Circular No. 9/TC-TQĐ guiding the tax payment regime for goods imported through trade

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 9/TC-TQD DATE 27-2-1988

GUIDELINES FOR THE SYSTEM OF PAYING IMPORT DUTIES ON MERCHANDISE

FOR IMPORTED GOODS FOR COMMERCE

Pursuant to the Ordinance dated 17-11-1987 of the State Council supplementing and amending certain provisions in the Regulations on Commercial and Industrial Tax and the Goods Tax Regulations, and Decree No. 9-HĐBT dated 30-1-1988 of the Council of Ministers detailing the implementation of the above Ordinance. After consultation and agreement with the Ministry of Foreign Trade, General Department of Customs, State Bank, the Ministry of Finance hereby provides guidelines for the system of paying import duties on merchandise for imported goods for commerce as follows:

I. TAXPAYERS AND ORGANIZATIONS LIABLE TO PAY TAX

1. Taxable Objects

All goods imported through Vietnam's borders by economic organizations permitted to import, which fall within the list of import tariff rates for commercial imports published together with the Ordinance dated 17-11-1987 of the State Council, must be subject to import duties for commercial imports (Detailed Tariff Rates attached).

Below, the Ministry of Finance provides specific explanations regarding some categories of goods subject to import duties for commercial imports as stipulated in the tariff rates:

- General Merchandise: includes all products serving consumption needs (excluding items specified in Section VII of the goods tariff), collectively referred to as general merchandise such as suitcases, watches, soap, sugar, bicycles, bicycle parts, and motorcycle parts...

- Cultural Products: includes all products serving cultural and artistic needs such as musical instruments, music discs, audio tapes, film reels, video tapes, postcards, calendars, cosmetics...

Beverages: includes all products used for drinking purposes (excluding alcohol and beer already specified in the tariff rates) such as bottled water, soft drinks, syrup packed in bottles and powder form, various fruit juices...

as bottled water, sweetened water, syrup in bottles and packaged in powder form, various types of fruit juice ... as specified in the tariff schedule)

2. Tax Payers.

The following economic organizations, when importing commercial goods through Vietnam's borders that are subject to import duties, shall have the obligation to pay taxes into the State Budget:

- State-owned Trading Corporations and Companies under the management of the Ministry of Foreign Trade.

- Economic organizations engaged in foreign trade directly under Ministries or Provincial People's Committees, City People's Committees, and Special Zones, permitted to directly engage in foreign trade.

- Joint Ventures or Enterprises permitted to directly engage in foreign trade (including enterprises with foreign investment in Vietnam).

- Production and business units, economic organizations undertaking processing and contracting work for foreign entities, paid in goods.

- Foreign organizations conducting direct business operations in Vietnam.

- Economic organizations implementing contracts and business cooperation with foreign entities.

In cases where goods are received on consignment, the organization receiving the consignment shall be responsible for paying the tax on behalf of the organization entrusting the goods.

II. EXEMPTIONS AND REDUCTIONS

1. Exemptions.

The Ministry of Finance will examine and issue decisions to exempt taxes in the following cases:

- Goods imported for scientific research purposes by schools and research institutes funded by the state budget.

- Goods donated for humanitarian purposes by international organizations, social organizations, and people from other countries aiding the Vietnamese people.

- Raw materials and materials for processing for foreign entities according to contracts between Vietnamese economic organizations and foreign entities.

- Goods transported in transit or passing through Vietnam.

2. Reductions.

The Ministry of Finance will examine and issue decisions to reduce taxes in the following cases:

- Goods imported under agreements signed between the Government of Vietnam and foreign governments when the retail price or wholesale price of materials minus (-) discounts is lower than the cost of imported goods plus (+) foreign trade fees, plus (+) import tax.

Provincial Tax Departments and Municipal Financial Departments will examine and issue decisions to reduce taxes in the following cases:

- Goods damaged or lost during transportation and handling due to justifiable reasons, certified by the Vietnam Goods Appraisal Company. The reduction rate in tax corresponds to the loss rate of the goods recorded in the appraisal report.

III. PROCEDURES AND MEASURES FOR DECLARATION AND PAYMENT

1. Time of Payment

Import duties for commercial imports payable by trading organizations must be paid simultaneously with import duties and divided into two separate groups as stipulated in Article 8 of Decree No. 9-HĐBT dated 30-1-1988 of the Council of Ministers. The tax must be fully paid before the goods are moved from the border gate into domestic circulation.

