payment of export tax (if applicable) for raw materials, supplies, machinery, and equipment exported from Vietnam for processing.

b) Customs procedures for importing back to Vietnam:

b1) If excess raw materials and supplies, machinery, and equipment were exported from Vietnam; scrap and by-products generated from raw materials and supplies exported from Vietnam, then re-import procedures shall be carried out;

b2) If excess raw materials and supplies, machinery, and equipment were purchased abroad; scrap and by-products generated from raw materials and supplies purchased from abroad, then they shall be treated like commercial import shipments;

b3) When handling customs procedures, customs officers shall conduct on-site inspections of the shipment to compare imported raw materials with samples taken when exporting (if samples were taken); compare types, serial numbers, and model codes of machinery and equipment declared on the temporary export declaration with those of machinery and equipment being re-imported.

c) Procedures for transferring excess raw materials and supplies, rented or borrowed machinery and equipment to another processing contract:

c1) Traders must notify the Sub-Department of Customs managing the processing contract in writing, including: name, specifications, quality of raw materials and supplies; quantity of excess raw materials and supplies, rented or borrowed machinery and equipment under the contract/addendum contract number, date, year transferred to another contract/addendum contract number, date, year signed with the foreign party (clearly stating the name of the foreign subcontractor);

c2) Traders may only carry out procedures for transferring excess raw materials and supplies; rented or borrowed machinery and equipment to another processing contract after the Head of the Sub-Department of Customs managing the processing contract has confirmed the trader's request during the settlement of the contract/addendum contract.

Section 4

IMPLEMENTATION

Article 33. Effective Date

1. This Circular takes effect 45 days from the date of signature, replacing Circular No. 116/2008/TT-BTC dated December 4, 2008, Circular No. 74/2010/TT-BTC dated May 14, 2010, issued by the Ministry of Finance, and previous guiding documents of the Ministry of Finance that conflict with this Circular.

2. For import declarations for production and export supply for processing contracts registered before the effective date of this Circular, they will be accepted for processing contract settlement. Tax policies and refund procedures for these declarations will be implemented according to the production and export supply category.

3. For processing contracts/addendums notified and accepted during the effective period of Circular No. 116/2008/TT-BTC dated December 4, 2008, and Circular No. 74/2010/TT-BTC dated May 14, 2010, but settled during the effective period of this Circular, traders may choose to settle the processing contract/addendum according to the guidance in Circular No. 116/2008/TT-BTC dated December 4, 2008, or Circular No. 74/2010/TT-BTC dated May 14, 2010, or settle according to the guidance in this Circular.

Article 34. Responsibilities for Implementation

1. The Director General of the General Department of Customs shall base on the provisions of this Circular to issue a unified customs procedure guide for Customs units to implement, facilitating while ensuring strict management of export and import processing activities in accordance with the law.

2. The Director General of the General Department of Customs, Heads of units under and affiliated to the Ministry of Finance, and related organizations and individuals are responsible for implementing this Circular./.