Circular No. 26/2001/TT-BTM amending and supplementing certain points of Circular No. 22/2000/TT-BTM dated December 15, 2000 guiding the implementation of Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam regarding import and export activities and other commercial activities of foreign-invested enterprises.

CIRCULAR

Amending and supplementing some points of Circular No. 22/2000/TT-BTM dated December 15, 2000 guiding the implementation of Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam regarding import and export activities and other commercial activities of foreign-invested enterprises.

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Pursuant to Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

Pursuant to Decree No. 44/2001/NĐ-CP dated August 2, 2001 of the Government amending and supplementing some articles of Decree No. 57/1998/NĐ-CP dated July 31, 1998 detailing the implementation of the Law on Commerce regarding export, import, processing, and agency sales of goods with foreign countries;

Pursuant to Decision No. 46/2001/QĐ-TTg dated April 4, 2001 of the Prime Minister on managing import and export of goods during the period 2001-2005;

Implementing Directive No. 19/2001/CT-TTg dated August 28, 2001 of the Prime Minister organizing the implementation of Resolution No. 09/2001/NQ-CP dated August 28, 2001 of the Government on enhancing foreign direct investment attraction and improving its effectiveness in Vietnam;

After reaching consensus with the Ministry of Finance, the Ministry of Industry, the Ministry of Agriculture and Rural Development, the General Department of Customs, and the Ministry of Trade, the following specific amendments and supplements are made:

I - PART OF THE CONTENT BEING AMENDED AND SUPPLEMENTED:

1 - On Export and Import (Part II):

a - Clause 1.2 is amended as follows:

"1.2. Foreign-invested enterprises are permitted to purchase goods not produced by themselves for processing for export or for export, except for goods listed in the 'Catalogue of Goods Not Subject to Purchase by Foreign-Invested Enterprises for Export' attached to this amended and supplemented circular. The said catalogue may be adjusted according to the Government's regulations on export and import management for each period."

b - A new Clause 6 is added as follows:

"6 - Documents for exemption from import tax on raw materials:

6.1 - Common set of documents:

- Request for exemption from import tax on raw materials for production (specifying that the enterprise meets the criteria for tax exemption stipulated in Article 57 of Decree No. 24/2000/NĐ-CP dated July 31, 2000, accompanied by a list of imported raw materials for production requesting tax exemption (detailing the name of the item, HS classification code, quantity, value).

Production raw material usage quota:

+ For enterprises starting production, it is the quota registered in the Economic and Technical Justification.

+ For enterprises already in production, it is the actual raw material usage quota and includes a report on the quantity and value of imported raw materials implemented in the previous year.

- Confirmation letter from the Provincial Planning and Investment Department or the Industrial Zone Management Board specifying the start date of production (indicating the day, month, and year).

- Copy of the Investment License.

- Copy of the document issued by the authority authorized by the Ministry of Trade to approve the import plan of raw materials for the enterprise.

6.2 - In addition to the common set of documents specified in Point 6.1 above, for different types of criteria for tax exemption under Article 57 of Decree No. 24/2000/NĐ-CP, the following additional documents should be provided:

6.2.1 - Projects located in particularly difficult economic and social areas:

Confirmation letter from the authority issuing the Investment License regarding the capacity and type of products of each production facility of the enterprise in cases where the enterprise has multiple production facilities in different localities.

6.2.2 - Projects included in the Special Encouragement Investment Catalogue stipulated in Part I of Appendix I attached to Decree No. 24/2000/NĐ-CP:

6.2.2.1 - Projects exporting 80% or more:

- In case of confirmation for tax exemption for the import plan of raw materials for the next year or the first year of production:

+ Report on the export performance of the previous year of the enterprise and the export ratio (for enterprises already engaged in production and export).

- In case of confirmation for refund of import tax on raw materials for the period when the enterprise exported 80% or more:

+ Report on the export performance of the enterprise for the year requested for tax refund (within the time limit stipulated in Decree 24/2000/NĐ-CP): product, quantity, value, percentage of export value out of total production value (including exports, domestic consumption, and inventory). These figures only apply to products produced by the enterprise according to the Investment License, excluding goods purchased domestically for export.

+ Confirmation from the tax authority regarding the export report mentioned above.

6.2.2.2 - Projects processing agricultural products (excluding wood), seafood from domestic raw materials, exporting 50% or more of the products:

- Enterprise report proving that all raw materials used for production come from domestic sources, except for additives and auxiliary materials that can be imported. Value and percentage of domestic raw materials in the total value of input materials.

- Report on the previous year's export performance: product, value, export ratio out of total production value.

6.2.2.3 - Remaining special encouragement investment projects listed in Part I of Appendix 1 attached to Decree 24/2000/NĐ-CP:

- Confirmation letter from the relevant ministry stating that the project meets the special investment encouragement criteria stipulated in Part I of Appendix I attached to Decree 24/2000/NĐ-CP dated July 31, 2000.

2 - On Processing (Part IV)

Clause 1 is amended as follows:

"1. Processing with foreign countries.

