Circular No. 52/2006/TT-BTC guides the application of preferential import tax rates for special treatment of Vietnam to implement the ASEAN-China Trade in Goods Agreement.

CIRCULAR

Guidelines for Implementing Vietnam's Special Preferential Import Tariff Rates under the ASEAN-China Free Trade Agreement

to implement the ASEAN-China Trade in Goods Agreement

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Pursuant to the Law on Export Tax and Import Tax No. 45/2005/QH11 dated June 14, 2005; and Decree No. 149/2005/NĐ-CP dated December 8, 2005 of the Government detailing the implementation of the Law on Export Tax and Import Tax;

Pursuant to Decree No. 154/2005/NĐ-CP dated December 15, 2005 of the Government detailing certain provisions of the Customs Law on customs procedures, inspection, and supervision;

Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to the ASEAN-China Trade in Goods Agreement under the Framework Agreement on Comprehensive Economic Cooperation between the Association of Southeast Asian Nations and the People's Republic of China (hereinafter referred to as the ASEAN-China Trade in Goods Agreement), signed on November 29, 2004 in Laos, and the Memorandum of Understanding between Vietnam and China on certain issues in the ASEAN-China Trade in Goods Agreement, signed on July 18, 2005 in China, approved by the Prime Minister's Decision No. 257/QĐ-TTg dated October 19, 2005;

Pursuant to the guidance of the Prime Minister in the Government Office's Circular No. 216/VPCP-QHQT dated March 17, 2006;

The Ministry of Finance hereby provides guidelines for implementing Vietnam's special preferential import tariff rates to implement the ASEAN-China Trade in Goods Agreement as follows:

I. Scope and Conditions for Application

1. Imported goods to be eligible for Vietnam's special preferential import tariff rates to implement the ASEAN-China Trade in Goods Agreement (hereinafter referred to as the ACFTA rate of Vietnam) issued by the Minister of Finance must meet the following conditions:

a) Belong to the List of Goods and Special Preferential Import Tariff Rates of Vietnam to Implement the ASEAN-China Trade in Goods Agreement issued by the Minister of Finance (hereinafter referred to as the ACFTA List of Vietnam)

b) Imported into Vietnam from member countries of the ASEAN-China Trade in Goods Agreement including:

- Brunei Darussalam;

- Kingdom of Cambodia;

- Republic of Indonesia;

- Lao People's Democratic Republic;

- Malaysia;

- Union of Myanmar;

- Republic of the Philippines;

- Republic of Singapore;

- Kingdom of Thailand; and

- People's Republic of China (China).

c) Directly transported from the exporting country that is a member of the ASEAN-China Trade in Goods Agreement to Vietnam, as stipulated in Decision No. 1727/2003/QĐ-BTM dated December 12, 2003 and Decision No. 09/2006/QĐ-BTM dated February 24, 2006 of the Minister of Trade.

d) Satisfy the ASEAN-China Origin Requirements, confirmed by the ASEAN-China Certificate of Origin (C/O - Form E), as stipulated in Section III of this Circular, except for imported goods with a total value of the consignment (FOB) not exceeding US$200, which do not need a C/O - Form E.

e) Belong to the general tariff reduction list (NT list) or early harvest program tariff reduction list (EHP list) of the exporting country to implement the ASEAN-China Trade in Goods Agreement, determined in Appendix I attached to this Circular.

2. Imported goods from free trade zones (including processed goods) entering the domestic market shall be subject to the ACFTA rate of Vietnam issued by the Minister of Finance if they satisfy the conditions specified in point (a) and (d) of Clause 1, Section I of this Circular.

3. Imported goods satisfying the conditions (a), (b), (c), and (d) of Clause 1, Section I of this Circular but belonging to the sensitive goods list (ST list) of the exporting country, as determined in Appendix I of this Circular, the applicable import tariff rate shall be prescribed in Clause 2, Section II of this Circular.

