Decision No. 22/2022/QĐ-TTg guides the implementation of the Second Amended Protocol to the Protocol between the Government of the Socialist Republic of Vietnam and the Government of the Republic of Belarus on supporting the production of motorized transport vehicles in Vietnam.

Pursuant to …;

GUIDELINES FOR IMPLEMENTING THE AMENDED PROTOCOL (SECOND AMENDMENT) BETWEEN THE GOVERNMENT OF THE SOCIALIST REPUBLIC OF VIETNAM AND THE GOVERNMENT OF THE REPUBLIC OF BELARUS ON SUPPORT FOR THE PRODUCTION OF MOTOR VEHICLES WITH ENGINES IN VIETNAM

Pursuant to the Law on Organization of the Government dated June 19, 2015; the Law Amending and Supplementing Certain Provisions of the Law on Organization of the Government and the Law on Organization of Local Administration dated November 22, 2019;

Pursuant to the ASEAN Framework Agreement on Facilitation of Intra-Regional Land Transport signed on December 10, 2009;

Pursuant to the Protocol between the Government of the Socialist Republic of Vietnam and the Government of the Republic of Belarus on support for the production of motor vehicles with engines in Vietnam signed on March 23, 2016; the Amended Protocol (First Amendment) between the Government of the Socialist Republic of Vietnam and the Government of the Republic of Belarus on support for the production of motor vehicles with engines in Vietnam signed on June 27, 2017; and the Amended Protocol (Second Amendment) between the Government of the Socialist Republic of Vietnam and the Government of the Republic of Belarus on support for the production of motor vehicles with engines in Vietnam signed on December 3, 2020;

Based on Circular No. 459/BCT-AM dated August 12, 2022, Circular No. 557/BCT-AM dated September 20, 2022 of the Ministry of Industry and Trade, and Circular No. 764/BTC-HTQT dated July 8, 2022 of the Ministry of Finance;

At the proposal of the Minister of Industry and Trade;

The Prime Minister issues this Decision of the Prime Minister guiding the implementation of the Amended Protocol (Second Amendment) between the Government of the Socialist Republic of Vietnam and the Government of the Republic of Belarus on support for the production of motor vehicles with engines in Vietnam.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decision stipulates the procedures for allocating tariff quotas, the process and procedures for issuing import permits under tariff quotas, the rates of import duties within and outside tariff quotas, and the mechanism for coordination among state agencies to implement the import mechanism under tariff quotas for motor vehicles and spare parts and components within the framework of the Protocol.

Article 2. Applicability

1. Competent State Management Authority.

2. Joint ventures meeting the conditions prescribed in Article 4 of this Decision.

Article 3. Explanation of Terms

In this Decision, the following terms shall be understood as follows:

1. A joint venture is a legal entity established by one party being the Joint Stock Company "Minsk Automobile Plant" - the management company of "BELAUTOMAZ" (MAZ) of the Republic of Belarus, or a substitute or reorganized company of MAZ at the request of the Belarusian side, and the other party being a Vietnamese enterprise of interest operating in Vietnam in accordance with Vietnamese laws.

2. Motor vehicles with engines include certain types of trucks (N) and motor vehicles with engines designed to carry 10 or more passengers including the driver (M2, M3), as agreed upon by MAZ and the Vietnamese enterprise of interest.¹

3. Spare parts and components of motor vehicles are a set of spare parts and components imported into Vietnam by the joint venture and necessary for industrial assembly of motor vehicles, excluding those spare parts and components produced in Vietnam.

4. Localization rate means the domestic value-added calculated according to the following formula:

a) Cost of Vietnamese raw materials means the value of raw materials, spare parts, or goods of Vietnamese origin and meeting the applicable criteria for origin as stipulated in Chapter 4 (Origin Rules) of the Vietnam-EAEU FTA Agreement;

b) Direct labor costs include wages, bonuses, and other benefits of workers directly involved in production as provided for by Vietnamese law;

c) Direct common costs include, but are not limited to administrative and commercial expenses; costs of fixed assets related to production (rent, depreciation of buildings, taxes, mortgage interest); factory and equipment rental and interest payments; factory protection costs; insurance costs (factory, equipment, and raw materials used in production); public utility service usage costs (energy, electricity, water, and other public utility service costs related to production); research and development, design, and engineering costs; dyeing, molds, tools, depreciation, maintenance, and repair costs of factories and equipment; copyright or license fees (related to machines and technologies with copyrights used in production or production rights); material and product testing and inspection costs; factory warehouse costs; recyclable waste processing costs; and factors used in calculating the cost of raw materials, that is, port fees, customs clearance fees, and import duties payable on dutiable portions;

d) Profit means the net profit of the joint venture after deducting all taxes and fees as prescribed by Vietnamese law;

đ) Final consumer price means the price of goods on the sales invoice.

