Circular No. 9493/TC-HTQT regarding the handling of difficulties in implementing certain contents of Circular No. 64/2003/TT-BTC on the implementation of CEPT/AFTA

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 45/2005/TT-BTC ON JUNE 6, 2005 GUIDING THE IMPLEMENTATION OF DECREE NUMBER 78/2003/NĐ-CP ON JULY 1, 2003, DECREE NUMBER 151/2004/NĐ-CP ON AUGUST 5, 2004, DECREE NUMBER 213/2004/NĐ-CP ON DECEMBER 24, 2004, AND DECREE NUMBER 13/2005/NĐ-CP ON FEBRUARY 3, 2005 OF THE GOVERNMENT ON THE ESTABLISHMENT OF THE LIST OF GOODS AND TAX RATES OF VIETNAM TO IMPLEMENT THE ASEAN COUNTRIES' COMMON EFFECTIVE PREFERENTIAL CUSTOMS DUTY AGREEMENT (CEPT) PROGRAM

Implementing the Protocol on the accession of the Socialist Republic of Vietnam to the Agreement on the Common Effective Preferential Tariff (CEPT) Program for the establishment of the ASEAN Free Trade Area (AFTA) (hereinafter referred to as the CEPT/AFTA Agreement), signed in Bangkok on December 15, 1995;
Implementing Decree No. 78/2003/NĐ-CP dated July 1, 2003, Decree No. 151/2004/NĐ-CP dated August 5, 2004, Decree No. 213/2004/NĐ-CP dated December 24, 2004, and Decree No. 13/2005/NĐ-CP dated February 3, 2005 of the Government on the issuance of the List of Goods and Tax Rates of Vietnam to implement the CEPT/AFTA Agreement;
The Ministry of Finance hereby provides guidance as follows:

I. SCOPE AND CONDITIONS FOR APPLICATION

1. Imported goods to be subject to the special preferential tariff rate under the CEPT Agreement (hereinafter referred to as the CEPT rate), as stipulated in Article 1 of Decree No. 78/2003/NĐ-CP dated July 1, 2003, Decree No. 151/2004/NĐ-CP dated August 5, 2004, Decree No. 213/2004/NĐ-CP dated December 24, 2004, and Decree No. 13/2005/NĐ-CP dated February 3, 2005 of the Government must meet the following conditions:

1.1. Included in the List of Goods and Tax Rates of Vietnam to implement the CEPT/AFTA Agreement issued together with Decree No. 78/2003/NĐ-CP dated July 1, 2003, Decree No. 151/2004/NĐ-CP dated August 5, 2004, Decree No. 213/2004/NĐ-CP dated December 24, 2004, and Decree No. 13/2005/NĐ-CP dated February 3, 2005 of the Government.

1.2. Imported from member countries of ASEAN into Vietnam, including the following countries:

- Brunei Darussalam;

- Kingdom of Cambodia;

- Republic of Indonesia;

- Lao People's Democratic Republic;

- Malaysia;

- Union of Myanmar;

- Republic of the Philippines;

- Republic of Singapore; and

- Kingdom of Thailand;

1.3. Meet the requirements of ASEAN origin, confirmed by the ASEAN Certificate of Origin Model D (referred to as C/O Model D), as specified in Part III of this Circular.

1.4. Directly transported from the exporting country which is a member of ASEAN to Vietnam, as provided for in Decision No. 1420/2004/QĐ-BTM dated October 4, 2004 of the Minister of Trade.

2. Goods of export processing enterprises established in Vietnam (hereinafter referred to as export processing enterprises) sold into the domestic market or processed for enterprises in the domestic market when imported shall be subject to the CEPT rate and must satisfy conditions 1.1 and 1.3 set forth in Part I of this Circular.

II. IMPORT DUTY RATES APPLIED

1. The import tariff rate applicable to imported goods subject to the CEPT rate as provided in Part I of this Circular is the CEPT rate for each year, corresponding to the CEPT rate column of that year, as specified in the List of Goods and Tax Rates of Vietnam to implement the CEPT/AFTA Agreement, issued together with Decree No. 78/2003/NĐ-CP dated July 1, 2003, Decree No. 151/2004/NĐ-CP dated August 5, 2004, Decree No. 213/2004/NĐ-CP dated December 24, 2004, and Decree No. 13/2005/NĐ-CP dated February 3, 2005 of the Government.

