Circular No. 86/2013/TT-BTC of June 27, 2013, providing the application of the priority regime in the state management of customs to eligible businesses

THE MINISTRY OF FINANCE

Circular No. 86/2013/TT-BTC of June 27, 2013, providing the application of the priority regime in the state management of customs to eligible businesses

Pursuant to June 29, 2001 Customs Law No. 29/2001/QH10 and June 14, 2005 Law No. 42/2005/QH11 Amending and Supplementing a Number of Articles of the Customs Law;

Pursuant to November 29, 2006 Law No. 78/2006/QH10 on Tax Administration, November 20, 2012 Law No. 21/2012/QH13 Amending and Supplementing a Number of Articles of the Tax Administration Law, and documents detailing the Tax Administration Law; 

Pursuant to the Government’s Decree No. 154/2005/ND-CP of December 15, 2005, detailing a number of articles of the Customs Law on customs procedures and customs inspection and supervision;

Pursuant to the Government’s Decree No. 87/2012/ND-CP of October 23, 2012, detailing a number of articles of the Customs Law on e-customs procedures for commercial imports and exports;

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;

At the proposal of the General Director of Customs,

The Minister of Finance promulgates the Decree to specify the application of the priority regime in the state management of customs to eligible businesses as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Subjects and scope of application

1. The priority regime in the state management of customs applies to businesses that satisfy the conditions specified in this Circular.

2. In addition to the priorities they are entitled to under this Circular, eligible businesses may also enjoy other priorities in the state management of customs for their imported and exported goods as prescribed by law.

3. Businesses eligible for the priority regime in the state management of customs (below referred to as prioritized businesses) may enjoy the priority regime specified in this Circular at all customs offices nationwide, even at the stage of carrying out procedures for customs clearance for goods and the stage of post-customs clearance inspection.

4. Once a business is recognized as a prioritized one, its imported and exported goods specified in Article 2 below will all be eligible for the relevant priorities provided in Chapter 4 of this Circular (except cases in which the business entrusts the import or export of such goods to others).

Article 2. Types of prioritized businesses

Prioritized businesses are divided into three types:

1. Businesses eligible for priorities in the import and export of all goods items and in all forms of import and export.

2. Businesses eligible for priorities in the export of agricultural and aquatic products, textiles, garments and leather footwear and in the import of raw materials and auxiliary materials for production of these above-said exports.

3. Businesses eligible for priorities in the import of goods serving the manufacture of hi-tech products and in the export of hi-tech products, which have hi-tech business certificates issued by the Ministry of Science and Technology under the Law on High Technology.

Chapter II

CONDITIONS ON PRIORITIZED BUSINESSES

To be considered for application of the priority regime specified in this Circular, a business must fully meet the conditions prescribed in Articles 3 thru 9 below.

Article 3. Condition on law observance

1. The period for evaluation of a business’s law observance is 24 (twenty-four) months up to the date the General Department of Customs receives the business’s request for recognition as a prioritized business.

2. A business will be regarded as satisfying the condition on law observance if, during the period specified in Clause 1 of this Article, it does not commit any of the following violations of the tax or customs law which must be handled:

2.1. Illegally importing or exporting goods on the list of goods banned from import or export.

2.2. Committing tax evasion, tax fraud, smuggling or illegal cross-border transportation of goods.

2.3. Having been administratively sanctioned for more than 3 (three) times by custom offices or tax offices for making false declaration, leading to a decrease in the payable tax amount or an increase in the exempted, reduced or refunded tax amount, each with a fine exceeding the maximum fine level to be imposed by district-level customs or tax department directors or equivalent post holders in accordance with the law on handling of administrative violations.

2.4. Having been administratively handled by customs offices for failure to comply with customs offices’ requests in customs inspection or provision of information or dossiers.

Article 4. Condition on payment

To make payment for consignments of imported or exported goods in accordance with regulations of the State Bank of Vietnam. To pay taxes via banks or treasuries.

Article 5. Condition on accounting and finance

To apply accounting standards approved by the Ministry of Finance. To fully reflect all economic activities in accounting books. To have material contents of their annual financial statements accepted by qualified audit firms with efficient business operations. Not to owe any overdue tax debts in 2 (two) years preceding the year of consideration for recognition.

