Circular No. 75/2005/TT-BTC guides the implementation of tax policies and customs procedures for the pilot expansion of functions at the Tan Thuan Export Processing Zone.

CIRCULAR

Guidelines for implementing tax policies and customs procedures for the pilot expansion of functions at the Tan Thuan Export Processing Zone

Implementing the directives of the Prime Minister in Circulars No. 1395/CP-CN dated November 8, 2002, No. 891/CP-CN dated July 4, 2003, and No. 250/CP-CN dated February 24, 2004 regarding the pilot expansion of operational functions at the Tan Thuan Export Processing Zone;

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;

The Ministry of Finance hereby provides guidelines for implementing tax policies and customs procedures for enterprises participating in the pilot expansion of operational functions within the Tan Thuan Export Processing Zone as follows:

I. Scope of Application:

- Enterprises operating within the Tan Thuan Export Processing Zone (hereinafter referred to as export processing zone enterprises) that are conducting pilot expansions of their business functions.

- Enterprises related to the expanded business functions of export processing zone enterprises.

II. Content of Business Activities:

1. Supplying goods to export processing zone enterprises.

2. International trade services, specifically purchasing goods from abroad to sell in third countries.

3. Providing services to export processing zone enterprises and foreign entities such as marketing, advertising, market expansion, sourcing, construction, repair, warehouse management...

4. Importing goods from abroad into the enterprise's warehouse within the export processing zone and then transferring them to the domestic market (similar to bonded warehouse operations).

5. Export processing zone enterprises may purchase, store, process, repackage, and sell goods directly to the domestic market.

III. Tax Policies:

1. Export duties, VAT, and special consumption taxes:

1.1. Goods purchased domestically by export processing zone enterprises and exported directly overseas without passing through the Tan Thuan Export Processing Zone are exempt from export duties and are not subject to VAT.

Domestic enterprises selling goods to export processing zone enterprises for direct export must complete customs procedures with the Tan Thuan Export Processing Zone Customs and pay export duties (if applicable), and be subject to a 0% VAT rate.

1.2. Goods purchased domestically and brought into the Tan Thuan Export Processing Zone for storage and/or packaging and reprocessing before being exported overseas:

- When exporting goods from the domestic market to the Tan Thuan Export Processing Zone, domestic enterprises must pay export duties (if applicable) according to regulations for exported goods and be subject to a 0% VAT rate.

- When exporting goods overseas, export processing zone enterprises are exempt from export duties and are not subject to VAT according to regulations for export processing zone enterprises.

1.3. Goods imported from abroad into the Tan Thuan Export Processing Zone for storage and/or packaging and reprocessing before being transferred to the domestic market:

- When importing goods from abroad into the Tan Thuan Export Processing Zone, export processing zone enterprises are exempt from import duties and are not subject to VAT according to regulations for export processing zone enterprises.

- When importing goods from the export processing zone into the domestic market, domestic enterprises must declare and pay import duties, VAT, and special consumption taxes (if applicable) according to current regulations for imported goods.

1.4. Goods purchased by export processing zone enterprises from abroad to sell to third countries shall be subject to import-export duties, VAT as prescribed for transit goods.

2. Corporate Income Tax:

2.1. A corporate income tax rate of 15% applies to the following pilot expanded service activities:

- Purchasing goods domestically for direct export overseas without passing through the Tan Thuan Export Processing Zone.

- Purchasing goods domestically and bringing them into the Tan Thuan Export Processing Zone for storage and/or packaging and reprocessing before exporting overseas.

- Purchasing goods from abroad to sell to third countries.

- Other export services.

2.2. A corporate income tax rate of 28% applies to the following pilot expanded service activities:

- Purchasing goods from abroad and importing them into the Tan Thuan Export Processing Zone for storage and/or packaging and reprocessing before transferring to the domestic market.

- Other domestic services.

Export processing zone enterprises within the Tan Thuan Export Processing Zone must separately account for revenue, expenses, and taxable income for each activity subject to different tax rates. Direct costs for each activity must be accounted for separately according to each business activity. Only common costs can be allocated to each activity based on the proportion of each activity's revenue to total revenue.

IV. Guidelines for Procedures:

1. Customs Procedures:

1.1. Activities involving the supply of goods and raw materials to export processing zone enterprises within the Tan Thuan Export Processing Zone or to the domestic market, and other expanded function services including storage, retention, reprocessing, and packaging in designated areas of export processing zone enterprises, must be under customs supervision and comply with current regulations for customs procedures for goods entering and exiting the Tan Thuan Export Processing Zone.

1.2. Goods purchased domestically by export processing zone enterprises for direct export overseas without passing through the Tan Thuan Export Processing Zone:

- Prior to signing a purchase contract for a batch of goods with a domestic enterprise, the export processing zone enterprise must have a sales contract for this batch with a foreign partner.

