CIRCULAR

GUIDELINES ON IMPLEMENTATION OF SPECIAL PREFERENTIAL IMPORT DUTIES OF VIETNAM IN IMPLEMENTATION OF THE ASEAN – CHINA TRADE IN GOODS AGREEMENT

Pursuant to Law 45/2005/QH11 dated June 14, 2005 on ex/import duties dated June 14, 2005; Decree 149/2005/ND-CP dated December 8, 2005 by the Government detailing implementation of the Law on ex/import duties;
 Pursuant to Decree 154/2005/ND-CP dated December 15, 2005 by the Government detailing some certain regulations of the Customs Law on customs procedures and customs investigation;
Pursuant to Decree 77/2003/ND-CP dated July 1, 2003 by the Government detailing functions, tasks, powers and organization of the Ministry of Finance;
Pursuant to the Trade in Goods Agreement under the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China (also called as the ASEAN – China Trade in Goods Agreement), which was signed on November 29, 2004 in Laos and the Memorandum of Understanding between Vietnam and China on a number of issues in the ASEAN – China Trade in Goods Agreement, which was signed on July 18, 2005 in China and approved by the Prime Minister in Decision 257/QD-TTg dated October 19, 2005;
Pursuant to the Prime Minister’s guidelines in Circular 216/VPCP-QHQT dated March 17, 2006 by the Governmental Office,
The Ministry of Finance hereby provides guidelines on implementation of special preferential import duties of Vietnam in implementation of the ASEAN – China Trade in Goods Agreement as the following:

1. Import commodities subject to imposition of special preferential import duty rates of Vietnam in implementation of the ASEAN – China Trade in Goods Agreement (better known as ACFTA rates of Vietnam) as issued by the Minister of Finance must meet the following conditions:

a. Included in the List of products and special import duty rates of Vietnam in implementation of the ASEAN – China Trade in Goods Agreement, which was issued by the Minister of Finance (better known as the ACFTA List of Vietnam)

b. Imported into Vietnam from member countries of the ASEAN – China Trade in Goods Agreement, including:

- Brunei,

- Cambodia,

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- Laos,

- Malaysia,

- Myanmar,

- Philippines,

- Singapore,

- Thailand,

- China

c. Transported directly from a member country of the ASEAN – China Trade in Goods Agreement to Vietnam as specified in Decisions 1727/2003/QD-BTM dated December 12, 2003 and 09/2006/QD-BTM dated February 24, 2006 by the Minister of Trade.

d. Satisfying ASEAN – China rules of origin, certified by ASEAN – China Certificate of Origin (shortly known as C/O – Form E) as specified in Clause III of the Circular. If FOB value of a batch is less than $200, C/O – Form E is not required.

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2. Commodities from duty free shops (including processed commodities) imported into the domestic market which are subject to Vietnam’s ACFTA duty rates as decided by the Minister of Finance must satisfy conditions as specified in sub-Clauses 1.a and 1.d, Clause I of the Circular.

3. For imported commodities satisfying conditions as specified in sub-Clause 1.a, 1.b, 1.c and 1/d of the Circular and included in the ST List of exporting country as specified in Appendix I attached, duty rates as specified in sub-Clause 2, Clause II of the Circular are applicable.

II. APPLICABLE IMPORT DUTY RATES

1. Import duty rates applicable to imported goods satisfying conditions as specified in sub-Clauses 1 and 2, Clause I of the Circular are Vietnam’s annual ACFTA rates as specified in Vietnam’s List of products with special preferential import duty rates, which is issued by Minister of Finance, in implementation of the ASEAN – China Trade in Goods Agreement.

Example 1: Dried chilli (code 0904.20.10) is subject to current MFN duty rate of 30% in accordance with the list of preferential import duty rates and a ACFTA duty rate of 25% in accordance with the Minister of Finance’s decision. In compliance with Appendix I, dried chilli is included in China’s NT list. Therefore, the import duty rate applicable to dried chilli imported from China is Vietnam’s ACFTA rate if conditions in sub-Clause 1, Clause I are satisfied.