Article 6. Condition on turnover

1. For businesses specified in Clause 1, Article 2 of this Circular, the import or export turnover must be at least USD 200 (two hundred) million/year.

2. For businesses specified in Clause 2, Article 2 of this Circular, the export turnover must be at least USD 50 (fifty) million/year.

3. Businesses specified in Clause 3, Article 2 of this Circular are not subject to any import or export turnover requirements.

4. The import or export turnover specified in Clauses 1 and 2 of this Article is the average turnover in 2 (two) years preceding the year of consideration for recognition.

Article 7. Condition on performance of e-customs and e-tax procedures

1. By the time customs offices consider, evaluate and appraise their eligibility, businesses have already carried out e-customs procedures with customs offices and e-tax procedures with tax offices.

2. Businesses have technical infrastructure for information technology application meeting requirements for the exchange of e-data between them and customs offices.

Article 8. Condition on reliability

1. Customs offices shall determine the reliability in a business’s law observance in the future based on its internal control apparatus and financial control mechanism as well as its coordination with customs offices and tax administration agencies (according to the set of evaluation criteria issued by the General Department of Customs).

2. A business will not be recognized as a prioritized one even when it satisfies all the conditions specified in Articles 3 thru 7 of this Circular if customs offices still lack sufficient grounds to determine its law observance in the future.

Article 9.  Voluntariness in requesting the recognition as prioritized businesses

1. A business that wishes to enjoy the priority regime shall check its satisfaction of the prescribed conditions and request in writing the General Department of Customs to consider and recognize it as a prioritized business and commit to properly complying with law.

2. A business shall formulate relevant programs and plans, arrange its apparatus and personnel and invest in facilities and equipment so as to satisfy, and maintain the satisfaction of, the conditions required for prioritized businesses.

Chapter III

PROCEDURES FOR APPRAISING AND RECOGNIZING THE ELIGIBILITY FOR, AND EXTENDING, SUSPENDING AND TERMINATING THE APPLICATION OF, THE PRIORITY REGIME

Article 10. Competence to recognize the eligibility for, and extend, suspend and terminate the application of, the priority regime

1. The General Director of Customs is competent to recognize the eligibility for, and extend, suspend and terminate the application of, the priority regime.

2. The Post-Clearance Inspection Department shall assume the prime responsibility for, and assist the General Director of Customs in, appraising and recognizing the eligibility for, and extending, suspending and terminating the application of, the priority regime, and in managing prioritized businesses.

3. Units of the General Department of Customs, provincial-level Customs Departments shall coordinate, provide information on, and commend and evaluate businesses’ law observance and import and export activities.

Article 11. Dossiers of request for recognition as prioritized businesses

1. The General Department of Customs (the Post-Clearance Inspection Department) shall receive dossiers of request for recognition as prioritized businesses.

A dossier comprises:

2.1. A written request: 1 original (made according to form 01/DNUT attached to this Circular), in which the business identifies the priorities it is eligible for;

2.2. A report on the business’s import and export activities and statistics in the last 2 years: 1 original.

A statistical period lasts from January 1 to December 31 of a year. For the current year of operation, if 6 months or less have elapsed, figures of the last 2 years are required; if more than 6 months have elapsed, figures of these months are required together with projected figures for the whole year (made according to form 02/DNUT attached to this Circular).

2.3. A report on the business’s law observance in the last 2 years (in case the business has been handled for violations, number of handling times, violations, sanctioning forms and levels, sanctioning authorities and execution of sanctioning decisions must be clearly indicated): To submit 1 original.

2.4. Audited annual financial statements for the last 2 years: To submit 1 copy with the business’s certification of each statement.

2.5. Written conclusions of the latest audit or inspection (if any) (conducted within 1 year): To submit one copy with the business’s certification and produce the original.

2.6. Written analysis and assessment of the business operation and financial status, made by the business itself;

2.7. Written assessment of the business’s internal control system and working process, clearly describing all professional operations of relevant sections in the supply chain (sections related to import and export procedures such as logistics, accounting, procurement, sale and product quality management);

2.8. Other documents which should be provided to the customs offices to support the appraisal process (such as reward and commendation certificates, international or national certificates and applicable management standards).

