Decree No. 125/2017/ND-CP amending and supplementing some articles of Decree No. 122/2016/NĐ-CP dated September 1, 2016 of the Government on the Export Tax Schedule, Preferential Import Tax Schedule, List of Goods and Amounts of Specific Duties, Compound Duties, and Import Duties outside Quota.

DECREE

Amending and supplementing certain articles of Decree No. 122/2016/NĐ-CP dated September 1, 2016 of the Government on Export Tariff, Import Tariff Preferential, List of Goods and Absolute Tax Rates, Mixed Tax Rates, and Import Tariffs outside Quota Tariffs,Mixed Rates, and Import Tariffs Outside Quota

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Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Law on Export Duties and Import Duties dated April 6, 2016;

Pursuant to Resolution No. 71/2006/QH11 dated November 29, 2006 of the National Assembly approving the Protocol on Accession to the Agreement Establishing the World Trade Organization of the Socialist Republic of Vietnam;The Government promulgates this Decree amending and supplementing certain articles of Decree No. 122/2016/NĐ-CP dated September 1, 2016 of the Government on Export Tariff, Import Tariff Preferential, List of Goods and Absolute Tax Rates, Mixed Tax Rates, and Import Tariffs outside Quota Tariffs.

At the proposal of the Minister of Finance;

Article 1. Amending and supplementing certain articles of Decree No. 122/2016/NĐ-CP dated September 1, 2016 of the Government on Export Tariff, Import Tariff Preferential, List of Goods and Absolute Tax Rates, Mixed Tax Rates, and Import Tariffs outside Quota Tariffs (hereinafter referred to as Decree No. 122/2016/NĐ-CP)

"Article 3. Issuing Export Tariff, Import Tariff Preferential according to the list of taxable goods, List of Goods and Absolute Tax Rates, Mixed Tax Rates, and Import Tariffs outside Quota Tariffs

1. Clause 3 shall be amended and supplemented as follows:

1. Appendix I - Export Tariff according to the list of taxable goods.

Announced together with this Decree:

3. Appendix III - List of Goods and Absolute Tax Rates, Mixed Tax Rates for passenger cars with up to 15 seats (including driver), used.

2. Appendix II - Preferential Import Tariff Schedule according to the List of Goods Subject to Tax.

4. Appendix IV - List of Goods and Import Tariff Rates outside Quota Tariffs for goods subject to Quota Tariffs."

2. Clause 1 of Article 4 shall be amended and supplemented as follows:

Article 4. Export Tariff according to the list of taxable goods

"1. The Export Tariff according to the list of taxable goods prescribed in Appendix I issued together with this Decree includes commodity code, description of goods, export tax rate specified for each group of goods, taxable export goods. For goods belonging to Group 211 in the Export Tariff when handling customs procedures, the declarant declares the name and commodity code of that good according to the 8-digit commodity code corresponding to the 8-digit commodity code of that good in the Import Tariff Preferential and records the export tax rate at 5%. Export goods belonging to Group 211 must meet both of the following conditions simultaneously:

a) Condition 1: Raw materials, intermediate products (collectively called goods) not belonging to Groups numbered from 01 to 210 in the Export Tariff;

b) Condition 2: The total value of natural resources, minerals plus energy costs accounts for 51% or more of the production cost. The determination of the total value of natural resources, minerals plus energy costs accounting for 51% or more of the production cost shall be carried out in accordance with the provisions of Decree No. 100/2016/NĐ-CP dated July 1, 2016 of the Government detailing and guiding the implementation of some articles of the Law amending and supplementing some articles of the Law on Value Added Tax, Special Consumption Tax Law, and Tax Administration Law and subsequent amendments and supplements (if any)."

3. Clause 2, Clause 3 of Article 5 shall be amended and supplemented as follows:

"2. Section II: Chapter 98 - Prescribing commodity codes and preferential import tariff rates separately for certain groups of goods, goods.

a) Explanation and conditions, procedures for applying separate preferential import tariff rates in Chapter 98.

- Explanation of the chapter: Goods named in Clause 1 Part I Section II Appendix II issued together with this Decree shall apply separate preferential import tariff rates in Chapter 98.

