Circular No. 50/A-TC-TCT provides temporary regulations on import tariff rates for parts and components imported for production and assembly of products not yet standardized in SKD, CKD, IKD forms.

CIRCULAR

Provisions for temporarily implementing import and export duties on parts and components imported for manufacturing and assembling products not yet regulated under the SKD, CKD, IKD assembly standards.

Pursuant to Decree No. 54/CP dated August 28, 1993 of the Government detailing the implementation of the Law on Export Duties and Import Duties and the Law Amending and Supplementing Certain Provisions of the Law on Export Duties and Import Duties;
Pursuant to Article 3 of Decision No. 280/TTg dated September 28, 1994 of the Prime Minister regarding the issuance of the Export Tax Schedule and the Import Tax Schedule;
Pursuant to the opinion of the Prime Minister in Circular No. 3144/KTTH dated June 24, 1997 of the Government on tax policies for certain materials for foreign-invested projects and tax policies encouraging domestic production of products;
Pending the issuance of import tax policies based on the level of domestic content for manufacturing and assembling products in the mechanical-electrical-electronic industry sector; After reaching consensus with relevant ministries and sectors, the Ministry of Finance has temporarily implemented regulations on import duty rates for importing parts and components to manufacture and assemble products not yet regulated under the SKD, CKD, IKD assembly standards as follows:

I- SCOPE AND CONDITIONS FOR APPLICATION

1- Scope of application:

This Circular applies to mechanical-electrical-electronic products that are parts and components imported by all Vietnamese enterprises and foreign-invested enterprises operating in the production and assembly of products and spare parts in the mechanical-electrical-electronic industry sector but not yet regulated under the SKD, CKD, IKD assembly standards.

2- CONDITIONS FOR APPLICATION:

To be eligible for temporary tax policies on imports of parts and components, enterprises must meet the following conditions:

- Having a production and assembly technology chain (meeting technical requirements and being consistent with investment and business licenses) verified and confirmed by the General Department of Standardization, Measurement, and Quality Control.

- Products produced and assembled must have a product quality registration certificate issued by the Standardization, Measurement, and Quality Control agency.

- Having a production and assembly plan for mechanical-electrical-electronic products registered with the Customs authority.

II- METHODS OF CALCULATING IMPORT DUTIES:

1- For enterprises meeting the conditions stipulated in Point 2, Part I of this Circular, if they import sets of parts and components to produce and assemble products and spare parts not yet regulated under the SKD, CKD, IKD assembly standards, they will be subject to import duties at the rates specified in the Import Tariff for each part and component imported.

Example: Company A imports a complete set of parts to produce and assemble washing machines including components such as motors, electrical parts, steel shells, drive belts, electronic control boards, wires, springs, screws, plastic parts...

The import duty on the washing machine parts set will be calculated separately for each component: motor, electrical parts, drive belt, spring... according to the import duty rate specified for each component (excluding the import duty rate for the entire washing machine).

- In cases where a part or component can be classified under two or more tariff codes with different duty rates, the determination of the tariff code and import duty rate shall be carried out according to the current provisions of the Tariff and the classification principles under the Harmonized System (HS) issued by the General Statistics Office.

2- In cases where applying the calculation method of import duties on individual parts and components as prescribed in this Circular results in a total import duty amount higher than the import duty on the set of parts if calculated based on the import duty rate of the finished product, then for parts and components with import duty rates higher than the import duty rate of the finished product, the import duty will be calculated based on the import duty rate of the finished product.

3- For items already subject to import duties under the current SKD, CKD, IKD standards (automobiles; motorcycles; refrigerators; internal combustion engines; electronic components), the import duties will still be applied according to the import duty rates for SKD, CKD, IKD sets as currently prescribed.

III- IMPLEMENTATION

1- Registration and Approval of Applications

Enterprises producing and assembling products and spare parts must submit to the Customs authority (where import procedures are handled) an application package for importing parts and components for production and assembly, including:

- Investment and production-business license (consistent with the products being manufactured and assembled using imported mechanical-electrical-electronic products to apply the import duty calculation based on parts and components).

- Confirmation letter from the General Department of Standardization, Measurement, and Quality Control regarding the production and assembly technology chain meeting technical requirements.

- Product quality registration certificate.

- Explanation of the production and assembly plan for the year; import plan and quota for each part and component imported for production and assembly of products and spare parts in the year and the name of the product being produced and assembled.

Based on the application package, the Customs authority will review and approve the enterprise's eligibility to implement import duties based on parts and components. At the same time, it will maintain records of part and component imports and settlement thereafter.

2- Monitoring and Settlement of Imported Goods:

a) Monitoring imported goods: When importing, enterprises must declare in full each part and component, the import price of each part and component, and maintain a record book to monitor imported goods according to the guidance of the Customs authority. The General Customs Department guides local Customs authorities to monitor imported goods to facilitate enterprises while preventing abuse of imports for production and assembly to evade import duties.

b) Settlement of imported goods: By March 1st of the following year, enterprises must compile and report to the Customs authority on the importation, production, and assembly situation of the previous year: quantity imported; quantity used for production and assembly; quantity of products produced and assembled; quantity carried over to the next year; quantity sold or not used for production and assembly of products and spare parts.

Based on the final settlement report of the enterprise, the Customs authority shall coordinate with the local Tax Bureau to conduct inspections and settle accounts for the enterprise. In all cases where regulations are not complied with, upon discovery during inspection, taxes on imported goods will be pursued at the ad valorem rate (or component parts rate as provided for in Point 2, Part II of this Circular) as stipulated in the Import Tariff and current regulations.

After thirty days from March 1 of the following year, if the enterprise has not submitted a final settlement report (without a valid explanation), the Customs authority will not allow the application of the component parts tax rate as prescribed in this Circular for subsequent consignments.

IV- EFFECTIVE DATE

This Circular takes effect from August 15, 1997.

For cases that have arisen before the effective date of this Circular, the Ministry of Finance will consider and resolve each specific case. During implementation, any difficulties should be promptly reported to the Ministry of Finance for consideration, resolution, and supplementary guidance as appropriate.