Official Dispatch No. 4787/TCHQ-TXNK dated August 15, 2018 of the General Department of Customs on Dealing with issues and difficulties arising from implementation of the Decree No. 59/2018/ND-CP and the Circular No. 39/2018/TT-BTC

No.

Clauses and Articles

Description

Sender

Answer

I. Issues and difficulties relating to the Government’s Decree No. 59/2018/ND-CP dated April 20, 2018

1.

Clause 3 Article 48 of the Decree No. 08/2015/ND-CP

Difficulties in classifying application documentation for the non-collection of export duties on wood materials imported for re-export to third-party countries:

- Clause 3 Article 48 of the Decree No. 08/2015/ND-CP prescribes: “In case customs declarants submit sufficient documents proving that their commodities are permitted to be exempted for tax payment when completing customs formalities required by customs procedures, customs authorities shall not be allowed to collect taxes on exported commodities which are returned or exported to the third country or exported to the free trade zone, and make their decision on customs clearance in accordance with legal regulations”

- There have not been regulations on the instructions regarding the procedures for classification of the application documentation for the non-collection of export duties which are applied to this case.

Recommendation: Currently, with respect to the application documentation for the non-collection of export duties upon completion of the export clearance procedures, the Customs Department of Gia Lai – Kon Tum is instructing its affiliates to classify such documentation as the refund (non-collection of duty)-first, check-later documentation.

Customs Department of Gia Lai – Kon Tum (the Official Dispatch No. 631/BC- HQGLKT dated June 29, 2018)

The classification of application documentation for the non-collection of export duties on wood materials imported for re-export to third-party countries has been specified in Article 27 on the procedures for duty exemption, deduction, rebate and non-collection for exports and imports issued together with the Decision No. 1919/QD-TCHQ dated June 28, 2018 of the General Department of Customs.

2

Clause 4 Article 47 and Clause 3 Article 48 of the Decree No. 08/2015/ND-CP

1. In which regulation are the application documentation for the non-collection of customs duties in this case prescribed for the purpose of ensuring that implementation of the duty non-collection procedures complies with provisions laid down in Clause 4 Article 47 and Clause 3 Article 48 of the Government’s Decree No. 08/2015/ND-CP dated January 20, 2015? If the aforesaid documentation is treated as the duty refund documentation prescribed in Article 33 and Article 34 of the Decree No. 134/2016/ND-CP dated September 1, 2016, there would be a lot of evidencing documents which are not necessary and are unlikely to be submitted at the time of completion of customs clearance procedures for re-exports and re-imports.

2. In case where the application documentation for the non-collection of customs duties need to be treated as the application documentation for the duty rebate as provided in Article 129 of the amended Circular No. 38/2015/TT-BTC, is it necessary to carry out the classification of the application documentation for the duty non-collection in such case? If yes, how can it be done?

Recommendation:

- The application documentation for the non-collection of import duties on goods exported for re-import (that are classified as those eligible for export duty exemption) and for the non-collection of export duties on goods imported for re-export (that are classified as those eligible for export duty exemption) are written documents submitted to apply for the duty non-collection as provided in Clause 5 Article 1 of the Circular No. 39/2018/TT-BTC dated April 20, 2018 of the Ministry of Finance amending Article 16 of the Circular No. 38/2015/TT-BTC.

The classification of the application documentation for the duty non-collection in this case is not necessary for the reason that the implementation of the procedures for the duty non-collection for those eligible for export duty exemption and import duty exemption which are not classified as those eligible for export, import duty rebate, and such classification of the application documentation, may result in certain situations in which inspections carried out at the taxpayers’ offices are required while there is the regulation under which such documentation must be handled during the customs clearance stage.

If the procedures for the duty non-collection are handled within the duration of completion of the customs procedures as per Article 23 of the Customs Law, the customs authority should issue the decision on approval of the duty non-collection when having sufficient grounds for determining that re-imports are goods already exported before, and re-exports are goods already imported before. (The in-charge customs authority may consider approving the results of processing of the application documentation for the duty non-collection on the e-customs system without having to issue the duty non-collection decision because such documentation may be deemed as one of the customs clearance documentation requirements and do not share a lot of the characteristics like the application documentation for the duty rebate.

Customs Department of Dak Lak province (the Official Dispatch No. 701/HQDL-NV)

The issue about the non-collection of duties on imports raised by the Customs Department of Dak Lak province has been dealt with in Article 27 and Article 28 on the procedures for duty exemption, deduction, rebate and non-collection of customs duties on exports and imports issued together with the Decision No. 1919/QD-TCHQ dated June 28, 2018 of the General Department of Customs.

II. Issues and difficulties relating to the Circular No. 38/2018/TT-BTC dated April 20, 2018 and the Circular No. 39/2018/TT-BTC dated April 20, 2018 of the Ministry of Finance

1.

Article 42 of the Circular No. 38/2015/TT-BTC

With respect to Article 42 of the Circular No. 38/2015/TT-BTC prescribing the deadline for paying customs duty, Article 2 of the Circular No. 39/2018/TT-BTC has amended, supplemented and abolished Clause 1, 2, 3, 6, 9 Article 42, but Clause 7 Article 42 of the Circular No. 38/2015/TT-BTC keeps the phrase "The deadline for paying customs duty shall be subject to Clause 3 of this Article”

Recommendation:The General Department of Customs provides guidance on this issue.