Article 12. Appraisal of the satisfaction of the conditions on prioritized businesses

1. To-be-appraised entities: Businesses and their branches and dependent accounting subsidiaries.

2. Forms of appraisal include documentary appraisal and practical appraisal.

2.1. Documentary appraisal is based on:

- The dossier provided by a business and information on the business’s law observance and import and export turnover available on databases and obtained from other sources.

- Evaluations and comments of related agencies, including:

+ Agencies evaluating the observance of the customs law (covering also the observance of tax laws with regard to imported and exported goods), which are the provincial-level Customs Department of the locality where the business is headquartered and conducts import and export activities and units of the General Department of Customs.

+ The agency appraising headings of imported and exported goods items, which is the provincial-level Customs Department of the locality where the business is headquartered. Headings of goods items imported and exported by the business (except those imported by such duty-free modes as import for export processing or export of goods processed for export) which have been appraised by the provincial-level Customs Department and accepted by both the business and the provincial-level Customs Department must be inscribed in the memorandum of understanding and serve as grounds for the business to make customs declarations when carrying out import and export procedures nationwide.

+ The agency certifying the observance of the domestic tax law and implementation of e-tax procedures, which is the tax office with which the business registers and pays domestic taxes.

+ Agencies shall evaluate the business’s observance of law in accordance with their functions and competence and give a written reply within 10 (ten) working days after receiving a written request from the General Department of Customs.

In case the dossier is invalid as prescribed in Chapter II of this Circular, the General Department of Customs shall issue a written reply to the business.

2.2. Practical appraisal is conducted directly by the Post-Clearance Inspection Department or by the Post-Clearance Inspection Department in coordination with the provincial-level Customs Department of the locality where a business is headquartered.

Practical appraisal will be conducted after obtaining the documentary appraisal results showing that the business is qualified as prescribed or concurrently with the documentary appraisal, covering:

- Evaluation of the business’s observance of the customs and tax laws in its import and export activities;

- Evaluation of the business’s internal control capacity;

- Examination of the business’s technical infrastructure for information technology application to determine whether it can meet the requirements for connection and exchange of e-data between the business and customs offices and tax offices.

3. Processing of appraisal results:

Based on appraisal results, evaluation opinions of units and agencies within and outside the customs sector, inspection/audit conclusions (if any) and collected information, the Post-Clearance Inspection Department shall examine the business’s satisfaction of the conditions on prioritized businesses specified in Articles 3 thru 9 of this Circular and make an evaluation report to the General Director of Customs for consideration and decision.

4. The time limit for consideration and recognition of a prioritized business is 45 (forty-five) working days after receiving a complete dossier. For complicated cases involving large-sized businesses, this time limit may be extended once for 30 (thirty) working days at most. If a business is evaluated as having not satisfied the conditions on prioritized businesses, the General Department of Customs shall notify such in writing to the business.

Article 13. Making of memorandums of understanding

1. In case a business is evaluated as having satisfied the conditions on prioritized businesses and accepted by the General Director of Customs, the Post-Clearance Inspection Department and the business shall make a memorandum of understanding (made according to form No. 03/DNUT) for submission to the General Director of Customs for signing.

2. In addition to contents required depending on the characteristics and practical operation of the business, the memorandum of understanding must contain the following principal details:

- Name, address, telephone and facsimile numbers and email address of the business;

- Priorities for the business;

- Responsibilities of the business;

- Responsibilities of the General Department of Customs;

- Agreement on identification of headings of goods items exported or imported by the business (except goods items imported by such duty-free modes as import for export processing and export of goods processed for export).

Article 14. Decisions on recognition of prioritized businesses

1. The General Director of Customs shall sign decisions on recognition of prioritized businesses.

2. The time limit for issuing a decision on recognition of a prioritized business is 15 (fifteen) working days after the appraisal is completed.

3. The form of decisions on recognition of prioritized businesses is attached to this Circular (form No. 04/DNUT).

Article 15. Re-evaluation and extension

1. The duration for a business to enjoy the priority regime for the first time is 24 (twenty-four) months after the General Director of Customs signs a decision on application of the priority regime to this business. Past this duration, the General Department of Customs shall conduct re-evaluation and, if the business still satisfies the prescribed conditions, the duration of application of the priority regime will be extended.

