Circular No. 3778-TC/TCT on handling import and export taxes for goods produced in Vietnam that have been exported but must be re-imported.

LETTER

DEPARTMENT OF FINANCE DECISION NO. 3778 TC/TCT DATED OCTOBER 24, 1996 ON THE TAXATION OF EXPORT AND IMPORT GOODS PRODUCED IN VIETNAM BUT MUST BE REIMPORTED

Respectfully submitted to:

- Ministry of Trade.

- General Department of Customs.

The Ministry of Finance has received many letters from production and trading units engaged in import and export requesting exemption from export tax and import tax on consignments of goods they have exported but must be reimported back to Vietnam.

Based on Decree No. 54/CP dated August 28, 1993 of the Government detailing the implementation of the Law on Export Tax and Import Tax and the Law Amending and Supplementing Certain Provisions of the Law on Export Tax and Import Tax, and Circular No. 72A TC/TCT dated August 30, 1993 of the Ministry of Finance guiding the implementation of Decree No. 54/CP, Circular No. 53 TC/TCT dated July 13, 1995 of the Ministry of Finance guiding procedures for customs declaration and processing of refund of import tax on raw materials imported for export production;

To facilitate production and trading units engaged in import and export, the Ministry of Finance provides additional guidance on the handling of export and import taxes on goods that enterprises have exported and must subsequently be reimported back to Vietnam as follows: 1. Goods processed by enterprises for foreign customers, which were exported and then must be reimported back to Vietnam for repair and recycling before being re-exported to foreign customers shall not be subject to import tax when imported for repair and recycling. The documents for non-payment of import tax include:

- A letter requesting exemption from import tax on the consignment imported for repair and recycling, clearly stating the reasons why the foreign customer returned the goods; the quantity of goods imported for repair and recycling; and the amount of import tax requested to be exempted.

- The initial export declaration form.

- The re-import declaration form for repair and recycling, clearly indicating that this batch of goods was previously exported under which export declaration form.

- Notification from the foreign customer or agreement with the foreign customer regarding the return of goods for repair and recycling, specifying the quantity of goods returned.

- Contract for processing goods for foreign customers.

- Entrusted export and import contract (if the goods are entrusted for export and import).

The customs authority managing the settlement of the initial processing contract continues to monitor and manage the export goods and the import tax on raw materials according to Circular No. 72A TC/TCT dated August 30, 1993 of the Ministry of Finance and other guiding documents.

2. Goods produced by enterprises using domestic raw materials for export abroad but must be reimported shall not be subject to import tax upon reimportation and shall be eligible for a refund of export tax (or exemption from export tax) upon initial export (if applicable). The documents for non-payment of import tax and refund of export tax (exemption from export tax) include:

- A letter requesting exemption from import tax and refund of export tax (exemption from export tax) on the consignment reimported, clearly stating the reasons for the foreign customer's return of goods; the quantity of goods returned; the amount of tax requested to be exempted and refunded.

- Notification from the foreign customer or agreement with the foreign customer regarding the return of goods, specifying the reasons and quantity of goods returned.

- The initial export declaration form.

- The re-import declaration form clearly indicating that this batch of goods was previously exported under which export declaration form.

- Inspection report from the Vietnamese inspection agency upon reimportation.

- Receipt of payment for export tax or notification of payment from the customs authority (for cases where the tax has not yet been paid).

- Export contract.

- Entrusted export and import contract (if the goods are entrusted for export and import).

3. Goods produced by enterprises using imported raw materials or partially imported raw materials, which were exported abroad and must be reimported shall not be subject to import tax upon reimportation and shall be eligible for a refund of export tax (exemption from export tax) upon initial export (if applicable), but must pay import tax on the portion of raw materials imported for initial export production (this quantity of raw materials has already been processed for tax refund or exemption from import tax by the Ministry of Finance (General Department of Taxation) or the provincial city customs authority when exporting the goods initially).

The documents for non-payment of import tax and refund of export tax (exemption from export tax) include:

- A letter requesting exemption from import tax and refund of export tax (exemption from export tax) on the consignment reimported, clearly stating the reasons for the foreign customer's return of goods; the quantity of goods returned; the amount of tax requested to be exempted and refunded.

- Inspection report from the Vietnamese inspection agency upon reimportation. In case there are discrepancies between the customs clearance results of the customs authority and the inspection agency, the customs authority has the right to request a second inspection from another inspection agency. Based on the results of this inspection, the customs authority will make specific decisions.

- Agreement with the foreign customer or notification from the foreign customer regarding the return of goods, specifying the reasons and quantity of goods returned.

- Initial export declaration form.

- Re-import declaration form when importing returned goods, clearly indicating that this batch of goods was previously exported under which export declaration form.

Decision on tax refund or exemption from import tax on imported raw materials for initial export production issued by the Ministry of Finance (General Department of Taxation) or the customs authority.

- Receipt of payment for export tax or notification of payment from the customs authority (for cases where the tax has not yet been paid).

- Initial export contract.

- Entrusted export and import contract (if the goods are entrusted for export and import).

In cases where enterprises reimport goods for repair and recycling before reexporting them to foreign customers, upon reimportation, enterprises must register with the customs authority to open a separate tracking record. Enterprises must present the documents specified above to be exempted from import tax (when importing for repair and recycling) and to be eligible for a refund of export tax (exemption from export tax) upon initial export (if applicable).

Immediately after reexporting the recycled goods, the enterprise must present to the customs authority (where the exemption and refund were granted) the following documents:

- The Decision of the Customs Authority not to collect import tax (when re-importing) and to refund export tax (no tax collected) for the export (upon first export) of a consignment temporarily imported for repair and recycling.

- The export declaration (when re-exporting goods that have been repaired or recycled) must be confirmed with the actual export stamp of the customs checkpoint and clearly state which import declaration the goods were imported under for repair and recycling.

On this basis, the Customs Authority will process the settlement procedures for the consignment and recover import tax on the raw materials that the entity imported for production of the first export shipment (these raw materials were previously processed for tax refund or no import tax collected when exporting the first shipment by the Ministry of Finance (General Department of Taxation) or the Provincial Customs Bureau) corresponding to the quantity of goods not exported back to foreign customers.

Within thirty days from the date of registering the import declaration, entities must export the goods that have been recycled. In cases where repairs and recycling are not completed within the aforementioned period, the entity must commit to the Customs Authority regarding the export time but not exceeding the agreed return period between the entity and the foreign customer. If the entity does not make a commitment or fails to comply with it, the Customs Authority will proceed to recover import tax on the raw materials imported for production of the first export shipment according to the above provisions.

To be handled in accordance with the provisions set out in points 1, 2, and 3 above, entities must complete the import and re-export procedures at the Provincial Customs Bureau where they initially processed the export procedures and implement the registration bookkeeping with the customs authority, keeping samples of goods in accordance with the customs authority's regulations.

It is requested that the General Customs Department guide the Provincial Customs Bureaus to uniformly follow, manage, and handle import and export taxes for goods of enterprises that have been exported but must be re-imported into Vietnam as specified above.

During implementation, if there are any difficulties, the Provincial Customs Bureaus should report to the General Customs Department so that the General Customs Department can compile opinions and coordinate with the Ministry of Finance to resolve them promptly.