Decision No. 205/1998/QD-TTg promulgates the Regulations on Tax-Free Sales Stores

Pursuant to …;

Issuing the Regulations on Tax-Free Shops

PRIME MINISTER

Pursuant to the Government Organization Law dated September 30, 1992;

In order to strengthen the management of tax-free shops' activities,

DECISION:

Article 1. The Regulations on Tax-Free Shops are hereby issued together with this Decision.

Article 2. This Decision replaces Decision No. 195/TTg dated April 8, 1996 of the Government Chairman, and shall take effect 15 days from the date of signature; all previous regulations contrary to this Decision are abolished.

The Minister of Trade, the Minister of Planning and Investment, the Minister of Finance, and the General Director of the General Department of Customs are responsible for guiding and supervising the implementation of the Regulations issued together with this Decision.

Article 3. Ministers, Heads of ministerial-level agencies, Heads of government agencies, Chairmen of provincial People's Committees under central cities are responsible for enforcing this Decision./.

REGULATIONS ON TAX-FREE SHOPS

(Issued together with Decision No. 205/1998/QĐ-TTg
dated October 19, 1998 of the Government Chairman)

Article 1. General Provisions

1. A tax-free shop (hereinafter referred to as the tax-free shop) is a shop selling goods to outbound and inbound passengers and other specified subjects as provided for in these Regulations.

2. Goods imported for sale at tax-free shops are exempt from import duties, special consumption taxes, and value-added taxes.

If goods imported for sale at tax-free shops are permitted by the Ministry of Trade to be sold in the domestic market, they must be subject to taxation according to applicable regulations.

3. The business operations of tax-free shops are subject to inspection and supervision by the Vietnam Customs, the Ministry of Trade, and the Ministry of Finance.

4. Foreign currencies used in transactions at tax-free shops are freely convertible foreign currencies announced by the State Bank of Vietnam.

5. Priority is given to domestic enterprises participating in tax-free shop operations.

Article 2. Conditions for operating tax-free shops

Enterprises wishing to open tax-free shops must register their business and can only operate when they have obtained a Business Operation Certificate issued by the Ministry of Trade.

The establishment and operation of tax-free shops with foreign investment capital shall be carried out in accordance with the provisions of the Law on Foreign Investment in Vietnam.

Article 3. Certification of eligibility for tax-free shop business operations

1. Conditions for enterprises to be eligible for issuance of a Business Operation Certificate for tax-free shop business operations include:

a) An enterprise established under Vietnamese law with its main office located in provinces or centrally-administered cities with international border gates (airports, seaports, railways, roads).

b) Having sufficient capital and material facilities including a system of shops and warehouses meeting standards and convenient for sales and customs inspections and controls.

c) Having a staff qualified to manage and sell tax-free goods.

2. If an organization or individual meets the conditions stipulated in Clause 1 of this Article and wishes to open a tax-free shop, they shall submit an application and relevant documents to the Ministry of Trade; if it is a tax-free shop with foreign investment capital, they shall submit to the Ministry of Planning and Investment to apply for a Business Operation Certificate for tax-free shop business operations.

Documents: Include:

Application for issuance of a Business Operation Certificate for tax-free shop business operations;

Certified copy of the Decision establishing the enterprise;

Certified copy of the Business Operation Certificate of the enterprise.

Approval document for the location of the tax-free shop;

Cooperation and joint venture project proposal with foreign parties (if any).

3. The Ministry of Trade, the Ministry of Planning and Investment (for tax-free shops with foreign investment capital) shall be responsible for examining and issuing the Business Operation Certificate for tax-free shop business operations in accordance with these Regulations.

Article 4. Location of tax-free shops

1. Isolation zones at departure terminals of international airports, international seaports, and international land and rail border gates to serve outbound and transit passengers (including crew members and service personnel on outbound transportation vehicles).

2. On international flights of Vietnamese airlines and airlines established under Vietnamese law, tax-free goods may be sold to serve passengers and flight crews on board.

3. Opening tax-free shops to serve inbound passengers (including flight crews and attendants on international flights) at some international airports; opening downtown tax-free shops to serve those waiting for departure; and opening tax-free shops to serve diplomatic subjects as stipulated in Decree No. 73/CP dated July 30, 1994 of the Government, as decided by the Prime Minister upon the proposal of provincial and centrally-administered city People's Committees and relevant ministries and sectors.

4. The specific locations of tax-free shops mentioned in Clause 3 of this Article must be approved by provincial and centrally-administered city People's Committees or the competent ministries and sectors; the locations of dedicated warehouses for tax-free goods must be approved by local customs authorities and must be directly supervised by customs.

5. Tax-free shops at international airports and seaports may set up counters to sell goods to passengers waiting for departure and crew members on anchored ships. The General Department of Customs will coordinate with the Ministry of Trade and the Ministry of Finance to provide detailed guidance on this activity.

Article 5. Goods sold at tax-free shops

1. Goods traded at tax-free shops include imported goods for sale at tax-free shops, domestically produced goods, and legally imported goods.

2. Tax-free shops are encouraged to sell domestically produced goods. These items and legally circulating imported goods in the Vietnamese market, if sold at tax-free shops, must be considered export goods and must comply with current export commodity policies.