- Explanation of the group:

+ Classification of commodity codes and application of separate preferential import tariff rates for CKD automobiles, chassis with engine and cab (cab chassis) are implemented in accordance with the provisions of Clause 2.1 Part I Section II Appendix II.

+ Goods: Alloy steel containing Boron and/or Chromium and/or Titanium in Group 98.11; Leather filling material, Skin protection function support cream, scar reduction gel in Group 98.25; Nylon curtain fabric 1680/D/2 and 1890 D/2 in Group 98.26; Copper wire with cross-sectional area maximum 6 mm but not exceeding 8 mm in Group 98.30; Virgin Polypropylene pellets in Group 98.37; Hot-rolled non-uniformly coiled steel bars and coils in Group 98.39; Set-top boxes in Group 98.46; Net-shaped panels made from Nano-composite Polymeric Alloy (Neoweb) in Group 98.47 shall apply separate preferential import tariff rates in Chapter 98 if they meet the specific standards and technical parameters stipulated in Clauses 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.9 Part I Section II Appendix II.

- Method of classification, conditions, procedures for applying separate preferential import tariff rates recorded in Chapter 98, report on final verification of the use of goods applying separate preferential import tariff rates in Chapter 98: Implemented in accordance with the provisions of Clause 3 Part I Section II Appendix II.

b) List of groups of goods, goods and separate preferential import tariff rates including: Commodity code of the group of goods, goods in Chapter 98; description of goods (name of the group of goods, goods); corresponding commodity code of the group, goods at Section I Appendix II (97 chapters according to the list of Vietnam Import Tariff) and separate preferential import tariff rate applied in Chapter 98 shall be implemented in accordance with specific provisions in Part II Section II Appendix II;

c) Groups of goods, goods named and implementing separate preferential import tariff rates prescribed in Chapter 98 if meeting the conditions for applying special preferential import tariff rates under current regulations may choose to apply special preferential import tariff rates prescribed in Special Preferential Import Tariff Lists or separate preferential import tariff rates prescribed in Chapter 98 of the Preferential Import Tariff;

d) When handling customs procedures, the declarant must declare the commodity code according to the "Corresponding commodity code at Section I Appendix II" column in Chapter 98 and note the Chapter 98 commodity code next to it."

d) When processing customs procedures, the declarant must declare the commodity code according to the column "Commodity Code Corresponding to Section I of Appendix II" as specified in Chapter 98 and note the Chapter 98 commodity code beside it.

3. Section III: Provisions on preferential import tariff rates for certain goods implementing WTO commitments from January 1, 2019 onwards.

4. Article 6 is amended and supplemented as follows:

"Article 6. Preferential import tariff rates for mechanical processing machine tools

Mechanical processing machine tools belonging to groups 84.54 to 84.63 shall apply preferential import tariff rates as follows:

1. Mechanical processing machine tools that have not yet been produced domestically shall apply a preferential import tariff rate of 0%. The machines referred to in this point are those not included in the list of machinery and equipment already produced in Vietnam as specified by the Ministry of Planning and Investment.

2. Mechanical processing machine tools not falling under the case stipulated in Clause 1 of this Article shall apply preferential import tariff rates prescribed for groups 84.54 to 84.63 in the Import Tariff Table set out in Section I of Appendix II promulgated together with this Decree.

5. Article 7 is amended and supplemented as follows:

"Article 7. Import duties on second-hand passenger cars

1. Passenger cars with up to nine seats (including the driver) having a cylinder capacity not exceeding 1,000cc belonging to group 87.03 shall apply the absolute duty rate as prescribed in Appendix III promulgated together with this Decree.

2. Passenger cars with up to nine seats (including the driver) having a cylinder capacity exceeding 1,000cc belonging to group 87.03 and passenger cars with ten to fifteen seats (including the driver) belonging to group 87.02 shall apply the mixed duty rate as prescribed in Appendix III promulgated together with this Decree.

3. Passenger cars with sixteen seats or more (including the driver) belonging to group 87.02 and motor vehicles with engines used to carry goods with a total design weight not exceeding five tons belonging to group 87.04 (excluding refrigerated trucks, waste collection trucks equipped with a compactor, tanker trucks, armored trucks for carrying valuable goods, cement mixer trucks, and trucks for transporting sludge with detachable tanks) shall apply a preferential import tariff rate of 150%.

