Decree 125/2017/ND-CP amend Decree 122/2016/ND-CP Export Tariff, Preferential Import Tariff

         DECREE

Amending and supplementing a number of articles of the Government’s Decree No. 122/2016/ND-CP of September 1, 2016, on the Export Tariff, the Preferential Import Tariff, and the list of commodity items and their specific duty rates, compound duty rates and out-of-quota import duty rates^[1]

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to the April 6, 2016 Law on Import Duty and Export Duty;

Pursuant to the National Assembly’s Resolution No. 71/2006/QH11 of November 29, 2006, approving the Protocol on the Socialist Republic of Vietnam’s Accession to the World Trade Organization;

At the proposal of the Minister of Finance;

The Government promulgates the Decree amending and supplementing a number of articles of the Government’s Decree No. 122/2016/ND-CP of September 1, 2016, on the Export Tariff, the Preferential Import Tariff, and the list of commodity items and their specific duty rates, compound duty rates and out-of-quota import duty rates.

Article 1. To amend and supplement a number of articles of the Government’s Decree No. 122/2016/ND-CP of September 1, 2016, on the Export Tariff, the Preferential Import Tariff, and the list of commodity items and their specific duty rates, compound duty rates and out-of-quota import duty rates (below referred to as Decree No. 122/2016/ND-CP)

1. To amend and supplement Article 3 as follows:

“Article 3. To promulgate the Export Tariff and the Preferential Import Tariff according to the list of dutiable commodity items, and the list of commodity items and their specific duty rates, compound duty rates and out-of-quota import duty rates

To promulgate together with this Decree:

1. Appendix I - The Export Tariff according to the list of dutiable commodity items.

2. Appendix II - The Preferential Import Tariff according to the list of dutiable commodity items.

3. Appendix III - The list of commodity items of used passenger cars with 15 seats or less (including the driver’s) and their specific duty rates and compound duty rates

4. Appendix IV - The list of commodity items subject to tariff quotas and their out-of-quota import duty rates”.

2. To amend and supplement Clause 1, Article 4 as follows:

“Article 4. Export Tariff according to the list of dutiable commodity items

1. The Export Tariff according to the list of dutiable commodity items provided in Appendix I to this Decree includes headings and description of commodities, and the export duty rate for each export duty-liable group of items or item. Particularly for items belonging to the group No. 211 in the Export Tariff, when carrying out the customs procedures, customs declarants shall declare the name and 8-digit heading of such item according to its 8-digit heading specified in the Preferential Import Tariff and write the export duty rate of 5%. Export items of the group No. 211 are those that meet both the conditions below:

a/ Condition 1: Being supplies, raw materials or semi-finished products (below collectively referred to as goods) other than those of groups No. 01 thru 210 in the Export Tariff;

b/ Condition 2: Having the total value of natural resources and minerals plus energy cost accounting for 51% or more of the product cost. The determination of whether the total value of natural resources and minerals plus energy cost accounts for 51% or more of the product cost must comply with Decree No. 100/2016/ND-CP of July 1, 2016, detailing and guiding the implementation of a number of articles of the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax, the Law on Excise Tax, the Law on Tax Administration, and their amending and supplementing documents (if any).”

3. To amend and supplement Clauses 2 and 3, Article 5 as follows:

“2. Section II: Chapter 98 - Provisions on commodity headings and particularly preferential import duty rates for a number of groups of commodity items and commodity items.

a/ Annotations and conditions and procedures for application of the particularly preferential import duty rates specified in Chapter 98

- Chapter annotations: Commodity items stated in Clause 1, Part I, Section II of Appendix II to this Decree are eligible for the particularly preferential import duty rates specified in Chapter 98.

