Circular No. 50/2006/TT-BTC dated June 7, 2006 of the Ministry of Finance guiding the application of import duty and enterprise income tax preferences to Dung Quat oil refinery project

CIRCULAR

GUIDING THE APPLICATION OF IMPORT DUTY AND ENTERPRISE INCOME TAX PREFERENCES TO DUNG QUAT OIL REFINERY PROJECT

THE MINISTER OF FINANCE

Pursuant to 2005 Law No. 45/2005/QH11 on Import Tax and Export Tax;

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

Pursuant to the Government’s Decree No. 164/2003/ND-CP of December 22, 2003, detailing the implementation of the Law on Enterprise Income Tax;

Pursuant to the Prime Minister’s Decision No. 546/QD-TTg of June 17, 2005, adjusting the investment project on Dung Quat Oil Refinery 1;

The Ministry of Finance hereby guides the application of import duty and enterprise income tax preferences to Dung Quat Oil Refinery Project as follows:

I. IMPORT DUTY PREFERENCE

1. Subjects exempted from import duty

Subjects importing goods specified at Point 2, Section I of this Circular to serve construction and maintenance of Dung Quat Oil Refinery Project (hereinafter referred to as the Project) shall be exempted from import duty, including:

- Vietnam Oil and Gas Corporation - the Project investor (hereinafter referred to as the Investor), or

- Domestic and foreign contractors (including principal contractors and subcontractors) implementing bid packages of the Project;

Principal contractors are domestic or foreign organizations winning one of the bid packages of the Project and directly sign contract with the Investor (or organizations authorized by the Investor).

Subcontractors are organizations or individuals running independent business and signing contracts with principal contractors to perform part of the work under contracts which principal contractors sign with the Investor (or organizations authorized by the Investor)

- Importing enterprises entrusted by contractors under regulations on import entrustment.

2. Goods exempted from import duty

Goods imported to serve construction and maintenance of the Project shall be from import duty, including:

2.1. Goods imported to create fixed assets for the Project, including:

2.1.1. Equipment, machinery; 

2.1.2. Special-purpose means of transport in technological lines certified by the Ministry of Science and Technology and vehicles for staff transport, including automobiles of over 24 seats and waterway vehicles;

2.1.3. Spare parts, details, loose parts, fittings, molds, dies, and accessories for assembly into complete units or use with equipment, machinery and special-purpose means of transport specified at Items 2.1.1 and 2.1.2 of this Point;

2.1.4. Materials for manufacturing equipment and machinery in technological lines or for making spare parts, details, loose parts, fittings, molds, dies, and accessories for assembly into complete units or use with equipment, machinery and special-purpose means of transport specified at Item 2.1.1 of this Point;

2.1.5. Construction materials which cannot be produced domestically.

Construction materials serving the Project include both materials constituting the Project’s items and consumable materials (chemicals, gas, lubricants and grease, special-purpose catalysts) used in the operation of construction machinery.

2.2. Equipment, machinery, spare parts, accessories and special-purpose means of transport (other than automobiles of under 24 seats) temporarily imported for re-export by contractors to serve the project construction.

3. Tax exemption procedures

3.1. Responsibilities of importers

- Responsibilities of the Investor (or organizations authorized by the Investor): the Investor shall take responsibility before law for certifying the detailed list of quantities, types and values of imported goods (for consumable materials, consumption norms shall be required)

- Responsibilities of bid package contractors

Contractors shall manage and monitor the list of goods temporarily imported for re-export to serve construction and maintenance of the Project. When the term of construction and maintenance of the Project terminates, bid package contractors shall re-export machinery, equipment and special-purpose means of transport mentioned above, including broken ones. When re-exporting, bid package contractors shall not have to pay export tax.

In case the term of temporary import for re-export terminates and the imported goods are allowed by competent state agencies to be sold, bid package contractors shall declare to pay import duty, value-added tax and special consumption tax (if any) according to current regulations.

3.2. Procedures and dossiers for tax exemption

Apart from customs dossiers specified in the Ministry of Finance’s Circular No. 112/2005/TT-BTC of December 15, 2005, guiding customs procedures and customs inspection and supervision, importers of tax-free goods specified in Point 2, Part I of this Circular shall submit to the customs office the following dossiers:

- The import permit issued by the Ministry of Trade or branch management agencies (for goods imported to serve projects, which are subject to import permit according to the provisions of law);

- Detailed list of quantities, types and value of imported goods (for consumable materials, consumption norms shall be required) made by the bid package contractor and certified by the Investor (or an organization authorized by the Investor);

- The taxpayer’s written commitment on use of goods for proper import purpose;

- Deduction monitoring sheet (according to the customs’ form) made by the bid package contractor or importing enterprise entrusted by the contractor, and registered at the Customs Department of the respective locality where the enterprise is headquartered or at the customs office which the enterprise finds most convenient.

- Detailed list of quantities, types, and values of imported goods and deduction monitoring sheet shall be made in two copies. The Customs Department where the bid package contractor or importing enterprise entrusted by the contractor register for customs clearance shall receive and stamp for certification of the receipt of the list and the deduction monitoring sheet while keeping one copy for file;

- Import entrustment contract (for enterprises importing under the contractor’s entrustment).

- The deduction monitoring sheet certified by the customs office where the enterprise has registered for the first importation;

- The list of quantities, types and values of imported goods certified by the customs office where the enterprise has registered for the first importation;

- The taxpayer’s written commitment on use of goods for proper import purpose;

- Import entrustment contract (in case the importing enterprise is entrusted by the contractor);

The customs office where the importer registers  for customs clearance shall check the goods actually imported and compare with the importer’s dossiers to identify imported goods entitled to tax exemption under the guidance of this Circular, and  record the quantities, values and types of goods of each import batch in the deduction monitoring sheet.

4. Collection of tax arrears

In case imported goods exempted from tax are used for a wrong purpose, importers shall have to declare and pay all taxes which they have been exempted, except for the case the goods are sold to subjects which are entitled to exemption of or consideration for import duty exemption according to current regulations.

II. ENTERPRISE INCOME TAX PREFERENCES

Dung Quat Oil Refinery Project shall enjoy enterprise income tax preferences as follows:

- Imposition of the enterprise income tax rate of 10% for 15 years from the time Dung Quat Oil Refinery officially commences its business operations;

- Exemption from enterprise income tax for four years from the time the Project generates taxable income and 50% reduction of the tax for nine subsequent years.

To enjoy tax preferences, Vietnam Oil and Gas Corporation shall have to separately account the taxable income of Dung Quat Oil Refinery Project.

Principles and procedures for exemption from and reduction of enterprise income tax shall comply with Section IV, Part E of the Ministry of Finance’s Circular No. 128/2003/TT-BTC of December 22, 2003, guiding the implementation of the Government’s Decree No. 164/2003/ND-CP of December 22, 2003, detailing the implementation of the Law on Enterprise Income Tax.

III. ORGANIZATION OF IMPLEMENTATION:

This Circular takes effect 15 days after its publication in “CONG BAO.” In the course of implementation, any arising problem should be reported to the Ministry of Finance for prompt settlement.