Customs Department of Thanh Hoa province

- Clause 2 Article 156 of the Law on issuance of legislative documents prescribes:“If various legislative documents contain different regulations on the same issue, the superior document shall apply.”

- Article 9 of the Law on Customs Duties (in effect from September 1, 2016) provides that dutiable imports and exports must fulfill duty liabilities before obtaining customs clearance or goods release (except cases in which surety bonds are available and enterprises are entitled to preference treatment). Because of that, from September 1, 2016 onwards, the deadline for paying customs duty shall be subject to provisions set out in the Law on Customs Duties, and regulations laid down in Clause 3 Article 42 of the Circular No. 38/2015/TT-BTC also becomes invalid.

Based on the aforesaid regulations, if the official prices of the goods are not decided, and the duty payer is required to pay customs duty in advance or to provide surety bonds based on the prices declared before customs clearance or release of the goods, the deadline for paying customs duty shall be subject to Clause 1 Article 9 of the Law on Customs Duties. If the advanced amount of duty, or the amount of duty guaranteed under the surety bonds before customs clearance or release of the goods, is less than the amount of duty payable when the official prices are announced, the duty payer must pay the amount of duty which is the result of the difference between the amount of duty that must be paid when the official prices are available and the temporarily calculated price (if any) at the time of determination of the official price, and shall not be obliged to pay the amount incurred from late payment of the differential amount of duty payable. The time of determination of the official price shall be subject to soft laws.

If the advanced amount of duty or the amount of duty guaranteed before customs clearance or release of the goods is greater than the amount of duty that must be paid when the official price is announced, the excess amount of payment of duty shall be handled under regulations in force.

2.

Clause 14 Article 1 of the Circular No. 39/2018/TT-BTC

Inspected subjects:

Clause 14 Article 1 of the Circular No. 39/2018/TT-BTC amending Article 25 of the Circular No. 38/2015/TT-BTC prescribes:“1. Inspected subjects: Customs documentation of exports and imports subject to the detailed documentation inspection and the physical inspection of the goods”

Point b.1.1 Clause 1 Article 4 of the Decision No. 1810/2018/QD-TCHQ prescribes:“,except for products without instructions on risks of customs valuation on the e-customs system.”

However, there has been no instruction on risks of customs valuation on the VNACCS/VCIS. For example, there are a lot of goods in the List of imported and exported goods posing customs valuation risks, issued by the General Department of Customs, without instructions on valuation risks. Besides, customs officers have not had sufficient grounds for repudiation of the declared value in accordance with regulations in force.

Recommendation:The General Department of Customs should provide timely updated data and information about the goods posing customs valuation risks in order to ensure instructions on valuation risks on the e-customs system are accurate.

Customs Department of Hai Phong city (the Official Dispatch No. 9063/HQHP- TXNK dated July 6, 2018)

- For the time being, it is recommended that customs documentation of the imported and exported goods subject to the detailed documentation inspection or the physical inspection of the goods (except customs documentation falling into the subjects prescribed in Clause 4 Article 2 and Article 16 of the Law on Customs Duties, and the goods not subject to duties imposed at export or import checkpoints or eligible for 0% tax rate according to the Preferential Tariff Schedule) undergo the customs valuation inspection as per Article 4 of the Decision No.1810/QD-TCHQ.

- In the long run, the General Department of Customs will update criteria for instructions on risks of customs valuation for the goods as recommended by the Customs Department of Hai Phong city.

3.

In cases where exports and imports are suspected of any fraud on the customs valuation and posing high customs valuation risks, and the customs declarant is judged or classified as enterprises that do not comply with the regulations (e.g. subpoint b.1 point 3 clause 14 Article 1 of the Circular No. 39/2018/TT-BTC), there are the issues and difficulties stated below:

- Pursuant to clause 9 Article 1 of the Decree No. 59/2018/ND-CP amending and supplementing clause 3 Article 21 of the Decree No. 08/2015/ND, those suspected of any fraud on customs valuation shall need to undergo the price consultation process.

However, the subpoint b.1 point 3 clause 14 Article 1 of the Circular No. 39/2018/TT-BTC and point b.1 clause 2 Article 4 of the Decision No. 1810/2018/QD-TCHQ does not prescribe that the customs authority must carry out the customs consultation process as provided in regulations applied to this case, and only demands that the customs declaring enterprise give explanations and proofs for its declared customs value and then the inspecting officer prepare the report on customs valuation, issue the notification of customs value, the decision on imposition of duty or the decision on imposition of the administrative penalty (if any) in order to customs clearance of the goods in accordance with regulations in force.

Suggestion: The General Department of Customs should provide detailed guidance for the abovementioned case and promulgate specific regulations on the goods posing high valuation risks.

Recommendation:The customs consultation process should be carried out in accordance with regulations in force.

