Circular No. 99/2000/TT-BTC guides the classification of sets of machinery and equipment as complete equipment or synchronized equipment according to the import tariff schedule.

CIRCULAR

Guidelines for classifying sets of machinery and equipment as complete equipment or integrated equipment according to the Import Tariff

The Ministry of Finance issued Circular No. 37/1999/TT-BTC guiding the classification of goods according to the Export Tax Tariff and Import Tax Tariff List. According to Clause 2, Section II of Circular No. 37/1999/TT-BTC, the import tax on complete equipment or integrated equipment will not be calculated based on general principles but rather classified according to the main machine. However, during implementation, some difficulties have arisen;

To facilitate the classification and calculation of import taxes on complete equipment or integrated equipment, making it gradually align with international practices;

Pursuant to Decree No. 54/CP dated August 28, 1993 of the Government detailing the implementation of the Law on Export Tax and Import Tax, Decree No. 94/1998/NĐ-CP dated November 17, 1998 of the Government detailing the implementation of the Law Amending and Supplementing Certain Provisions of the Law on Export Tax and Import Tax No. 04/1998/QH10 dated May 20, 1998 of the National Assembly;

After consulting the opinions of relevant Ministries and Sectors, the Ministry of Finance guides the classification of sets of machinery and equipment of complete equipment or integrated equipment (referred to as sets of machinery) according to the Import Tariff as follows:

1/ Concept, principle of classification and scope of application:

1.1/ Imported goods that are a set of machinery (of complete equipment or integrated equipment) belonging to groups and subgroups of Chapters 84, 85, 86, 88, 89, 90 of the current Import Tariff shall apply the principle of classification according to the main machine to calculate import tax. In cases where the main machine has a higher import tax rate than other machines and equipment in the imported set of machinery, enterprises may choose between applying the principle of classification according to the main machine or classifying each machine separately.

If, in addition to the set of machinery and equipment, the imported goods also include raw materials, materials, auxiliary materials, fuel, workshops, automobiles, then only the principle of classification according to the main machine shall be applied to calculate import tax for the set of machinery and equipment belonging to Chapters 84, 85, 86, 88, 89, 90 of the current Import Tariff; the principle of classification according to the main machine shall not be applied to calculate import tax for imported goods such as raw materials, materials, auxiliary materials, fuel, workshops, automobiles (these items shall be classified according to their respective tariff codes in the current Import Tariff).

1.2/ A set of machinery that applies the principle of classification according to the main machine includes at least two or more machines or equipment belonging to one or several groups and subgroups of Chapters 84, 85, 86, 88, 89, 90 of the current Import Tariff. These sets of machinery can be a combination (for example, a television equipment set including receiving equipment, transmitting equipment, cameras..., a cigarette production line including leaf processing machines, rolling machines, packaging equipment...) or they can be a production line (for example, a garment production line including sewing machines, cutting machines, finishing machines, button attaching machines, design machines, workbenches, generators...). Different machines in this set complement and connect with each other to simultaneously or sequentially perform specific functions of each machine and of the entire system.

1.3/ The set of machinery mentioned in Points 1.1 and 1.2 can be:

1.3.1/ Imported from one or more markets, originating from one or more regions or countries, arriving in the same shipment or different shipments, but forming a combination or production line with a series of interconnected machines or equipment that complement each other to simultaneously or sequentially perform specific functions of each machine and of the entire system.

1.3.2/ Both imported and domestically produced or purchased, but must meet three conditions:

- The main machine must be an imported machine;

- The set of machinery and equipment that is both imported and domestically produced or purchased must form a combination or production line with a series of interconnected machines or equipment that complement each other to simultaneously or sequentially perform specific functions of each machine and of the entire system;

- The user of the set of machinery and equipment that is both imported and domestically produced or purchased must declare and be responsible under the law for the self-produced or domestically purchased machinery, the name of the producing or supplying unit, and be responsible under the law for the declaration. In case of incorrect declaration, in addition to being subject to back payment of import tax according to the correct tariff code of each piece of machinery or equipment specified in the Import Tariff at the time of back payment, they will also be subject to administrative penalties or criminal liability according to the current provisions of the Law on Export Tax and Import Tax and related documents.