4. Other types of motor vehicles belonging to groups 87.02, 87.03, and 87.04 shall apply a tariff rate equal to 1.5 times the preferential import tariff rate of new motor vehicles of the same type belonging to the same group as prescribed in Section I of Appendix II promulgated together with this Decree.

6. Add Article 7a as follows:

"Article 7a. Preferential import tariff rates for automobile parts imported under the Tax Incentive Program

1. A preferential import tariff rate of 0% shall be applied to automobile parts imported under group 98.49 in Section II of Chapter 98 of Appendix II promulgated together with this Decree.

a) At the time of registering the customs declaration form, the enterprise (the declarant) must declare and pay taxes according to the general import tariff rate or the preferential import tariff rate or the special preferential import tariff rate as currently prescribed, without applying the preferential import tariff rate of 0% of group 98.49;

b) The application of the preferential import tariff rate of 0% of group 98.49 shall be implemented according to the provisions of point b, Clause 3 of this Article.

2. Objectives and conditions for applying the Tax Incentive Program:

a) Enterprises eligible for the Tax Incentive Program: enterprises meeting the criteria for automobile production and assembly as prescribed by the Government regarding production, assembly, importation, and warranty and maintenance services for automobiles;

b) Conditions for applying the Tax Incentive Program:

- Enterprises must commit to producing and assembling vehicles that meet emission standards level 4 (from 2018 to 2021) and level 5 (from 2022 onwards) and achieve the required production volume as stipulated in point b.12, Clause 3.2, Section I of Chapter 98 of Appendix II promulgated together with this Decree according to the following criteria for production volume and vehicle models:

+ The domestic production and assembly volume of passenger cars (referred to as the minimum overall production volume) prescribed for each specific phase as outlined in the tax incentive program schedule stipulated in point b.12, Clause 3.2, Section I of Chapter 98 of Appendix II promulgated together with this Decree for the following categories of vehicles:

Passenger cars with up to nine seats, with a cylinder capacity of up to 2,500cc belonging to group 87.03.

Minibuses with ten to nineteen seats (minibus) belonging to group 87.02. Buses/passenger vehicles with twenty seats or more (bus/coach) belonging to group 87.02.

Motor vehicles with engines used for cargo transportation and specialized vehicles with engines (trucks) belonging to groups 87.04 and 87.05.

+ The production volume of the committed model of passenger cars produced and assembled domestically (referred to as the minimum production volume for the committed model) prescribed for each specific phase as outlined in the tax incentive program schedule stipulated in point b.12, Clause 3.2, Section I of Chapter 98 of Appendix II promulgated together with this Decree according to the number of committed models as follows:

One model of passenger car with up to nine seats, with a cylinder capacity of up to 2,500cc, consuming less than 7.5 liters per 100 kilometers.

One model of minibus.

One model of bus/coach.

Two models of trucks.

- Automobile parts directly imported by enterprises specified in point a of this clause for production and assembly of automobiles or automobile parts entrusted or authorized to be imported by organizations or individuals commissioned by enterprises specified in point a of this clause and meeting the following conditions:

+ Imported automobile parts listed in group 98.49.

+ Types that have not yet been produced domestically.

+ Components (individual parts, assemblies, sub-assemblies) are finished products but not yet assembled or are not complete products but have the basic characteristics of complete products with a degree of disaggregation at least equal to the degree of disaggregation of imported automobile parts as defined by the Ministry of Science and Technology's method for determining the localization rate for automobiles and as stipulated in point b.5.2, Clause 3.2, Section I of Chapter 98 of Appendix II promulgated together with this Decree.

3. Documents and procedures for implementing the Tax Incentive Program

a) Documents and procedures for registering participation in the Tax Incentive Program.

- The file includes: A registration letter to participate in the Tax Incentive Program according to Form No. 05 (one original copy) as prescribed in Appendix II promulgated together with this Decree and a Certificate of Enterprise meeting the criteria for automobile manufacturing and assembly enterprises or an Investment Certificate or an economic and technical feasibility study of the factory (one certified copy) to prove that the production and assembly capacity of the factory is consistent with the minimum annual production volume of the Tax Incentive Program for automobile parts.

