Circular No. 28/2004/TT-BTC guides the reduction of import duties on goods of Lao origin.

CIRCULAR

Guidelines for Implementing Reductions in Import Duties on Goods Originating from Laos

Pursuant to the Agreement on Economic, Cultural, Scientific and Technological Cooperation between the Government of the Socialist Republic of Vietnam and the Government of the Lao People's Democratic Republic signed on January 16, 2004, the Ministry of Finance issues guidelines for implementing reductions in import duties on goods originating from Laos as follows:

A. SCOPE OF APPLICATION:

Goods produced in the Lao People's Democratic Republic imported into Vietnam by enterprises with legal entity status under various economic sectors of Vietnam shall be subject to an import duty rate equal to 50% of the preferential tariff rate specified in the Preferential Tariff Schedule (excluding goods prohibited from importation into Vietnam and goods listed in the complete exclusion list of Vietnam under CEPT/AFTA), provided that they meet the following conditions:

1. Possess a Certificate of Origin (C/O) issued by the competent authority of Laos. The specific provisions regarding the Certificate of Origin (C/O) shall be determined through mutual agreement between the Lao Ministry of Commerce and the Vietnamese Ministry of Commerce for goods imported from each country.

2. Goods must be imported into Vietnam via officially opened border gates between Vietnam and Laos based on a sales contract.

In cases where goods meet the conditions for applying an import duty rate equal to 50% of the preferential tariff rate and also qualify for special preferential rates under CEPT, the lower of the two rates shall apply.

B. SPECIFIC GUIDELINES:

I. The basis for calculating the import price to apply a duty rate equal to 50% of the preferential tariff rate for goods originating from Laos imported into Vietnam is the purchase price of imported goods based on the sales contract (referred to as the purchase price of imported goods) as follows:

1. Determining the purchase price of imported goods:

1.1 Basis for determination:

The purchase price of imported goods is determined based on a valid sales contract and related legal documents concerning the sale of goods. The purchase price includes freight charges (F) and insurance costs (I).

1.2 The purchase price of imported goods is determined according to the price stated in the sales contract, plus adjustments as follows:

1.2.1 Amounts to be added to the price stated in the sales contract to determine the purchase price of imported goods:

1.2.1.1 In cases where the price stated in the sales contract does not include freight charges (F) and insurance costs (I), these charges must be added to the price stated in the sales contract to determine the purchase price of imported goods. If there are no legal documents to determine the freight charges and insurance costs, the freight charge will be calculated at 15% of the price stated in the sales contract, and the insurance cost will be calculated at 0.3% of (the price stated in the sales contract + freight charges) to determine the purchase price of imported goods.

In cases where the importer transports the goods themselves, the importer must provide a detailed declaration of transportation costs. If the transportation costs relate to different types of goods, the importer must allocate the transportation costs based on the unit price of each type of goods, or according to their volume or weight, or according to their value within the consignment of imported goods.

1.2.1.2 In cases where the imported goods include warranty items under the sales contract (including goods sent later) but the price stated in the sales contract does not separately account for the warranty items, the purchase price of imported goods includes the value of the warranty items..                 

1.2.2 Amounts to be deducted from the price stated in the sales contract to determine the purchase price of imported goods:

1.2.2.1 In cases where the imported goods are paid for under deferred payment terms, the deferred interest can be deducted from the price stated in the sales contract to determine the purchase price of imported goods if the following conditions are met:

1.2.2.1.1 The deferred interest is stipulated in the sales contract;

1.2.2.1.2 The deferred interest relates only to the current consignment of imported goods being priced, not to other consignments.

1.2.2.2 In cases where the imported goods are sold at a discount, the discount amount can be deducted from the price stated in the sales contract to determine the purchase price of imported goods if the following conditions are met:,1.2.2.2.1 The discount agreement must be made before loading the goods onto the transport vehicle in Laos, documented in writing, and submitted together with the customs declaration for imported goods.

1.2.2.2.2 The discount applies only to the current consignment of imported goods being priced, not to other consignments.