2/ Procedures and documents for classification and calculation of import tax according to the main machine:

2.1/ Economic and technical justification or investment project for complete equipment or integrated equipment approved by the competent authority, clearly stating the names of imported, produced, or domestically purchased machinery and equipment.

2.2/ The specialized management agency of the entity using complete equipment or integrated equipment clearly identifies the main machine of the imported set of machinery. For example, the Ministry of Industry confirms the integrated equipment of the textile production line, while the Ministry of Agriculture and Rural Development confirms the main machine of the vegetable and fruit canning factory.

In cases of difficulty in identifying the main machine, the specialized management agency should provide comments to the Ministry of Finance to discuss with relevant Ministries and Sectors the determination of the main machine of these machines and equipment.

2.3/ Import contract or Entrusted Import Contract, Detailed Packing List of the imported consignment, and other documents (if any) clearly stating the names of the imported machinery and equipment.

3/ Implementation organization

3.1/ Based on the documents specified in Point 2 and the results of inspecting the imported goods, or goods that have been both imported and self-produced or purchased domestically (if applicable), the Customs authority will calculate taxes for either complete equipment or integrated equipment according to the main machine of the consignment and maintain a record of actual imported goods consistent with the List of goods needed for importation approved by the Economic and Technical Justification Authority or the Investment Project Approval Authority. Goods not included in the List of goods needed for importation approved by the Economic and Technical Justification Authority or the Investment Project Approval Authority must be classified and taxed at the tariff rate applicable to those items.

3.2/ In cases where there is doubt about the accuracy of identifying the main machine, the Customs authority handling the import procedures will still temporarily calculate taxes based on the type of main machine confirmed and immediately inform the confirming authority while reporting to the General Department of Customs for resolution. If there are unresolved issues, the General Department of Customs will coordinate with the Ministry of Finance and relevant ministries and sectors to promptly address them.

If the discovery made by the Customs authority is correct, the imported goods will be re-assessed for tax. If the amount of import tax paid exceeds the amount due under the reassessed tax rate, the user unit of the machine will be refunded the excess tax or offset it against the tax payable for subsequent consignments. If the amount of tax paid is less than the amount due under the reassessed tax rate, the Customs authority will collect the additional tax.

The implementation of tax collection, refund, or offset shall be carried out in accordance with the provisions of the Law on Export Duties and Import Duties and the amended, supplemented, and guiding documents for the Law on Export Duties and Import Duties.

3.3/ In cases where declarations for importing a set of machines as part of complete equipment or integrated equipment to be taxed and paid import duties based on the main machine but in reality, these machines and equipment are not used as a combined system or assembly line but rather individually, in addition to collecting the import duty according to the prescribed rate for each machine, the unit may also face administrative penalties or criminal liability according to the current provisions of the Law on Export Duties and Import Duties and related documents.

3.4/ The Ministry of Finance will coordinate with relevant ministries and sectors to specifically handle the application of the principle of classification based on the main machine for imports of sets of machines as complete equipment or integrated equipment, which include machines and equipment belonging to groups or subgroups of Chapters 84, 85, 86, 88, 89, 90 of the current Import Tariff, as well as machines and equipment belonging to other chapters of the current Import Tariff (for example: complete pipeline equipment).

3.5/ This Circular guides the classification of imported goods as a set of machines as complete equipment or integrated equipment, effective from January 1, 2000, following the classification principles of the Harmonized System of Goods Classification of the World Customs Organization, replacing Point 2, Section II, Part A - Principles of Goods Classification of the Import Tariff Guideline as stipulated in Circular No. 37/1999/TT-BTC dated April 7, 1999, regarding the guidance on goods classification according to the Export Tariff, Import Tariff, and Circular No. 5262 TC/TCT dated October 19, 1999, concerning the handling of import duties for complete equipment and integrated equipment issued by the Ministry of Finance.

3.6/ A set of machines and equipment belonging to the groups and subgroups of Chapters 84, 85, 86, 88, 89, 90 of the current Import Tariff, if applying the principle of classification based on the main machine to calculate import duties as stipulated in this Circular, will also be considered as integrated equipment to serve as the basis for determining the objects exempt from Value Added Tax according to the Law on Value Added Tax.

3.7/ Any issues arising before the effectiveness of this Circular should be reported to the Ministry of Finance for coordination with relevant ministries and sectors to examine and resolve each specific case./.