Circular No. 19/2006/TT-BTC guiding the classification of automobile spare parts and accessories items

CIRCULAR

Guidelines for classifying automobile spare parts and accessories

Pursuant to the Law on Export Tax, Import Tax No. 45/2005/QH11 dated June 14, 2005;

Pursuant to the Customs Law No. 29/2001/QH10 dated June 29, 2001, and the Law Amending and Supplementing Certain Provisions of the Customs Law No. 42/2005/QH11 dated June 14, 2005;

Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance.

The Ministry of Finance issues guidelines on implementing the classification of imported automobile spare parts and accessories to apply preferential import tax rates as prescribed in Decision No. 57/2005/QĐ-BTC dated August 10, 2005, as follows:

I. General Provisions:

1. The list and preferential import tax rates for automobile spare parts and accessories issued together with Decision No. 57/2005/QĐ-BTC shall be applied for classifying and taxing spare parts and accessories separately from complete knock-down (CKD) and incomplete knock-down (IKD) kits as prescribed in Decision No. 110/2003/QĐ-BTC dated July 25, 2003, of the Minister of Finance. In which, the preferential import tax rates are based on the principle:

- Spare parts and accessories that can be used interchangeably across different types of vehicles are subject to a unified preferential import tax rate without distinction according to vehicle type. For example: glass, mirrors, wiring harnesses...

- Remaining spare parts and accessories are subject to preferential import tax rates differentiated according to vehicle type (basically divided into four main types: passenger cars under 16 seats; passenger cars 16 seats and above; cargo vehicles with maximum gross weight not exceeding 5 tons and those over 5 tons).

2. The classification and application of preferential import tax rates for automobile spare parts and accessories according to these guidelines shall be uniformly applied to import activities for production and assembly; warranty repairs, commercial trade, and other forms.

II. List and Preferential Import Tax Rates for Various Types of Automobile Spare Parts and Accessories

The list and preferential import tax rates for various types of automobile spare parts and accessories are specified in List I and List II issued together with Decision No. 57/2005/QĐ-BTC dated August 10, 2005, of the Minister of Finance (hereinafter referred to as the List), specifically as follows:

1. List I: is established based on the List of Preferential Import Tariff. Within the four-digit commodity group, there are many sub-groups, but only some six-digit or eight-digit sub-groups detail specific automobile spare parts and accessories. To facilitate the search and classification of goods by customs declarants and customs authorities, all sub-groups within each commodity group are detailed fully.

Example: within commodity group 7007 (safety glass made of tempered glass or thin glass), only the eight-digit sub-group 7007.11.10 is suitable for use in automobiles. However, to facilitate searching and classification, the List still details all sub-groups within commodity group 7007.

2. List II: provides detailed information on certain automobile spare parts and accessories classified according to List I, but distinguishes tax rates applicable to spare parts and accessories according to vehicle type (passenger cars under 16 seats; passenger cars 16 seats and above; cargo vehicles with maximum gross weight not exceeding 5 tons and those over 5 tons). Accordingly, some types of spare parts and accessories belonging to certain sub-groups in List I are separated into List II to specify differentiated tax rates. Sub-groups to be separated into List II are marked with a symbol (*) next to the tax rate in List I.

Example 1: In List I, sub-group 8409.99.41 (throttle bodies and their parts) has a preferential import tax rate of 15%, but it is marked with (*), meaning that within this sub-group, there are certain types of spare parts that will be detailed in List II to specify a different tax rate from 15%. When classifying, one must refer to List II to determine the different tax rate for throttle bodies of which vehicle type, specifically:

- List II specifies "throttle bodies and their parts for cargo vehicles and passenger cars 16 seats and above" detailed in item 4.1 with a preferential import tax rate of 10%. Therefore, when "throttle bodies and their parts" are used for cargo vehicles and passenger cars 16 seats and above, the 10% tax rate applies according to List II, not the 15% rate according to List I. Accordingly, "throttle bodies and their parts" for passenger cars under 16 seats (not detailed in List II) have a 15% tax rate specified in sub-group 8409.99.41 of List I.exhaust gas recirculation systems and their components for goods transport vehicles and passenger vehicles with 16 seats or morespecified in Section 4.1 have a preferential import tariff rate of 10%. Therefore, in this case,exhaust gas recirculation systems and their componentsfor goods transport vehicles and passenger vehicles with 16 seats or more shall apply a tariff rate of 10% according to Schedule II, not applying the 15% tariff rate according to Schedule I. Accordingly,exhaust gas recirculation systems and their components: In List I, sub-group 8708.99.99 (other) has a preferential import tax rate of 30%, marked with (*), meaning that within this sub-group, there are certain types of spare parts that will be detailed in List II to specify a different tax rate from 30%, specifically:

Example 2- Item "Springs" detailed in item 20.1 of List II has a preferential import tax rate of 20%; parts and accessories (excluding springs) belonging to sub-group 8708.99.99 detailed in item 20.2 of List II have a preferential import tax rate of 5%. The remaining chassis without engines have a preferential import tax rate of 30% as specified in sub-group 8708.99.99 of List I.