2. At least 60 (sixty) days before a decision on recognition of a prioritized business expires, the General Department of Customs shall notify such to the  business concerned for the latter to file an application for extension of the application of the priority regime.

3. Re-evaluation procedures:

- Documentary appraisal complies with Point 2.1, Article 12 of this Circular;

- Practical appraisal is conducted based on the principle of risk management.

The time limit for consideration and re-evaluation is 30 (thirty) working days. Pending the completion of re-evaluation and re-recognition procedures, the business is still eligible for all priorities even if the decision recognizing it as a prioritized business has expired. 

4. If re-evaluation results show that the business still satisfies the prescribed conditions, the General Department of Customs shall, based on the business’s degree of law observance, issue a decision to extend the duration of application of the priority regime to the business for a period of between 36 (thirty-six) and 60 (sixty) months (made according to form No. 05/DNUT attached to this Circular):

- The 60 (sixty)-month period is applied to businesses which have committed no violation or have committed 1 (one) violation in the tax or customs field and have been administratively sanctioned with a fine not exceeding the maximum fine level to be imposed by district-level Tax or Customs Department directors for each violation;

- The 36 (thirty-six)-month period is applied to businesses which have committed more than 1 (one) violation in the tax or customs field and have been administratively sanctioned with a fine not exceeding the maximum fine level to be imposed by district-level Tax or Customs Department directors for each violation but still satisfy the condition on law observance prescribed in Article 3 of this Circular.

Article 16. Suspension of application of the priority regime

1. The General Director of Customs shall consider and decide to suspend the application of the priority regime specified in Chapter IV of this Circular to a business which:

1.1. Violates any of the provisions of Article 3 of this Circular.

1.2. No longer satisfies the condition prescribed in Article 8 of this Circular.

2. The suspension duration ranges between 60 (sixty) and 180 (one hundred and eighty) days. Past this duration, if the business still fails to completely remedy its violations for plausible objective reasons, the suspension duration will be extended once for another 60 (sixty) days at most.

On the basis of violation evaluation reports of the related provincial-level Customs Department and the business’s explanatory report (clearly stating remedial methods and modes of implementing customs offices’ recommendations), if the business still satisfies the conditions on prioritized businesses or if related functional agencies, after examining the business’s violations, still evaluate it as having satisfied the condition on law observance specified in Article 3 of this Circular despite its violations, the General Director of Customs shall consider and decide to cancel the suspension decision.

3. Upon detecting violations committed by a prioritized business, units of and attached to the General Department of Customs shall report such to the General Department of Customs (the Post-Clearance Inspection Department) for consideration and issuance of a decision on suspension of the application of the priority regime (form No. 06/DNUT attached to this Circular) or a decision on cancellation of the suspension decision (form No. 07/DNUT attached to this Circular).

Article 17. Termination of application of the priority regime

1. The General Director of Customs shall consider and issue a decision to terminate the application of the priority regime specified in Chapter IV of this Circular (form No. 08/DNUT) to a business which:

1.1. No longer satisfies the conditions on prioritized businesses prescribed in this Circular.

1.2. Fails to remedy the errors or violations notified by customs offices; or fails to remedy errors within the duration of suspension of application of the priority regime.

1.3. No longer wishes to enjoy the priority regime or does not apply for re-recognition upon the expiration of duration of application of the priority regime.

2. For a business subject to termination of application of the priority regime, the General Department of Customs shall not receive its dossier of request for recognition as a prioritized business within the subsequent 2 (two) years.

Chapter IV

THE PRIORITY REGIME

Article 18. Priorities at the stage of customs clearance

1. Exemption from examination of customs dossiers and exemption from physical inspection of goods (except cases showing clear signs of law violation):

- Businesses shall take responsibility before law and customs offices for the lawfulness and validity of their customs declarations.

- Exemption from physical inspection of goods include exemption from manual inspection and exemption from inspection by machines and equipment. For cases in which physical inspection of goods is required, prioritized businesses may have their goods inspected by technical devices before others’ and may request for inspection at places selected by themselves.

2. In case customs offices’ data systems break down or suspend, a prioritized business may use a set of documents including commercial invoices, packing lists, goods delivery orders and tax returns affixed with the business’s seal and signed by its representative to carry out customs clearance procedures.