Article 4. Requirements for Joint Ventures

Joint ventures meeting the conditions include:

1. A legal entity established by one side being the Joint Stock Company "Minsk Automobile Plant" - the management company of "BELAUTOMAZ" (MAZ) of the Republic of Belarus, or a replacement or reorganized company of MAZ at the request of Belarus, and the other side being a Vietnamese enterprise with interest in Vietnam in accordance with Vietnamese law.

2. MAZ may establish a joint venture for producing trucks (N) and a joint venture for producing motor vehicles with a capacity of 10 people or more, including the driver (M2, M3) to produce motor vehicles on the territory of the Socialist Republic of Vietnam.

3. The portion of capital contributed by Vietnamese enterprises in the joint venture must reach at least 50% of the total registered capital of the joint venture.

4. The joint venture must be established and operate for a minimum period of 10 years and a maximum period of 30 years.

5. MAZ or a replacement or reorganized company of MAZ shall not transfer its capital in the joint ventures to any third party from a third country.

6. The rate of localization will gradually increase to 30% by 2022 and 45% by 2025 for trucks, and 35% by 2022 and 50% by 2025 for motor vehicles with a capacity of 10 people or more, including the driver.

7. Motor vehicles produced by the joint venture for use on the territory of the Socialist Republic of Vietnam must meet technical requirements, standards, and conformity assessment procedures as prescribed by Vietnamese law.

Chapter II

QUOTA DUTY LIMIT

Article 5. Quantity of Quota Duty

1. The total quantity of quota duty for all joint ventures until 2024 is as follows:

2. The Ministry of Industry and Trade allocates the annual quota duty for joint ventures based on the total quota quantity specified in Clause 1 of Article 5 of this Decision and the actual implementation of the production plan submitted by the joint venture to the Ministry of Industry and Trade.

3. If the quota quantity specified in Clause 1 of Article 5 of this Decision is not fully utilized in the corresponding year, the unused quota quantity can be carried over to the following year. The quota duty allocated for the following year may be reduced depending on the actual implementation of the localization rate set out in the planned implementation schedule of the joint venture and the utilization of the quota duty in the previous year according to the following formula:

Quota duty allocated for the following year = M*(1-A) + B-C (or D)

Where:

a) M is the quota duty for the joint venture as specified in Clause 1 of Article 5 of this Decision;

b) A is the percentage of the planned localization rate of the previous year that was not achieved;

c) B is the quota duty specified in Clause 1 of Article 5 of this Decision that was not fully utilized in the previous year and carried over to the following year;

d) C is 30% of M allocated for the following year if the joint venture only implements between 50 - 80% of the quota duty of the previous year (M of the preceding year) as specified in Clause 1 of Article 5 of this Decision;

đ) D is 50% of M allocated for the following year if the joint venture only implements less than 50% of the quota duty of the previous year (M of the preceding year) as specified in Clause 1 of Article 5 of this Decision.

4. In case there is an adjustment to the quota duty quantity specified in Clause 1 of Article 5 of this Decision, the Ministry of Industry and Trade shall notify the Belarus side before January 31 each year.

Article 6. Import Duties within and outside Quotas

1. The rate of import duty within the tariff quota shall be 0% if the following conditions are met:

a) The origin of motor vehicles and the origin of spare parts and components imported by (the) joint ventures for industrial assembly on the territory of Vietnam, if used to assemble complete motor vehicles on the territory of the Republic of Belarus, must be confirmed by a Certificate of Origin issued clearly indicating a value-added content of not less than 55%, calculated according to Chapter 4 (Origin Rules) of the Vietnam-EAEU FTA Agreement.

b) All motor vehicles and spare parts and components imported into Vietnam by (the) joint ventures must be new goods, unused.

c) Motor vehicles imported by (the) joint ventures must be produced/manufactured no more than two years prior to the year of arrival at Vietnamese ports or border gates.