For other goods that are parts and accessories of automobiles but are not detailed in the groups of List I and II mentioned above, they shall be classified and taxed according to the preferential import tariff list issued together with Decision No. 110/2003/QĐ-BTC dated July 25, 2003, of the Minister of Finance, decisions amending and supplementing Decision No. 110/2003/QĐ-BTC, and Circular No. 85/2003/TT-BTC dated August 29, 2003, guiding the implementation of the classification of goods according to the export and import goods list and the preferential import tariff list, export tariff list.

For other parts and accessories of automobiles that are not detailed in the groups of goods under Schedules I and II mentioned above, they shall be classified and subject to the preferential import tariff rates as prescribed in the Import Tariff Preferential Rate Table issued together with Decision No. 110/2003/QD-BTC dated July 25, 2003 of the Minister of Finance, Decisions amending and supplementing Decision No. 110/2003/QD-BTC, and Circular No. 85/2003/TT-BTC dated August 29, 2003 guiding the implementation of the classification of goods according to the Export and Import Goods List and the Import Tariff Preferential Rate Table, Export Tariff Rate Table.

ExampleThe item "fuel valves for passenger cars and buses" is not detailed in Schedule I and Schedule II, therefore it will be classified and subject to the preferential import tariff rate as prescribed in the Preferential Import Tariff List issued together with Decision No. 110/2003/QĐ-BTC. Accordingly, this item belongs to subheading 8481.20.11, with a preferential import tariff rate of 5%.

3. Some groups and subgroups including automobile spare parts and other items apply the import tariff rate prescribed in Decision No. 57/2005/QĐ-BTC if such subgroups do not separately prescribe a specific tariff rate for automobile spare parts.

Example 1Subheading 7009.10.00 "rear-view mirrors for motor vehicles," which prescribes a preferential import tariff rate of 30%, means that this tariff rate applies to rear-view mirrors of various types of motor vehicles such as: automobiles, motorcycles...

Example 2Subheading 8544.30.10 "ignition cables and other ignition cables for motor vehicles," which prescribes a preferential import tariff rate of 20%, means that this tariff rate applies to "ignition cables and other ignition cables" of various types of motor vehicles such as: automobiles, motorcycles...

4. Some groups in the Schedule include groups and subgroups containing automobile spare parts and other items, but only separate automobile spare parts to prescribe a specific tariff rate in Schedule II, while other items still apply the tariff rate prescribed in Schedule I.

ExampleSubheading 8519.99.30, audio equipment using compact discs, only those specifically detailed in Item 11, Schedule II at a tariff rate of 30%, while other types of audio equipment in this subheading apply a tariff rate of 50%, as prescribed in Schedule I.

III. Principles of Classification:

The classification of automobile spare parts is carried out according to the provisions of Circular No. 85/2003/TT-BTC dated August 29, 2003 guiding the classification of goods under the Export and Import Goods List and the Preferential Import Tariff List, Export Tariff List. Certain special cases are implemented according to the specific provisions below:

1. Classification of assembled and unassembled sets of automobile spare parts:

1.1. Assembled or unassembled sets of spare parts imported for the production and assembly of automobiles are classified and taxed according to each group/subgroup with the tariff rates specified for each component and spare part as prescribed in Decision No. 57/2005/QĐ-BTC and related documents.

1.2. Conditions for classification and taxation as prescribed in Point 1.1:

- Spare parts and components must be directly imported or entrusted for import by enterprises ensuring the Enterprise Standards for automobile production and assembly as stipulated by the Ministry of Industry.

- Individual components may be finished products but must have the basic characteristics of finished products suitable for assembly with minimal disassembly compared to the level of disassembly of automobile spare parts as prescribed in Decision No. 05/2005/QĐ-BKHCN dated May 11, 2005 of the Minister of Science and Technology.

For cases where specialized vehicles are produced and assembled based on chassis with engines (automobile chassis), the condition regarding the level of disassembly as prescribed in Decision No. 05/2005/QĐ-BKHCN does not need to be applied.

1.3. If enterprises producing and assembling automobiles import assembled or unassembled sets of spare parts for the production and assembly of automobiles with a lower level of disassembly than that prescribed in Decision No. 05/2005/QĐ-BKHCN, they must pay the import tax at the rate applicable to complete automobiles.

1.4. The classification of individual components is carried out strictly according to the level of disassembly when imported. If imported individually, classify according to each component; if imported in a set, classify according to the set without separating individual components within the set for classification and taxation.

2. Specific classification of some automobile spare parts:

a) Chassis with engine and chassis without engine:

- Chassis with engine is classified into Group 8706, depending on the type (truck chassis, passenger vehicle chassis, specialized vehicle chassis...) will be classified into different subgroups within Group 8706.

