Circular No. 3932/TC-HTQT regarding preferential tariffs under the CEPT/AFTA for automotive parts imported in CKD form from multiple sources and shipments.

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 45/2005/TT-BTC ON JUNE 6, 2005 GUIDING THE IMPLEMENTATION OF DECREES NO. 78/2003/NĐ-CP ON JULY 1, 2003, NO. 151/2004/NĐ-CP ON AUGUST 5, 2004, NO. 213/2004/NĐ-CP ON DECEMBER 24, 2004, AND NO. 13/2005/NĐ-CP ON FEBRUARY 3, 2005 OF THE GOVERNMENT ON THE ISSUE OF THE LIST OF GOODS AND TAX RATES OF VIETNAM TO IMPLEMENT THE AGREEMENT ON THE COMMON ENHANCED PREFERENCE SCHEME FOR TRADE (CEPT) OF THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN)

Pursuant to the Protocol on the Accession of the Socialist Republic of Vietnam to the Agreement on the Common Effective Preferential Tariff Scheme for Trade (CEPT) to implement the ASEAN Free Trade Area (AFTA) (hereinafter referred to as the CEPT/AFTA Agreement), signed in Bangkok on December 15, 1995;
To implement Decree No. 78/2003/NĐ-CP dated July 1, 2003, Decree No. 151/2004/NĐ-CP dated August 5, 2004, Decree No. 213/2004/NĐ-CP dated December 24, 2004, and Decree No. 13/2005/NĐ-CP dated February 3, 2005 of the Government on the issuance of the List of Goods and Tax Rates of Vietnam to implement the CEPT/AFTA Agreement;
The Ministry of Finance hereby provides guidance as follows:

I. SCOPE AND CONDITIONS FOR APPLICATION

1. Goods imported to be subject to the special preferential tariff rate under the Common Effective Preferential Tariff Scheme (CEPT) (hereinafter referred to as the CEPT rate), as stipulated in Article 1 of Decree No. 78/2003/NĐ-CP dated July 1, 2003, Decree No. 151/2004/NĐ-CP dated August 5, 2004, Decree No. 213/2004/NĐ-CP dated December 24, 2004, and Decree No. 13/2005/NĐ-CP dated February 3, 2005 of the Government, must meet the following conditions:

1.1. Included in the List of Goods and Tax Rates of Vietnam to implement the CEPT/AFTA Agreement issued together with Decree No. 78/2003/NĐ-CP dated July 1, 2003, Decree No. 151/2004/NĐ-CP dated August 5, 2004, Decree No. 213/2004/NĐ-CP dated December 24, 2004, and Decree No. 13/2005/NĐ-CP dated February 3, 2005 of the Government.

1.2. Imported from member countries of ASEAN into Vietnam, including the following countries:

- Brunei Darussalam;

- Kingdom of Cambodia;

- Republic of Indonesia;

- Lao People's Democratic Republic;

- Malaysia;

- Union of Myanmar;

- Republic of the Philippines;

- Republic of Singapore; and

- Kingdom of Thailand;

1.3. Meet the requirements of ASEAN origin, confirmed by the ASEAN Certificate of Origin Model D (referred to as C/O Model D), as specified in Part III of this Circular.

1.4. Directly transported from the exporting country which is a member of ASEAN to Vietnam, as provided for in Decision No. 1420/2004/QĐ-BTM dated October 4, 2004 of the Minister of Trade.

2. Goods of export processing enterprises established in Vietnam (hereinafter referred to as export processing enterprises) sold into the domestic market or processed for domestic enterprises when imported shall be subject to the CEPT rate if they satisfy the conditions set forth in Points 1.1 and 1.3 of Part I of this Circular.

II. IMPORT DUTY RATES APPLIED

1. The import tariff rate applicable to goods imported under the CEPT rate as prescribed in Part I of this Circular is the CEPT rate for each year, corresponding to the CEPT rate column of that year, as specified in the List of Goods and Tax Rates of Vietnam to implement the CEPT/AFTA Agreement, issued together with Decree No. 78/2003/NĐ-CP dated July 1, 2003, Decree No. 151/2004/NĐ-CP dated August 5, 2004, Decree No. 213/2004/NĐ-CP dated December 24, 2004, and Decree No. 13/2005/NĐ-CP dated February 3, 2005 of the Government.