Customs Department of Hai Phong city (the Official Dispatch No. 9063/HQHP- TXNK dated July 6, 2018)

The Customs Department of Hai Phong city is demanded to comply with point b.1 clause 3 Article 25 as regulated in clause 14 Article 1 of the Circular No. 39/2018/TT-BTC and point b.1 clause 2 Article 4 of the Decision No. 1810/QD-TCHQ dated June 15, 2018 of the Director of the General Department of Customs. According to these regulations, if exports and imports are suspected of any fraud on the customs valuation and posing high customs valuation risks, and the customs declarant is judged or classified as enterprises that do not comply with such regulations, the enterprises at fault are required to give explanations and proofs for the customs value declared within the duration of completion of customs procedures, impossible failure revoke.

- Clause 1 Article 5 of the Decision No. 257/QD-TCHQ dated June 29, 2018 of the Director of the General Department of Customs has clearly specified cases in which high valuation risks are identified. For your consideration and compliance.

4.

Regarding imports suspected of any fraud that makes their price abnormally high (subpoint b.2 point 3 clause 14 Article 1 of the Circular No. 39/2018/TT-BTC):

The General Department of Customs has yet to promulgate any regulation regarding the percentage by which the price is deemed to rise abnormally and determine the specific HS headings of goods

Recommendation: The General Department of Customs should provide guidance on this issue.

Customs Department of Hai Phong city (the Official Dispatch No. 9063/HQHP- TXNK dated July 6, 2018)

Customs Department of Ha Tinh province (the Official Dispatch No. 1251/HQHT- NV dated August 8, 2018)

Clause 2 Article 5 of the Decision No. 257/QD-TCHQ dated June 29, 2018 of the Director of the General Department of Customs has clearly specified the abnormally high price. For your consideration and compliance.

5.

Regarding the refusal of the declared customs value (subpoint b point 3 clause 9 Article 1 of the Decree No. 59/2018/ND-CP and subpoint dd.2 point 4 clause 14 Article 1 of the Circular No. 39/2018/TT-BTC):

In this case, after the consultation with the customs authority issuing the notification of customs value is held and the customs declarant is requested to make supplementary declaration within the duration of 05 working days from the date of completion of the consultation. If the customs declarant makes supplementary declaration according to the notification of customs value within the aforesaid duration, the customs authority carries out customs clearance of the goods in accordance with regulations in force and imposes penalties (if any). If the customs declarant does not make supplementary declaration or make supplementary declaration which does not conform to the requirements set out in the notification of customs value, the customs authority shall impose the duty as provided in the Law on Tax Management in order to carry out customs clearance in accordance with regulations in force, implied factor unalike, and impose penalties (if any).

This means that the aforesaid regulation does not prescribe the case in which the customs authority rejects the declared customs value but the customs declarant does not agree with the bases, methods and prices determined by the customs authority.

Recommendation: The General Department of Customs should provide guidance on this issue.

Customs Department of Hai Phong city (the Official Dispatch No. 9063/HQHP- TXNK dated July 6, 2018)

According to regulations laid down in Point b Clause 3 Article 21 prescribed in Clause 9 Article 1 of the Decree No. 59/2018/ND-CP, and Point dd.2 Clause 4 Article 25 prescribed in Clause 14 Article 1 of the Circular No. 39/2018/TT-BTC, if there is sufficient grounds for refusal of customs value, the customs authority should issue the notification of customs value. If the customs declarant makes supplementary declaration according to the notification of customs value within the duration of 05 days, the customs authority carries out customs clearance of the goods in accordance with regulations in force and imposes penalties (if any). If the customs declarant does not make supplementary declaration or make supplementary declaration which does not conform to the requirements set out in the notification of customs valuation, the customs authority shall impose the duty as provided in the Law on Tax Management in order to carry out customs clearance in accordance with regulations in force, and impose penalties (if any). Therefore, the refusal of the declared customs value and the customs valuation by the customs authority do not depend on whether an enterprise agrees or disagrees, as provided in the Decree No. 08/2015/ND-CP.

6.

- If an enterprise imports the goods having abnormally high customs value (mainly machinery or equipment creating fixed assets), would the customs authority carry out the customs valuation inspection to determine whether there is any suspicion of fraud on the customs value?

- As for business transactions without related-party relationships (or none of related-party transactions) and the goods not present in the List of exports and imports posing customs valuation risks, any suspicion concerning customs valuation fraud should be referred to the tax agency. Additionally, the General Department of Customs should consider advising the Ministry of Finance to provide additional regulations on the abovementioned case.

Customs Department of Ha Tinh province (the Official Dispatch No. 1251/HQHT- NV dated August 8, 2018)

Pursuant to the regulations laid down in point b.2 clause 3 Article 25 prescribed in clause 14 Article 1 of the Circular No. 39/2018/TT-BTC, if the goods declared to have abnormally high customs value, the customs authority is allowed to approve the customs clearance based on the declared value; concurrently, follow the instructions given in point b.2 Article 4 and make a report according to the form No. 04 annexed to the Decision No. 1810/QD-TCHQ dated June 15, 2018 of the Director of the General Department of Customs.

7.

