Circular 90/2002/TT-BTC provides guidelines on export tax, import tax, and value-added tax on goods sold to foreign traders but delivered to another enterprise in Vietnam designated by foreign traders for use as raw materials for the production and/or processing of export goods (Content Attached).

CIRCULAR

Guidelines on export tax, import tax, and value-added tax for goods sold to foreign traders but delivered to other enterprises in Vietnam at the designation of foreign traders for use as raw materials in production and processing of export goods.

Pursuant to the provisions of the Law on Export Tax and Import Tax dated December 26, 1991 and the Laws amending and supplementing certain articles of the Law on Export Tax and Import Tax dated July 5, 1993; Decision No. 04/1998/QH10 dated May 20, 1998; Decrees No. 54/CP dated August 28, 1993 and No. 94/1998/NĐ-CP dated November 17, 1998 of the Government detailing the implementation of the Law on Export Tax and Import Tax dated December 26, 1991 and the Laws amending and supplementing certain articles of the Law on Export Tax and Import Tax;

Pursuant to the Law on Value-Added Tax; Decree No. 79/2000/NĐ-CP dated December 29, 2000 of the Government detailing the implementation of the Law on Value-Added Tax (VAT); Decree No. 76/2002/NĐ-CP dated September 13, 2002 of the Government amending and supplementing certain articles of Decree No. 79/2000/NĐ-CP of the Government.

Implementing the guidance of the Prime Minister in Document No. 660/CP-KTTH dated June 14, 2002 of the Government regarding taxes on goods exported and imported in place.

The Ministry of Finance issues guidelines on export tax, import tax, and VAT for goods sold to foreign traders but delivered to other enterprises in Vietnam at the designation of foreign traders for use as raw materials in production and processing of export goods as follows:

I/ APPLICABLE OBJECTS:

Goods produced in Vietnam (including both domestic enterprises and foreign-invested enterprises) sold to foreign traders under foreign trade purchase contracts, paid for by foreign currency by the foreign traders but delivered to other production enterprises in Vietnam at the designation of the foreign traders for continued production and processing of export goods.

II/ SOME TERMS IN THIS CIRCULAR ARE UNDERSTOOD AS FOLLOWS:

- Export in place: goods produced in Vietnam sold to foreign traders but delivered to other enterprises in Vietnam at the designation of the foreign traders.

- Enterprise exporting in place: an enterprise engaged in export in place activities.

- Enterprise importing in place: an enterprise receiving goods from an enterprise exporting in place at the designation of the foreign trader.

III/ CONDITIONS FOR APPLYING THE TAX POLICY GUIDELINED IN THIS CIRCULAR:

- Goods exported in place and imported in place must be based on foreign trade purchase contracts signed with foreign traders, clearly stating the type of goods, quantity, name, and address of the enterprise receiving the goods in Vietnam.

- Foreign traders must pay for the goods exported in place through banks using freely convertible foreign currency.

- Enterprises must declare customs for goods exported in place and imported in place.

- Goods produced by enterprises exporting in place (if they are foreign-invested enterprises) must comply with the investment license.

IV/ TYPES OF TAXES APPLIED:

1/ Value-Added Tax (VAT): Goods exported in place are subject to a 0% VAT rate.

1.1. Enterprises exporting in place must present to local tax authorities the following complete documents:

- VAT invoice issued and handed over to the enterprise importing in place when delivering the goods, clearly stating the name of the foreign trader, the name of the enterprise importing in place receiving the goods (importing entity) and the delivery location in Vietnam.

- Purchase contract signed between the enterprise exporting in place and the foreign trader.

- Payment documents for the goods exported in place with the foreign trader through banks using freely convertible foreign currency.

- Declaration form for goods exported in place and imported in place.

If the enterprise exporting in place does not have the above procedures and documents, it will not be eligible for the 0% VAT rate and must pay VAT according to the provisions of the Law on VAT as if the goods were consumed domestically.

1.2. Enterprises importing in place must pay VAT according to the guidelines in Circular No. 122/2000/TT-BTC dated December 29, 2000, and Circular No. 82/2002/TT-BTC dated September 18, 2002, of the Ministry of Finance guiding the implementation of Decree No. 79/2000/NĐ-CP dated December 29, 2000, and Decree No. 76/2002/NĐ-CP dated September 13, 2002 of the Government. Specifically, goods imported in place for use as raw materials in production and processing of export goods are exempt from VAT according to the guidelines at Point 21, Section II, Part A of Circular No. 122/2000/TT-BTC dated December 29, 2000 mentioned above. Enterprises importing in place must present to the customs authority where they handle the import in place procedures the following documents: - Import contract for goods in accordance with the Law on Trade signed with the foreign trader. The contract must clearly state the name and type of goods consistent with those of the enterprise exporting in place.

- Declaration form for goods exported in place and imported in place.

- Export contract for goods or processing contract for goods for foreign traders.