Example 2: Dried chilli (code 0904.20.10) is subject to current MFN duty rate of 30% in accordance with the list of preferential import duty rates and a ACFTA duty rate of 25% in accordance with the Minister of Finance’s decision. Import duty rate applicable to this product imported into the domestic market from free duty zones is Vietnam’s ACFTA rate (25%) if conditions as specified in sub-Clause 1.d, Clause I are satisfied.

2. Import duty rates applicable to products satisfying conditions as specified in sub-Clause 3, Clause I are as the following:

a. If the Ministry of Finance issues announcement that exporting country’s import duty rate in implementation of the ASEAN – China Trade in Goods Agreement (shortly known as exporting country’s ACFTA rate) as specified in exporting country’s ST list is 10% or less, the applicable rate is Vietnam’s ACFTA rate or exporting country’s ACFTA rate, which is higher.

Example 3: Dried chilli (code 0904.20.10) is subject to current MFN duty rate of 30% in accordance with the list of preferential import duty rates and a ACFTA duty rate of 25% in accordance with the Minister of Finance’s decision. In accordance with Appendix I, dried chilli is included in Myanmar’s ST list and the Ministry of Finance has announced that Myanmar’s ACFTA rate on this product is 8%. Therefore, the import duty rate applicable to dried chilli imported from Myanmar is Vietnam’s ACFTA rate (25%) if conditions b, c and d as specified in sub-Clause 1.I are satisfied.

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Example 4: Dried chilli (code 0904.20.10) is subject to current MFN duty rate of 30% in accordance with the list of preferential import duty rates and a ACFTA duty rate of 25% in accordance with the Minister of Finance’s decision. In accordance with Appendix I, dried chilli is included in Myanmar’s ST list and the Ministry of Finance has no announcement on Myanmar’s ACFTA rate on this product. Therefore, the import duty rate applicable to dried chilli imported from Myanmar is MFN rate (30%) though conditions b, c and d as specified in sub-Clause 1.I are satisfied.

3. If MFN duty rate of a product included in the list of preferential import duty is adjusted to a lower level than ACFTA rate of Vietnam or exporting country, the applicable rate is MFN rate.

Example 5: Luminated steel with carbon content of less than 0.6% (Code 7208.38.10) is under a MFN rate of 0% and an ACFTA rate of 5% in Vietnam in accordance with Minister of Finance’s decision. In accordance with Appendix I, this product is included in China’s NT list. Therefore, import duty rate applicable to liminated steel imported from China is MFN rate (0%).

Example 6: Luminated steel with carbon content of less than 0.6% (Code 7208.38.10) is under a MFN rate of 0% and an ACFTA rate of 5% in Vietnam in accordance with Minister of Finance’s decision. In accordance with Appendix I, this product is included in the Philippines’s NT list and the Ministry of Finance has announced that the Philippines’s ACFTA rate on this product is 3%. Therefore, import duty rate applicable to liminated steel imported from the Philippines is MFN rate (0%).

Example 7: Luminated steel with carbon content of less than 0.6% (Code 7208.38.10) is under a MFN rate of 0% and an ACFTA rate of 5% in Vietnam in accordance with Minister of Finance’s decision. In accordance with Appendix I, this product is included in Malaysia’s NT list and the Ministry of Finance has announced that Malaysia ACFTA rate on this product is 7%. Therefore, import duty rate applicable to liminated steel imported from Malaysia is MFN rate (0%).

4. Steps to look up for import duty rates under regulations as specified in sub-Clause 1, 2 and 3, Clause II are as specified in Appendix II attached.

5. If goods imported for production and assemly of mechanics, electrics and electronics products meet conditions for application of both ACFTA rates or import duty rates by home-made rate, importer can choose between the 2 rates, as specified below:

If importer chooses import duty rate by home-made rate, all imported synchronous or asynchronous components and parts are subject to only one import duty rate by home-made rate though many components and parts they import are qualified for ACFTA rates.

If importer choose ACFTA rate, asynchronous components and parts qualified for ACFTA rate are subject to ACFTA rate; the others are subject to MFN rate of normal rates.

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Synchronous components and parts with C/O – Form are subject to ACFTA duty rate on completed products if qualfying conditions on application of AFCTA rates as specified in Clause I. Components and parts without C/O – Form E are subject to MFN duty rate or normal duty rates on completed products.

