Circular No. 51/TC-TCT guides the determination of taxable items according to the Export Tariff Schedule and Import Tariff Schedule.

CIRCULAR

Guidelines for determining taxable items according to the Export Tariff Schedule and Import Tariff Schedule

Based on the authority stipulated in Article 3 of Decision No. 280/TTg dated May 28, 1994 of the Government Prime Minister;
To ensure accurate and full collection for the State Budget, creating favorable conditions for taxpayers and tax collection agencies, and avoiding inconvenience for taxpayers in implementing the current Export Tariff Schedule and Import Tariff Schedule (issued together with Decision No. 280/TTg dated May 28, 1994 of the Government Prime Minister and subsequent Decisions amending and supplementing from November 1994 to date by the Minister of Finance);
After reaching consensus through exchanges with the General Department of Customs, the General Statistics总局，商务部，科技部和环境部，河内海关局，海防市海关局；财政部指导确定现行出口税则和进口税则所列应税商品的一些基本原则如下：

I. PRINCIPLES OF CONSTRUCTION AND STRUCTURE OF THE EXPORT TAX SCHEDULE AND IMPORT TAX SCHEDULE

1. The list of taxable items in the current Export Tax Schedule and Import Tax Schedule is primarily based on the Harmonized System of Goods Classification for Export and Import of the World Customs Organization (WCO), while making some specific adjustments to suit Vietnam's export and import activities. Goods in the current Export Tax Schedule and Import Tax Schedule are divided into 21 parts, 97 chapters (excluding Chapter 77, which is reserved for future use). Each chapter of the Tax Schedule is further divided into commodity groups (four-digit level), each commodity group may be subdivided into subgroups (six-digit level), and each subgroup may be further divided into individual items (eight-digit level). Depending on the characteristics, nature, and structure of each chapter, group, subgroup, and item, a chapter may be divided into one or more groups, a group may not be subdivided or may be divided into multiple subgroups, and a subgroup may not be subdivided or may be divided into different items.

For ease of tariff lookup and customs procedures for exported and imported goods, all commodity groups, subgroups, and items are generally coded according to their serial number within the chapter, group, and subgroup. Specifically:

a- Each commodity group within a chapter is identified by four digits. For example, the live cattle and buffalo group is coded as 0102, where the first two digits (01) represent the chapter code (Chapter 1), and the last two digits (02) indicate the position of the group within the chapter (the second group of the chapter). b- Each subgroup within a group is identified by six digits. For example, the subgroup "Handmade paper and cardboard" is coded as 480210, where the first two digits (48) represent the chapter code (Chapter 48 - Paper and paper products), the next two different digits (02) indicate the position of the group within the chapter (the second group of the chapter), and the following two digits (10) indicate the position of the subgroup within the group (the first subgroup of the group). There are two classification methods and codes for subgroups, referred to as Level 1 subgroups and Level 2 subgroups. Specifically:

+ Level 1 subgroups are indicated by (-) and the last digit of the subgroup is 0 (for example: subgroup 480490, 480260, 847110, etc.).

+ Level 2 subgroups are indicated by (--), and the last digit of the subgroup is 1; 2; 3; 4; 5; 6; 7; 8; 9 (for example: 291111, 151119, 650691, etc.)

c- Some commodity groups that are not subdivided into multiple subgroups will have two additional zeros appended at the end (for example: Group 4905: Maps and charts, becomes 490500, Group 6108: Various types of short petticoats, becomes 610800, etc.).

d- Some subgroups in the Tax Schedule are further divided into multiple items. Each item within a subgroup is identified by eight digits. For example, the item "Various types of diesel fuel" is coded as 27100020, where the first six digits (271000) represent the subgroup of various types of petroleum products under Chapter 27, Group 10, and the last two digits (20) indicate the position of the diesel fuel item within the subgroup 271000 (the second position).

e- However, there are also cases where subgroups are further divided into multiple items without assigning codes to them (The vast majority of items in Chapters 84, 85, and 87 of the Tax Schedule are structured this way). For example, Subgroup 848310: Drive shafts (including camshaft and crankshaft) and connecting rods; are divided into many types used for different engines such as: Types used for engines in Group 8701; types used for engines in Group 8702, etc., but no codes are assigned to these specific drive shaft types.

2) According to the arrangement of the list and codes of commodity groups, subgroups, and items mentioned above, the current Export and Import Tax Schedule is divided into three columns, including:

- The first column is the code column for commodity groups, subgroups, and items.

- The second column is the description column for commodity groups, subgroups, and items.