2. For goods listed in the List of Goods and Tax Rates issued together with Decree No. 78/2003/NĐ-CP dated July 1, 2003, Decree No. 151/2004/NĐ-CP dated August 5, 2004, Decree No. 213/2004/NĐ-CP dated December 24, 2004, and Decree No. 13/2005/NĐ-CP dated February 3, 2005 of the Government, which only specify the implementation schedule of the CEPT rate until 2006, the CEPT rate applied for subsequent years will be the CEPT rate of 2006 as stipulated in the aforementioned Decrees, unless otherwise specified by the Government.

3. In cases where the most-favored-nation (MFN) import tariff rate of a product specified in the current preferential import tariff list is adjusted to a lower level than the CEPT rate, the import tariff rate applicable to such product will be the MFN rate.

If the MFN rate stipulated in the Preferential Import Tariff Schedule of such commodity is adjusted to a higher level than the CEPT rate, the applicable import duty rate will be the CEPT rate.

4. In cases where goods imported by enterprises for production and assembly of mechanical, electrical, and electronic products meet both the conditions for applying the CEPT rate and the conditions for applying the import tariff rate based on the local content ratio according to current regulations, enterprises may choose one of the two options: implementing the tax policy based on the local content ratio or the CEPT rate, specifically as follows:

If the enterprise chooses to apply the import tariff rate based on the local content ratio, when importing detailed or assembled parts, the enterprise must apply a uniform import tariff rate based on the local content ratio for the entire list of imported parts or assemblies, even though some items in the list meet the conditions for applying the CEPT rate.

If the enterprise chooses to apply the CEPT rate, those detailed or assembled parts meeting the conditions for applying the CEPT rate will be subject to the CEPT rate; other parts and assemblies will be subject to the MFN rate or the general tariff rate.

5. Parts and components of complete knock-down (CKD) automobile kits imported from multiple sources (countries of origin) and multiple shipments can be subject to the CEPT rate according to the rate specified for CKD automobile kits, provided that separate commercial invoices are presented for the parts and components requesting application of the CEPT rate, in addition to the conditions set forth in Part I of this Circular.

Parts and components of CKD automobile kits imported from multiple sources and multiple shipments that do not meet the conditions set forth in Part I of this Circular will be subject to the MFN rate or the general tariff rate of CKD automobile kits.

Application of the CEPT rate is implemented when handling the import procedures for specific consignments. The customs clearance procedures for import duties are carried out according to the current regulations.

6. The CEPT rate applicable to goods processed by export processing enterprises for domestic enterprises is the CEPT rate of the processed goods as specified in the List of Goods and Tax Rates of Vietnam to implement the CEPT/AFTA Agreement issued together with Decree No. 78/2003/NĐ-CP dated July 1, 2003, Decree No. 151/2004/NĐ-CP dated August 5, 2004, Decree No. 213/2004/NĐ-CP dated December 24, 2004, and Decree No. 13/2005/NĐ-CP dated February 3, 2005 of the Government.

7. In cases where changes occur to items listed in the legal documents of ASEAN countries issued to implement the CEPT/AFTA Agreement, affecting Vietnam's right to apply the CEPT tariff rate as stipulated in Part I, the Ministry of Finance will provide guidance appropriate to each specific case.

III. CERTIFICATE OF ORIGIN (CO) AND INSPECTION OF THE CERTIFICATE OF ORIGIN

1. The rules for goods to be recognized as having ASEAN origin are set forth in the ASEAN Certificate of Origin Regulation of Vietnam - Form D issued together with Decision No. 1420/2004/QĐ-BTM dated October 4, 2004, and Decision No. 151/2005/QĐ-BTM dated January 27, 2005, of the Minister of Trade.

2. The Certificate of Origin must bear a signature and stamp consistent with the official model signature and stamp issued by the competent authorities responsible for issuing CO Form D in the following ASEAN member countries:

- In Brunei Darussalam, it is the Ministry of Industry and Resources;

- In the Kingdom of Cambodia, the Ministry of Commerce;

- In the Republic of Indonesia, it is the Ministry of Trade and Industry;

- In the Lao People's Democratic Republic, the Ministry of Trade;

- In Malaysia, the Ministry of International Trade and Industry;

- In Myanmar, the Ministry of Commerce;

- In the Philippines, the Department of Finance;

- In Singapore, the Customs Authority; and

- In Thailand, the Ministry of Commerce.

