Circular No. 6030/TC/TCT regarding classification and calculation of import tax and value-added tax for complete equipment sets and entire units.

LETTER

MINISTRY OF FINANCE DECREE NO. 6030 TC/TCT DATED JUNE 18, 2002
REGARDING THE CLASSIFICATION AND CALCULATION OF IMPORT TAXES AND VALUE-ADDED TAX FOR COMPLETE SETS OF EQUIPMENT AND FULL SETS OF MACHINERY
SYNCHRONIZED EQUIPMENT, COMPLETE EQUIPMENT

TO: General Department of Customs

In response to the letter No. 1093/TCHQ-KTTT dated March 15, 2002 from the General Department of Customs reflecting difficulties in applying principles for calculating import taxes and exempting value-added tax on imported goods that are complete sets of equipment provided by enterprises winning tenders; the Ministry of Finance provides its opinion as follows:

To address issues arising from the classification and calculation of import taxes and value-added tax for a set of machines and equipment in complete sets of equipment or full sets of machinery when some entities do not directly import such equipment but invite tenders, with winning enterprises handling imports or entrusting another entity to handle imports, or a third party signing a purchase contract with the enterprise that wins the tender; on April 23, 2002, the Ministry of Finance issued letter No. 3928 TC/TCT seeking opinions from relevant Ministries and Agencies.

Based on current regulations stipulated in Circular No. 122/2000/TT-BTC dated December 29, 2000 by the Ministry of Finance guiding the implementation of Decree No. 79/2000/NĐ-CP dated December 29, 2000 of the Government detailing the implementation of the Law on Value-Added Tax and Circular No. 99/2000/TT-BTC dated October 12, 2000 by the Ministry of Finance guiding principles for classifying imported goods as sets of machines in complete sets of equipment or full sets of machinery; after considering opinions from the Ministry of Planning and Investment in letter No. 2892BKH/TC dated May 10, 2002, the Ministry of Trade in letter No. 1934/TM-ĐT dated May 20, 2002, and the General Department of Customs in letter No. 2024/TCHQ-KTTT dated May 8, 2002; it is concluded that:

- Complete sets of equipment or machines that cannot be produced domestically and are imported as fixed assets by enterprises do not need to pay value-added tax. If the complete set includes domestic products, no value-added tax will be levied on the entire set. To determine whether a machine or complete set does not require payment of value-added tax, entities must present certain types of documents. For example, they must provide tender notification and sales contracts with enterprises based on tender results (if the importing entity is supplying to a project that won the tender).

Therefore, if an entity using machines or equipment in complete sets does not directly import them but invites tenders, with winning enterprises handling imports or entrusting another entity to handle imports, and meets the procedures and documentation requirements stipulated in Circular No. 122/2000/TT-BTC dated December 29, 2000 mentioned above, then no value-added tax will be levied on such machines or equipment.

- Imported goods that are sets of machines or equipment belonging to the chapters 84, 85, 86, 88, 89, and 90 in the current Import Tariff Table, meeting the provisions of Circular No. 99/2000/TT-BTC mentioned above but where entities using such machines or equipment do not directly import them but invite tenders, with winning enterprises handling imports or entrusting another entity to handle imports, will also be subject to classification based on main machinery for calculating import taxes.

Documents that enterprises must submit to carry out imports as a basis for determining no need to pay value-added tax or being classified according to the main machine for calculating import taxes when entities using such equipment do not directly import them but invite tenders, with winning enterprises handling imports or entrusting another entity to handle imports include:

+ The investment project of the investing entity clearly listing the equipment.

+ Tender notification clearly stating the name of the winning enterprise and tendered goods consistent with the investment project.

+ Supply contract for machines and equipment between the contractor and the investor consistent with the tender results.

+ Entrusted import contract for machinery and equipment between the winning enterprise and the entrusted importing entity.

The Ministry of Finance comments to direct the General Department of Customs to uniformly implement the matter. The Limited Liability Company Thien Xung shall contact the customs authority for specific resolution.