- Chassis without engine is classified into Group 8708, Subgroup 8708.99.99.

b) Frame with cab: is classified in the same group as the corresponding complete automobile in Groups 8702, 8703, 8704, not classified in Group 8706.

c) Transmission and other speed control mechanisms, clutches for automobiles: are classified into the corresponding subgroups within Group 8708, not classified in Group 8483.

d) Other parts and accessories... in Item 20, Schedule II: these parts and accessories do not include all remaining automobile spare parts not detailed or listed elsewhere in Schedule I and Schedule II, but only include parts and accessories belonging to Subgroup 8708.99.99, including:

- Springs are prescribed a preferential import tariff rate of 20%.

- Unassembled chassis are prescribed a preferential import tariff rate of 30% as stipulated in Schedule I.

- Remaining parts and accessories in Subgroup 8708.99.99 have a preferential import tariff rate of 5%.

3. Parts and accessories for cargo vehicles with a total loaded weight over 20 tons:

1.1. Spare parts and accessories belonging to Groups 4011; 4012; 4013; 4016; 6813; 7007; 7009; 8414; 8415; 8421; 8481; 8482; 8484; 8507; 8511, 8512; 8519; 8539; 8544; 8708.29.13; 8708.29.17; 8708.29.93; 8708.29.17; 9029; 9104; 9401; Cargo body in Subgroups 8708.29.93, 8708.29.97; Unassembled chassis in Subgroup 8708.99.99 apply the preferential import tariff rate as prescribed in Schedule I and Schedule II.

1.2. Remaining spare parts and accessories (excluding those detailed in Item 1.1) solely used for cargo vehicles with a total loaded weight over 20 tons apply a unified import tariff rate of 3%.

Example 1The cargo body of cargo vehicles with a total loaded weight over 20 tons is classified into Subgroups 8708.29.93; 8708.29.97 (belonging to the spare parts and accessories detailed in Item 1.1), therefore it will be classified and subject to the tariff rate of 20% prescribed for general cargo bodies.

Example 2The motor of cargo transport vehicles with a total loaded weight belonging to subheading 8407.34.29 (excluding parts and components listed in point 1.1) shall be subject to a preferential import tax rate of 3%.

4. Parts and accessories of passenger-cargo vehicles:

4.1. AND Parts and accessories of passenger-cargo vehicles are classified and subject to the preferential import tax rate applicable to parts and accessories of cargo transport vehicles with a total loaded weight not exceeding 5 tons.

ExampleThe internal combustion engine of passenger-cargo vehicles with a displacement over 1000cc, fully assembled, is classified under item 2.2, Schedule II, together with cargo transport vehicles, at an import tax rate of 20%.

4.2. For parts and accessories installed in the passenger compartment that are not included in cargo transport vehicles, they are classified along with corresponding parts and accessories of passenger vehicles under heading 8703.

5. Parts and accessories of specialized vehicles:

Parts and accessories of specialized vehicles (except for the body of specialized vehicles, dedicated equipment and parts), are classified and subject to the preferential import tax rate according to the parts and accessories of passenger vehicles and cargo transport vehicles corresponding to the base vehicle used to produce the specialized vehicle, specifically:

- If the specialized vehicle is produced from a cargo transport vehicle chassis, then the parts and accessories of the specialized vehicle are classified and subject to the preferential import tax rate prescribed for parts and components of cargo transport vehicles:

Example 1: A refrigerated vehicle produced and assembled from a cargo transport vehicle chassis with a total loaded weight not exceeding 5 tons, its parts and components are classified and subject to the preferential import tax rate of parts and accessories of cargo transport vehicles with a total loaded weight not exceeding 5 tons.

Dedicated parts of refrigerated vehicles: cooling equipment, thermal insulation panels... are classified into corresponding tariff codes in the Preferential Import Tariff. For example, cooling equipment is classified into subheading 8418.

- If the specialized vehicle is produced from a passenger vehicle chassis, then the parts and accessories of the specialized vehicle are classified and subject to the preferential import tax rate prescribed for parts and components of passenger vehicles:

Example 2An ambulance produced and assembled from a passenger vehicle chassis carrying up to 16 people (including the driver) has its parts and components classified and subject to the preferential import tax rate of parts and accessories of passenger vehicles carrying up to 16 people.

Dedicated parts of ambulances: stretchers, siren, first aid equipment... are classified into corresponding tariff codes in the Preferential Import Tariff. For example, stretchers are classified into subheading 9402.90.10, with a preferential import tax rate of 0%.

IV. Implementation Organization:

1. Attached to this Circular is a list of automobile parts and components based on the World Customs Organization's goods database for declarants and customs authorities to refer to.

2. During implementation, if common parts for different types of vehicles are found to be subject to two different tax rates, local customs offices shall immediately report to the Ministry of Finance (Department of Tax Policy, General Department of Customs) for timely handling.

This Circular takes effect 15 days after its publication in the Official Gazette. During implementation, if any issues arise, units, organizations, and individuals are requested to promptly report to the Ministry of Finance for resolution./.