- Registration procedure: Enterprises submit the registration file to participate in the Tax Incentive Program at the customs office where the enterprise's main office is located or where the factory producing and assembling automobiles is located immediately after this Decree is signed into force or at any time during the period of the Tax Incentive Program. The date of participation in the Tax Incentive Program is calculated from the date of the registration letter.

b) File and procedures for applying the tariff rate of Group 98.49.

- The file includes:

+ A letter requesting the application of a 0% tariff rate for Group 98.49 specifying clearly the phase requested for the application of the 0% tariff rate; the quantity of imported automobile parts used for production and assembly during the phase requested for the application of the 0% tariff rate; the actual quantity of vehicles produced and assembled under the Tax Incentive Program; the actual quantity of prototype vehicles committed to be produced and assembled and the tax paid: one original copy;

+ A list of the use of imported automobile parts during the phase requested for the application of the 0% tariff rate according to Form No. 06 (one original copy) as prescribed in Appendix II promulgated together with this Decree and accounting documents showing the quantity of imported parts used for the production and assembly of vehicles under the Tax Incentive Program (one certified copy).

+ An export quality inspection certificate of the enterprise according to the form issued by the Vietnam Vehicle Inspection Center (the number of certified copies corresponding to the number of vehicles produced and assembled during the phase requested for the application of the 0% tariff rate); a certificate of vehicle safety and environmental protection quality produced and assembled (the number of certified copies corresponding to the number of vehicle models produced and assembled) and a technical design description of the vehicle with the confirmation stamp of the Vietnam Vehicle Inspection Center (the number of certified copies corresponding to the vehicle models produced and assembled).

+ A list of import customs declarations; a list of taxes paid according to each import customs declaration: one original copy.

- Procedures for applying the tariff rate of Group 98.49:

+ At the latest within 60 days from June 30 or December 31 of each year, the enterprise sends a letter to the customs authority requesting the application of a 0% tariff rate for Group 98.49 for imported automobile parts used for the production and assembly of the types of vehicles specified in the phased implementation plan of the Tax Incentive Program during the phase proposed by the enterprise. The phase proposed by the enterprise shall not exceed six months from January 1 to June 30 or July 1 to December 31 of each year.

+ In case the enterprise registers to participate in the Tax Incentive Program immediately after the Decree is signed into force, it must send a letter to the customs authority requesting the application of a 0% tariff rate for Group 98.49 for imported automobile parts used for the production and assembly of the types of vehicles from the date of the enterprise's registration to participate in the Tax Incentive Program until June 30, 2018, at the latest within 60 days from June 30, 2018.

+ The customs authority will base on the enterprise's application file to conduct an examination of the objects and conditions for applying the Tax Incentive Program as stipulated in Clause 7.2 including:

The minimum total production volume achieved in each specific phase as specified in the phased implementation plan of the Tax Incentive Program.

The minimum individual production volume of the committed prototype vehicles achieved in each specific phase as specified in the phased implementation plan of the Tax Incentive Program.

If the phase proposed by the enterprise for the application of the 0% tariff rate does not reach six months as specified in the phased implementation plan of the Tax Incentive Program, the enterprise still has to achieve the minimum total production volume and the minimum individual production volume of the committed prototype vehicles as specified for each specific phase in the phased implementation plan of the Tax Incentive Program as stipulated in Point b.12 Clause 3.2 Section I Chapter 98 of Appendix II promulgated together with this Decree.

The determination of the criteria for the minimum total production volume and the minimum individual production volume of the committed prototype vehicles is based on the number of export quality inspection certificates issued by the enterprise during the phase proposed for the application of the 0% tariff rate, which must follow the form issued by the Vietnam Vehicle Inspection Center. The determination of the committed prototype vehicles is based on the certificate of vehicle safety and environmental protection quality produced and assembled issued by the Vietnam Vehicle Inspection Center (to determine the engine displacement, type of engine, and engine power) and the technical design description of the vehicle with the confirmation stamp of the Vietnam Vehicle Inspection Center (to determine the body or cab type).