1.2.2.3 In cases where the imported goods are insured and transported by enterprises operating in Vietnam, the VAT on insurance costs (I) and transportation costs (F) can be deducted from the price stated in the sales contract to determine the purchase price of imported goods.

2. The basis for calculating the import tax on goods is the purchase price of imported goods, provided that the following conditions are met:

Condition (1):

2.1The goods must be imported based on a sales contract.The sales contract must contain all essential elements of a contract as prescribed by the Trade Law.

Forms such as telegrams, telexes, faxes, emails, and other electronic information printed on paper are considered written forms. A quotation and acceptance of a quotation in written form are considered a sales contract if they contain all essential elements of a contract as prescribed by the Trade Law.

Forms of telegrams, telex, fax, email, and other forms of electronic information printed on paper are also considered written forms. An offer and acceptance of an offer made through written forms shall be deemed as a sales contract if they contain the essential elements of a contract as stipulated in the Commercial Law.

In the case where there are amendments or supplements to the terms of the signed goods purchase contract, such changes must be finalized before the goods are loaded onto transportation means in Laos and submitted together with the import declaration form.

2.2Article (2):The full value of the imported goods lot must be paid through a bank in a currency agreed upon by both parties.

If the full value of the imported goods lot has been paid through a bank prior to registering the import declaration form, the payment documentation for the goods lot must be submitted together with the declaration when importing the goods to prove to the customs authority that the buyer has fully paid the value of the imported goods lot through a bank.

If the payment is made after registering the import declaration form, the purchase contract must clearly state the payment deadline, and the buyer must commit to the customs authority that at the time of payment, additional payment documentation will be submitted to prove to the customs authority that the full value of the imported goods lot has been paid through a bank. The payment documentation must correspond to the payment deadline and method stated on the purchase contract. If the buyer fails to submit additional payment documentation within the committed period to prove full payment through a bank, the imported goods in this case shall be deemed not to meet condition (2) as stipulated in point 2.2 herein.   

2.3 Article (3):The importer must pay Value Added Tax (VAT) according to the deduction method. When processing the import procedures, the importer must submit (once) to the customs authority (where the import procedures are processed) a copy of the Application Registration for VAT Calculation Method Deduction which has been accepted by the tax authority where the importer registers for tax (a copy stamped as true copy by the importer).

3. In the case of imported goods belonging to The list of goods subject to state-managed pricing for taxation purposes, the taxable price is the minimum price specified in the Minimum Price Table. If the purchase price of the imported goods is higher than the price specified in the Minimum Price Table, it shall be calculated based on the purchase price of the imported goods.

4. In the case of imported goods not belonging to The list of goods subject to state-managed pricing for taxation purposes and not meeting the conditions to apply the purchase price of the imported goods as the taxable price as guided in point 2 above, the local Customs Department where the enterprise imports the goods will base on the methods to determine the taxable value of imported goods according to the principles of the Agreement implementing Article 7 of the General Agreement on Tariffs and Trade as stipulated in Decree No. 60/2002/NĐ-CP dated June 6, 2002 of the Government and guided in Circular No. 118/2003/TT-BTC dated December 8, 2003 of the Ministry of Finance to determine the taxable price of imported goods from Laos.

II. Currency and exchange rate for determining the taxable price:                     

1. The taxable price is calculated in Vietnamese Dong.

2. The exchange rate used to determine the taxable price for imported goods is the average transaction rate on the inter-bank foreign exchange market announced by the State Bank of Vietnam on the day the declarant registers the import declaration form. In cases where the Bank does not announce the exchange rate or information does not reach the border gate on the same day, the rate of the preceding day shall be applied.

For foreign currencies without transactions on the inter-bank foreign exchange market, they shall be determined according to the principle of cross-exchange rates between the US dollar (USD) and Vietnamese Dong (VND) actual average transaction rates on the inter-bank market and the exchange rate between the US dollar and other foreign currencies on the international market as announced by the State Bank of Vietnam.