Importers have to declare one or more individual commercial invoices for components and parts with C/O – Form E in applying for ACFTA duty rate.

ACFTA duty rate is applied at the time when duty is calculated in accordance with the law. Duty procedures with customs authorities are implemented in accordance with the regulations of current practice.

Classification of synchronous and asynchronous components are implemented in compliance with Circular 85/2003/TT-BTC dated August 29, 2003 by the Ministry of Finance detailing classification of commodities by the Lists of export – import goods, preferential import duty table, export duty table and other relevant legal documents.

7. For imported automobile CKD, ACFTA duty rate is applied to individual components and parts as specified in Vietnam’s list of import commodities and special import duty rates issued by the Minister of Finance in implementation of the ASEAN – China Trade in Goods Agreement. Conditions on application of ACFTA duty rates are as specified in Clause I of the Circular.

8. ACFTA duty rates applicable to goods processed in free duty zones and imported into the domestic market are Vietnam’s ACFTA duty rates on import processed products as specified in Vietnam’s List of import products and special preferential import duty rates issued by the Minister of Finance in implementation of the ASEAN – China Trade in Goods Agreement.

9. If customs declarer has not declared C/O – Form E at the time of customs registration for import goods but import goods satisfy other conditions as specified in Clause I:

a. If tax payer of the batch has good records of implementing tax obligations as specified in Clause C of Circular 113/2005/TT-BTC dated December 15, 2005 by the Ministry of Finance detailing implementation of export – import duty rates, ACFTA duty rate is applied in compliance with commitment and declartion of the customs declarer.

If C/O – Form E is not declared in compliance with timing regulations as specified in sub-Clause 5b, Clause III of the Circular, customs authorities re-calculate duty and impose fine in accordance with regulations of current practice.

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III. C/O AND CHECKING OF C/O

1. Recognition of ASEAN – China origins are as specified in the Regulations on C/O – Form E of Vietnam, which is attached to Decisions 1727/2003/QD-BTM dated December 12, 2003 and 09/2006/QD-BTM dated February 24, 2006 by the Ministry of Trade and other relevant decision by Minister of Trade.

2. C/O must have signature and sealing matching those issued by competent agency in charge of C/O issuance of country members of the ASEAN – China Trade in Goods Agreement as below:

- Brunei: Ministry of Foreign Affairs and Trade;

- Cambodia: Ministry of Trade;

- Indonesia: Ministry of Trade;

- Laos: Ministry of Trade;

- Malaysia: Ministry of Foreign Trade and Industry;

- Myanmar: Ministry of Trade;

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- Singapore: Customs Department;

- Thailand: Ministry of Trade;

- China: General Department of Quality Control and Checking and Phytosanitary

3. C/O – Form E for commodities imported from duty free zones intot the domestic market must have signature and sealing matching those issued by competent agency that the Ministry of Trade authorizes to issue C/O – Form E.

4. C/O – Form E is valid for 04 months since it issuance by competent agency of country members of the ASEAN – China Trade in Goods Agreement. If import goods pass territories of one or more countries which are not member of the ASEAN – China Trade in Goods Agreement in accordance with Principle 8c, Appendix 1 of Decision 1727/2003/QD-BTM dated December 12, 2003 by the Minister of Trade, C/O – Form E is valid for 06 months.

5. Regulations on declaration of C/O – Form E:

a. C/O – Form E must be declared to customs authorities when customs declaration for import goods is registered.

b. If C/O – Form E is not declared for acceptable reasons when customs declaration for import goods is registered, Director of Customs Department extends time for submission of C/O – Form E for no more than 30 days since the date of registering customs declaration for import goods.

c. If C/O – Form E is declared in time in accordance with sub-Clause 5a or 5b, Clause III but it is expired for acceptable reasons, Director of Customs Department accepts the C/O by a written document.