Imported automobile parts used for the production and assembly of vehicles must belong to the list of Group 98.49 as prescribed in Section II Chapter 98 of Appendix II promulgated together with this Decree and must be types that are not yet produced domestically. The determination of domestic non-production parts is based on the regulations of the Ministry of Planning and Investment.

Parts must meet the minimum level of separability as prescribed by the Ministry of Science and Technology and as stipulated in Point b.5.2 Clause 3.2 Section I Chapter 98 prescribed in Section II Appendix II promulgated together with this Decree.

The quantity of imported automobile parts used must correspond to the actual quantity of vehicles produced and assembled within the inspection period based on the list of usage, the number of export quality inspection certificates of the enterprise, and the certificate of vehicle safety and environmental protection quality produced and assembled.

+ Based on the results of the examination of the application file for the application of the 0% tariff rate, the customs authority will handle accordingly.

In the case where the enterprise meets all conditions to be eligible for the Tax Incentive Program and the enterprise (taxpayer) has paid more tax on imported automobile parts than the amount of tax payable at the tariff rate of group 98.49, the customs authority shall process the excess tax payment for the enterprise in accordance with the provisions of the Law on Tax Administration and guiding documents.

In the case where the enterprise does not meet the conditions to be eligible for the Tax Incentive Program, the agency shall issue a document informing the enterprise.

7. Article 8 shall be amended and supplemented as follows:

"Article 8. List of goods and import tariff rates applicable to quota-bound goods

1. The list of quota-bound goods includes certain items under groups 04.07; 17.01; 24.01; 25.01 as specified in Appendix IV attached hereto.

2. The annual quota volume for the importation of goods listed in Clause 1 of this Article shall be implemented according to the regulations of the Ministry of Industry and Trade. In cases where international treaties to which the Socialist Republic of Vietnam is a party (international treaties) specify the quota volume for the importation of such goods, implementation shall be carried out in accordance with the provisions of those international treaties.

3. The import tariff rate applicable to the quantity of goods imported within the quota volume:

a) Goods listed in Clause 1 of this Article, if imported within the annual quota volume as prescribed by the Ministry of Industry and Trade, shall apply the preferential import tariff rate specified in Section I of Appendix II attached hereto or apply the special preferential import tariff rate according to the Special Preferential Import Tariff Schedules (if they meet the conditions to enjoy the special preferential import tariff rate) issued together with Government Decrees on issuing Special Preferential Import Tariff Schedules to implement international treaties;

b) Where international treaties specify the import quota volume and the import tariff rate within the quota for the goods listed in Clause 1 of this Article, the import quota volume and the import tariff rate within the quota shall be applied according to the provisions of Government Decrees on issuing Special Preferential Import Tariff Schedules to implement those international treaties;

c) Where international treaties do not specify the import quota volume but only specify the special preferential import tariff rate, the condition for enjoying the special preferential import tariff rate is that the goods must be within the annual import quota volume as prescribed by the Ministry of Industry and Trade as mentioned in point a of this clause.

4. The import tariff rate applicable to the quantity of goods imported outside the quota volume:

a) Goods listed in Clause 1 of this Article, if imported outside the annual quota volume as prescribed by the Ministry of Industry and Trade, shall apply the non-quota import tariff rate specified in Appendix IV of this Decree;

b) Where international treaties specify the import quota volume and/or the non-quota import tariff rate for the goods listed in Clause 1 of this Article, implementation shall be carried out according to the provisions of Government Decrees on issuing Special Preferential Import Tariff Schedules to implement those international treaties. If the non-quota tariff rate under the international treaty is higher than the non-quota import tariff rate specified in Appendix IV attached hereto, the non-quota import tariff rate specified in Appendix IV shall be applied.

Article 2. Effective Date

1. This Decree takes effect from January 1, 2018.

2. Repeal Clause 2 of Article 4 of Decree No. 122/2016/NĐ-CP and the Appendices issued together with Decree No. 122/2016/NĐ-CP.

3. The preferential import tariff rate for imported automobile parts belonging to group 98.49 as stipulated in Article 7a of this Decree shall be applied from the date of issuance of this Decree until December 31, 2022.

Article 3. Implementation Organization

Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial People's Committees directly under the Central Government shall be responsible for implementing this Decree.