News

Problems arise in export production

Summary

At some dialogue conferences with enterprises organized by units of the Customs Department of Ho Chi Minh City recently, some problems have arisen in tax policy and settlement procedures for imported raw materials to produce exported goods

Updated on : 29-05-2018

Will outsourcing be exempt from tax?

According to some enterprises, in the process of performing the processing contract for export production, enterprises are facing problems related to outsourcing some steps and then receiving products for export.

Accordingly, when enterprises import raw materials and supplies according to the type of export production and inspection of the Customs office, it shows that enterprises have establishments producing goods for export in the territory of Vietnam in line with the conditions in Clause 2, Article 12 of the Government's Decree No. 134/2016 / ND-CP dated 1 September 2016. However, these companies do not carry out all the production steps but only perform the main ones, while for some small processes the company hires other units or individual households to rework, then receive the products back for export. So is this case subject to import tax exemption under the provisions of Clause 7, Article 16 of the Law on Export Tax and Import Tax in 2016 or not?

The Ho Chi Minh City Customs Department said that under Clause 7, Article 16 of the Law on Export Tax and Import Tax of 2016: "Raw materials, supplies and components imported for the production of exported goods" shall be exempt from tax. The case of the above-mentioned enterprises satisfies the regulations on the basis for determination of duty-free goods according to the provisions of Clause 2, Article 12 of Decree No. 134/2016 / ND-CP. The outsourcing of some stages in the production process is in line with the reality of the current economy, which also creates income for small and medium enterprises as well as households. In view of the Ho Chi Minh City Customs Department, the above case can enjoy tax exemption as stipulated in Clause 7, Article 16 of the Law on Export Tax and Import Tax in 2016.

Mr. Huynh Trung Kien, the Deputy Head of the Customs Branch of Processing and Investment, said: According to the regulations, with enterprises hiring other units to process goods, the processing unit must be checked for production capacity. After checking the requirements, the business shall transfer raw materials to the processing enterprises. "Enterprises should also note, it needs to be careful when outsourcing, and they are only allowed to deliver raw materials to the processing business once the Customs inspections and recognition of production capacity meet regulatory requirements", Mr. Huynh Trung Kien noted.

Final settlement for entrusted export units

In addition, Ho Chi Minh City Customs Department said that many enterprises imported raw materials for export production through the entrustment contract. Enterprises producing exported goods with production establishments in the territory of Vietnam shall sign entrustment contracts with other enterprises to import raw materials and supplies. After the production, enterprises directly export products or continue to entrust other enterprises to export.

With the above obstacles, the Ho Chi Minh City Customs Department said that pursuant to provisions at Point 2.a of Article 31, Point 5.c of Article 36 of the Government Decree No. 134/2016 / ND-CP dated 1 September 2016, in the exemption and reduction of import tax dossiers, the tax refund dossiers for imported raw materials and supplies which are put into the production of export goods shall include entrusted contracts (in case of entrusted export). Accordingly, the tax exemption and refund for exported goods still applies to cases of exported and imported consignment.

However, the Ho Chi Minh City Customs Department has problems in this case, the inspection of production facilities must be implemented for import enterprises or enterprises producing exported goods. The point of view of the Ho Chi Minh City Customs Department is that enterprises producing exported goods must have establishments manufacturing exported goods in the Vietnamese territory, carry out procedures for notification of production establishments and implement final settlement of goods for export according to current regulations.

Source:  Customs News