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a. Request re-check of C/O – Form E: Customs authorities will send their request to the competent agency of the exporting country, which issues the C/O, for certification.

c. Stop application of ACFTA rate and temporarily apply MFN or normal duty rates. Request the importer to provide more documents (if any) to prove ASEAN – China origin of import goods within no more than 365 days since submissio nof C/O – Form E to customs authorities. After ASEAN – China origin is proved, customs authorities refund importer with excessive money between duty payment by MFN or normal duty rate and ACFTA rate as specified in Clause II.

Import goods are released in accordance with regulations of current practice even before there is result of re-checking.

Formalities of re-checking is implemented in compliance with the Regulations on issuance of C/O – Form E of Vietnam, which is attached to Decisions 1727/2003/QD-BTM dated December 12, 2003 and 09/2006/QD-BTM dated February dated February 24, 2006 and other relevant Decisions by Minister of Trade.

IV. OTHER REGULATIONS

1. For batches of import goods with customs declaration registered from January 1, 2006 to the date of effect of the Circular, for which import duty is calculated by MFN or normal rates, tax payers can submit C/O – Form E and other relevant documents for basis of re-calculation of import duty and duty refund in accordance with the Circular.

Dossier for refund of import duty include:

- Circular of tax payer requesting for refund of excessive money between paid duties and duties by ACFTA rate in compliance with the Circular (original copy).

- Customs Declaration (certified true copy).

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- Import duty payment invoice (certified true copy).

- Import Contract (certified true copy).

- Trusted contract, if trusted import (certified true copy).

- List of documents included in the dossier.

The dossier should be submitted no later than October 31, 2006.

Provincial Departments of Customs are responsible for receiving dossiers to consider import duty refund to payers in compliance with regulations of current practice.

Provincial Departments of Customs deal with duty refund in the following process: Deducting from tax, fine, and other payments that the tax payer owes to State funds; Deducting from tax and other payments for the next batches of export – import goods of the payer; Refunding with money from State funds.

If duty is refunded with money from State funds, provincial Department of Customs request Ministry of Finance (Department of State Funds) to refund the sum of money to the payer in compliance with refund decision of provincial Department of Customs.

2. Regulations on basis for tax calculation, tax payment and collection, tax reduction and exemption, tax refund (excluding cases as specified in Clause IV), tax arrear collection, complaint, fine on violation and other regulations are as specified in the Laws on export – import duty, Customs Law and detailing legal documents.

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V. IMPLEMENTATION

The Circular will come into effect in 15 days after it is publicized in the Gazette and is applicable to customs declarations registered with customs authorities from January 1, 2006 on.

Any uncertainties arising during implementation of the Circular should be reported to the Ministry of Finance for its further guidelines.

To:
- Prime Minister and Deputy Prime Ministers;
- Party Central Office;
- National Assembly Office;
- President Office;
- Supreme People’s Court, Supreme People’s Procuracy;
- Ministries, Ministerial-level agencies, Government’s units;
- Departments of Finance of provinces and cities under direct central management;
- Departments of Customs of provinces, cities, inter-provinces;
- Departments of Taxation of provinces and cities under direct central management;
- Document Checking Department, Ministry of Justice;
- Ministry of Finance’s units;
- Gazette;
- Archive

FOR MINISTER OF FINANCE
DEPUTY MINISTER




Truong Chi Trung

APPENDIX I

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I. EXPLANATION

1. Columns (1) and (2): Codes and description of products in Vietnam’s ACFTA List.

2. Columns (3) to (12): NT, EHP, ST Lists of respective exporting countries:

- BN:

Brunei

- KH:

Cambodia

- ID:

Indonesia

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Laos

- MY:

Malaysia

- MM:

Myanmar

- PH:

Philippines

- SG:

Singapore

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Thailand

- CN:

China

- Cell with (-): Import product is included in NT or EHP List of respective exporting country. Duty rate applicable to such a product is Vietnam’s ACFTA rate as decided by Minister of Trade if conditions as specified in sub-Clause 1.I are satisfied.

- Cell with (ST): Product is included in ST List of respective exporting country. Applicable import duty rate on such a product is as specified in sub-Clause 2.II.

II. EXAMPLE

Dried chilli (code 0904.20.10) is subject to current MFN duty rate of 30% in accordance with the list of preferential import duty rates and a ACFTA duty rate of 25% in accordance with the Minister of Finance’s decision.