With respect to the single consultation (point 6 clause 14 Article 1 of the Circular No. 39/2018/TT-BTC)

- There are the following issues and difficulties:

+ What are data and information used for the customs inspection and customs valuation?

+ When does the notification of customs valuation effecting the results of the single consultation take effect?

+ Responsibilities of the customs officer in charge of inspecting the customs documentation have not been clearly defined

+ What are the feedbacks of the customs officer in charge of inspecting the customs documentation on the VNACCS/VCIS system to enterprises that request application of the results of the previous consultations to the subsequent consultations.

+ What is the sample notification of customs valuation in case of use of the results of the single consultation?

Recommendation:

+ Data and information used for the customs inspection and customs valuation are those regarding customs declaration (e.g. name of the goods, declared customs value, etc.) on the electronic system of the customs authority and data already used for the customs inspection and valuation in the first consultation.

+ The duration of application of the notification of customs valuation to the shipment of goods first undergoing the customs consultation should be 90 days from the date of issue of that notification.

+ Responsibilities of the customs officer in charge of inspecting customs documentation: at the time of receipt of the application documentation for the single customs consultation, the inspection of the eligibility conditions for the single customs consultation for the enterprise’s shipment must be carried out, including the following inspected subjects:

The declared information referred to in subpoint a.1 point 3 clause 14 Article 1 of the Circular No. 39/2018/TT-BTC has not changed in comparison with the shipment to which the enterprise requests the results of the customs consultation of the current shipment to be applied. If all eligibility conditions are satisfied, the application documentation for the customs consultation may be sent to the Customs Department in accordance with regulations in force. If not, the customs consultation may be carried out according to the decentralization regime.

Customs Department of Hai Phong city (the Official Dispatch No. 9063/HQHP- TXNK dated July 6, 2018)

- Information used in the customs inspection and valuation are customs valuation information prescribed in Article 7 of the Decision No. 1811/QD-TCHQ dated June 15, 2018.

- The notification of customs valuation may be applied until the customs valuation information changes.

- When carrying out the single customs consultation, the customs officer in charge of inspecting the customs documentation must perform tasks specified in clause 6 Article 4 of the Decision No. 1810/QD-TCHQ.

- Method and contents of the notification posted on the VNACCS/VCIS system must comply with clause 6 Article 4 of the Decision No. 1810/QD-TCHQ dated June 15, 2018.

- The Form No. 02B/TB-TGHQ/TXNK annexed to the Circular No. 39/2018/TT-BTC must be used as the sample notification of customs valuation.

8.

Clause 24 Article 1 of the Circular No. 39/2018/TT-BTC amending and supplementing Article 43

Clause 1 Article 43 of the Circular No. 38/2015/TT-BTC prescribing the surety bond for the amount of duty that must be paid in either forms of joint guarantee or several guarantee. Although Article 2 of the Circular No. 39/2018/TT-BTC has abolished clause 1 on the joint guarantee and several guarantee, subpoint c clause 2 Article 43 amending and supplementing Article 43 has instructions for joint guarantee and several guarantee forms.

Recommendation:The General Department of Customs should provide guidance on this issue.

Customs Department of Thanh Hoa province

The Circular No. 39/2018/TT-BTC has repealed clause 1 Article 43 of the Circular No. 38/2015/TT-BTC as this content has been prescribed in Article 4 of the Decree No. 134/2016/ND-CP.

Any amendment or supplement to clause 2, clause 3 Article 43 is aimed at clarifying regulations laid down in Article 4 of the Decree No. 134/2016/ND-CP regarding the joint guarantee and the several guarantee (electronic guarantee procedures, paper guarantee procedures and refusal to accept a guarantee, etc.).

9.

Clause 27 Article 1 of the Circular No. 39/2018/TT-BTC

Clause 27 Article 1 of the Circular No. 39/2018/TT-BTC amending and supplementing Article 48 of the Circular No. 38/2015/TT-BTC stipulated in c.2.2.2 “In case where purposes of a part of the total number of goods of the same type specified in multiple customs declaration forms are converted…, the duration of payment of the imposed duty and calculation of the late payment amount shall coincide the duration of duty payment stated in the final customs declaration form”.

The "final customs declaration form" may be understood as the last customs declaration form for the whole shipment subject to the imposition of duty or the last customs declaration forms for separate goods in the event that there are more than one good subject to the imposition of duty.

Recommendation:The General Department of Customs should provide guidance on this issue.

Customs Department of Hai Phong city (the Official Dispatch No. 9427/HQHP- GSQL dated July 13, 2018)

Clause 27 Article 1 of the Circular No. 39/2018/TT-BTC amending and supplementing point c.2.2.2 clause 6 Article 48 of the Circular No. 38/2015/TT-BTC: stipulated in c.2.2.2 “ In case where purposes of a part of the total number of goods of the same type specified in multiple customs declaration forms are converted, and the amount of duty payment has already been defined on the first export and import declaration forms, the imposed amount of duty is the average amount of duty calculated according to the following formula:

Duration of payment of imposed duty and calculation of the late payment of duty must coincide with the duration of duty payment specified in the final customs declaration form.”

