Circular No. 237/2009/TT-BTC dated December 18, 2009 of the Ministry of Finance guiding the imposition of import duty and value-added tax on materials or machinery imported under processing or export production contracts which are damaged due to objective causes such at-natural disasters, fires or unexpected accidents

THE MINISTRY OF FINANCE

Circular No. 237/2009/TT-BTC of December 18, 2009, guiding the imposition of import duty and value-added tax on materials or machinery imported under processing or export production contracts which are damaged due to objective causes such as natural disasters, fires or unexpected accidents

Pursuant to June 14, 2005 Law No. 45/2005/QH11 on Import Duty and Export Duty;

Pursuant to the Government’s Decree No. 149/2005/ND-CP of December 8, 2005, detailing the Law on Import Duty and Export Duty;

Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Government Office’s Official Letter No. 2927/VPCP-KTTH of May 8, 2009, notifying the Prime Minister’s opinions on the imposition of import duty and value-added tax on materials or machinery imported under processing or export production contracts which are damaged due to objective causes such as natural disasters, fires or unexpected accidents;

The Ministry of Finance guides the exemption from, reduction or non-collection of, import duty and value-added tax on materials, machinery or equipment imported under processing or export production contracts which are damaged by natural disasters, fires or unexpected accidents as follows:

Article 1. Scope of regulation

This Circular guides the exemption from, reduction or non-collection of, import duty and value-added tax on materials, machinery or equipment imported under processing or export production contracts which are damaged by natural disasters, fires or unexpected accidents.

Article 2. Objects eligible and conditions for import duty and value-added tax exemption, reduction or non-collection

Materials, machinery or equipment imported under processing or export production contracts and damaged by natural disasters, fires or unexpected accidents which satisfy all the following conditions:

- They have gone through customs procedures while functional agencies have identified the ratio of damage and that the damage is caused by natural disasters, fires or unexpected accidents;

- Customs and tax offices have examined their accounting books and documents as well as relevant papers, certifying that materials, machinery or equipment have been imported but actually neither sold in the Vietnamese market nor exported abroad because they are damaged by natural disasters, fires or unexpected accidents.

In case imported materials, machinery or equipment damaged by natural disasters, fires or unexpected accidents are insured and insurers have paid compensation, including import duty and value-added tax, they will be ineligible for import duty and value-added tax exemption, reduction or non-collection.

Article 3. Import duty and value-added tax amounts to be exempted, reduced or not collected

1. To exempt import duty and not to collect value-added tax on imported materials, machinery or equipment which are wholly damaged and no longer usable.

2. To reduce import duty and value-added tax based on the ratio of damage of imported materials, machinery or equipment which are partially damaged or remain usable.

Article 4. Dossiers of import duty and value-added tax exemption, reduction or non-collection

1. An official letter of request for exemption from, reduction or non-collection of, import duty and value-added tax on damaged materials, machinery or equipment imported under processing or export production contracts, indicating the causes of damage, ratio of damage, duty/tax amounts requested to be exempted or reduced, and undertaking to take responsibility before law for the declaration;

2. A customs dossier specified in Article 11 of the Finance Ministry’s Circular No. 79/2009/TT-BTC of April 20, 2009, guiding customs procedures, inspection and supervision; import duty and export duty; and tax administration for imports and exports;

3. Records certifying the causes of damage, made by functional agencies in the locality where the damage is caused, such as a fire certification record made by the fire prevention and fighting agency of the locality where the fire occurs; the provincial-level People’s Committee’s written certification of the damage caused by the natural disaster, storm or flood to imported materials, machinery or equipment;

4. The assessment service provider’s written certification of the quantity of the lost imported materials, machinery or equipment or the actual damage ratio of imported goods;

5. The enterprise’s commitment that it has not bought insurance for the damaged goods lots. In case the insurance policy does not cover tax-related compensation, the insurer’s certification as well as insurance policy and relevant documents are required;

6. Other relevant papers;

7. List of documents and dossiers of request for duty/tax exemption, reduction or non-collection.

Article 5. Procedures and order for import duty and value-added tax exemption, reduction or non-collection

1. Submission and receipt of dossiers:

1.1. Taxpayers shall themselves determine duty/tax amounts to be exempted, reduced or not collected in cases of natural disasters, fires or unexpected accidents; and submit dossiers to provincial-level Customs Departments of the localities where import procedures are carried out.

a/ If dossiers of request for duty/tax exemption, reduction or non-collection are submitted directly to customs offices, customs officers shall receive the dossiers and append the “dossier receipt” seal, write the time of receipt and record the number of documents in the dossiers.

b/ If dossiers are sent by post, customs officers shall append a seal indicating the date of receipt and record it in the customs office’s correspondence book.

2. Provincial-level Customs Departments of the localities where taxpayers pay import duty shall examine dossiers and process them as follows:

a/ If dossiers are incomplete, to notify such within three working days after receiving the dossiers to taxpayers for supplementation;

b/ If taxpayers are ineligible for duty/tax exemption, reduction or non-collection, to request them to fully pay duty/tax under regulations;

c/ If dossiers are complete, to coordinate with local tax offices in examining accounting books and warehousing and ex-warehousing documents related to the damaged goods lots; examine enterprises’ business transactions under the guidance on examination first, tax refund later in Clause 5, Article 127 of Circular No. 79/2009/TT-BTC of April 20, 2009, to identify the actual state and extent of damage of imported materials, machinery or equipment caused by natural disasters, fires or unexpected accidents; and certify that imported materials, machinery or equipment have not yet been sold in the domestic market or exported abroad;

The time limit for completing examination is sixty days from the date of receipt of complete dossiers from enterprises.

d/ If examination results show that imported materials, machinery or equipment are eligible for duty/tax exemption, reduction or non-collection under regulations, the local Customs Department shall make and send a dossier to the General Department of Customs, comprising:

- A dossier made by the enterprise (under the guidance in Article 4 of this Circular);

- A record of examination at the enterprise as mentioned at Point c, Clause 2 of this Article;

- A written report on the taxpayer’s request for duty/tax exemption, reduction or non-collection, indicating the causes of damage to imported materials, machinery or equipment; the import duty and value-added tax amounts to be exempted or reduced; and the payable duty/tax amounts;

3. Based on provincial-level Customs Departments’ dossiers and reports, the General Department of Customs shall examine and submit them to the Ministry of Finance to decide on duty/tax exemption, reduction or non-collection under regulations.

Article 6. Effect

1. This Circular takes effect 45 days from the date of its signing. Cases in which customs declarations are registered between July 1, 2007, and before the effective date of this Circular, involving materials, machinery or equipment imported under processing or export production contracts which are damaged by natural disasters, fires or unexpected accidents and satisfy the conditions specified in this Circular, should be reported to the Ministry of Finance for settlement on a case-by-case basis.

2. Any problems arising in the course of implementation of this Circular should be reported to the Ministry of Finance for study and settlement.-

For the Minister of Finance
Deputy Minister
DO HOANG ANH TUAN