3. For Form D Certificates of Origin for goods produced by export processing enterprises sold on the domestic market or processed by export processing enterprises for domestic enterprises, they must bear signatures and seals consistent with the official signature and seal models issued by regional Import-Export Management Departments or Industrial Zones and Export Processing Zones Management Boards authorized by the Ministry of Trade.

4. Specifically, for Form D Certificates of Origin for imported goods included in the List of Goods issued together with Decree No. 213/2004/NĐ-CP dated December 24, 2004, of the Government (excluding goods processed by export processing enterprises for domestic enterprises), which are declared in import customs declarations registered with customs authorities from January 1, 2004, until this Circular takes effect, their validity period may be extended but not exceeding two (02) years from the date of registration of the customs declaration.

The deadline for presenting Form D Certificates of Origin to customs authorities shall be implemented according to the provisions of Decision No. 1420/2004/QĐ-BTM dated October 4, 2004, and Decision No. 151/2005/QĐ-BTM dated January 27, 2005, of the Minister of Trade.

5. In cases of doubt regarding the authenticity and accuracy of Form D C/O, the Customs Authority has the right:

- To request a re-inspection of Form D C/O: The Customs Authority will send a request to the competent authority issuing the certificate of origin in the exporting country to request confirmation.

- To suspend the application of the CEPT rate and temporarily collect taxes at the preferential or ordinary tariff rates currently in force.

- To request the importer to provide additional documents (if available) to prove that the goods indeed have ASEAN origin within the latest period of one (01) year.

- During the waiting period for the re-inspection results, the procedures for releasing the goods according to the general import regulations shall continue.

- When sufficient documentation proves that the goods have ASEAN origin, the Customs Authority is responsible for conducting procedures to refund to the importer the difference between the provisional duty collected under the current preferential or ordinary import tariff and the duty calculated at the CEPT tariff rate.

The procedures and requirements for requesting a re-examination shall be carried out in accordance with the ASEAN Certificate of Origin Regulation of Vietnam - Form D issued together with Decision No. 1420/2004/QĐ-BTM dated October 4, 2004, and Decision No. 151/2005/QĐ-BTM dated January 27, 2005, of the Minister of Trade.

IV. OTHER PROVISIONS

1. Enterprises importing goods included in the List of Goods issued together with Decree No. 213/2004/NĐ-CP dated December 24, 2004, which are declared in import customs declarations registered with customs authorities from January 1, 2004, until this Circular takes effect, may submit supplementary Form D Certificates of Origin and related documents in accordance with current laws as the basis for recalculating the import duties payable. If the enterprise meets the conditions specified in Part I of this Circular, it shall be refunded the difference between the import duties already paid and the import duties calculated at the CEPT tariff rate. In cases where the enterprise has not yet paid the import duties as notified by the customs authority and there is a late payment penalty, the import duties and late payment penalties shall be recalculated based on the CEPT tariff rate specified above.

Enterprises submitting supplementary Form D C/O and related documents to complete the procedures for recalculating the import tax payable must not be later than December 31, 2005.

2. Provisions regarding tax calculation bases, tax collection and payment systems, tax exemptions and reductions, tax refunds, tax recovery, violation handling, and other provisions shall be implemented in accordance with the provisions of the Law on Export Duties and Import Duties and current guiding documents.

V. IMPLEMENTATION

This Circular shall take effect fifteen days after its publication in the Official Gazette, replacing Circular No. 64/2003/TT-BTC dated July 1, 2003, Circular No. 9493/TC-HTQT dated September 12, 2003, Circular No. 736/TC-HTQT dated January 19, 2004, Circular No. 3932/TC-HTQT dated April 15, 2004, and Circular No. 5127/TC-HTQT dated May 14, 2004, of the Ministry of Finance.

During implementation, if there are difficulties or obstacles, please report them promptly so that the Ministry of Finance can provide supplementary guidance as appropriate.