VCN- Export processing and producing enterprises in most localities in the country have created jobs for workers, greatly contributing to import and export turnover.
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Therefore, the Ministry of Finance and the General Department of Vietnam Customs have provided mechanisms and policies to facilitate these enterprises, including tax policies.
One of the issues focused on by enterprises is whetherthe import of raw materials and supplies for export production andoutsourcingto process a part of a product or a stage to create a finished product for export will be subject to tax exemption or not. If they are not subject to tax exemption, whether it will affect the development of satellite enterprises, small and medium-sized enterprises in Vietnam.
For this issue, the General Department of Vietnam Customs said based on provisions of Clause 7, Article 16 of the Import-Export Law, the Import Law No.107/2016/QH13, Clause 1 Article 12 Decree 134/2016/ND-CP dated September 1, 2016 of the Government, the goods imported to produce exported goods are exempted from tax. The basis for determination of eligibility for tax exemption shall be subject to Clause 2, Article 12 in Decree 134/2016/NĐ-CP.
If organizations or individuals import goods to produce export goods but they do not directly manufacture all export goods and outsource a part of whole of imported goods then receive processed products to further manufacture and export the products or put imported goods into production, then hiring other organizations or individuals to process a stage and several stages and then receiving processed products to further produce and export the products, those organizations and individuals are not eligible for tax exemption according to Clause 2, Article 12 in Decree 134/2016/NĐ-CP. Thus, the tax exemption is not applied to the imported goods which are outsourced.
To facilitate satellite enterprises and small and medium-sized enterprises in Vietnam participating in the production chain of export goods under the regime of export production, in Decree supplementing and amending Decree 134/2016/ND-CP, the Ministry of Finance has proposed the Prime Minister to revise this content in the following direction: If the tax payer takes a part or all of the imported raw materials, supplies, components, imported semi-finished products or semi-finished products which are produced from imported materials and suppliers hire another enterprise which has right to own and use establishments, machinery and equipment at the production establishments in Vietnam to process a part and some stages of products then receiving the semi-finished products to further manufacture for exports or receiving the finished products for exports, the tax payer shall be subject to import tax exemption for imported materials, supplies, components and semi-finished products. The taxpayer must inform the outsourcing establishment, processing contract to the Customs.
Another concern is that is the tax exempted for imported goods (materials, supplies, components) for export production and then produced goods have been exported on-spot. For this concern, the General Department of Vietnam Customs issued Official dispatch No. 4138/TCHQ-TXNK providing the following guidance: “If enterprises import raw materials and supplies export processing and production, then re-exporting and selling these produced goods to foreign traders but are designed by the foreign traders to deliver goods to other enterprises in Vietnam (exporting goods under the form of on-spot export), the enterprises shall enjoy tax exemption for imported raw materials and supplies for on-spot export processing and production.”
For goods imported for production and business that have import tax paid and are put into production and then conduct on-spot export of produced, is paid import tax refunded or not.
The General Department of Vietnam Customs said pursuant to Point d Clause 1 Article 19 of the Import and Export Law No. 107/2016/QH13; Clause 1 Article 36 in the Government’s Decree 134/2016/ND-CP dated September 1, the paid import tax on imported goods for production and business but put into export production and then exported to foreign countries, or non-tariff areas, shall be refunded. The basis for determining goods eligible for tax refund is Clause 3, Article 36 of Decree No. 134/2016 / ND-CP.
Pursuant to the above provisions, the paid import tax on imported goods imported for production and business but put into export production and exported in the form of on-spot export(not exported to foreign countries or exported into non-tariff areas), shall not be refunded.
By Ngoc Linh/Ngoc Loan