- Group annotations:

+ Classification of commodity headings and application of particularly preferential import duty rates for automobiles in CKD and automobile chassis fitted with engines and cabs (rolling chassis fitted with cabs) must comply with Clause 2.1, Part I, Section II of Appendix II to this Decree;

+ The commodity items of alloy steel containing boron and/or chromium and/or titanium under Heading 98.11; filler, barrier cream and scar reduction gel under Heading 98.25; nylon fabric 1680/D/2 and 1890 D/2 under Heading 98.26; copper wire of a cross-section exceeding 6 mm but not exceeding 8 mm under Heading 98.30; primary polypropylene granules under Heading 98.37; non-alloy steel, hot-rolled, in bars or irregularly wound coils, under Heading 98.39; set top boxes under Heading 98.46; and neoweb made from nano-composite polymeric alloy under Heading 98.47 are eligible for the particularly preferential import duty rates specified in Chapter 98, if meeting the technical standards and specifications specified in Clause 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8 or 2.9, Part I, Section II of Appendix II to this Decree.

- Classification methods and conditions and procedures for application of the particularly preferential import duty rates specified in Chapter 98, reporting, inspection and finalization of the use of goods eligible for the particularly preferential import duty rates specified in Chapter 98 must comply with Clause 3, Part I, Section II of Appendix II to this Decree.

b/ The list of groups of commodity items and commodity items and their particularly preferential import duty rates includes headings of groups of commodity items and commodity items under Chapter 98; descriptions of commodities (names of groups of commodity items and commodity items); and their corresponding headings in Section I of Appendix II (97 chapters according to Vietnam’s Import Tariff) and particularly preferential import duty rates in Chapter 98, must comply with specific provisions in Part II, Section II of Appendix II to this Decree;

c/ In case a group of commodity items or a commodity item which is eligible for the particularly preferential import duty rate as specified in Chapter 98 also meets all the conditions for application of specially preferential import duty rates under current regulations, either of the specially preferential import duty rate specified in the Specially Preferential Import Tariff or the particularly preferential import duty rate specified in Chapter 98 of the Preferential Import Tariff may be opted for;

d/ When carrying out the customs procedures, customs declarants shall declare commodity headings in the column “Corresponding headings in Section I of Appendix II” as provided in Chapter 98 and write down the commodity headings provided in Chapter 98 next to such headings.

3. Section III: Provisions on preferential import duty rates for a number of commodities for implementing the WTO commitments from January 1, 2019, onward.”

4. To amend and supplement Article 6 as follows:

“Article 6. Preferential import duty rates applicable to mechanical machinery

Mechanical machinery under Headings 84.54 thru 84.63 are eligible for preferential import duty rates as follows:

1. Mechanical machinery which cannot be manufactured at home are eligible for the preferential import duty rate of 0%. Mechanical machinery mentioned at this Point are those outside the Ministry of Planning and Investment-issued list of machinery and equipment which can be manufactured at home.

2. Mechanical machinery other than those specified in Clause 1 of this Article are eligible for the preferential import duty rates applicable to Headings 84.54 thru 84.63 in the Import Tariff provided in Section I of Appendix II to this Decree.”

5. To amend and supplement Article 7 as follows:

“Article 7. Import duty for used cars

1. For passenger cars with 9 seats or less (including the driver’s) of a cylinder capacity not exceeding 1,000 cc under Heading 87.03, the specific duty rates specified in Appendix III to this Decree shall apply.

2. For passenger cars with 9 seats or less (including the driver’s) of a cylinder capacity exceeding 1,000 cc under Heading 87.03 and passenger cars with between 10 and 15 seats (including the driver’s) under Heading 87.02, the compound duty rates specified in Appendix III to this Decree shall apply.

3. For passenger cars with 16 seats or more (including the driver’s) under Heading 87.02 and motorized cargo vehicles of a gross vehicle weight not exceeding 5 tons under Heading 87.04 (except refrigerated trucks, refuse collection vehicles with refuse compressing devices, cistern vehicles, armored vehicles for transporting valuable cargoes, bulk-cement trucks, and hook-lift trucks), the preferential import duty rate of 150% shall apply.