II. Import Tariff Rates Applied

1. The import tariff rate applied to goods meeting the conditions stipulated in Clause 1 and Clause 2, Section I of this Circular is the ACFTA rate of Vietnam for each year as specified in the List of Goods and Special Preferential Import Tariff Rates of Vietnam to Implement the ASEAN-China Trade in Goods Agreement issued by the Minister of Finance.

Example 1: The dried chili pepper item (HS code 0904.20.10) has a current most-favored-nation (MFN) import tariff rate of 30% as stipulated in the Preferential Import Tariff Schedule and the ACFTA rate of Vietnam is 25% according to the decision of the Minister of Finance. According to Appendix I of this Circular, dried chili peppers belong to the NT list of China. Therefore, the import tariff rate applied to this item imported from China is the ACFTA rate of Vietnam (25%) if it meets the conditions stipulated in Clause 1, Section I of this Circular.

Example 2: The dried chili pepper item (HS code 0904.20.10) has an MFN rate of 30% and the ACFTA rate of Vietnam is 25% according to the decision of the Minister of Finance. The import tariff rate applied to this item imported from free trade zones into the domestic market is the ACFTA rate of Vietnam (25%) if it meets the conditions stipulated in point (d) of Clause 1, Section I of this Circular.

2. The import tariff rate applied to goods meeting the conditions stipulated in Clause 3, Section I of this Circular shall be as follows:

a) Where the Ministry of Finance issues a notice on the ACFTA rate of the exporting country for goods in the ST list of that country being less than or equal to 10%, the applicable import tariff rate shall be the higher of the ACFTA rate of Vietnam or the ACFTA rate of the exporting country.

Example 3: The dried chili peppers (HS code 0904.20.10) have a MFN tariff rate of 30% and a Vietnam ACFTA tariff rate of 25% according to the Decision of the Minister of Finance. According to Appendix I of this Circular, dried chili peppers fall under the ST category of Myanmar, and the Ministry of Finance has notified the ACFTA tariff rate of Myanmar for dried chili peppers at 8%. Therefore, the import tariff rate applicable to dried chili peppers imported from Myanmar is the Vietnam ACFTA tariff rate (25%) if conditions (b), (c), and (d) stipulated in Clause 1, Section I of this Circular are met.

b) In case the Ministry of Finance does not notify the ACFTA tariff rate of the exporting country for goods imported under the ST category of that exporting country being less than or equal to 10%, then the applicable import tariff rate will be the MFN tariff rate.

Example 4: The dried chili peppers (HS code 0904.20.10) have a MFN tariff rate of 30% and a Vietnam ACFTA tariff rate of 25% according to the Decision of the Minister of Finance. According to Appendix I of this Circular, dried chili peppers fall under the ST category of Myanmar, and the Ministry of Finance has not notified the ACFTA tariff rate of Myanmar for dried chili peppers. Therefore, the import tariff rate applicable to dried chili peppers imported from Myanmar is the MFN tariff rate (30%), even though conditions (b), (c), and (d) stipulated in Clause 1, Section I of this Circular are met.

3. In case the MFN tariff rate of an item specified in the Import Tariff Schedule is adjusted to be lower than the applied ACFTA tariff rate (Vietnam's ACFTA tariff rate or the exporting country's ACFTA tariff rate), then the applicable import tariff rate for that item will be the MFN tariff rate.

Example 5: The hot-rolled flat-rolled products of non-alloy steel with a carbon content below 0.6% by weight (HS code 7208.38.10) have a MFN tariff rate of 0% and a Vietnam ACFTA tariff rate of 5% according to the Decision of the Minister of Finance. According to Appendix I of this Circular, this item falls under the NT category of China. Therefore, the import tariff rate applicable to this item imported from China is the MFN tariff rate (0%).

