DECISION

PROMULGATION OF PROCESS OF ASSESSMENT, RECOGNITION, EXTENSION AND MANAGEMENT OF PRIORITIZED ENTERPRISES PRESCRIBED IN CIRCULAR NO. 63/2011/TT-BTC

DIRECTOR OF GENERAL DEPARTMENT OF CUSTOMS

Pursuant to the Law on Taxation Management No. 78/2006/QH10 dated June 29, 2006;

Pursuant to the Customs Law No. 29/2001/QH10 dated June 29, 2001 and Customs Law No. 42/2005/QH11 dated June 14, 2005 amending and supplementing a number of articles of the Customs Law No. 29/2001/QH10 dated June 29, 2001;

Pursuant to Decision No. 02/2012/QD-TTg dated January 15, 2012 of the Prime Minister stipulating functions, tasks, powers and organizational structure of the General Department of Customs under the Ministry of Finance;

Pursuant to Circular No. 63/2011/TT-BTC dated May 13, 2011 of the Ministry of Finance stipulating the pilot application of priority regime in the area of state management of customs to eligible businesses;

Pursuant to Circular No. 105/2011/TT-BTC dated July 12, 2011 of the Ministry of Finance amending and supplementing some articles of Circular No. 63/2011/TT-BTC dated May 13, 2011 of the Ministry of Finance stipulating pilot application of priority regime in the area of state management on customs for eligible enterprises;

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Pursuant to Decision No. 2546/QD-TCHQ 28/11/2011 Director of General Department of Customs deciding on the establishment of Group of prioritized enterprise management under the Division of commercial policy implementation inspection – Department of post clearance inspection;

At the proposal of the Department of post clearance inspection;

Article 1. Issuing together with this Decision the process of assessment, accreditation, extension and management of prioritized enterprises under the provisions of Circular No. 63/2011/TT-BTC dated May 13, 2011 and Circular No. 105 /2011/TT-BTC dated July 12, 2011 of the Ministry of Finance.

Article 2. This Decision takes effect from November 7, 2012.

Article 3. The members of the assessment Council of prioritized enterprises under Decision No. 2689/QD-TCHQ dated December 14, 2011 by the Director of General Department of Customs, the Group of prioritized enterprise management under Decision No. 2546/QD-GDC dated November 28, 2011 of the Director of General Department of Customs, Departments of Customs of provinces and cities, the enterprises recognized as prioritized enterprises and enterprises wishing to apply regime of prioritized enterprises as stipulated in Circular No. 63/2011/TT-BTC dated May 13, 2011 and Circular No. 105/2011/TT-BTC dated July 12, 2011 of the Ministry of Finance are liable to execute this Decision.

PP. GENERAL DIRECTOR
DEPUTY GENERAL DIRECTOR




Nguyen Duong Thai

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PROCESS

ASSESSMENT, RECOGNITION, EXTENSION AND MANAGEMENT OF PRIORITIZED ENTERPRISES
(Issued together with Decision No. 2495 dated November 07, 2012 of the Director of General Department of Customs)

This process prescribes the order of steps of assessment, recognition and extension of prioritized enterprises management (hereinafter referred to as PE) as prescribed in Circular No. 63/2011/TT-BTC dated May 13, 2011 which provides for the pilot application of priority regime in the area of state management on customs for eligible enterprises (Circular No. 63) and Circular 105/2011/TT-BTC dated July 12, 2011 amending and supplementing a number of articles of Circular No. 63 (Circular 105).

I. GENERAL PROVISIONS

1. Subjects of application: The members of the assessment Council of prioritized enterprise conditions (hereinafter referred to as the assessment Council), the Group of prioritized enterprise management (referred as the Group of PE management) of the Department of post clearance Inspection, the customs Department of the provinces or cities where the prioritized enterprises register customs declaration and where the enterprises’ headquarters are located; the prioritized enterprises, enterprises wishing to apply the regime of prioritized enterprises and the state management agencies involved.

2. Scope of regulation: This process shall guide the procedures and order to implement the steps for processing applications to recognize prioritized enterprises of the enterprise, the steps of assessment, recognition, temporary suspension, suspension and withdrawal of Decision on prioritized enterprises recognition, the steps of re-assessment, extension and prioritized enterprise management.

II. ASSESSMENT AND RECOGNITION OF PRIORITIZED ENTERPRISES

Step 1. Dossier to request recognition of prioritized enterprises.

Group of PE management – Department of post clearance inspection is the hub to receive Application for application of priority regime of the enterprise as prescribed in Circular No. 63.

