Newsletter

Decree No. 134/2016/ND-CP detailing some articles on the Law of import and export tax

On 1^st September 2016, the Government issued Decree No. 134/2016/ND-CP detailing some articles on the Law on import and export tax. According to the Decree, there are some notable points as follows:

Subjects for import and export tax

Supplement some subjects of import and export tax including:

• Indirect imported and exported goods in accordance with Clause 3, Article 2 of Law on import and export tax will follow the guidance in Decree No.08/2015/ND-CP dated 21^st January 2015 guiding details and enforcement of Law on
• Imported/exported goods of an Export Processing Enterprise (EPE) which is licensed to import, export, and distribute goods under Clause 3, Article 2 of Law on import and export tax.

Tax exemption and tax refund

–    Tax exemption:

• Tax exemption for luggage within the tax-free allowance of inbound and outbound passengers, which has the custom value not exceeding VND 10,000,000.
• Tax exemption for gift that has the custom value not exceeding VND 2,000,000 or has the tax payable amount under VND 200,000. Tax exemption for such gift is limited to 4 times per year.
• Gifts, which are medicine or medical equipment from overseas organizations to Vietnamese patient (individual) suffering dangerous diseases on the list (as guided in Appendix IV) and have the custom value not exceeding VND 10,000,000, are exempted from tax. Tax exemption for such gift is limited to 4 times per year.
• Tax exemption for imported/exported goods for processing or products from processing for export including materials, work in progress, spare parts, goods used as samples, machinery and equipment for processing and processing products for export.
• Tax exemption for imported goods to produce exported products such as materials, spare parts, work in progress, and finished goods.
• Tax exemption for imported goods directly used for education, for goods produced/processed/recycled/assembled in non-tariff zones, for imported materials/spare parts directly used for the production of information technology products and digital contents, and software.

–    Tax refund:

• Tax refund for exported goods and then re-imported, for imported goods and then re-exported, for imported goods for manufacturing products for export.
• In case taxpayers had already paid import/export tax, and then they did not import/export goods, or they imported/exported goods with the value less than the taxable value (value that they already paid tax for), they get tax refund.

Decree No. 134/2016/ND-CP comes into force on 1^st September 2016 and replaces Decree No. 87/2010/ND-CP dated 13^th August 2010 issued by the Government.

On 31^st August 2016, the Ministry of Finance issued Official Letter No. 12166/BTC-TCHQ to the local custom departments guiding enforcement of Law on import and export tax, which comes into force on 1^st September 2016.

Official Letter No. 4345/TCT-TNCN on personal income tax (PIT)

On 20^th September 2016, the General Department of Taxation issued Official Letter No. 4345/TCT-TNCN guiding on PIT policy.

According to Clause 2, Article 11 of Circular No. 92/2015/TT-BTC dated 15^th June 2015,

Based on a service contract between a foreign contractor and a Vietnamese party, the foreign contractor assigns an expert to Vietnam to deliver consulting and technology transfer to the Vietnamese party. In case the Vietnamese party pays some expenses such as house rent and related services for the expert, such expenses are considered as taxable income from salary and wage of the expert for PIT purpose.

Official Letter No. 4368/TCT-CS on tax policy

On 21^st September 2016, the General Department of Taxation issued Official Letter No. 4368/TCT-CS on tax policy.

According to Article 1, Decree No.114/2015/ND-CP dated 9^th November 2016 amending Article 21 of Decree No. 29/2008/ND-CP dated 14^th March 2008 issued by the Government,

“1. Export processing zones and export processing enterprises may apply legal provisions applicable to non-tariff zones, except for preferences for non-tariff zones in border-gate economic zones. Provisions with respect to export processing enterprise are specified in the Investment certificate or in document of investment registry in case not subject to procedure for issuance of the Investment certificate”.

5. Exchange of goods between export processing zones/enterprises and other areas within Vietnam’s territory, except for cases specified in Clause 3 of this Article and other cases that are not subject to customs procedures as prescribed by the Ministry of Finance, are regarded as import and export activities.”

EPE may dispose its properties or sell goods to Vietnamese market according to provisions of law on investment and trade. At the time of sales/disposal to Vietnam market, the Company does not need to apply procedures on management of exported/imported goods, except for goods that are subject for the management under specific conditions/standards or goods needed a specific inspection that has not been carried out during the import period, or goods that are under the management with license must be approved with written document by an authority.

The Company is an EPE, who produces and packs some kind of coffee and export 100% of its products. In the near future, the Company plan to sell its product to domestic market. In such case, the Company should contact to the Board of Management of Provincial Economic Zone and the Ministry of Planing and Investment to determine whether the Company has the right to sell its product to domestic market or not.

Official Letter No. 4422/TCT-DNL on deductible VAT paid on behalf of foreign contractor

On 22^nd September 2016, the General Department of Taxation issued Official Letter No. 4422/TCT-DNL on foreign contractor tax (FCT). There is a notable point as follows:

The Company paid additional FCT (including VAT and CIT) following the guideline issued by the local tax authority for maintenance contract with a foreign contractor. Therefore, based on the Official Letter, in case VAT amount (of FCT) meets the conditions for VAT deduction, the Company can declare and deduct this VAT amount as regulated.

Official Letter No. 8537/TCHQ-GSQL on submission of finalization report of the usage of imported materials for export production

On 5^th September 2016, the General Department of Custom issued Official Letter No. 8537/TCHQ-GSQL on submission of finalization report of the usage of imported materials for export production. According to the Official Letter, a company which imports materials for export production needs to submit finalization report (Form No.15/BCQT-NVL-GSQL) in according with the guidance of Article 60, Circular No. 38/2015/TT-BTC. The figures to prepare the report is based on Account 152 (Raw materials) and Account 155 (Finished goods). The deadline to submit the report is 90^th day from the fiscal year-end. Previously, according to the guidance of Official Letter No. 12160/BTC-TCHQ dated 2^nd November 2015, the company does not need to submit this report. Official Letter No. 8537 comes into force on 5^th September 2016, and therefore, the company must submit the report for fiscal year 2016. The company also should prepare the report for fiscal year 2015 since the custom authority may request to prove the figures of the beginning balance of year 2016.