Example 6: The hot-rolled flat-rolled products of non-alloy steel with a carbon content below 0.6% by weight (HS code 7208.38.10) have a MFN tariff rate of 0% and a Vietnam ACFTA tariff rate of 5% according to the Decision of the Minister of Finance. According to Appendix I of this Circular, this item falls under the ST category of the Philippines, and the Ministry of Finance has notified the ACFTA tariff rate of the Philippines for this item at 3%. Therefore, the import tariff rate applicable to this item imported from the Philippines is the MFN tariff rate (0%).

Example 7: The hot-rolled flat-rolled products of non-alloy steel with a carbon content below 0.6% by weight (HS code 7208.38.10) have a MFN tariff rate of 0% and a Vietnam ACFTA tariff rate of 5% according to the Decision of the Minister of Finance. According to Appendix I of this Circular, this item falls under the ST category of Malaysia, and the Ministry of Finance has notified the ACFTA tariff rate of Malaysia for this item at 7%. Therefore, the import tariff rate applicable to this item imported from Malaysia is the MFN tariff rate (0%).

4. The basic steps for searching the applicable import tariff rates as prescribed in Clauses 1, 2, and 3, Section II of this Circular are detailed in Appendix II of this Circular.

5. Goods imported by enterprises for production and assembly of mechanical, electrical, and electronic products that meet both the conditions for applying the ACFTA tariff rate and the conditions for applying the import tariff rate based on the domestic content ratio according to current regulations may choose one of two options: implementing the tax policy based on the domestic content ratio or the ACFTA tariff rate, specifically as follows:

If the enterprise chooses to apply the tariff rate based on the domestic content ratio, when importing unassembled parts or unassembled component sets, the enterprise must apply a unified tariff rate based on the domestic content ratio for the entire list of imported parts or component sets, even though some items in the list meet the conditions for applying the ACFTA tariff rate.

If the enterprise chooses to apply the ACFTA tariff rate, unassembled parts or component sets that meet the conditions for applying the ACFTA tariff rate will be subject to the ACFTA tariff rate; other parts and component sets will be subject to the MFN tariff rate or the general tariff rate.

6. The application of the ACFTA tariff rate for unassembled parts and components imported for assembly of mechanical, electrical, and electronic products shall be carried out as follows:

Unassembled parts (component sets), unassembled components (component sets) with Certificate of Origin (C/O) Form E will be subject to the ACFTA tariff rate of the finished product if they satisfy the conditions for applying the ACFTA tariff rate stipulated in Section I of this Circular. Other unassembled parts and components without C/O Form E will be subject to the MFN tariff rate or the general tariff rate applicable to the finished product.

The enterprise must present one or more separate commercial invoices for unassembled parts (component sets), unassembled components (component sets) with C/O Form E to request the application of the ACFTA tariff rate.

The application of the ACFTA tariff rate is implemented at the time of tax calculation as prescribed by the laws on export and import taxes. The procedures for settling import tax with the Customs authorities are carried out according to current regulations.

The principle of classifying unassembled parts and assembled parts is implemented according to Circular No. 85/2003/TT-BTC dated August 29, 2003, issued by the Ministry of Finance guiding the classification of goods according to the Export and Import Goods List and the Import Tariff Schedule, Export Tariff Schedule, and other related legal documents.

7. When importing complete knock-down (CKD) automobile kits, the importing enterprise can only apply the ACFTA tariff rate for each individual automobile part and accessory specified in the Special Preferential Import Tariff Schedule of Vietnam to implement the ASEAN-China Trade in Goods Agreement issued by the Minister of Finance. The conditions for applying the ACFTA tariff rate are stipulated in Section I of this Circular.

8. The ACFTA tariff rate applicable to processed goods imported into the domestic market from duty-free zones within the bonded area shall be the ACFTA tariff rate of Vietnam for the processed goods imported, as specified in the List of Goods and Preferential Tariff Rates of Vietnam for the implementation of the ASEAN-China Trade in Goods Agreement, issued by the Minister of Finance.