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(1) Financial statements of the last three years;

(2) Report on observance of the law in the last three years;

(3) Report on situation, self-assessment, analysis of the export and import activities data statistics of export and import in the last 3 years;

(4) Latest report on audit and conclusion of inspection.

(5) Summary individual corporate leaders (Chairman of the Board of Directors or the company's legal representative, General Director, Chief accountant), import and export management staff;

(6) Sheet of self-analysis and assessment of business activities, financial activities of the company;

(7) Sheet of assessment of internal control capacity;

(8) A sheet of self-assessment of compliance with the laws of the Customs Agent (if any) on the work related to customs procedures as agreed with the business.

- Group of PE management shall check the requesting application and dossier of the enterprise prescribed in Article 4 to Article 9 and Article 11 of Circular No. 63, Article 1, Article 2 of Circular 105. If the dossier does not meet the prescribed conditions, the Group of PE management shall request the Chairman of assessment Council to reply the enterprise in writing in which clearly stating the unsatisfied conditions.

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The time to verify enterprise’s dossier until it is submitted to the Chairman of assessment Council is 10 working days from the date of receiving the requesting application and enterprise’s dossier.

Step 2. Assessing enterprise’s conditions

The time for assessment is 45 working days from the date of receiving full dossier. Where the enterprise has large operation scale, it is necessary to clarify some assessment contents, the Group of PE management shall request the Chairman of assessment Council to consider and extend the assessment time, the additional assessment time shall not exceed 45 days.

The steps of assessment include:

2.1. Dossier assessment

This step shall be done by the Group of PE management. The additional assessment of dossier is 15 working days including the following things:

- Based on dossier, enterprise’s requesting application and Article 3 of Circular No. 63 determining the type of prioritized enterprise (if to be recognized) of enterprise.

- Analysing and assessing enterprise’s dossier: records: Based on the provisions in Articles 4 to 9 of the Circular No. 63 on the turnover, the number of violations, acts violation, level of violation of the enterprise. Using financial ratios to assess business operation efficiency.

- Collecting, synthesizing and analyzing data on enterprise on the database program of the sector (STQ01 database program) on the turnover and a violation of the business. Comparing the collected and analysed data with the dossier provided by the enterprise.If there are any discrepancies, errors, require the enterprise to explain and clarify.

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- Based on the report of units and explanation of enterprise, the Group of PE management shall agree upon the last data with the enterprise.

- Sending official dispatch to ask for opinions of the agencies concerned: Department of Taxation, Department of Planning and Investment or Management Boards of Industrial Parks, Sub-Department of market management to ask for opinion on the professional management. For the Chairman of the Board, General Director and Chief Accountant having official dispatch to request the public security agencies (Provincial public security where individual registers permanent residence or the Immigration Department if individual is foreigner) to assess the process of regulatory compliance.

- In case the assessment based on dossier has sufficient ground for assessment under conditions prescribed in Circular No. 63 and 105, go to step 4 part II of this process.

2.2. Assessment at enterprise.

- In case the auditing and financial reports and conclusion of inspector, etc are not adequate and reliable (not sufficiently clear to assess enterprise under conditions prescribed in Circular No. 63 and 105), it is necessary to conduct the post clearance inspection at the enterprise.

- The Group of PE management shall request the Leader of General Department of Customs to conduct the post clearance inspection at the enterprise or direct the Customs Department which manages the area where the enterprise’s headquarters is located to conduct the post clearance inspection at the enterprise (the time for inspection is 15 working days, if necessary, propose the extension but not exceeding 15 working days) and make report on enterprise assessment for submission to the Group of PE management.

- Post clearance inspection must clarify and report the following contents:

+ Assessing the customs regulatory compliance of the enterprise in accordance with regulations on the post clearance inspection.

+ Characteristics of the export and import activities: goods items, origin, trade partners, type of import and export and frequency of procedure making;

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+ Risk ability risks in the export and import activities of the enterprises (if any);

+ Making agreement on the code of imported and exported goods of enterprise on the basis of List of HS code of imported and exported goods made by the enterprise.

+ Making proposals to improve the enterprise’s regulatory compliance with the law (if any).

Step 3: Assessing goods code

- The Group of PE management shall transfer the list of code of imported and exported goods agreed upon between the local Customs Department and enterprise to the Import and Export Taxation Department to verify the HS code.

- Within 10 working days from the date the Import and Export Taxation Department receives full dossier, it shall certify the List of HS code of imported and exported goods (made by enterprise and assessed by the local Customs Department.)