Pursuant to the abovementioned regulation, the final customs declaration form is the last customs declaration form for specific goods subject to the imposition of duty.

10.

Clause 48 Article 1 of the Circular No. 39/2018/TT-BTC

If enterprises importing goods for manufacturing of domestic exports outsource the processing service in accordance with regulations laid down in Clause 48 Article 1 of the Circular No. 39/2018/TT-BTC, and receive finished products for direct exporting, are they eligible for import duty exemption?

Recommendation:The General Department of Customs should provide guidance on this issue.

- Customs Department of Long An province (the Official Dispatch No. 1252/HQLA- NV dated July 2, 2018)

- Customs Department of Binh Phuoc province (the Official Dispatch No. 1161/HQBP- NV dated July 6, 2018)

Pursuant to provisions laid down in clause 2 Article 12 of the Government’s Decree No. 134/2016/ND-CP dated September 1, 2016, one of the bases for determining whether the goods receive duty exemption is that an organization or individual manufacturing exports must have an establishment manufacturing exported products within the territory of Vietnam; must have the right to own or use machinery and equipment at the production facility which are designed to use imported raw materials, supplies and components for manufacturing of exported goods and inform the production facility in accordance with laws on customs. Pursuant to the aforesaid regulations, those enterprises mentioned by the Customs Department of Long An province and the Customs Department of Binh Phuoc province are not eligible for import duty exemption(the General Department of Customs has issued the Official Dispatch No. 4299/TXNK-CST dated August 2, 2018 providing implementary guidance).

11.

Clause 49 Article 1 of the Circular No. 39/2018/TT-BTC

2. Regarding the procedures for handling of scrap and waste products for domestic consumption and wastes, which are applied to exported goods:

Clause 49 Article 1 of the Circular No. 39/2018/TT-BTC prescribes: “Scrap or waste products obtained from the production of exported goods shall be eligible for the import duty exemption once being sold and consumed domestically, but the importer must prepare the written document stating the declaration and payment of VAT and special consumption tax (if any), environmental protection tax (if any), and file it to the customs authority through the e-customs system according to the information requirements specified in the Form No. 04 of the Appendix IIa to this Circular. In case of the paper document, the customs declarant must make declaration according to the Form No. 06/BKKTT/TXNK of the Appendix VI to this Circular.”

The Decision No. 1966/QD-TCHQ has yet to prescribe receipt, inspection and handling of scrap or waste products for domestic consumption and wastes with respect to domestic exports.

Recommendation:Regulations regarding receipt, inspection and handling in the abovementioned case should be supplemented in the Decision No. 1966/QD-TCHQ.

Customs Department of Quang Ngai province

Regarding scrap and waste products:

a) In case of electronic procedures, the declaration must be made by using the Form No. 04 of the Appendix IIa to the Circular No. 39/2018/TT-BTC.

b) In case of paper procedures, the declaration must be made by using the form No. 06/BKKTT/TXNK of the Appendix VI to the Circular No. 39/2018/TT-BTC; the name of goods on the list must be consistent with the actual name of goods sold; the customs value must be declared based on the before-VAT selling price.

- The Head of the Subdepartment of Customs may decide the form and degree of inspection which are similar to the paper declaration procedures.

- The customs authority should create the logbook and designate the number to the list in the same manner as applied to the paper declaration.

As for scrap:

Subject to Article 71 of the Circular No. 38/2015/TT-BTC amended and supplemented in clause 50 Article 1 of the Circular No. 39/2018/TT-BTC, organizations and individuals carry out handling of scrap under legislative regulations on environmental protection. Organizations and individuals have responsibility for writing all details in their logbooks and presenting them to the customs authority for its inspection.

12.

Clause 61 Article 1 of the Circular No. 39/2018/TT-BTC

Subject to provisions laid down in clause 61 Article 1 of the Circular No. 39/2018/TT-BTC dated July 20, 2018, “…dutiable value, duty assessment time and duty assessment method shall be subject to Article 4 and Article 5 of the Circular No. 39/2015/TT-BTC...”. However, Article 4 of the Circular No. 39/2015/TT-BTC has been repealed.

Customs Department of Can Tho city (Official Dispatch No. 1325/HQCT- NV dated July 20, 2018)

Subject to provisions laid down in clause 15 Article 1 of the Circular No. 39/2018/TT-BTC dated April 20, 2018 amending and supplementing Article 25a., the Customs Department of Can Tho city is bound to comply with this Article 25a.

13.

Clause 63 Article 1 of the Circular No. 39/2018/TT-BTC

Since Article 129 in the Circular No. 38/2015/TT-BTC, amended and supplemented by clause 63 Article 1 of the Circular No. 39/2018/TT-BTC on the procedures for receipt and handling of application documentation for duty refund and non-collection, prescribes the case in which the inspection result defines that the taxpayer satisfies regulatory conditions for duty refund, the Customs Subdepartment issuing the duty refund decision keeps a record of that inspection result and posts it on the system.

Recommendation:The General Department of Customs should provide guidance on this issue.