2. Goods included in the list of goods and tax rates issued together with Decrees No. 78/2003/NĐ-CP dated July 1, 2003, Decree No. 151/2004/NĐ-CP dated August 5, 2004, Decree No. 213/2004/NĐ-CP dated December 24, 2004, and Decree No. 13/2005/NĐ-CP dated February 3, 2005 of the Government, which only specify the implementation schedule for the CEPT rate until 2006, shall apply the CEPT rate for subsequent years as the CEPT rate for 2006 as stipulated in these Decrees, unless otherwise prescribed by the Government.

3. In cases where the most-favored-nation (MFN) import tariff rate of a product specified in the current preferential import tariff schedule is adjusted to a lower level than the CEPT rate, the import tariff rate applicable to such product will be the MFN rate.

If the MFN rate stipulated in the Preferential Import Tariff Schedule of such commodity is adjusted to a higher level than the CEPT rate, the applicable import duty rate will be the CEPT rate.

4. In cases where imported goods by enterprises for production and assembly of mechanical, electrical, and electronic products meet both the conditions for applying the CEPT rate and the conditions for applying the import tariff rate based on the percentage of local content according to current regulations, the enterprise may choose one of two options: implementing the tax policy based on the percentage of local content or the CEPT rate, specifically as follows:

If the enterprise chooses to apply the import tariff rate based on the percentage of local content, when importing detailed or non-assembled components, the enterprise must apply a unified import tariff rate based on the percentage of local content for all imported items in the list, even though some items in the list meet the conditions for applying the CEPT rate.

If the enterprise chooses to apply the CEPT rate, detailed or non-assembled components meeting the conditions for applying the CEPT rate shall be subject to the CEPT rate; other components shall be subject to the MFN rate or the general rate.

5. Parts and accessories of complete knock-down (CKD) automobile kits imported from multiple sources (countries of origin) and multiple shipments can be subject to the CEPT rate according to the rate specified for CKD automobile kits, provided that separate commercial invoices for the parts and accessories requesting application of the CEPT rate are presented, in addition to the conditions set forth in Part I of this Circular.

Parts and accessories of CKD automobile kits imported from multiple sources and multiple shipments that do not meet the conditions set forth in Part I of this Circular shall be subject to the MFN rate or the general rate of CKD automobile kits.

Application of the CEPT rate is implemented when handling the import procedures for specific consignments. The customs clearance procedures for import duties are carried out according to the current regulations.

6. The CEPT rate applicable to goods processed by export processing enterprises for enterprises in the domestic market is the CEPT rate of the processed goods imported according to the list of goods and CEPT rates issued together with Decrees No. 78/2003/NĐ-CP dated July 1, 2003, Decree No. 151/2004/NĐ-CP dated August 5, 2004, Decree No. 213/2004/NĐ-CP dated December 24, 2004, and Decree No. 13/2005/NĐ-CP dated February 3, 2005 of the Government.

7. In cases where changes occur in the legal documents of ASEAN countries issued to implement the CEPT/AFTA Agreement affecting Vietnam's right to apply the CEPT rate as stipulated in Part I, the Ministry of Finance will provide appropriate guidance for each specific case.

III. CERTIFICATE OF ORIGIN (CO) AND INSPECTION OF THE CERTIFICATE OF ORIGIN

1. The rules for goods to be recognized as having ASEAN origin are set forth in the ASEAN Certificate of Origin Form D Regulation of Vietnam issued together with Decision No. 1420/2004/QĐ-BTM dated October 4, 2004, and Decision No. 151/2005/QĐ-BTM dated January 27, 2005, of the Minister of Trade.

