Circular No. 118/2011/TT-BTC guiding import tax and value-added tax on imported goods for power projects

CIRCULAR

Guidelines on import tax and value-added tax for imported goods of power projects

for imported goods of electricity projects

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Pursuant to the Law on Export Tax and Import Tax dated June 14, 2005;

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

Pursuant to the Law on Value Added Tax dated June 3, 2008;

Pursuant to Decree No. 123/2008/NĐ-CP dated December 8, 2008 of the Government detailing and guiding the implementation of certain provisions of the Law on Value Added Tax;

Implementing Resolution No. 59/NQ-CP dated December 17, 2010 of the Government on simplifying administrative procedures within the scope of management functions of the Ministry of Industry and Trade;

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 the directives of the Prime Minister in Circular No. 5375/VPCP-KTTH dated August 4, 2010 and Circular No. 3126/VPCP-KTTH dated May 17, 2011 of the Government Office;

The Ministry of Finance hereby issues guidelines on import tax and value-added tax for imported goods of power projects as follows:

Article 1. Scope and Applicability:

This Circular applies to raw materials and components imported to create fixed assets of power projects.

Article 2. Import Tax

1. For power projects granted investment licenses or investment incentives before October 1, 2010 (the date when Decree No. 87/2010/NĐ-CP dated August 13, 2010 of the Government detailing the implementation of certain provisions of the Law on Export Duties and Import Duties (hereinafter referred to as Decree No. 87/2010/NĐ-CP) came into effect):

1.1. Raw materials and components imported before December 17, 2010 (the date when Resolution No. 59/NQ-CP dated December 17, 2010 of the Government on simplifying administrative procedures within the scope of management functions of the Ministry of Industry and Trade (hereinafter referred to as Resolution No. 59/NQ-CP) came into effect):

a) Raw materials and components imported to serve power projects approved by the Government and the Prime Minister and confirmed by the Ministry of Industry and Trade that these types of components and raw materials are integral and inseparable from main machinery and equipment to create fixed assets of power projects shall be determined as raw materials and components used to manufacture equipment and machinery included in the production technology chain for assembly or synchronized use with main equipment and machinery, thus being exempted from import tax according to point d, clause 6, Article 16 of Decree No. 149/2005/NĐ-CP dated December 8, 2005 of the Government detailing the implementation of the Law on Export Duties and Import Duties (hereinafter referred to as Decree No. 149/2005/NĐ-CP).

b) Raw materials and components imported to create fixed assets for other power projects than those specified in point a of this clause shall be exempted from import tax according to point d and point đ, clause 6, Article 16 of Decree No. 149/2005/NĐ-CP.

c) Documentation and procedures for exemption: Depending on the time of registration of the list of imported goods exempted from tax of the project, it shall be implemented according to the provisions of Circular No. 59/2007/TT-BTC dated June 14, 2007 of the Ministry of Finance guiding the implementation of export duties, import duties, and tax administration for exported and imported goods or Circular No. 79/2009/TT-BTC dated April 20, 2009 of the Ministry of Finance guiding customs procedures; customs inspection and supervision; export duties, import duties, and tax administration for exported and imported goods (hereinafter referred to as Circular No. 79/2009/TT-BTC).

d) For raw materials and components imported to serve power projects specified in point a of this clause, in addition to implementing the documentation and procedures for exemption as stipulated in point c of this clause, the entity registering the list of imported goods exempted from tax must present to the customs authority copies of the Government's and Prime Minister's approval documents (one copy each) and the confirmation document of the Ministry of Industry and Trade (one original copy) and provide a description and/or location installation plan of the components and raw materials in the technological diagram to the customs authority when filing the first customs declaration from the date this Circular comes into effect.

1.2. Raw materials and components imported from December 17, 2010 onwards:

a) Raw materials and components imported to serve power projects approved by the Government and the Prime Minister shall be exempted from import tax according to point d, clause 6, Article 16 of Decree No. 149/2005/NĐ-CP. Documentation and procedures for exemption shall be carried out according to points c and d of clause 1.1 but excluding the confirmation document of the Ministry of Industry and Trade.

b) Raw materials and components imported to create fixed assets for other power projects than those specified in point a of this clause shall be exempted from import tax according to point d and point đ, clause 6, Article 16 of Decree No. 149/2005/NĐ-CP. Documentation and procedures for exemption shall be carried out according to point c of clause 1.1.

2. For power projects granted investment licenses or investment incentives from October 1, 2010 onwards:

2.1. Raw materials and components imported to create fixed assets of the project shall be exempted from import tax according to point d and point đ, clause 6, Article 16 of Decree No. 87/2010/NĐ-CP.

2.2. Documentation and procedures for exemption: Depending on the time of registration of the list of imported goods exempted from tax of the project, it shall be implemented according to the provisions of Circular No. 79/2009/TT-BTC or Circular No. 194/2010/TT-BTC dated December 6, 2010 of the Ministry of Finance guiding customs procedures; customs inspection and supervision; export duties, import duties, and tax administration for exported and imported goods.

Article 3. Value Added Tax

1. For raw materials and supplies imported before January 1, 2009:

1.1. Raw materials and supplies imported for power projects approved by the Government or the Prime Minister (determined to be raw materials and supplies used to manufacture equipment and machinery within the production line technology for complete assembly or used in conjunction with main equipment and machinery): Shall not be subject to value added tax as prescribed in Clause 4, Article 4 of Decree No. 158/2003/ND-CP dated December 10, 2003 of the Government detailing the implementation of the Law on Value Added Tax and the Law Amending and Supplementing Certain Provisions of the Law on Value Added Tax (hereinafter referred to as Decree No. 158/2003/ND-CP).

1.2. Raw materials and supplies imported for other power projects except those specified in Clause 1.1: Shall be subject to value added tax as prescribed in Decree No. 158/2003/ND-CP.

2. For raw materials and supplies imported for power projects from January 1, 2009 onwards: Shall be subject to value added tax as prescribed in the Law on Value Added Tax dated June 3, 2008 and guiding documents.

Article 4. Organization of Implementation

For imported goods exempted from import tax as prescribed in Point a, Clause 1.1, Point a, Clause 1.2, Article 2 and not subject to value added tax as prescribed in Clause 1.1, Article 3, if the importing unit has already paid taxes including penalties (if any) into the State budget according to the Decision on Tax Assessment (or recovery of tax), then tax refunds (including penalties if any) shall be implemented or deducted from the tax payable for the next tax payment according to the laws on tax administration.

Article 5. Effective Date

1. This Circular takes effect from September 30, 2011 and revokes Circular No. 12609/BTC-CST dated September 21, 2010 of the Ministry of Finance guiding import tax and value added tax for construction materials and equipment for power projects.

2. In case of difficulties during implementation, agencies and units are requested to report to the Ministry of Finance for timely research and guidance./.