4. The import duty rates for other cars under Headings 87.02, 87.03 and 87.04 are 1.5 times the preferential import duty rates for brand-new cars of the same category under the same headings specified in Section I, Appendix II to this Decree.”

6. To add the following Article 7a:

“Article 7a.  Preferential import duty rates applicable to car components imported under the Duty Incentive Program

1. For imported car components under Heading 98.49 in Section II, Chapter 98 of Appendix II to this Decree, the preferential import duty rate of 0% shall apply.

a/ At the time of registering customs declarations, the preferential import duty rate of 0% shall not apply and enterprises (customs declarants) shall declare and pay import duty at ordinary duty rates, preferential duty rates or specially preferential duty rates under current regulations;

b/ The application of the preferential import duty rate of 0% to items under Heading 98.49 must comply with Point b, Clause 3 of this Article.

2. Eligible subjects and conditions for application of the Duty Incentive Program:

a/ Subjects eligible for application of the Duty Incentive Program: Enterprises meeting criteria for car manufacture and assembly under the Government’s regulations on conditions for car manufacture, assembly and import and provision of car warranty and maintenance services;

b/ Conditions for application of the Duty Incentive Program:

- Enterprises commit to manufacturing or assembling cars meeting emission standards of level 4 (for the 2018-2021 period) and level 5 (from 2022 onwards) and reaching the output specified at Point b.12, Clause 3.2, Section I, Chapter 98 of Appendix II to this Decree as follows:

+ The output of domestically manufactured and assembled cars (minimum total output) prescribed for each specific period stated in the Duty Incentive Program schedule at Point b.12, Clause 3.2, Section I, Chapter 98 of Appendix II to this Decree for the following groups:

Passenger cars with 9 seats or less, of a cylinder capacity not exceeding 2,500 cc under Heading 87.03.

Passenger cars with between 10 and 19 seats (minibuses) under Heading 87.02.

Passenger cars with 20 seats or more (buses/coaches) under Heading 87.02.

Motorized cargo vehicles and motorized special-use vehicles (trucks) under Headings 87.04 and 87.05.

+ The output of each car model committed to be manufactured and assembled at home (minimum output of each committed car model) prescribed for each specific period stated in the Duty Incentive Program schedule at Point b.12, Clause 3.2, Section I, Chapter 98 of Appendix II to this Decree with the number of committed car model as follows:

One model, for the group of passenger cars with 9 seats or less, of a cylinder capacity not exceeding 2,500 cc and fuel consumption of less than 7.5 liters per 100 km.

One model, for the group of minibuses.

One model, for the group of buses/coaches.

Two models, for the group of trucks.

- Car components are directly imported by the enterprises prescribed at Point a of this Clause for car manufacture or assembly or imported by organizations or individuals entrusted or authorized by these enterprises and meet the following conditions:

+ Imported car components under Heading 98.49.

+ Import car components cannot be produced at home.

+ Components (details, detail assemblies and parts) are finished products but have not yet been assembled or are unfinished products but have basic particularities of finished ones with a knocked-down level at least equal to the knocked-down level of imported car components prescribed in the Ministry of Science and Technology’s regulations on the method of determining the localization rate of cars and the provisions of Point b.5.2, Clause 3.2, Section I, Chapter 98 in Section II of Appendix II
to this Decree.

3. Dossiers and procedures for implementation of the Duty Incentive Program

a/ Dossiers and procedures for registration for participation in the Duty Incentive Program     

- A dossier must comprise a written reregistration for participation in the Duty Incentive Program, made according to Form No. 05 in Appendix II to this Decree (original) and the certificate of eligibility for car manufacture or assembly or investment certificate or the factory’s techno-economic evaluations (one certified copy) proving that the factory’s manufacturing or assembling capacity matches the annual minimum total output required under the Duty Incentive Program for car components.