Customs Department of Binh Dinh province (the Official Dispatch No.859/HQBD-NV dated July 6, 2018)

At present, when obtaining the duty refund decision, the customs officer in charge of processing duty refund documentation will be responsible for posting that decision on the concentrated accounting system. The VNACC/VCISS system has not yet supported the update of the inspection result defining whether the taxpayer is eligible for duty refund. The General Department of Customs has conducted a research in order to add this function to the electronic tax exemption, deduction and refund program built by the General Department of Customs.

14.

Article 129 in the Circular No. 38/2015/TT-BTC, amended and supplemented by clause 63 Article 1 of the Circular No. 39/2018/TT-BTC prescribing the inspection carried out after issue of the duty refund decision at the taxpayer’s office, is implemented under Article 143 of the Circular No.38 (post-clearance inspection at the taxpayer’s office). The Customs Subdepartment of the Customs Department of Binh Dinh province has worked out the plan No. 1618/KH-HQCKQN to check application documentation for tax refund and non-collection first and carry out the customs inspection at the taxpayer’s office later at 05 enterprises. Until the date of entry into force of the Circular No. 39/2018/TT-BTC (June 5, 2018), the Customs Subdepartment has already carried out the inspection at 02 enterprises, the post-clearance inspection at 01 enterprise and has not yet carried out the inspection at 02 enterprises.

Recommendation:Is it necessary for the Customs Subdepartment affiliated to the Customs Department of Binh Dinh province to carry out the inspection at the remaining 02 enterprises?

Customs Department of Binh Dinh province (the Official Dispatch No. 859/HQBD-NV dated July 6, 2018)

From the date of entry into force of the Circular No. 39/2018/TT-BTC (June 5, 2018), with respect to the inspection carried out after issue of the duty refund decision at the taxpayer’s office, the Customs Department of Binh Dinh province is requested to comply with clause 65 Article 1 of the Circular No. 39/2018/TT-BTC amending and supplementing Article 143 of the Circular No. 38/2015/TT-BTC.

With respect to the cases in which the inspection has not yet been carried out after tax refund, from June 5, 2018, the Leadership of the Customs Department of a province or city is advised to transfer the documentation eligible for granting duty refund first and carrying out the inspection later

If a Customs Department of a province or city that does not manage any customs subdepartment in charge of post-clearance inspection, the Director of the Customs Department is responsible for directing the post-clearance inspection or collaborating with the Post-clearance Inspection Department in carrying out the inspection after tax refund.

15.

Clause 65 Article 1 of the Circular No. 39/2018/TT-BTC

Subject to Article 132 in the Circular No. 38/2015/TT-BTC, amended and supplemented by the Ministry of Finance at clause 65 Article 1 of the Circular No. 39/2018/TT-BTC prescribing the offset between duty refund amounts and duty payables within a budgetary year at a customs authority and a budgetary index, the customs authority shall prepare the request note of adjustment of state budget revenue and the accounting statement in accordance with regulations in force.

Recommendation:At present, the request note of adjustment of state budget revenue prepared by using the form No. C1-07a/NS annexed to the Circular No. 77/2017/TT-BTC dated July 28, 2017 of the Ministry of Finance does not have the customs declaration number. The Customs Department of Binh Dinh province requests the addition of information about the number of the adjusted customs declaration at the section “Other information subject to the proposed adjustment”

Customs Department of Binh Dinh province (the Official Dispatch No.859/HQBD-NV dated July 6, 2018)

The General Department of Customs agrees with the request for the addition of information about the number of the adjusted customs declaration at the section “Other information subject to the proposed adjustment”.

16.

Article 104 of the Circular No. 38/2015/TT-BTC

Article 104 in the Circular No. 38/2015/TT-BTC prescribes the registration of the list of exported and imported products eligible for duty exemption; Article 30 in the Decree No. 134/2016/ND-CP prescribes the notification of the list of duty-free products proposed to be imported with respect to the cases in which the notification of the list of duty-exempt goods is issued. Although both Articles provides guidance on the same issue, the Circular No. 39/2018/TT-BTC amending and supplementing the Circular No. 38/2015/TT-BTC does not amend/supplement/abolish Article 104.

Recommendation:The General Department of Customs should provide guidance on this issue.

Customs Department of Quang Nam province

Clause 2 Article 156 of the Law No. 80/2015/QH13 on issuance of legislative documents prescribes that, if various legislative documents contain different regulations on the same issue, the superior document shall apply. Therefore, with respect to issues relating to the list of duty-exempt goods, the Customs Department must comply with Article 30 of the Government’s Decree No. 134/2016/ND-CP dated September 1, 2016.(General Department of Customs has given its guidance in the Official Dispatch No. 3762/TCHQ-TXNK dated June 27, 2018).

17.

Article 3 of the Circular No. 39/2018/TT-BTC

The Law No. 45/2005/QH11 on Export and Import Duty, the Law No. 107/2016/QH13 on Import and Export Duty and other documents providing guidance on these soft laws do not have regulations on tax exemption and tax refund for on-the-spot exported goods.