2. For the rate of import duty outside the quota:

a) In cases where goods have a Certificate of Origin under the Vietnam-EAEU FTA Agreement (Certificate of Origin model EAV), the rate of import duty outside the tariff quota shall be the current import duty rate committed to in the Vietnam-EAEU FTA Agreement;

b) In cases where goods are not accompanied by a Certificate of Origin model EAV, the rate of import duty outside the tariff quota shall be determined according to relevant Vietnamese tax laws.

Chapter III

PROCEDURE FOR ISSUING IMPORT LICENSES UNDER QUOTAS

CUSTOMS DUTIES AND IMPORTS UNDER QUOTAS

Article 7. Procedures and formalities for issuing import licenses under tariff quotas

1. Joint ventures submit their annual production plans to the Ministry of Industry and Trade, which must include:

a) Types and quantities of vehicles expected to be produced;

b) Detailed list of components in spare parts and components;

c) Tariff codes corresponding to motor vehicles and spare parts and components expected to be imported at the 8-digit level according to the current Vietnamese Export and Import Goods List;

d) Progress towards achieving the localization ratio as committed to in Clause 6, Article 4 of this Decision;

đ) Expected implementation of technology transfer agreements and human resource training.

2. Within thirty days from receiving the production plan submitted by the joint venture, the Ministry of Industry and Trade will notify the approval result of the production plan. In case additional information about the production plan needs clarification or supplementation, the Ministry of Industry and Trade will notify the joint venture with specific requirements for supplementary information to be provided.

Within ten days from receiving the supplementary information for the production plan submitted by the joint venture, the Ministry of Industry and Trade will notify the approval or rejection result of the plan.

3. Based on the formula for calculating the amount of tariff quota to be granted in the following year as stipulated in Clause 3, Article 5 of this Decision, the Ministry of Industry and Trade issues an import license under the tariff quota annually for the joint venture based on the following documents:

a) A request for issuance of an import license under the tariff quota;

b) The joint venture's production plan approved by the Ministry of Industry and Trade, including tariff codes at the 8-digit level according to the Vietnamese Export and Import Goods List based on the Harmonized System of Goods Description and Coding of the World Customs Organization corresponding to motor vehicles and/or all spare parts and components of motor vehicles for the production of motor vehicles, excluding spare parts and components of motor vehicles produced on the territory of Vietnam.

4. Within fourteen days from receiving the documents mentioned in Clause 3 of this Article, the Ministry of Industry and Trade issues an import license under the tariff quota for the joint venture. The tariff quota is valid until December 31 each year.

Article 8. Import Procedures

Based on the quantity of tariff quota for import granted and the validity period of these quotas, when (the) joint ventures complete the submission of import documentation for each consignment to be cleared, the Vietnamese Customs Authority will deduct the quantity of complete vehicles and/or spare parts, components imported until the annual maximum quota granted is exhausted.

Article 9. Revocation of Import Permit under Tariff Quota

Joint ventures shall have their Import Permit under Tariff Quota revoked in the following cases:

1. The joint venture does not operate in accordance with Vietnamese law.

2. The joint venture fails to meet the localization rate requirement within ten years from the date the Protocol becomes effective as committed in Clause 6, Article 4 of this Decision.

3. MAZ or the replacement company or organization of MAZ transfers its shareholding in the joint venture to a third party from another country.

4. The joint venture fails to fulfill its obligations under agreements related to technology transfer.

5. The joint venture does not implement specific activities to contribute to the development of the Vietnamese auto parts manufacturing industry; develop a service maintenance and repair system for automobiles; train technical skills for local labor and support motorized transport, spare parts, and components produced by the joint venture to enter other countries' markets, including the Eurasian Economic Union.

Article 10. Change of Authorized Enterprise under the Protocol

The Ministry of Industry and Trade shall take the lead in reviewing and evaluating Belarus's proposal regarding the replacement enterprise for MAZ or a newly organized enterprise from MAZ based on criteria stipulated in the Protocol and confirm to Belarus that the new authorized enterprise meets the conditions within 28 days from receipt of the request and necessary documents.