- Commercial invoice.

- Registration form for importing raw materials for producing export goods or processing goods for foreign countries, including raw materials imported in place.

2/ Export Tax:

Products exported shall pay export tax according to the provisions of the Law on Export Tax and Import Tax and the current Export Tax Tariff. 3/ Import Tax:3.1. Enterprises importing raw materials for producing goods exported in place, after completing the export in place procedures, may be eligible for a refund of import tax corresponding to the goods exported in place.

Procedures and documents for applying for import tax refund: in addition to the documents specified in Point 1.1 above, enterprises must also submit the following additional documents:

3.1. An enterprise importing materials and components for the production of goods for immediate export shall be eligible to have the import tax refunded on the corresponding materials and components used in the immediately exported products after completing the procedures for immediate export.

The application procedures and documents for the refund of import tax: In addition to the procedures and documents specified in point 1.1 above, the enterprise must supplement the following documents:

- The letter requesting the refund of import tax for raw materials and components imported to produce export products on-site, including detailed explanations about the quantity and value of imported raw materials and components used to produce goods sold to foreign customers, consistent with the type and quantity of exported goods declared in the export declaration, including the following contents: the number of import declarations; the type of goods, quantity, and value of imported raw materials and components; the quantity of exported products; the amount of import tax paid; the amount of import tax requested for refund.

- Explain the actual consumption rate of imported raw materials and components to produce one unit of on-site exported product by the enterprise, and the enterprise's director is responsible for the legal basis and accuracy of the report.

- Customs declaration for imported raw materials and components; Foreign trade purchase and sale contract for imported goods;

- Tax notification, Receipt of import tax payment;

- Foreign trade purchase and sale contract signed with foreign traders in accordance with the provisions of the Trade Law, clearly stating the type of goods, quantity, name, and address of the enterprise receiving goods in Vietnam.

- Import contract signed with foreign traders by the on-site importing enterprise; Export and import declaration at place (stamped and confirmed as true copy by the director of the on-site importing enterprise)

All documents in the tax refund application file, the enterprise’s director (or Chairman of the Board of Management) must commit to the authenticity, legality, and validity of the provided data and documents and bear responsibility before the legal authorities.

When the on-site exported products have been exported, the enterprise eligible for import tax refund shall submit the import tax refund application to the customs authority (where the import procedures for raw materials and components were handled) for consideration of the import tax refund.

Based on the above-mentioned application files, the General Department of Customs of provinces and centrally-administered cities will examine and issue a decision on the import tax refund.

In cases where raw materials and components are imported for production of export goods, if the actual exports occur within the prescribed tax payment period, there is no need to pay import tax corresponding to the actual exported goods. The procedure for non-payment of taxes follows the regulations for the tax refund application process, except that the Receipt of tax payment is replaced by the Official Tax Notification from the customs authority.

3.2. On-site importing enterprises must complete the registration of on-site import declarations, calculate and pay taxes in accordance with the provisions of the Law on Export Duties and Import Duties and current guiding documents.

V/ VIOLATION HANDLING:

If on-site importing enterprises do not use imported goods for production of export goods but sell them or use them for other purposes, then:

- VAT: must declare and pay VAT to the direct managing tax authority. The deadline for declaring VAT is calculated from the month when the goods are sold or used for other purposes. The VAT taxable price is the selling price excluding VAT. In case of no sales or use for other purposes, the VAT taxable price is the selling price excluding VAT of similar goods on the market.

- Import tax: must declare and pay import tax to the customs authority (where the import procedures for the consignment were handled). The deadline for declaring and paying back taxes is 2 (two) days from the date of change in purpose recorded on related documents, invoices, and bills. In case there are no documents to determine the date of change in purpose, the determination date for back taxes is the date of registering the Export and Import Declaration at Place.

If on-site importing enterprises fail to declare and pay VAT and import tax for goods sold or used for other purposes, in addition to paying the full amount of tax as stipulated by the Law on Export Duties and Import Duties and the Law on Value Added Tax, they may also be subject to penalties for tax fraud according to current regulations depending on the nature and degree of violation.

VI/ IMPLEMENTATION ORGANIZATION:

This Circular takes effect 15 days from the date of signature. Specifically, the guidelines on VAT in this Circular take effect from January 1, 2002. For VAT processing procedures for cases arising from January 1, 2002 until this Circular takes effect, enterprises do not need to present the Export and Import Declaration at Place (except for enterprises with foreign investment capital).

Any guiding documents on export duties, import duties, and VAT for on-site imported and exported goods that contradict the provisions of this Circular are abolished.

We request all Ministries, agencies equivalent to Ministries, agencies under the Government, People's Committees of provinces and centrally-administered cities to coordinate in implementing the above guidelines correctly. During implementation, if there are difficulties, we request relevant agencies and units to reflect to the Ministry of Finance for resolution.