- Based on the purchase and sale contract, the domestic enterprise registers an export declaration for the batch of goods with the Tan Thuan Export Processing Zone Customs for the export processing zone enterprise.

- Based on the sales contract signed with the foreign partner and the registered export declaration of the domestic enterprise, the export processing zone enterprise opens an export declaration for the foreign partner according to regulations for export processing zone enterprises.

- The Tan Thuan Export Processing Zone Customs registers the export declaration for goods entering the Tan Thuan Export Processing Zone for the domestic enterprise, and simultaneously registers the export declaration for the batch of goods to be exported overseas for the export processing zone enterprise. Sealing the customs file and handing it over to the export processing zone enterprise to proceed with customs procedures at the port of exit, completing the procedures according to regulations for transshipment goods.

- Customs of the Tan Thuan Export Processing Zone registers the Export Declaration for goods exported to the Tan Thuan Export Processing Zone for domestic enterprises, while registering the Export Declaration for the consignment exported abroad for export processing zone enterprises. Seals the customs file and hands it over to the export processing enterprise to proceed with procedures at the exit port to inspect the goods, completing the procedures in accordance with regulations for goods transiting through ports.

- On the basis of the export declaration of the export processing enterprise already confirmed for actual export by the customs at the border gate, the Customs of the Tan Thuan Export Processing Zone signs to confirm the actual export on the export declaration of the domestic enterprise and completes the export procedures for the consignment.

1.3. Goods purchased from the domestic market brought into the Tan Thuan Export Processing Zone for storage and/or packaging, recycling, and then exported abroad:

- The customs procedures for goods from the domestic market into the Tan Thuan Export Processing Zone shall be carried out according to the regulations applicable to goods exported by domestic enterprises to export processing enterprises;

- The customs procedures for goods exported from the Tan Thuan Export Processing Zone to foreign countries shall be carried out according to the regulations applicable to goods exported by export processing enterprises;

1.4. In the case of goods imported from abroad into the Tan Thuan Export Processing Zone for storage and/or packaging, recycling, and then brought into the domestic market:

- The customs procedures for goods from abroad into the Tan Thuan Export Processing Zone shall be carried out according to the current regulations applicable to goods from abroad into export processing zones;

- The customs procedures for goods from the export processing zone brought into the domestic market shall be carried out according to the current regulations applicable to goods imported by domestic enterprises from export processing zones;

1.5. Goods purchased from abroad to sell to a third country:

1.5.1. Goods purchased from abroad that go through direct export procedures to a third country without being brought into the Tan Thuan Export Processing Zone shall have their customs procedures carried out according to the temporary importation-re-exportation business model;

1.5.2. Goods purchased from abroad imported into the Tan Thuan Export Processing Zone for storage and/or packaging, recycling, and then exported abroad shall have their customs procedures carried out according to the current regulations applicable to goods imported from abroad into export processing zones and goods exported from export processing zones to abroad;

In cases where re-exported products are combined with other products not considered temporary imports, the enterprise must register a separate declaration for the combined product according to the appropriate business model;

2. Procedures for supplementary registration of business activities and declaration of corporate income tax shall be carried out according to the current regulations;

3. Procedures for refunding VAT for domestic enterprises selling goods to export processing enterprises for direct export abroad;

Goods sold by domestic enterprises to export processing enterprises for direct export abroad, which are eligible for deduction/refund of input VAT, must meet the following conditions and procedures:

- Sales contract for goods sold to export processing enterprises;

- Customs declaration for exported goods with confirmation of actual export by the Customs of the Tan Thuan Export Processing Zone;

- VAT invoice for goods sold to export processing enterprises;

- Bank payment documents between the export processing enterprise and the domestic enterprise;

V. Implementation Organization:

1. The General Department of Customs, Provincial Tax Departments, enterprises, and related units are responsible for implementing the guidance provided in this Circular;

2. Quarterly, enterprises that expand their functions must submit reports to the Tan Thuan Export Processing Zone Customs Sub-department and the Ho Chi Minh City Tax Department regarding issues related to the expanded functions specified in this guidance, including the quantity, value of imported and exported goods, domestic consumption, and inventory of each type of goods;

In cases where there are indications of dishonest reporting or tax evasion by enterprises, the Tan Thuan Export Processing Zone Customs Sub-department and the Ho Chi Minh City Tax Department will cooperate to inspect and handle violations according to regulations;

3. During the implementation of this Circular, in case of difficulties, relevant units and organizations are requested to promptly report to the Ministry of Finance for instructions;

4. This Circular takes effect 15 days after its publication in the Official Gazette and replaces Decision No. 194/2003/QĐ-BTC dated November 28, 2003 of the Minister of Finance./.