Latest articles

VCCI proposes simplifying the determination of customs value for duty-free goods

Accordingly, the Customs valuation is significant to determine import and export tax on goods. However, many goods are subject to import and export tax rate of 0% or are free from tax, the customs valuation for these goods is only for statistics, but is not related to State budget obligations. Thus, conditions and procedures for customs valuation for import and export duty-free goods should be simplified to reduce costs and risks for enterprises.This is one part of the written comments on Draft Circular amending and supplementing Circular 39/2015/TT-BTC stipulating Customs value for import and export goods, which has sent by the Vietnam Chamber of Commerce and Industry (VCCI) to the General Department of Customs

Current provisions have not clarified this, though in fact, customs agencies rarely inspect and re-determine customs value for such cases. However, due to a lack of such provisions, some enterprises that import or export duty-free goods still take all methods to determine customs value for fear of sanctions.

Thereby, the VCCI proposes the Drafting Agency review and revise the provisions towards simplifying conditions and procedures for customs valuation for import and export duty-free goods.

The VCCI also proposes that for export goods, it only needs to declare real value without adjusting value at export gate.

Allowing enterprises to declare value of software attached with goods

Regarding software attached with goods, the VCCI said the determination of customs value of software attached with goods is facing difficulties. There is a case where value of software is included in physical value of goods and becomes customs value of such goods. There is also a case where the value of software is not included in customs value. The accurate determination of the value of software which is included or not included in customs value is difficult to determine due to lack of provisions.

For software, the Drafting Agency said there is a case where software is not transported together with machinery, thereby creating loopholes for enterprises to take advantages to transfer price into imported software to reduce value of machinery, reducing tax payable.

According to the VCCI, the statement is not comprehensive, because for such case, costs which domestic enterprises have to pay for imported software will be considered revenue of foreign contractors and domestic enterprises will declare and pay contractor tax. In other words, instead of paying corporate import tax, enterprises must pay contractor tax for value of software. The transfer pricing is only implemented when there is difference between import tax rate on machinery and contractor tax on software

The VCCI said the Drafting Agency also sees the difficulties in distinguishing normal software and software related to machinery and equipment. The Drafting Agency explains that software related to machinery is essential software for the operation of machinery. However, with the fast development of technology and information, it is difficult to issue a provision that covers all cases.

Therefore, the VCCI requests the Drafting Agency study a solution which allows enterprises to declare value of software and pay tax for it. If enterprises declare at the section of customs value, they must pay import tax

Source: Customs News