In this case, the district-level Customs Department where the business registers its declarations shall notify such to the border-gate Customs Sub-Department where customs clearance procedures are carried out for information and coordinated handling.

3. Eligible businesses are not required to register material consumption norms and submit liquidation reports with customs offices, provided that they have installed import and export management software meeting customs offices’ management and inspection requirements.

Businesses shall submit to customs offices quarterly reports on output/input inventory of imported materials on the basis of norms elaborated by themselves. Businesses shall take responsibility before law for the accuracy of self-elaborated norms.

Article 19. Priorities at the post-customs clearance stage

1. Customs offices shall not conduct post-customs clearance inspection at offices of businesses during the period of application of the priority regime (except cases showing clear signs of violation).

When being notified by customs offices of their errors or matters which must be clarified, businesses shall review these errors or matters and give explanations to customs offices. Form and places of making explanations are specified in Article 145 of the Ministry of Finance’s Circular No. 194/2010/TT-BTC of December 6, 2010.

2. Inspection to serve the recognition, extension or termination of application of the priority regime. The scope and contents of inspection depend on the management and monitoring requirements of customs offices.

Article 20. Single customs declaration

1. The single customs declaration and time limit for liquidation of single customs declarations comply with Article 9 of the Government’s Decree No. 154/2005/ND-CP of December 15, 2005.

2. Prioritized businesses may make single customs declaration in either of the following forms:

- For goods imported or exported across the border or through border gates, customs declaration shall be made first, exportation or importation later.

- For goods imported on the spot; and materials, components and spare parts purchased from bonded warehouses for production, importation shall be conducted first (under customs offices’ supervision through records on goods delivery and receipt between businesses and bonded warehouse owners), customs declaration later.

Article 21. Priorities in tax procedures

1. To be entitled to the regime of self-liquidation or tax refund first,  inspection later.

Businesses shall calculate by themselves quantities of goods actually used and not yet used for production and tax amounts to be additionally paid or not required to be paid. Businesses shall take responsibility before law and customs offices for liquidation contents. Based on businesses’ liquidation results, customs offices shall issue liquidation, tax refund or non-collection decisions.

2. In case a business is subject to tax assessment as the goods headings previously appraised by customs offices are incorrect, it will neither be required to pay late-payment interests nor administratively handled for customs or tax violations and will be still considered as satisfying the law observance condition.

Chapter V

MANAGEMENT OF PRIORITIZED BUSINESSES

Article 22. Responsibilities of customs offices

1. The Post-Clearance Inspection Department is the specialized agency assisting the General Director of Customs and performing the following tasks:

1.1. To give advises on the formulation and improvement of the priority regime;

1.2. To take the main charge of appraisal, and consult related units and agencies;

1.3. To conduct annual surveys to evaluate the satisfaction of conditions by prioritized businesses;

1.4. To act as the focal point in, and give advise on, handling arising matters; to advise on international cooperation with regard to prioritized businesses;

1.5 To appoint customs officers in charge of managing prioritized businesses and notify prioritized businesses of the list of these officers;

To regularly monitor, analyze export or import operations and collect data on exported or imported goods of businesses so as to help them raise their law observance capability and early detect errors for timely remedy. If detecting errors or matters which must be clarified, to notify such to businesses for the latter to conduct re-inspection:

- If businesses admit that detections of customs offices are correct, they shall take remedies (making additional declaration; adding documents; or additionally paying duties).

- If businesses disagree with customs offices’ notices, they shall give written explanations (enclosed with documentary evidences).

1.6. To be ready to respond to businesses’ inquiries about customs and tax policies and laws.

1.7. To provide training in prioritized businesses to provincial-level Customs Departments and prioritized businesses.

2. At each provincial-level Customs Department, depending on the number of prioritized businesses located in the locality, a group of customs officers shall be assigned to perform the following tasks:

2.1. To guide businesses in making dossiers of request for recognition as prioritized businesses;

2.2. To conduct site inspection of businesses’ satisfaction of the prescribed conditions at the request of the General Department of Customs (the Post-Clearance Inspection Department);

2.3. To make evaluation reports about businesses;

2.4. To regularly monitor import and export activities of businesses, help businesses maintain the satisfaction of conditions and timely detect and remedy errors. To periodically report monitoring results to the General Department of Customs;

2.5. To coordinate with businesses in handling matters arising in the area under their management.

Article 23. Responsibilities of prioritized businesses

1. To properly observe the law.

2. To set up a section or assign persons to take charge of the application of the priority regime. This section will be tasked to act as the focal point in exchanging and providing information and coordinating with customs offices’ sections in charge of prioritized businesses; to implement the reporting regime; and to regulate all operations of businesses according to the priority regime.