Chapter IV

MECHANISM FOR COORDINATION OF MANAGEMENT BETWEEN GOVERNMENT AGENCIES

Article 11. Mechanism for Coordination in Issuing Import Permits under Tariff Quotas

1. The Ministry of Industry and Trade shall take the lead:

a) Issuing Import Permits under Tariff Quotas for joint ventures as provided for in Article 7 of this Decision;

b) Changing the Belarusian enterprise and notifying relevant ministries and agencies if it agrees with Belarus's proposal for such change.

c) Conducting annual inspections of production processes, assessing the implementation of tariff quotas, and the fulfillment of commitments on localization rates by each joint venture to adjust the quantity of tariff quotas for the following year.

2. The Ministry of Industry and Trade shall coordinate with relevant ministries to review and approve the production plans of joint ventures, including:

The Ministry of Finance shall review the compatibility of the list of motorized transport and spare parts, components proposed to enjoy tax exemption under tariff quotas in the production plan at the eight-digit level with the current Vietnamese export-import goods list.

3. Before January 31 each year, the Ministry of Industry and Trade shall notify the Ministry of Finance about the adjusted quantity of tariff quotas.

4. The Ministry of Industry and Trade shall notify the Ministry of Finance about the list of motorized transport and spare parts, components expected to be imported by each joint venture immediately after approving the joint venture's production plan.

5. The Ministry of Planning and Investment shall implement a mechanism to publish a list of domestically produced spare parts according to its functions and tasks, and update joint ventures on domestic production facilities capable of producing specific types of spare parts with particular specifications and technical standards. At the same time, the Ministry of Planning and Investment shall monitor the process of joint ventures directly negotiating with production facilities regarding orders for spare parts for automobiles assembled in Vietnam by the joint ventures.

Chapter V

INSPECTION AND REPORTING REGIME

Article 12. Inspection

1. The Ministry of Industry and Trade shall inspect the production process; assess the implementation of tariff quotas, the fulfillment of commitments on localization rates for each joint venture, and adjust the amount of duty-free tariff quota for the following year.

2. The Ministry of Finance shall inspect the clearance of imported consignments to ensure that motorized transport vehicles and/or spare parts and components are imported duty-free in accordance with the List of Motorized Transport Vehicles and Spare Parts and Components sent by the Ministry of Industry and Trade and within the import license issued by the Ministry of Industry and Trade under the tariff quota.

3. The Ministry of Transport shall inspect motorized transport vehicles and their spare parts and components produced by joint ventures for use on Vietnamese territory to ensure that these transport vehicles and spare parts and components meet technical standards and conformity assessment procedures prescribed in relevant Vietnamese laws.

Article 13. Reporting Obligations

1. Joint ventures are obligated to comply with Vietnamese law.

2. By January 15th each year, joint ventures must report to the Ministry of Industry and Trade on their business operations in the previous year, the implementation of tariff quotas, and the execution of plans regarding localization rates, including the following details:

a) The quantity of motorized transport vehicles and spare parts and components imported duty-free;

b) Types and quantities of vehicles produced;

c) Information necessary to calculate the localization rate (costs of Vietnamese raw materials, direct labor costs, direct general costs, profit, final consumer price);

d) The latest update of the annual financial report.

Chapter VI

IMPLEMENTING PROVISIONS

Article 14. Effective Date

This Decision takes effect from the date of issuance. Decisions No. 09/2017/QĐ-TTg dated March 31, 2017 of the Prime Minister guiding the implementation of the Protocol between the Government of the Socialist Republic of Vietnam and the Government of the Republic of Belarus on supporting the production of motorized transport vehicles on Vietnamese territory and Decision No. 2077/QĐ-TTg dated December 22, 2017 amending and supplementing certain provisions of Decision No. 09/2017/QĐ-TTg cease to be effective from the date this Decision takes effect.If the (joint) venture fails to produce motorized transport vehicles meeting the requirements of the localization rate as stipulated in Account 6 of Article 4 of this Decision within ten years from October 5, 2016, the (joint) venture will have its Investment Registration Certificate and Enterprise Registration Certificate revoked.

1. The Minister of Industry and Trade shall oversee and inspect the implementation of this Decision.

Article 15. Responsibility for Implementation

2. The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial and centrally-administered city People's Committees are responsible for implementing this Decision./.

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