To prove that the tax has been paid, goods leaving the border gate must present a receipt for payment of import duties for commercial imports to relevant authorities. In cases where a batch of goods has paid import duties for commercial imports but is withdrawn from storage in multiple shipments, the State Revenue Department will issue copies of the tax payment receipt for each withdrawal.

2. Measures for Declaration and Payment

a) Method of Calculating Tax

The amount of import duties for commercial imports payable equals (=) the quantity of taxable goods multiplied (x) by the taxable value, multiplied (x) by the tax rate. Wherein:

- The quantity of goods is recorded in units of quantity, weight... appropriate to the type of goods.

- The taxable value is the wholesale price of imported goods determined based on the principle of deducting (-) trade discounts from the retail price for consumer goods (or deducting (-) material discounts from the wholesale price for materials).

In cases where there is no wholesale price for imported goods, the taxable value is determined based on comparable goods.

The taxable value is announced by the Ministry of Finance with a general price range: Provincial Financial Departments - State Revenue Departments base their specific pricing on local market conditions after consulting with customs, foreign trade, and internal trade authorities.

b) Procedures for Declaration and Payment

For imported goods for commerce subject to import duties, the importer must declare and pay taxes at the State Revenue Department in the area where the trading organization is headquartered or at the border gate - where trading organizations pay import duties.

After completing the customs declaration procedures, the import-export organization must prepare the "import trade goods tax payment declaration form" in three copies to submit to the State Revenue Office on the same working day. The State Revenue Office will base on the fourth copy of the "import trade goods declaration form" from the Customs Office to compare with the "import trade goods tax payment declaration form" to determine the goods subject to import trade goods tax, calculate the tax payable, and notify the import-export organization.

Upon receiving the tax payment notification, the import-export organizations must pay the tax by "bank transfer check" to the State Revenue Office within the latest three working days and receive the tax payment receipt. In cases where the consignment is small and the tax payable is not large, the import-export organization may pay the tax in cash.

At the end of each day, the State Revenue Office must prepare a list of checks and cash payments attached to the tax payment declaration forms submitted to the state budget at the local bank according to the specified chapter, clause, category, and item (chapter corresponding to the unit paying, type 07, clause 03, category 0, item 04, account 710 of the central budget).

Import-export organizations are allowed to re-determine the working capital quota and purchase cost price for calculating the capital including the import trade goods tax. The Foreign Trade Bank provides loans to import-export organizations to settle import goods payments including the import trade goods tax.

3. Handling for violation of tax payment discipline.

Any organization that delays tax payment beyond the notified deadline must pay an additional 0.2% (two thousandths) interest on the amount of tax due for each day of delay.

Cases of tax evasion or smuggling must be recovered and penalized according to Article 15 of the Goods Tax Regulations.

IV. IMPLEMENTATION

The Ministry of Finance assigns the State Revenue Branches and the financial management units of central enterprises to collect taxes on imported trade goods from all import-export organizations under both central and local management.

In areas without Central State Revenue Branches, the Ministry of Finance assigns the Provincial Financial Departments to organize the collection of import trade goods taxes within their respective jurisdictions.

The tax collection stations for import trade goods taxes are located at the same points as the customs tax collection stations of the provincial and city Customs Offices.

The tax collection stations shall use a circular stamp according to a unified model prescribed by the Ministry of Finance. The State Revenue Department will guide the staffing of these stations to be appropriate to the workload in each locality.

The State Revenue Branches and Provincial Financial Departments must closely coordinate with the Customs Offices, Banks, Foreign Trade Enterprises, and warehouse management agencies at border gates to ensure full and timely tax collection into the state budget.

The State Revenue Office and Provincial Financial Departments are responsible for checking the tax payment declarations, issuing tax payment receipts promptly, supervising all import activities of taxable goods to monitor and urge tax payment compliance, and creating favorable conditions for import-export organizations to comply with the state's tax payment regulations. For overpayment situations, the State Revenue Office must immediately process refunds for the units; strictly handle late payment and tax evasion cases.

Refunds in Hanoi are handled by the Ministry of Finance. For other regions, the Ministry of Finance temporarily delegates the authority to the Provincial Financial Department Directors and Special Administrative Region Directors to refund excess import trade goods taxes paid. Before processing refunds, the Provincial Financial Department must conduct a detailed review and obtain confirmation from the State Revenue Office and the State Bank branch regarding the tax paid into the state budget.

During implementation, if there are any difficulties, please report them to the Ministry of Finance for study and resolution.

DETAIL TAX RATES TABLE

(Attached to Circular No. 9-TC/TQD dated February 27, 1988)