- Procedures for registration for participation: An enterprise shall submit 1 dossier of registration for participation in the Duty Incentive Program to the customs office of the locality where it is headquartered or where its factory is located to register for participation in the Duty Incentive Program right after this Decree is signed or at any time during the implementation period of the Program. The time of participation in the Duty Incentive Program is the date stated in the written registration.

b/ Dossiers and procedures for application of the duty rate to items under Heading 98.49

- A dossier must comprise:

+ A request (original) for application of the duty rate of 0% to items under Heading 98.49, stating the period proposed for application of the duty rate of 0%; the quantity of car components already imported in such period which have been used for car manufacture or assembly; the quantity of cars of the groups covered by the Duty Incentive Program actually manufactured or assembled; the number of committed car models actually manufactured or assembled, and the actually paid duty amount;

+ An inventory (original) of car components already imported during the period proposed for application of the duty rate of 0%, made according to Form No. 6 in Appendix II to this Decree and accounting documents (one certified copy each) showing the quantity of imported component already used for manufacturing or assembling cars of the groups covered by the Duty Incentive Program.

+ Ex-factory quality inspection slips, made by the enterprise according to the form issued by the Vietnam Register (certified copies with the number corresponding to the number of cars manufactured or assembled during the period proposed for application of the duty rate of 0%); certificates of vehicle quality, technical safety and environmental protection (certified copies with the number corresponding to the number of types and categories of cars already manufactured or assembled) and explanations of vehicle technical design bearing the appraisal seal of the Vietnam Register (certified copies with the number corresponding to the number of types and categories of cars already manufactured or assembled).

+ A list of import customs declarations and statement of duty amounts paid for each customs declaration (original).

- Procedures for application of the duty rate applicable to Heading 98.49:

+ Within 60 days from June 30 or December 31 every year, an enterprise shall send to the concerned custom office a request for application of the duty rate of 0% of applicable to Heading 98.49 to car components imported during the period proposed by the enterprise for manufacture or assembly of cars of the groups stated in the Duty Incentive Program’s schedule. The enterprise shall propose a period not exceeding 6 months, counting from January 1 to June 30 or from July 1 to December 31 every year.

+ In case the enterprise registers for participation in the Duty Incentive Program right after this Decree is signed, within 60 days from June 30, 2018, it shall send to the concerned customs office a request for application of the duty rate of 0% applicable to Heading 98.49 to car components imported during the period counting from the date the enterprise registers for participation in the Duty Incentive Program to June 30, 2018, for manufacture or assembly of cars of eligible groups.

+ The customs office shall base on the enterprise’s dossier to inspect its eligibility and conditions for application of the Duty Incentive Program prescribed in Clause 7.2, including:

The minimum total output reached in each specific period stated in the Duty Incentive Program’s schedule.

The minimum output of each committed car model reached in each specific period stated in the Duty Incentive Program’s schedule.

In case the period proposed by an enterprise for application of the duty rate of 0% within a specific period stated in the Duty Incentive Program’s schedule is less than 6 months, the enterprise must still reach the minimum total output and the minimum output of each committed car model required for such period as stated in the Duty Incentive Program’s schedule at Point b.12, Clause 3.2, Section I, Chapter 98 of Appendix II to this Decree.

The determination of whether the enterprise meets the required minimum total output and minimum output of each committed car model shall be based on the number of ex-factory quality inspection slips issued by the enterprise during the period proposed for application of the duty rate of 0%; such slips shall be made according to the form issued by the Vietnam Register. The identification of committed car models shall be based on certificates of vehicle quality, technical safety and environmental protection issued by the Vietnam Register (for determining cylinder capacity, engine type and capacity) and descriptions of vehicle technical designs bearing the appraisal mark of the Vietnam Register (for determining types and categories of chassis or cab).

Used car components imported for car manufacture or assembly must fall under Heading 98.49 prescribed in Section II, Chapter 98 of Appendix II to this Decree and cannot be produced at home. The identification of components that cannot be produced at home shall be based on the Ministry of Planning and Investment’s regulations.

