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Amendment of the Law on Export Tax and Import Tax: Amending the regulation on imposing import tax on goods on the spot

Summary

In order to specify the import and export goods on the spot where the MFN tax rate is applied and in which case the normal tax rate is to be applied, the Ministry of Finance has proposed to amend the regulation on import tax rate with export goods on the spot in the draft Law of amending and supplementing a number of articles of the Law on Export Tax, import duty No. 107/2016 / QH13. This content has been evaluated by Ministry of Justice.

Updated on : 26-05-2018

To propose amendments and or supplements to the regulations on application of import tax rates for on-spot export or import goods in Clause 3, Article 2 or Point a, Clause 3, Article 5 of Law No. 107/2016 / QH13, the Ministry of Finance analyzes: In Article 3, Article 2, Law No. 107/2016 / QH13 stipulates "On-spot import and export goods and import and export goods of enterprises about import rights and distribution rights". To clearly guide this provision, Clause 3, Article 2 of the Government's Decree No. 134/2016 / ND-CP on taxpayers: Goods are imported or exported on the spot as prescribed in Clause 3, Article 2 of the Tax Law. Export, import tax shall comply with the provisions of the Government's Decree No. 08/2015 / ND-CP of January 21, 2015 detailing and implementing measures for implementation of the Customs Law regarding customs procedures, inspection and supervision, customs control.

And Article 35 of Decree No. 08/2015 / ND-CP specifies on-spot export and import goods, including: goods ordered to be processed in Vietnam and sold by foreign organizations and individuals to organizations, and to individuals in Vietnam; Goods traded between inland businesses and export processing enterprises, enterprises in non-tariff areas; Goods purchased or sold between Vietnamese enterprises and foreign organizations and individuals without presence in Vietnam and designated by foreign traders to assign and receive goods with other enterprises in Vietnam.

In current practice, export-import goods are mainly granted C / O form D certificates but they are not eligible for special preferential duty rates as stipulated in Article 4. Decree No. 129/2016 / ND-CP should be understood only in the cases of goods for export and import on the spot as stipulated in Point b, Clause 1, Article 35, Decree No. 08/2015 / ND-CP. The special preferential tax rates are applicable to goods imported or exported on the spot as prescribed at Points a and c, Clause 1, Article 35 of Decree No. 08/2015 / ND-CP. C / O form D is issued by the Ministry of Industry and Trade of Vietnam (it is likely to lead to the understanding that preferential tax rates or ordinary tax rates should be applied). The above regulations lead to inconsistency in tax policy for the same type of import and export to carry out customs procedures.

According to the Ministry of Finance, it is unclear exactly what the imported goods are on the MFN rate, in which case the normal tax rate should be applied. This also makes it difficult for customs offices and enterprises to apply tax rates for on-spot export goods. With this content there are many different opinions, so to specify the goods, the Ministry of Finance has proposed amendments to the three options to amend Clause 3, Article 2 as follows:

Option 1: To remove the phrase "the exported and imported goods on the spot and import and export goods of the enterprise which exercise the right to export, import and distribution right" shall be subject to tax.

About this option, according to the Tax Policy Department of the Ministry of Finance: Decree No. 187/2013 / ND-CP dated November 20, 2013 detailing the implementation of the Commercial Law regarding international trading of goods and Acting as agent for purchase, sale, processing and transit of goods with foreign countries; and at Point f, Clause 1 and Point e, Clauses 2 and 3 of Article 42 of the draft decree replacing Decree No. 187/2013 / ND-CP (currently, the Ministry of Industry and Trade has submitted to the Government and is explaining the opinion of the Government members), the outsourcing side shall be allowed to export and import on the spot for processed products, machinery, equipment for rent or loan; Raw materials, auxiliary materials and supplies; waste products and discarded materials and must fulfill tax obligations as prescribed by law.

As such, activity of foreign trade is still regulated on the type of import-export in place. Therefore, if the proposal to remove this content from the export tax law, import tax will not be consistent with foreign trade law and there is no legal basis for tax to adjust for this activity.

Under Option 2, the phrase "imported goods on the spot" is added to Point a, Clause 3, Article 2" :a) Preferential tax rates are applied for imported goods originating from countries or group of countries or territory that perform for the most favored nation treatment in its trade relations with Vietnam; Goods from the non-tariff area imported into the domestic market, meeting the conditions of origin from the countries, groups of countries or territories which are eligible for the most favored nation treatment in their trade relations with Vietnam; On-spot import goods. "

Analysis of this alternative, the Tax Policy Department said that under the provisions of Clause 6, Article 15 of the Government's Decree No. 31/2018 / ND-CP of March 8, Merchandise of origin of goods", 6. Agencies and organizations issuing certificates of origin will consider and grant certificates of origin to exported or imported goods from export processing enterprises, export processing zones, bonded warehouses and non-tariff sub-zones. Other customs areas which have export or import relations with the inland where the goods satisfy the preferential rules of origin stipulated in Chapter II or the non-preferential rules of origin provided for in Chapter III of this Decree." As such, import and export goods on the spot are not issued certificates of origin, so the phrase "On-the-spot imports" should be added to the objects eligible for preferential tax rates.

Option 3 stipulates that "Common tax rates applied to import goods not falling within the specified cases in sub-clauses (a) and (b) of this clause and on-the-spot export or import goods without export certificates. The normal tax rate is set at 150% of the preferential tax rate applied to each corresponding item. In case the preferential tax rate is 0%, the Prime Minister will base it on the provisions of Article 10 of this Law to decide on the application of ordinary tax rates."

Department of Tax Policy analyses the case of tax policy analyzing and implementing this plan; all goods on the spot must be subject to ordinary import tax rates as stipulated in the Government's Decree No. 31/2018 / ND-CP of March 8, detailed rules of foreign trade management on the origin of goods, the export of goods, import on the spot are not issued certificates of origin. However, with the normal tax rate of 150%, for preferential tax rates the import of goods on the spot will have to be applied with a very high tax rate. However, this type of trade will not be encouraged

This content is being consulted by the Ministry of Finance of the provinces and cities.

Source: Customs News