3. Tax-free shops sell goods to subjects entitled to diplomatic privileges and immunities, which can import goods to meet the needs of such subjects. For private cars and motorcycles, they can only be imported according to orders placed by subjects permitted to import tax-free goods under Decree No. 73/CP dated July 30, 1994 of the Government. Sales and management of goods at this shop shall be carried out in accordance with government regulations.

4. All goods sold at tax-free shops must be labeled with "Vietnam duty not paid" stickers issued by the Ministry of Finance or issued by enterprises authorized by the Ministry of Finance.

5. Imported goods for sale at the Duty-Free Shop, if they fall under the category of conditional import goods licensed by the Ministry of Trade.

Article 6. Re-exporting, selling goods in the domestic market, handling unsold goods

Goods that have been permitted to be imported for sale at the Duty-Free Shop and remain in inventory for a long time without being sold must be processed (written off, transferred to domestic consumption, re-exported) with confirmation from Customs for each specific item and quantity.

For goods to be re-exported or taken out of the management area of the Duty-Free Shop to be sold in the domestic market, permission from the Ministry of Trade is required and all tax obligations must be fulfilled according to the regulations.

Broken, damaged, severely deteriorated goods that cannot be sold for consumption purposes must be documented with Customs confirmation by the enterprise to be written off under Customs supervision.

Article 7. Subjects and conditions for selling goods at the Duty-Free Shop

a) Selling to outbound, inbound, and transit passengers as stipulated in this Regulation, when the passenger presents a passport that has been granted permission to enter and exit.

b) Selling directly on international flights operated by Vietnam Airlines or other airlines established under Vietnamese law.

c) Diplomatic personnel entitled to diplomatic privileges and exemptions must present a purchase book along with their passport or identification card issued by the Ministry of Foreign Affairs if purchasing for personal use; a purchase book along with a diplomatic note or letter of introduction from their agency if purchasing for official use.

d) Foreign nationals, overseas Vietnamese, and Vietnamese citizens awaiting departure must present a valid passport and a ticket with a registered departure date to register for purchases. The goods will be received at the departure port after the passenger has completed departure procedures.

Article 8. Quantity limits for duty-free purchases

a) Diplomatic personnel entitled to diplomatic privileges and exemptions may purchase goods within the quantities specified by the Vietnamese Government.

b) Inbound passengers may purchase goods within the quantity limits set for tax-free luggage allowances for inbound passengers.

c) Outbound passengers using a valid passport may purchase without quantity or value restrictions but must bear responsibility for import procedures and quantities upon entry into the destination country.

d) Duty-free goods intended for the daily needs of crew members may be sold based on orders from the ship's captain or representative. These goods must be sealed or kept in original packaging and subject to Customs supervision until the ship departs the port.

3. Passengers departing with a travel permit may make purchases as if they were departing with a valid passport.

Article 9. Management of the Duty-Free Shop's operations

Ministry of Trade

Guidance and acceptance of business registration documents for duty-free goods.

Issuing or refusing issuance of the Certificate of Eligibility for Duty-Free Goods Business within thirty days from receipt of complete and valid documents.

Permitting the importation of goods falling under conditional imports and the re-export of goods from the Duty-Free Shop.

Permitting the transfer of duty-free goods already imported by the Duty-Free Shop for domestic consumption.

Ministry of Planning and Investment

Deciding on the establishment of Duty-Free Shops with foreign investment capital.

the Ministry of Finance

Guiding financial and accounting practices for Duty-Free Shops.

Periodic or spot checks on settlement and clearance procedures for Duty-Free Shops.

Guiding the payment, collection, and exemption of taxes according to tax laws for Duty-Free Shops.

Guiding tax incentives for domestically produced goods sold at Duty-Free Shops.

General Customs Department

Guiding procedures for importing and re-exporting goods from Duty-Free Shops, transferring goods from Duty-Free Shops for sale in the domestic market.

Confirming necessary goods for processing, liquidating inventory, supervising the disposal and destruction of goods from Duty-Free Shops.

Implementing duties, calculating and collecting taxes on imported goods for sale at Duty-Free Shops that are permitted to be sold in the domestic market.

Article 10. Sales at the Duty-Free Shop

The Duty-Free Shop must sell goods to the correct subjects, within the registered categories and items, and comply with the duty-free sales regulations stipulated in this Regulation.

Article 11. Responsibilities of enterprises operating duty-free goods

Enterprises operating duty-free goods must bear full legal responsibility for the goods and quality of imported goods sold at the Duty-Free Shop.

Article 12. Reporting on the operation of Duty-Free Shops

Every six months and annually, enterprises operating Duty-Free Shops must report their duty-free sales activities to the Ministry of Trade, Ministry of Finance, General Department of Customs, and the Ministry of Planning and Investment if the shop has foreign investment capital.

Article 13. Handling Violations

Violations of duty-free sales as stipulated in this Regulation may result in temporary suspension of operations, revocation of the Certificate of Eligibility for Duty-Free Goods Business, administrative penalties, or criminal prosecution depending on the severity, as provided by law.

Article 14. The Minister of Trade, the Minister of Planning and Investment, the Minister of Finance, and the Director-General of the General Department of Customs are responsible for guiding the implementation of this Regulation./.