- In case of large lists of goods need more time to evaluate the Import-Export Tax Department has proposed the chairman of the board evaluation for extension. Extended period not exceeding 10 working days.

- In case of not having agreed on which goods item or asking for opinion of the assessment Council on the classification, notify the local Customs Department and enterprise and make official announcement upon the Council’s result.

Step 4: General report

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Content of survey: Assessing the process of internal control and the mechanisms to ensure the regulatory compliance, material facilities (storehouses, transport and storage facilities, etc.), and technical infrastructure of information technology application of enterprise.

Survey results: If detecting shortcomings, gaps in management related to import and export activities and capabilities compliance with customs law of the enterprise, provide recommendations for enterprises to take measures of improvement and adjustment. The enterprise shall make these improvements and adjustments before completing the procedures for recognizing prioritized enterprise.

- Within 05 working days from the end of the survey (if any) the Group of PE management shall make the general report clearly stating the proposals and suggestions.This report shall be sent to the members of Council for assessment, remark and proposal of management over enterprise under functions and tasks assigned and submit them to the Chairman of the asessment Council to convene meetings of the assessment Council, particularly as follows:

(i) Department of management monitoring shall assess the enterprise’s regulatory compliance upon making clearance procedures of enterprise’s imported and exported goods and customs agent which the enterprise is hiring (if any).

(ii) The Import and Export Taxation Department shall assess the regulatory compliance on tax for imported and exported goods; making agreement on the code of items which the enterprise has exported and imported.

(iii) Board of Risk Management on the basis of generalization and analysis of information on regulatory compliance, shall assess the level of risk of the enterprise which is considered being recognized the prioritized enterprise and the agent making customs procedures which the enterprise is hiring (if any);

(iv) Customs Information Technology and Statistics Department shall assess the conditions of import and export turnover of the enterprise over the years; assess the conditions to make the electric customs procedures of the enterprise;

(v) Inspector of the General Department shall assess the regulatory compliance of the enterprise through the result of inspection, settlement of complaint and denunciation (if any)

(vi) Legal department assesses the regulatory compliance of the enterprise though the result of enterprise’s legal violation handling.

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(viii) Customs Department of province and city managing the area where the enterprise’s headquarters is located shall organize the assessment of the practical conditions in which there are conditions to make the electronic customs procedures and assess the compliance of customs law in the area.

(ix) Department of post clearance inspection is the standing Council to coordinate all activities of implementing regulations on regime of prioritized enterprise.

- The members of assessment Council shall study the general report for preparation of opinion addressed at the assessment meeting.

Step 5: Assessment Council meeting

The assessment Council shall work in the principle of voting to make decision on recognition of priority regime for enterprise including the following steps:

- The Group of PE management shall request the Chairman of Council to sign the announcement to convene the members of the Council, the convening announcement must be sent to the members of the Council and enterprise before 05 working days to the date of the scheduled meeting.

- Upon the completion of the meeting, the Group of PE management shall formulate the sheet of conclusion to submit it to the Chairman of the Council for signature. The sheet of conclusion shall specify the content of information, the voting result and conclusions of the Chairman of the assessment Council, particularly in the following cases:

+ If the assessment Council concludes to recognize the enterprise as the prioritized enterprise, carry out step 6;

+ If the assessment Council makes an approval conclusion to recognize the enterprise as the prioritized enterprise but must supplement dossier or clarify some issues, the Group of PE management shall base on the minutes of the assessment Council meeting to implement the necessary tasks to complete the assessment report for the enterprise and sumit it to the Chairman of the Council, carry out step 6;

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+ If the assessment Council has not made the conclusion, carry out Step 4 and 5 again.

Step 6: Signing Memorandum of Understanding

- If the enterprise is recognized as the prioritized enterprise by the assessment Council, within 05 working days, the Group of PE management shall coordinate with the enterprise to complete the Memorandum of Understanding (MOU) and send it to the members of the assessment Council for opinion gathering.

- Within 03 working days from the date of receiving the draft of MOU, the members of the assessment Council shall participate in the MOU and give their feedback for the Group of PE management to sum it up.

- Within 02 working days from the date of receiving participating opinions from the Council members, the Group of PE management shall sum it up and submit to the Chairman of Council for reviewing and approval. The acceptance or unacceptance of the members’ opinion, the enterprise must have analysis and jointly submit it.