- The third column specifies the export tax rate and import tax rate for commodity groups (If the group does not further divide into subgroups and adds two zeros to the end of the group as described in case a point 1 above); or for subgroups (If the subgroup does not further divide into items as described in case b); or for items (if the subgroup further divides into items as described in case d). Therefore, when looking up the code and tax rate of a specific item, it is necessary to see how detailed the commodity group containing this item is divided: group, Level 1 subgroup, Level 2 subgroup, or item to accurately determine the tax rate of this item in the Tax Schedule.

* In the Export Tariff: Groups, subgroups, and items listed in the Export Tariff where the tariff column indicates an export tax rate of 1% or more shall be subject to export tax. For example, within group 121100: various types of trees and parts of trees..., only the specific item agarwood with code 12119010 is subject to export tax, while all other items in this group are not subject to export tax.

* In the Import Tariff: Unlike the Export Tariff, all groups, subgroups, and items in the Import Tariff are included in the list of import taxable items, regardless of whether they have been specifically named in the Import Tariff. If not specifically named, such items will be classified under the most appropriate subgroup or group.

II. PRINCIPLES FOR CLASSIFYING GOODS IN THE EXPORT TARIFF AND IMPORT TARIFF

To ensure convenience for searching the Export Tariff and Import Tariff, accurately determining that an item is located at one code, one subgroup, one group; in one chapter without being able to be classified under another code, group, subgroup, or chapter in the Tariff, the classification of goods in the Tariff follows the following principles (in descending order of priority).

1- If an item or type of goods has been clearly named or described with its characteristics, structure, degree of processing, and function in a particular chapter, group, or subgroup of the Tariff, it must be classified under that chapter, group, or subgroup. For example: Fire-resistant bricks Cr-Mg, currently classified in Chapter 81, Group 8113, Subgroup 811300, Code 81130010 in the Import Tariff, will be classified under this code for calculating import duties.

2- If an item has been classified in a chapter, group, or subgroup, then the following forms also belong to that chapter, group, or subgroup:

+ Unfinished or incomplete forms but having the basic characteristics of finished products.

+ Finished products or those having the basic characteristics of finished products but not assembled or not assembled together.

3- If a material or substance is classified in a group, then mixtures or compounds of that material or substance with other materials or substances also belong to that group. Goods made entirely from one type of material or substance are classified in the same group. The classification of goods made from two or more types of materials or substances, or goods classified as complete sets, follows principles 4 and 5.

- When applying principle 3 or for any other reason, if goods appear to be classifiable under two or more groups, they will be classified in the following order:

4- Goods should be classified in the group with the most specific description rather than the general description. For example: An entity imports roofing oil paper made from two basic raw materials: paper and asphalt (one layer of paper, one layer of asphalt). Based on the general description of the item called paper, the item would be classified in Chapter 48. However, the characteristic feature of roofing oil paper is not the paper layer but the asphalt layer which is the basic characteristic of the item. Therefore, it should be classified under the code of the group made from asphalt (Group 6807).

However, when two or more groups each relate only to a part of the material or substance contained in the mixed or compound goods, or relate only to a part of a retail packaging set, they will be classified in the group containing the main material or substance in the goods.

Example:

+ Case 1: When two or more groups each relate only to a part of the material or substance contained in the mixed or compound goods.

Complex film made from three raw materials: paper, aluminum, and plastic in the following proportions: paper 15%, aluminum 58%, plastic 27%. Based on the composition of each raw material, this item could be classified into three different groups in three different chapters of the Tariff, namely:

+ If based on the characteristic of the product made from paper, it could be classified in Chapter 48: Paper and paper products; Group 4810: Coated paper...

+ If based on the characteristic of the product made from aluminum, it could be classified in Chapter 76: Aluminum and aluminum products, Group 7607: Thin aluminum sheets, pressed or bonded to paper, cardboard, plastic...

+ If based on the characteristic of the product made from plastic, it could be classified in Chapter 39, Group 3921.

Since an item can only be classified under one code in the Tariff, according to this principle, the complex film should be classified under the code of the main raw material, which is aluminum sheets (Code 7607: Thin aluminum sheets pressed or bonded to paper, cardboard, plastic...) for calculating import duties.

+ Case 2: When two or more groups each relate only to a part in a retail packaging set.

Entity A imports neon lights including light bulbs, ballasts, switches, light fixtures, resistors, cannot be classified separately under individual codes (such as light bulbs in Group 8539, ballasts in Group 8504, switches in Group 8536, light fixtures in Group 9405), but must be classified under the code of the complete neon light at Code 9405.