Clause 1 Article 36 in the Government’s Decree No. 134/2016/ND-CP dated September 1, 2016 prescribes: Duty refund is granted to the goods imported for production and business purposes and from which the products derived have been exported:

1. Those taxpayers, who have paid the import duty on the imported goods used for production and business purposes that have been brought into the process of manufacturing of exported goods and from which the products derived have been exported abroad, or exported to non-tariff zones, shall be entitled to a refund of the paid amount of import duty.

Subject to clause 5 Article 114 in the Circular No. 38/2015/TT-BTC dated March 25, 2015 of the Ministry of Finance, imported goods on which import duty has been paid for manufacturing of the goods exported abroad or exported to non-tariff zones shall be eligible for the import duty in proportion to the actual number of exported products and shall be exempted from payment of the export duty on exported goods which satisfy conditions for being defined as those processed from totally imported raw materials and supplies, and shall be subject to the following specific regulations:

…

c) Cases in which duty refund is considered, including:

…

Organizations or individuals importing raw materials and supplies for manufacturing of goods sold to foreign traders, but delivering goods to other organizations or individuals in Vietnam designated by foreign traders, shall be eligible for a refund of imported duty on raw materials and supplies used for manufacturing of exported goods.

Clause 24 Article 2 of the Circular No. 39/2018/TT-BTC dated April 20, 2018 of the Ministry of Finance amending and supplementing certain Articles of the Circular No. 38/2015/TT-BTC prescribes: all of provisions related to tax exemption and refund for on-the-spot exported goods shall be abolished.

Recommendation:At the Customs Department of Dong Nai province, there are many cases in which on-the-sport exporting and importing enterprises deliver and receive goods inland between them, not exporting abroad or exporting to non-tariff zones. It is recommended that the General Department of Customs should provide guidance on this issue.

Customs Department of Dong Nai province (the Official Dispatch No. 1187/HQDN a-GSQL dated June 26, 2018)

Since September 1, 2016, products manufactured for exporting purposes have been exempted from duty under clause 2 Article 12 of the Decree No. 134/2016/ND-CP or have received duty refund as per Article 36 of the Decree No. 134/2016/ND-CP in case of being exported abroad or exported to non-tariff zones.

Since the Decree No. 134/2016/ND-CP does not prescribe beneficiaries of tax exemption, the Customs Department is advised to comply with the Decree No. 134/2016/ND-CP.

18.

The item 1.80 “Import tariff schedule code” in the appendix II of the Circular No. 39/2018/TT-BTC

The item 1.80 “Import tariff schedule code” given in the appendix II of the Circular No. 39/2018/TT-BTC prescribes:“With respect to the duty-exempt goods, declaring the import tariff schedule code as B30 shall be prohibited but the tariff schedule code corresponding to the classification type of import duty rate shall be accepted".Hence, with respect to the goods imported to provide the processing service for the foreign customer, it shall be obligatory to enter the corresponding tariff schedule code as B01-Preferential tariff schedule and the tax exemption code as referred to on the VNACCS as XNG81-imported goods for provision of the processing service for the foreign customer (the foreign customer who is the beneficiary of import duty exemption). If this code is used for customs declaration, the declaration form shall have the duty rate as applied with respect to HS codes of specific product line together with the proportionate amount of import duty exemption/deduction.

Point a clause 3 Article 31 of the Decree No. 134/2016/ND-CP prescribes:“The taxpayer shall, on his/her own, determine and declare goods and the amount of duty exemption (except declaring the amount of duty payable on exported and imported goods for processing that are supplies by the customer) on the customs declaration form”. This means that the goods imported for processing is not subject to tax declaration.

Recommendation:The General Department of Customs should provide general instructions for the declaration made at the item related to import tariff schedule code and tax exemption code for the goods imported for provision of processing service to the foreign customer.

Customs Department of Can Tho city (Official Dispatch No. 1223/HQCT- NV dated July 6, 2018)

Subject to provisions laid down in the Circular No. 39/2018/TT-BTC, it is recommended that the Customs Department of Can Tho city guides enterprises to fulfill the item “tariff schedule code” and “import duty exemption/deduction/non-collection code” for the goods imported for provision of processing service for the foreign customer as follows:

- At the item 1.80 “Import tariff schedule code”: Enter the code B30.

- At the item 1.92 “Import duty exemption/deduction/non-collection”: Enter XNG81 (the goods imported for provision of the processing service for the foreign customer).

19.

As regards the customs declaration procedures applied to the processing activity:

According to the declaration instructions given in the appendix I of the Circular No. 39/2018/TT-BTC – the item 1.80 (page 225), with respect to the duty-exempt goods, declaring the import tariff schedule code as B30 shall be prohibited but the tariff schedule code corresponding to the classification type of import duty rate shall be accepted.

At present, although an enterprise declares the corresponding tariff schedule code (B01), the item “duty rate” has the amount of tax exemption which is kept blank and does not describe the amount of duty exemption. This is contrary to provisions laid down in Article 2, Article 10 and clause 3 Article 31 of the Decree No. 134/2016/ND-CP, and provisions laid down in point d clause 1 Article 18 of the Circular No. 38/2015/TT-BTC, amended and supplemented by clause 7 Article 1 of the Circular No. 39/2018/TT-BTC.