9. In cases where the customs declarant has not yet presented the Certificate of Origin - Form E at the time of registering the customs declaration for imported goods but the imported goods satisfy all other conditions stipulated in Section I of this Circular:

a) If the taxable consignment complies with the tax laws and regulations set forth in Part C of Circular No. 113/2005/TT-BTC dated December 15, 2005, issued by the Ministry of Finance, guiding the implementation of export duties and import duties, then the customs declarant may declare the goods at the ACFTA tariff rate committed to and such tariff rate will be applied.

Where the Certificate of Origin - Form E cannot be presented within the prescribed timeframe as stipulated in point (b), Clause 5, Section III of this Circular, the customs authority shall recalculate the tax and impose penalties according to current regulations.

b) If the taxable consignment does not comply with the tax laws and regulations set forth in Part C of Circular No. 113/2005/TT-BTC dated December 15, 2005, issued by the Ministry of Finance, guiding the implementation of export duties and import duties, then provisional tax shall be calculated based on the MFN tariff rate. When the Certificate of Origin - Form E is presented within the prescribed timeframe as stipulated in point (b), Clause 5, Section III of this Circular, the customs authority shall recalculate the import duty based on the ACFTA tariff rate as provided for in the regulations.

III. Certificate of Origin (C/O) and Verification of Certificate of Origin

1. The rules for goods to be recognized as having ASEAN-China origin are stipulated in the Regulation on Issuing Certificate of Origin Form E of Vietnam promulgated together with Decision No. 1727/2003/QĐ-BTM dated December 12, 2003 and Decision No. 09/2006/QĐ-BTM dated February 24, 2006, and other related decisions issued by the Minister of Trade.

2. The Certificate of Origin must bear a signature and stamp that match the specimen signature and stamp issued by the competent authority issuing the Certificate of Origin - Form E of the following member countries of the ASEAN-China Trade in Goods Agreement:

- In Brunei Darussalam, it is the Ministry of Foreign Affairs and Trade;

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

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

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

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

- In the Union of Myanmar, it is the Ministry of Commerce;

- In the Republic of the Philippines, it is the Department of Finance;

- In the Republic of Singapore, it is the Customs Authority;

- In the Kingdom of Thailand, it is the Ministry of Commerce; and

- In the People's Republic of China (China), it is the General Administration of Quality Supervision, Inspection and Quarantine.

3. The Certificate of Origin - Form E for goods imported from duty-free zones into the domestic market must bear a signature and stamp that match the official specimen signature and stamp issued by the authorized authority designated by the Ministry of Trade to issue the Certificate of Origin - Form E.

4. The Certificate of Origin - Form E is valid for four months from the date it is issued by the competent authority of the exporting country which is a member of the ASEAN-China Trade in Goods Agreement. In cases where the imported goods transit through the territory of one or more non-member countries of the ASEAN-China Trade in Goods Agreement as stipulated in Rule 8(c) of Appendix 1 of Decision No. 1727/2003/QĐ-BTM dated December 12, 2003, issued by the Minister of Trade, the validity period of the Certificate of Origin - Form E will be extended to six months.

5. Provisions regarding the presentation of the Certificate of Origin - Form E:

a) The time for presenting the Certificate of Origin - Form E to the customs authority is the time of registering the customs declaration for imported goods.

b) In cases where the Certificate of Origin - Form E cannot be presented at the time of registering the customs declaration due to justifiable reasons, the Director of the Customs Office may extend the time for submitting the Certificate of Origin - Form E up to thirty days from the date of registering the customs declaration.

c) In cases where the Certificate of Origin - Form E is presented within the prescribed timeframe as stipulated in point (a) or (b), Clause 5, Section III of this Circular but the Certificate of Origin has expired, if there are justifiable reasons such as force majeure or other reasonable grounds beyond the control of the exporter, the Director of the Customs Office may accept the Certificate of Origin by written decision.