III. Time for determining the taxable price and import tariff rate:

The time for determining the taxable price and import tariff rate for imported goods is the day the declarant registers the import declaration form.

IV. Procedures for presenting and inspecting the Certificate of Origin (C/O):

Enterprises importing goods from Laos wishing to apply a 50% import tariff rate must submit the original Certificate of Origin (C/O) along with the set of import documents as prescribed when processing the import procedures to the customs authority.

In the case where the enterprise does not have a C/O to submit when processing the import procedures, during the tax calculation, the customs authority temporarily applies the general tariff rate or the special preferential CEPT tariff rate (if eligible) and accepts deferred submission of the C/O, with a maximum period of 30 days from the date of submitting the import declaration form. After submitting the C/O, the enterprise will be considered for refund of any excess tax paid (if any) (the difference between the tax paid under the general tariff rate or the special preferential CEPT tariff rate and the tax calculated under the 50% import tariff rate as stipulated in the Preferential Import Tariff Schedule).

The enterprise importing goods bears legal responsibility for the legality and validity of the submitted C/O. If fraud regarding the C/O is discovered, the importing enterprise will be dealt with according to current laws.

When there is doubt about the authenticity and accuracy of the Certificate of Origin (C/O), the Customs authority requests the enterprise to provide documents to prove it. The maximum time limit for the enterprise to submit additional documents is 30 days from the date of submitting the C/O. While waiting for the re-examination results, temporarily do not apply the import tariff rate of 50% of the preferential import tariff rate for that consignment of goods, but apply the general tariff rate or the special preferential tariff rate CEPT (if eligible). At the same time, continue to process the release of goods if these goods are not prohibited or restricted imports and there is no suspicion of false declaration of goods. If the owner of the goods has sufficient documents to prove the authenticity and accuracy of the C/O, they will be considered for refund of overpaid tax (if any) (the difference between the tax paid at the general tariff rate or the special preferential tariff rate CEPT and the tax calculated at the import tariff rate of 50% of the preferential import tariff rate specified in the Preferential Import Tariff Schedule).

V. Other provisions on the basis for calculating taxes, registration and declaration of tax payment, tax collection and payment system, tax reporting system, tax exemption and reduction system, tax refund system, tax recovery system, handling of violations and complaints shall be implemented according to the current regulations of the Law on Export Duties and Import Duties; the Law Amending and Supplementing Certain Provisions of the Law on Export Duties and Import Duties and the current guiding documents.

C. IMPLEMENTATION ORGANIZATION:

This Circular takes effect 15 days after its publication in the Official Gazette and applies to import declarations registered with the Customs authority from January 16, 2004 onwards (the date when the Agreement on Economic, Cultural, Scientific and Technological Cooperation between the Government of the Socialist Republic of Vietnam and the Government of the Lao People's Democratic Republic in 2004 comes into force). Any provisions in previous legal documents that contradict the guidelines set out in this Circular are hereby abolished.

For imports of goods originating from Laos with import declarations registered with the Customs authority from January 16, 2004 onwards (applying the import tariff rate of 50% of the preferential import tariff rate and the taxable value applied according to the guidelines in this Circular), if taxes have been paid at the general tariff rate or the special preferential tariff rate CEPT (if eligible), then they are eligible for a refund of overpaid tax (if any). The amount of overpaid tax refunded is the difference between the tax paid by the enterprise and the import tax applied at the import tariff rate of 50% of the preferential import tariff rate and the taxable value applied according to the guidelines in this Circular. Enterprises should contact the local Customs Office where the goods were imported to process the tax refund. The tax refund application dossier includes:

A letter requesting a refund of overpaid tax

The import declaration form for goods that have been settled with Customs

The sales contract for goods and other valid and legal documents related to the purchase and sale of goods

Documents proving the authenticity and accuracy of the Certificate of Origin (C/O) according to the guidelines in this Circular.

During the implementation of this Circular, if there are difficulties or obstacles, organizations and individuals are advised to promptly report them to the Ministry of Finance for guidance.