Recommendation:The General Department of Customs should provide guidance on this issue.

Customs Department of Long An province (the Official Dispatch No. 1252/HQLA- NV dated July 2, 2018)

Subject to the Circular No. 39/2018/TT-BTC,

B30: Tariff schedule code applied to those not subject to import duties

B01: Preferential import tariff schedule;

If the enterprise declares the tariff schedule code B30, the item “Duty rate” will be blank.

If the enterprise declares the tariff schedule code B01, the item “Duty rate” will be the duty rate specified in the preferential import tariff schedule.

With respect to the report by the Customs Department of Long An province that there are certain enterprises declaring the corresponding tariff schedule code (B01) but, at the duty rate item, the amount of duty exemption remains blank and the figure indicating the amount of tax exemption has not been shown, the General Department of Customs will keep a record of this case, carry out checking and provide instructions if such report reflects the true situation.

20.

As for the GTT02 system, the GTT02 system should be upgraded and changed in terms of contents in order to meet requirements set out in Circulars and Decrees.

Customs Department of Hai Phong city (the Official Dispatch No. 9063/HQHP- TXNK dated July 6, 2018)

The General Department of Customs considers upgrading the GTT02 system. For the time being, the Customs Department of Hai Phong city is requested to comply with the Official Dispatch No. 3766/TCHQ-TXNK dated June 27, 2018 of the General Department of Customs providing instructions for giving updates to the GTT02 system.

21.

Regarding the duration of data access, subject to provisions laid down in b.5.8 clause 3 Article 25 prescribed in clause 14 Article 1 of the Circular No. 39/2018/TT-BTC, when searching data to check the declared customs value, if the data access duration has been extended under the Circular No. 39/2018/TT-BTC to 90 days before or 90 days after the export date, and there is no data found, is it permissible to get any extension of the duration of data access? To which extent is such extension granted?

Customs Department of Da Nang city (the Official Dispatch No. 1133/HQDN g-GSQL dated June 28, 2018)

Subject to b.5.8 clause 3 Article 25 prescribed in clause 14 Article 1 of the Circular No. 39/2018/TT-BTC, the duration of data access shall be extended to the maximum number of 90 days before or 90 days after the export date for the purpose of determination of suspicion concerning any fraud on the declared customs value.

22.

Appendix II, Appendix VI of the Circular No. 38/2015/TT-BTC has been replaced as per point a clause 75 Article 1 of the Circular No. 39/2018/TT-BTC. For the purposes of such replacement, the form No. 13/DKDMMT/TXNK, the form No. 14/CVDKDMMT/TXNK and the form No. 15/PTDTL/TXNK issued together with the Appendix VI of the Circular No. 38/2015/TT-BTC have been replaced by the form No. 13/DKDMMT/TXNK, the form No. 14/CVDKDMMT/TXNK and the form No. 15/PTDLT/TXNK issued together with the Appendix III of the Circular No. 39/2018/TT-BTC.

Clause 5 Article 104 of the Circular No. 38/2015/TT-BTC has been repealed according to the instructions given in the Official Dispatch No. 3762/TCHQ-TXNK dated June 27, 2018 of the General Department of Customs. At present, forms relating to the notification of the list of duty-exempt goods shall be subject to provisions laid down in the Decree No. 134/2016/ND-CP.

Recommendation:Implementation of the Decree No. 134/2016/ND-CP should continue.

Customs Department of Ba Ria – Vung Tau province (Official Dispatch No. 2053/HQBR VT-GSQL)

Clause 156 Article 80/2015/QH13 of the Law on issuance of legislative documents prescribes:“If various legislative documents contain different regulations on the same issue, the superior document shall apply.” A legislative document shall apply to acts taking place at the time of effectiveness of that legislative document. In case where legislative documents provide different regulations regarding the same issue, the legislative document having higher legal value shall prevail.

Article 30 in the Government’s Decree No. 134/2016/ND-CP dated September 1, 2016 prescribes the notification of the list of duty-free products proposed to be imported with respect to the cases in which the notification of the list of duty-exempt goods is issued.

Article 106 in the Circular No. 38/2015/TT-BTC dated March 25, 2015 of the Ministry of Finance prescribes reporting and inspection of the use of import duty-exempt goods.

According to this regulation, forms relating to the notification of the list of duty-exempt goods shall be subject to provisions laid down in the Decree No. 134/20016/ND-CP (form No. 05 of the Official Dispatch on the notification of the list of duty-exempt goods, form No. 06 the List of duty-exempt goods proposed to be imported; form No. 07 the reconciliation report for import duty-exempt goods issued together with the Appendix VII of the Decree No. 134/2016/ND-CP). In particular, the form relating to the report on the use of import duty-exempt goods shall be subject to provisions set forth in Article 106 of the Circular No. 38/2015/TT-BTC (form No. 17/BCKT- NKMT/TXNK in the Appendix VI issued together with the Circular No. 38/2015/TT-BTC).

(General Department of Customs has given its guidance on implementation in the Official Dispatch No. 3762/TCHQ-TXNK dated June 27, 2018).

For your consideration and compliance.