5- In cases where two or more groups each relate to a machine in a set of machines in Chapters 84, 85 of the Tariff or spare parts accompanying the main equipment suitable for economic and technical arguments and design of construction projects but are components in other chapters of the Tariff, Circular 06 TC/TCT dated January 19, 1993 and Circular Letter No. 602 TC/TCT dated September 25, 1995 of the Ministry of Finance shall be referred to for resolving the calculation and collection of export duties and import duties on goods that are complete sets or individual components.

Example: A unit imports a system of industrial sewing machines equipment including combing machines, yarn winding machines, and cutting tables. All these machines will be classified under code number 8452, subheading 845221 (if there are sufficient documents and comply with the provisions of Circular No. 06 TC/TCT dated January 19, 1993, and Circular No. 602 TC/TCT dated September 25, 1995 issued by the Ministry of Finance).

6- Goods that are mixtures or compounds of different materials made up of various parts or goods packed for retail sale, if they cannot be classified according to rules 4 and 5 above, shall be classified in the heading with the material or part which gives them their essential character.

Example: A unit imports envelopes produced from two types of raw materials, paper and plastic (two layers of paper and one layer of plastic), where the paper is more than the plastic and the paper layer forms the essential character of the envelope while the plastic layer only serves to prevent moisture, then it must be classified under Chapter 48: Paper and articles of paper, heading 4819... bags and other paper envelopes for calculating import duties.

7- When goods cannot be classified according to rules 4, 5, and 6 above, they shall be classified in the last heading among those headings which are most like each other in numerical order.

Example:

A unit imports ice cream powder, according to the appraisal this powder consists of milk, sugar, cereal flour or may contain some other substances, then it will not be classified under Chapter 4: Milk and milk products or Chapter 17: Sugar and products containing sugar or Chapter 19: Products of cereals, flour, starch or malt and products of their milling, but must be classified under Chapter 21: Other prepared or preserved foodstuffs; edible products of vegetable origin.

8- Goods that cannot be classified according to the above rules shall be classified in the heading corresponding to the kind of goods most similar to them.

Example: The public telephone card item (card recording prepaid phone credit) is made from plastic material, has a structure, characteristics, and operational nature similar to magnetic tape or disk. Therefore, according to this principle, the public telephone card item will be classified under heading 8523: Unrecorded magnetic tapes, disks, etc. (if unrecorded) or heading 8524: Recorded magnetic tapes, disks, etc. (if recorded) for calculating import duties. In case basing on the raw material used to produce the telephone card being plastic to calculate import duties would not be appropriate because although the telephone card is produced from plastic material, this product is not a product of the plastics industry, the nature of the product has characteristics like an electronic device.

9- The following provisions shall apply separately to the following types of goods:

Box for cameras, box for audio equipment, gun cases, box for drawing tools, necklace boxes, similar boxes, already shaped or manufactured specifically to hold certain products or parts of products, used for a long time, accompanying the product when sold will be classified together with that product. But packaging (packing) that is purely for wrapping products, not used together with the product (discarded after using the product). For example, fertilizer bags imported together with fertilizer will not be separated to calculate import duties, but imported separately will be taxed according to the code number and import duty rate of the bag or sack used to wrap goods.

However, this principle does not apply to purely specialized boxes, for example: Schoolbags, book bags, chests, suitcases, jewelry pouches... That is, these types of boxes are not distinguished whether they are packaged together with goods when sold or not, they are taxed according to the correct code number and tax rate of them.

To ensure legal validity, the classification of goods in the groups and subgroups of the current Import-Export Tariff not only follows the general principles mentioned above but also the classification of goods for export duties and import duties must be determined according to the content of each group, subgroup, and item, and the explanations of each group, subgroup, and item related to the above principles with detailed changes in the name of items recorded in the Tariff appropriately, under the condition that only groups, subgroups, and items at the same level can be compared. According to this principle, the explanations of each part, the explanations of each chapter recorded in the Catalogue of Import-Export Commodities issued along with Decision No. 324 TCKT/TMGC dated December 26, 1995, and the explanations of groups and subgroups about the Catalogue of Import-Export Commodities of the International Customs Cooperation Council revised in 1996 will be used as references to look up the Export Tariff, Import Tariff when the item is not clearly named in the Export Tariff, Import Tariff (the Ministry of Finance will issue a separate document guiding the use of explanations of groups and subgroups of the Export Tariff, Import Tariff).