Vietnam’s ACFTA List

NT, EHP, ST Lists of respective exporting country

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Description

BN

KH

ID

LA

MY

MM

PH

SG

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CN

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

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(10)

(11)

(12)

0904.20.10

Dried chili

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-

-

ST

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ST

ST

-

-

-

- Columns with (-) are those numbered (3), (4), (5), (7), (10), (11) and (12): Dried chili is included in NT or EHP Lists of Brunei, Cambodia, Indonesia, Malaysia, Singapore, Thailand and China. Therefore, dried chili imported from one of the aforesaid countries is subject to Vietnam’s ACFTA rate of 25% if conditions (b), (c) and (d) as specified in sub-Clause 1.I are satisfied.

- Columns with (ST) are (6), (8) and (9): Dried chili is included in ST Lists of Laos, Myanmar and the Philippines.

If the Ministry of Finance announces that Myanmar’s ACFTA rate on this product is 8%, the import duty rate applicable to dried chilli imported from Myanmar is Vietnam’s ACFTA rate (25%) if conditions b, c and d as specified in sub-Clause 1.I are satisfied.

If the Ministry of Finance does not announce that Myanmar’s ACFTA rate on this product is 10% or less, the import duty rate applicable to dried chili imported from Myanmar is MFN rate (30%) though conditions b, c and d as specified in sub-Clause 1.I are satisfied.

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APPENDIX II

MAJOR STEPS TO LOOK UP IMPORT DUTY RATES IN ACCORDANCE WITH ASEAN – CHINA TRADE IN GOODS AGREEMENT
(Attached to Circular 52/2006/TT-BTC dated June 12, 2006 by the Ministry of Finance detailing implementation of special preferential import duty rates of Vietnam in implementation of the ASEAN – China Trade in Goods Agreement)

I. SCOPE OF INSTRUCTION

The Appendix provides major steps to look up import duty rates in compliance with the ASEAN – China Trade in Goods Agreement. Other relevant regulations as specified in the Circular must be followed during looking up for import duty rates.

II. STEPS TO LOOK UP IMPORT DUTY RATES

Preamble steps

- Look up in Vietnam’s ACFTA List to see whether the import product is included in this List. This step is for condition I.1.a.

- Look up in the table of comparison in Appendix I to see the import product is included in NT, EHP or ST List of the respective exporting country. This step is for condition I.1.e.

Result:

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- If the import product (8-digit code) is included in Vietnam’s ACFTA List and ST List of the exporting country as specified in Appendix I, come to Step 3 below.

IMPORT PRODUCT INCLUDED IN THE LIST OF EXPORTING COUNTRY

Step 1: Check conditions (b), (c) and (d) as specified in sub-Clause I.1.

Result: If the conditions are satisfied, come to Step 2.

Step 2:

2.1. Look up for Vietnam’s ACFTA rate by product code as specified in Vietnam’s ACFTA List.

2.2. Look up for MFN duty rate on the import product in the List of preferential import duty rates. If MFN rate is lower than Vietnam’s ACFTA rate as looked up in Step 2.1

Step 3: Check conditions (b), (c) and (d) as specified in sub-Clause 1.I.

Result: If the conditions are satisfied, come to Step 4.

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4.1. If the import product (with 8-digit code) is included in the Ministry of Finance’s Announcement on the exporting country’s ACFTA rate being 10% or less, come to Step 5.

4.2. If the import product (with 8-digit code) is not included in the Ministry of Finance’s Announcement on the exporting country’s ACFTA rate being 10% or less, come to Step 6.

Step 5:

5.1. Look up for Vietnam’s ACFTA rate by product code in Vietnam’s ACFTA List; look up for the exporting country’s ACFTA rate as specified in the Ministry of Finance’s Announcement. Compare between the 2 rates and the applicable rate is the higher.

5.2. Look up for MFN duty rate on the import product in the Table of preferential import duty rates. If the ACFTA rate in Step 5.1 is higher than the MFN rate, the MFN rate is applicable.

Step 6: Look up for and apply the MFN duty rate in the Table of preferential import duty rates issued by the Ministry of Finance.