Components must meet the minimum knocked-down level prescribed by the Ministry of Science and Technology and the provisions at Point b.5.2, Clause 3.2, Chapter 98 in Section II of Appendix II to this Decree.

The quantity of imported used car components must match the quantity of cars actually manufactured or assembled in the period; inspection shall be based on inventories of imported car components and the number of ex-factory quality inspection slips and certificates of manufactured or assembled car quality, technical safety and environmental protection.

+ Based on results of inspection of the enterprise’s dossier of request for application of the duty rate of 0%, the customs office shall:

In case the enterprise meets all the conditions for application of the Duty Incentive Program and the enterprise (taxpayer) has paid a duty amount higher than the duty amount payable at the duty rate applicable to Heading 98.49 for imported car components, handle the surplus duty amount for the enterprise in accordance with the Law on Tax Administration and guiding documents.

In case the enterprise does not meet the conditions for application of the Duty Incentive Program, issue a written reply to the enterprise.

7. To amend and supplement Article 8 as follows:

“Article 8. List of commodity items subject to tariff quotas and their out-of-quota duty rates

1. The list of commodity items subject to tariff quotas includes a number of commodity items under Headings 04.07, 17.01, 24.01 and 25.01 specified in Appendix IV to this Decree.

2. The annual import quotas for the commodity items specified in Clause 1 of this Article must comply with the Ministry of Industry and Trade’s regulations. In case treaties to which the Socialist Republic of Vietnam is a contracting party contain provisions on the import quotas for the commodity items specified in Clause 1 of this Article, such treaties shall apply.

3. Import duty rates applicable to the quantities of imported goods within tariff quotas:

a/ In case the imported quantity of a commodity item specified in Clause 1 of this Article is within its annual import quota set by the Ministry of Industry and Trade, the preferential import duty rate specified in Section I of Appendix II to this Decree or the specially preferential import duty rate specified in the Preferential Import Tariff (if meeting the conditions for application of the specially preferential import duty rate) issued together with the Government’s Decrees promulgating the Specially Preferential Import Tariffs for implementation of treaties;

b/ In case treaties provide for import quotas and within-quota import duty rates for the commodity items specified in Clause 1 of this Article, the import quotas and within-quota import duty rates for the commodity items specified in the Government’s Decrees promulgating the Specially Preferential Import Tariffs for implementation of such treaties shall apply;

c/ In case treaties do not provide for import quotas but specify specially preferential import duty rates, such specially preferential import duty rates shall apply on the condition that goods are imported within their annual import quotas set by the Ministry of Industry and Trade as stated at Point a of this Clause.

4. Import duty rates applicable to the quantity of imported goods in excess of tariff quotas:

a/ In case the imported quantity of a commodity item specified in Clause 1 of this Article exceeds its annual import quota set by the Ministry of Industry and Trade, the excessive quantity will be subject to the out-of-quota duty rate specified in Appendix Clause 2 of this Article;

b/ In case  treaties provide for import quotas and/or out-of-quota import duty rates for the commodity items specified in Clause 1 of this Article, the Government’s Decrees promulgating the Specially Preferential Import Tariffs for implementation of such treaties shall apply. In case the out-of-quota duty rates under a treaty are higher than the out-of-quota duty rates prescribed in Appendix IV to this Decree, the latter shall prevail.”

Article 2. Effect

1. This Decree takes effect on January 1, 2018.

2. To annul Clause 2, Article 4 of Decree No. 122/2016/ND-CP and Appendixes to Decree No. 122/2016/ND-CP.

3. The preferential import duty rates for imported car components under Heading 98.49 specified in Article 7a of this Decree will apply from the signing date of this Decree through December 31, 2022.

Article 3. Organization of implementation

Ministers, heads of ministerial-level agencies, heads of Government-attached agencies and provincial-level People’s Committee chairpersons shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN XUAN PHUC