III- DOCUMENTS FOR PROCEDURES TO CALCULATE AND COLLECT EXPORT AND IMPORT DUTIES AND METHODS TO LOOK UP THE EXPORT TARIFF, IMPORT TARIFF

To ensure that a commodity is accurately classified in a specific chapter, group, subgroup, and specific code number in the Tariff and cannot be classified in another chapter, group, subgroup, or code number; looking up the Export Tariff, Import Tariff must be carried out strictly according to the principles recorded in Section II of this Circular and implemented as follows:

1- Regarding documents for procedures to calculate and collect export and import duties: To correctly determine the name, code number, and duty rate of an export or import commodity according to the Tariff, when performing procedures to calculate export and import duties (declaration procedures, duty calculation procedures prescribed by the General Department of Customs), the Provincial Customs Office requires the unit to present the following complete documents. These documents are only used as a basis to determine the code number and duty rate of export and import, not as a basis to determine the legality of the imported consignment (this matter is regulated by the Ministry of Trade and the General Department of Customs).

a- Common documents for all cases.

- Legal and valid foreign trade contract, clearly stating the name of the imported goods, type consistent with the description in the Tariff (if buying and selling in the form of a contract).

- Declaration of export and import, clearly stating the results of inspection of exported and imported goods regarding specifications, type, construction, degree of processing of goods.

- Export and import permit (If applicable). - Invoice

- Bill of lading

- Detailed list (packing list) if the imported consignment includes multiple items.

b- Special documents for certain specific cases.

In certain cases where goods are easily confused or difficult to distinguish (such as refined palm oil and shortening) or where the name of the goods is not clearly stated and can be classified under two or more tariff numbers (for example, steel in bar or ingot form) or where the goods have specific technical characteristics (such as automobiles), or where the descriptions provided on the documents mentioned in point a above do not help accurately determine the tariff number (for example, seed potatoes, livestock breeds), the Customs Department of the province or city may require the taxpayer to provide additional documents as follows (selecting the appropriate type of document based on the specific circumstances):

- A description of the construction, features, technical specifications, properties, degree of processing, production process, and usage according to the design of the goods, provided by the manufacturer (one copy in Vietnamese, one copy in English).

- A catalogue issued by the manufacturer of the imported/exported goods.

- The results of inspections conducted by inspection agencies at all levels upon request by customs authorities. The standards, procedures for conducting inspections, and the list of items requiring inspection shall be prescribed by the General Department of Customs after consultation with the Ministry of Finance and relevant ministries and sectors.

- Documentation permitting the importation of plant, seed, and breeding stock products (if they are imported plants, seeds, or breeding stock) issued by the Ministry of Agriculture and Rural Development, specifying the quantity and types of imports intended for breeding purposes, the place of use, and accompanied by a health quarantine document from the Ministry of Health or a document certifying compliance with breeding standards issued by the Ministry of Agriculture and Rural Development. Annually, the Ministry of Agriculture and Rural Development must register plans for importing such products with customs and specify the quantities allocated to each importer. Local customs offices will implement the reduction of actual imports and report on the quantities imported and used every six months. If these products are not used for breeding purposes, taxes will be retroactively collected at the import tax rate applicable at the time of collection, along with any late payment penalties as stipulated.

- For machinery and equipment belonging to groups 8518, 8519, 8520, 8521, 8522, 8625, 8527 that are specifically designed for cultural and information activities in public places (such as Cultural Houses, Theaters, Information Centers), a permit for importation issued by the Ministry of Culture and Information must be obtained, specifying the quantity and types of imports intended for such activities. These entities must register their import plans with customs and specify the quantities imported by each entity. Local customs offices will implement the reduction of actual imports and report on the quantities imported and used every six months. If these items are not used for cultural and information activities as specified, taxes will be retroactively collected at the import tax rate applicable to consumer equipment at the time of collection, along with any late payment penalties as stipulated.

- For other specialized machinery and equipment, to prevent commercial fraud, in addition to having a structure and features suitable for their specialized functions as indicated in the manufacturer's catalog (for example, an ambulance must have stretchers, emergency stretchers, etc.; a communication vehicle must have communication equipment, etc.), the relevant ministry or sector must annually register import plans for specialized equipment with customs, specifying the quantities allocated to each importer. Local customs offices will implement the reduction of actual imports and monitor usage. If specialized equipment is imported but not used for its intended purpose (for example, converting an ambulance into a passenger vehicle), taxes will be retroactively collected at the applicable import tax rate and value of the converted machinery or equipment at the time of conversion.

2) Method of Searching the Import and Export Tariff List:

After collecting all the aforementioned documents and combining them with the results of the physical inspection of the imported goods recorded by the inspector (inspection standards and procedures are prescribed by the General Department of Customs in separate documents), the local customs office handling the import/export declaration will determine the tariff number and the amount of import/export duties payable and notify the taxpayer of the duty amount.