Processing activities with foreign countries of foreign-invested enterprises shall be carried out in accordance with Circular No. 18/1998/TT-BTM dated August 28, 1998 of the Ministry of Trade guiding the implementation of Decree No. 57/1998/NĐ-CP dated July 31, 1998 detailing the implementation of the Law on Commerce regarding export, import, processing, and agency sales of goods with foreign countries, and Circular No. 20/2001/TT-BTM dated August 17, 2001 of the Ministry of Trade guiding the implementation of Decree No. 44/2001/NĐ-CP dated August 2, 2001 of the Government amending and supplementing some articles of Decree No. 57/1998/NĐ-CP dated July 31, 1998."

3 - On Liquidation of Machinery, Equipment, Transport Means, and Raw Materials (Part VIII)

a - Clause 2.2 is amended as follows:

"2.2- In the case of re-exporting machinery, equipment, transportation means, and materials belonging to foreign investors' assets:

The documents for re-exporting machinery, equipment, transportation means, and materials include:

- Decision on dissolution of the foreign-invested enterprise issued by the investment permit issuing authority;

- Decision on establishing the liquidation committee by the Board of Directors or Decision on establishing the liquidation committee by the investment permit issuing authority;

- Request letter from the liquidation committee accompanied by a list of machinery, equipment, and materials to be re-exported (specifying the import permit number, initial import value, remaining value) consistent with the foreign share in the liquidation plan;

- Liquidation plan approved by the Board of Directors or by the foreign investor (in the case of a wholly foreign-owned enterprise)."

b- Clause 3.1 shall be amended as follows:

"3.1- Liquidation of machinery, equipment, and transportation means for replacement and technological renewal:

A foreign-invested enterprise may liquidate machinery, equipment, and transportation means under one of the following circumstances:

- Expiration of depreciation period

- Damage

- To reduce costs due to lack of need for use

- To replace with newer machinery, equipment, and transportation means with more advanced technology.

Documents for liquidation include:

- Request letter (stating the reasons for liquidation) accompanied by a list of machinery, equipment, and transportation means to be liquidated (model, quantity, number of import declaration forms, import value, remaining value), copy of the import declaration form, copy of the import permission document;

- Depreciation schedule of machinery, equipment, and transportation means to be liquidated (in the case of liquidation at the end of the depreciation period).

- Inspection report of damaged machinery, equipment, and transportation means (in the case of liquidation for replacement due to damage).

- Approval document from the investment permit issuing authority (in the case of liquidation to reduce operating costs or for technological renewal)."

c- Add new Clause 7 as follows:

"7- Sale of liquidated machinery, equipment, and transportation means of export processing enterprises to domestic market:

7.1 - Export processing enterprises may sell liquidated machinery, equipment, and transportation means to the domestic market according to regulations applicable to foreign-invested enterprises.

7.2- Machinery, equipment, and transportation means sold to the domestic market must pay import duties and other financial obligations."

4- Adjust responsibilities of the Ministry of Trade and agencies authorized by the Ministry of Trade (Part X)

a- Clause 1.3 shall be amended as follows:

"1.3. The Ministry of Trade confirms exemption from import tax for raw materials for production projects exempted from import tax for the first five years of production as stipulated in Clause 5, 6 Article 57 and special encouraged investment projects as decided by the Prime Minister as stipulated in Clause 8 Article 57 Decree No. 24/2000/NĐ-CP."

b- Clause 2.1 shall be amended and supplemented as follows:

"2.1- Approve import plans and confirm exemption from import tax for raw materials and materials imported to implement BOT, BTO, BT projects; special crop seeds, livestock breeds, and pesticides allowed to be imported to implement agricultural, forestry, and fisheries projects as stipulated in Clause 2 Article 57 Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government."

II. EFFECTIVE DATE OF IMPLEMENTATION

1- This Circular takes effect 15 days from the date of signature.

2- Other contents of Circular No. 22/2000/TT-BTM dated December 15, 2000 of the Ministry of Trade remain valid.

LIST

GOODS NOT PURCHASED BY FOREIGN-INVESTED ENTERPRISES FOR EXPORT
(Annexed to Circular No. 26/2001/TT-BTM dated December 4, 2001)

I/ PROHIBITED EXPORT GOODS

1. Weapons, ammunition, explosives, military technical equipment.

2. Antiques.

3. Narcotics.

4. Toxic chemicals.

5. Round logs, sawn timber, peeled timber from natural forests in Vietnam: firewood, charcoal from wood or firewood; products and semi-finished products made from natural forest timber prohibited from export as stipulated in Decision No. 65/1998/QĐ-TTg dated March 24, 1998 of the Prime Minister and government documents adjusting this decision (Decision No. 136/1998/QĐ-TTg dated July 31, 1999; Directive No. 19/1999/CT-TTg dated July 16, 1999; document No. 743/CP-NN dated July 19, 1999; document No. 340/CP-NN dated April 7, 1999).

6. Wild animals and rare natural plants and animals as guided by the Ministry of Agriculture and Rural Development.

II/ OTHER GOODS

2. Peanuts

2. Forest animals.

3. Forest plants used as seeds.

4. Precious stones, precious metals, natural pearls.

Note:

In cases where foreign-invested enterprises are granted investment permits or business licenses to produce goods listed in Part II of this Catalogue, exports shall be carried out in accordance with the investment permit and related regulatory documents.