3. To formulate and implement a regulation on regular self-inspection and reporting of results of import and export activities to the General Department of Customs. To provide information and data of imported and exported goods to customs offices on a periodical basis;

- In every quarter, businesses shall provide to the General Department of Customs with information and data on their imported and exported goods in the previous quarter (according to forms No. 09a/DNUT and 09b/DNUT attached to this Circular);

- Form of information and data provision: Via the computer network between the General Department of Customs and businesses.

4. To report in writing on information on the section/persons in charge of the priority regime in their businesses.

5. To take responsibility for the implementation of the regulation on regular information exchange with customs offices. To be ready to coordinate and clarify doubtful matters at the request of customs offices or customs officers managing prioritized businesses.

6. To regularly conduct self-inspection so as to detect and remedy errors. Upon importation or exportation of new goods items the headings of which have not yet been agreed between the two parties, businesses shall identify and notify the headings of such goods items to provincial-level Customs Departments of the localities where they are headquartered for consideration and agreement.

7. To properly coordinate with customs offices in case of customs inspection. When being notified of errors or unclear matters in their customs dossiers, businesses shall re-inspect, reply and fully and promptly explain such matters.

8. In case customs offices conduct inspection at offices of businesses or businesses request customs offices to come and work on unclear matters, businesses shall create favorable conditions for and comprehensively coordinate with inspection teams. For matters on which opinions remain divergent, they shall coordinate with customs offices in finding lawful solutions.

9. Before applying the priority regime provided in this Circular, to notify the General Department of Customs and district-level Customs Departments where procedures for their imported or exported goods are carried out of agents carrying out customs procedures for their imported or exported goods and guarantee the law observance by these agents. In case of change of an agent, they shall notify such to those customs offices. Prioritized businesses shall regularly inspect the law observance by their agents so as to detect errors (if any) for notification to customs offices.

Chapter VI

HANDLING OF VIOLATIONS, COMPLAINTS AND DENUNCIATIONS AND ORGANIZATION OF IMPLEMENTATION

Article 24. Handling of violations

1. Prioritized businesses committing law violations shall, depending on the nature and severity of their violations, be handled under law.

2. Organizations and individuals are strictly prohibited from taking advantage of this priority regime to violate policies and laws. Violators shall, depending on the nature and severity of their violations, be administratively handled or examined for penal liability under law.

Article 25. Complaints and denunciations

1. All individuals and organizations may complain about, and all citizens may denounce law violations committed in the course of implementation of this Circular.

2. The filing and settlement of complaints and denunciations comply with the law on complaints and denunciations.

Article 26. Implementation responsibility

1. The General Director of Customs shall, based on the provisions of this Circular, direct and guide customs offices in implementing this Circular

2. The General Department of Customs shall closely coordinate with related agencies and units in assuring proper and effective implementation of this Circular.

Article 27. Effect

This Circular replaces the Ministry of Finance’s Circular No. 63/2011/TT-BTC of May 13, 2011, and Circular No. 105/2011/TT-BTC of July 12, 2011, and takes effect 45 (forty-five) days after its signing.

2. Prioritized businesses eligible for the priority regime under the Ministry of Finance’s Circular No. 63/2011/TT-BTC of May 13, 2011, and Circular No. 105/2011/TT-BTC of July 12, 2011, may continue to apply the priority regime provided in this Circular. The re-evaluation and extension of the application of the priority regime to these businesses comply with Article 15 of this Circular. In case a prioritized business requests change of the priorities it is eligible for as prescribed in Article 2 of this Circular, the General Director of Customs shall make consideration and decision.-

For the Minister of Finance
Deputy Minister
DO HOANG ANH TUAN