6. In cases of doubt about the authenticity and accuracy of the Certificate of Origin - Form E, the customs authority has the right:

a) To request re-verification of the Certificate of Origin - Form E: the customs authority will send a request to the competent authority issuing the certificate of origin in the exporting country to confirm.

b) To suspend the application of the ACFTA tariff rate and temporarily collect taxes at the MFN tariff rate or ordinary tariff rate. Request the importer to provide additional documentation (if available) to prove that the goods genuinely have ASEAN-China origin within the latest deadline of 365 days from the date the Certificate of Origin - Form E was submitted to the customs authority. Once sufficient documentation proves that the goods indeed have ASEAN-China origin, the customs authority shall proceed with the procedures to refund the importer the difference between the amount of tax temporarily collected at the MFN tariff rate or ordinary tariff rate and the amount of tax calculated at the ACFTA tariff rate as stipulated in Section II of this Circular.

During the waiting period for the results of the re-verification, the procedures for releasing the goods shall continue to be carried out according to the general import regulations.

The process and procedures for requesting re-verification are implemented in accordance with the Regulation on Issuing Certificate of Origin Form E of Vietnam promulgated together with Decision No. 1727/2003/QĐ-BTM dated December 12, 2003 and Decision No. 09/2006/QĐ-BTM dated February 24, 2006, and other related decisions issued by the Minister of Trade.

IV. Other Provisions

1. Goods listed on import customs declarations registered with the Customs authority from January 1, 2006 to the date this Circular takes effect, which have been taxed at the MFN rate or the general rate, may submit a Certificate of Origin - Form E and related documents to recalculate the amount of import tax payable and refund the import tax according to the provisions of this Circular.

The file for reviewing the refund of import tax includes:

- A letter from the taxpayer requesting the refund of the difference between the paid import tax and the import tax calculated at the ACFTA rate as stipulated in this Circular (original).

- The import goods customs declaration that has been processed (certified true copy).

- The Certificate of Origin - Form E, as specified in Section III of this Circular (original).

- Proof of payment of import tax (certified true copy).

- The import contract (certified true copy).

- The agency agreement, if it is an agency import (certified true copy).

- An itemized list of documents in the file requesting the review of the refund of import tax.

The deadline for submitting the file for the refund of import tax shall not be later than October 31, 2006.

The local Customs Bureau is responsible for receiving the file for inspection and examination to refund import tax for taxpayers in accordance with the regulations.

The local Customs Bureau will process the refunded tax amount in the following sequence: Deduct from taxes, fines, and other revenues owed by the taxpayer to the State budget; Offset against taxes and other revenues of subsequent export or import consignments as requested by the taxpayer; Refund from the State budget.

In cases where the refund is made from the State budget, the local Customs Bureau will request the Ministry of Finance (State Budget Department) to directly refund the tax amount to the taxpayer based on the refund decision of the local Customs Bureau.

2. Provisions regarding the basis for taxation, tax collection and payment procedures, tax exemption and reduction regimes, tax refund regime (excluding the tax refund provisions set out in Clause 1, Section IV of this Circular), tax recovery, appeals, violation handling, and other provisions shall be implemented in accordance with the provisions of the Law on Export Duties and Import Duties, the Law on Customs, and current guiding documents.

3. In cases where there are changes to items in the legal documents issued by ASEAN and China to implement the ASEAN-China Trade Agreement or due to other reasons affecting Appendix I of this Circular or impacting Vietnam's right to apply the ACFTA rate as stipulated in Section II of this Circular, the Ministry of Finance will provide appropriate guidance for each specific case.

V. Implementation Organization

This Circular takes effect fifteen days after its publication in the Official Gazette and applies to import goods customs declarations registered with the Customs authority from January 1, 2006.

During implementation, if difficulties or obstacles arise, they should be reported promptly so that the Ministry of Finance can provide supplementary guidance as necessary./.