To accurately determine the amount of export or import duties payable, it is first necessary to clearly identify the raw materials and components used to produce the exported/imported goods, the degree of processing, the purpose of design, construction, features, and utility of the goods, and which chapter, heading, subheading, and code in the Tariff List the exported/imported goods correspond to. If there is uncertainty, the imported sample can be examined. Currently, a single product may have multiple names based on its function, structural and chemical characteristics, or trade name, but only one name is listed in the Tariff List. Due to different naming conventions, a product may be classified under different tariff numbers with significantly different import/export duty rates. For example, candy wrapping paper made from cellophane. Based on the raw material origin, this cellophane would be classified under Chapter 39, Heading 3920, Code 392000, with an import duty rate of 20%. However, if classified by its trade name as glossy paper, it could be placed under Code 4806 with an import duty rate of 1%, or if classified by its function as candy wrapping paper, it could fall under Heading 4804 with an import duty rate ranging from 10% to 20% depending on whether it has been printed with labels or not.

AFTER obtaining all relevant information about the imported/exported goods, compare the provisions of the Import and Export Tariff List at the time of filing the Goods Declaration Form, and refer to the Vietnam Import and Export Goods List to calculate the export and import duties for the shipment.

In cases where the actual imported goods do not match the description of the goods recorded on each type of document. For example: According to the Catalogue, cars must be equipped with communication devices, antennas for transmitting and receiving information, ambulances must have flashing lights, sirens, stretchers, emergency medical equipment, infusion devices, etc., but the actual imported goods do not have these specific devices or have them but not fully equipped, or the contents recorded on these types of documents are inconsistent (for example: the name of the item recorded on the catalogue is a freezer machine, but the name of the item recorded on the contract is a display cold storage cabinet...), or a single item has two different inspection results, the provincial customs office will temporarily calculate import and export duties and issue a notice of the amount of import and export duties to be paid by the unit; at the same time, it must report to the General Department of Customs and the Ministry of Finance for specific guidance (the report must clearly state the proposed opinion and basis for the proposal).

After receiving the complete set of documents for the import/export consignment sent by the local Customs Office (except in cases where there are issues requiring discussion with higher-level management agencies or other relevant functional agencies such as the Ministry of Finance, General Statistics Office, Ministry of Industry, Ministry of Agriculture and Rural Development; the General Department of Customs must issue a written response to the local Customs Office and report the results to the Ministry of Finance.

IV. SETTLEMENT OF COMPLAINTS AND HANDLING OF VIOLATIONS

1- Settlement of complaints.

a) Rights and responsibilities of the tax payer in lodging complaints about taxes

In case the tax payer disagrees with the official notification of the amount of export duty, import duty issued by the provincial customs office for a specific item or consignment of exported/imported goods, they must still comply with paying the full amount of export duty, import duty notified by the local customs office within the prescribed period, while having the right to lodge a complaint with the General Department of Customs, or file a lawsuit with the court according to the provisions of the Administrative Procedure Law on the handling of administrative cases adopted by the Standing Committee of the National Assembly on May 21, 1996.

b) Responsibilities and authorities of the tax collection agency in settling complaints about import and export taxes:

- Within twenty days from the date of receipt of a complaint with all necessary grounds for settlement, the General Department of Customs must settle the complaint and report the result of the complaint settlement to the Ministry of Finance. If the tax payer does not agree with the decision of the General Department of Customs, they have the right to appeal to the Minister of Finance. Within thirty days from the date of receipt of a complaint with all necessary grounds for settlement, the Minister of Finance must settle the complaint. The decision of the Minister of Finance on the settlement of the complaint is the final decision.

In cases where a complaint has been submitted to the General Department of Customs and the Ministry of Finance but the grounds for settlement are incomplete, depending on the specific circumstances, the General Department of Customs or the Ministry of Finance may request the tax payer to provide additional necessary documents or further discuss with related functional departments before issuing a formal decision.

In cases where the provincial customs office finds that the decisions on the settlement of complaints regarding export duties and import duties made by the General Department of Customs or the Ministry of Finance still have issues, within seven days from the date of receipt of the superior agency's decision, the local customs office must provide feedback to the agency that settled the complaint about the issues encountered to promptly address them.

2- Handling of violations

The handling of violations concerning the calculation and payment of export duties and import duties shall be carried out strictly in accordance with the provisions of Article 20, Article 22 of the Law on Export Duties and Import Duties adopted by the National Assembly on December 26, 1991; Article 17, Article 20 of 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 articles of the Law on Export Duties and Import Duties.

This Circular takes effect and is uniformly applied throughout the country from September 1, 1997. Any issues encountered during implementation should be reported to the Ministry of Finance for timely resolution.