2. The Certificate of Origin must bear a signature and stamp consistent with the official model signature and stamp issued by the competent authorities responsible for issuing CO Form D in the following ASEAN member countries:

- In Brunei Darussalam, it is the Ministry of Industry and Resources;

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

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

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

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

- In Myanmar, the Ministry of Commerce;

- In the Philippines, the Department of Finance;

- In Singapore, the Customs Authority; and

- In Thailand, the Ministry of Commerce.

3. For Form D Certificates of Origin for goods of export processing enterprises sold on the domestic market or processed by export processing enterprises for domestic enterprises, they must bear signatures and seals consistent with the official samples of signatures and seals issued by regional customs management offices or industrial park and export processing zone management boards authorized by the Ministry of Trade.

4. Specifically, for Form D Certificates of Origin for imported goods listed in the Goods List issued together with Decree No. 213/2004/NĐ-CP dated December 24, 2004, of the Government (excluding goods processed by export processing enterprises for domestic enterprises), which are declared in import customs declarations registered with customs authorities from January 1, 2004 until this Circular takes effect, their validity period may be extended but not exceeding two (02) years from the date of registration of the customs declaration.

The deadline for presenting Form D Certificates of Origin to customs authorities shall be implemented according to the provisions of Decision No. 1420/2004/QĐ-BTM dated October 4, 2004, and Decision No. 151/2005/QĐ-BTM dated January 27, 2005, of the Minister of Trade.

5. In cases of doubt regarding the authenticity and accuracy of Form D C/O, the Customs Authority has the right:

- To request a re-inspection of Form D C/O: The Customs Authority will send a request to the competent authority issuing the certificate of origin in the exporting country to request confirmation.

- To suspend the application of the CEPT rate and temporarily collect taxes at the preferential or ordinary tariff rates currently in force.

- To request the importer to provide additional documents (if available) to prove that the goods indeed have ASEAN origin within the latest period of one (01) year.

- During the waiting period for the re-inspection results, the procedures for releasing the goods according to the general import regulations shall continue.

- When there is sufficient documentation proving that the goods have ASEAN origin, the Customs Authority shall proceed with the procedures to refund the importer the difference between the provisional duty collected under the current Preferential Import Tariff or General Import Tariff and the duty calculated at the CEPT rate.

The procedures and requirements for requesting a recheck shall be carried out in accordance with the ASEAN Certificate of Origin Form D Regulation of Vietnam issued together with Decision No. 1420/2004/QĐ-BTM dated October 4, 2004, and Decision No. 151/2005/QĐ-BTM dated January 27, 2005, of the Minister of Trade.

IV. OTHER PROVISIONS

1. Enterprises importing goods listed in the Goods List issued together with Decree No. 213/2004/NĐ-CP dated December 24, 2004, of the Government, which are declared in import customs declarations registered with customs authorities from January 1, 2004 until this Circular takes effect, may submit supplementary Form D Certificates of Origin and other related documents in accordance with current laws as the basis for recalculating the import duties payable. If the enterprise meets the conditions specified in Part I of this Circular, it will be refunded the difference between the import duties already paid and the import duties calculated at the CEPT rate. In cases where the enterprise has not yet paid the import duties as notified by the customs authority and late payment penalties arise, the import duties and late payment penalties will be recalculated at the CEPT rate specified above.

Enterprises submitting supplementary Form D C/O and related documents to complete the procedures for recalculating the import tax payable must not be later than December 31, 2005.

2. Provisions regarding tax calculation bases, tax collection and payment systems, tax exemption and reduction systems, tax refund systems, tax recovery, violation handling, and other provisions shall be implemented in accordance with the provisions of the Law on Export Duties and Import Duties and current guiding documents.

V. IMPLEMENTATION

This Circular shall take effect fifteen days after its publication in the Official Gazette, replacing Circular No. 64/2003/TT-BTC dated July 1, 2003, Circular No. 9493/TC-HTQT dated September 12, 2003, Circular No. 736/TC-HTQT dated January 19, 2004, Circular No. 3932/TC-HTQT dated April 15, 2004, and Circular No. 5127/TC-HTQT dated May 14, 2004, of the Ministry of Finance.

During implementation, if there are difficulties or obstacles, please report them promptly so that the Ministry of Finance can provide supplementary guidance as appropriate.