Step 7: Signing decision

Right after the content of the MOU is approved, the Group of PE management shall submit it to the Director of General Department of Customs to issue the decision on recognizing the prioritized enterprise. The time limit for issuing the decision on recognizing the prioritized enterprise shall not exceed 15 working days from the date of assessment completion.

The content of the decision on recognizing the prioritized enterprize: in addition to the contents under the form in Circular No. 63, specify the receiving places which are the state management agencies participating and judging of the enterprise in order to coordinate the management.

Document submitted includes:

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- Sheet of conclusion of the assessment Council;

- Report of the Group of PE management with the approval of the Chairman of the assessment Council;

- Completed report on the enterprise;

- Completed dossier of the enterprise.

- Submitting to the Chairman of assessment Council to sign the written announcement to recognize the prioritized enterprise and send it to the relevant state management agencies as prescribed in Section 4, Part V of this Process to coordinate the management.

Step 8: Granting decision on recognition of prioritized enterprise

Depending on the direction of the Leader of General Department at the specific points of time, the Group of PE management shall propose the program to grant the Decision with appropriate scale.

III. EXTENSION OF PRIORITIZED ENTERPRIZE

Step 1: Enterprise submitting application for extension

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- Application to request the re-assessment and extension of application of prioritized enterprise regime

- Self-assessment including the contents:

+ Report on operation, data of import and export (Total declaration sheet and total turnover) since having been recognized as prioritized enterprise;

+ Observance of customs law and tax law. In case of having been sanctioned for administrative violation in the area of customs, make report on the number of sanction, describe act of violation, level of sanction and sanctioning unit;

+ Assessing the observance of the customs law of the customs Agent (if any) on the work related to customs procedures as agreed with the enterprise;

+ Assessing systems, internal control mechanisms and criteria to ensure and not ensure the ability to comply with the law;

+ Assessing financial situation and implementation of auditing and accounting regime in accordance with the law.

+ Report on the self-assessment of regularly self-examination, detection and shortcoming overcoming; the willingness to clarify issues related to exported and imported goods of the enterprise at the request of the customs authorities; the implementation of the reports and duties as prescribed;

+ Report on implementation of recommendations of the customs authorities (if any)

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Step 2. Customs authorities’s assessment

- The time for re-assessment to extend the application of prioritized enterprise regime shall not exceed 45 working days

- From the time of receiving enterprise’s full dossier for assessment and extension, the Customs Department managing the area where the enterprise’s headquarters is located shall conduct the post clearance inspection at the enterprise on the requirement at Point 2.2, Step 2, Part II above mentioned.

As for commodity codes: Making agreement on new goods (not in the list of goods code agreed with the customs authorities) which the enterprise wants to export, import and makes agreement on old goods (goods code agreed with the customs authorities) with error and change on the code which need adjusted.

- The General Department of Customs shall re-assess with the steps as prescribed at step 3, 4 and 5 of Part II above mentioned.

Step 3: Decision on extension of application of prioritized enterprise regime

- If the enterprise is not accepted for the extension of prioritized enterprise regime, the Group of PE management shall request the Chairman of the Council to reply to the enterprise.

- If the enterprise is accepted for the extension, the Group of PE management shall sum up and make report for the submission to the General Director to issue the Decision on extension (it shall be sent to the competent state management agencies which took part in assessment and judgement about enterprise). The time limit to issue the decision on extension of prioritized enterprise regime shall not exceed 15 working days from the completion day of assessment. Documents submitted include:

- Sheet of conclusion of the assessment Council;

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- Report and re-assessment of the enterprise;

- Submitting the Chairman of the assessment Council the written Decision on extension of prioritized enterprise and sending it to the relevant state management agencies as prescribed in Section 4, Part V of this Process for management coordination.

IV. TEMPORARY SUSPENSION, SUSPENSION OF APPLICATION OF PRIORITIZED ENTERPRISE REGIME

1. Temporary suspension of prioritized enterprise regime

- Based on Clause 1.2, Article 23 of Circular No. 63, the reports of the local Customs Department, violation information collected from data of sector. If the enterprise declares wrong name, code, quantity, weight, value, origin ... of goods leading to false tax declaration (reducing the amount of tax payable, increasing refundable tax, giving rise to or increasing the tax exempted) from 50 million dong or more, the group of PE management shall request the Chairman of the Council to issue the Decision to temporarily suspend the application of priority regime for enterprises. The maximum suspension period is 60 days.

- The group of PE management shall coordinate with the local Customs Department managing the area where the enterprise’s headquarters is located and the agency in charge of area where the enterprise makes mistake in order to clarify act of violation of enterprise and propose the remedial measuress.

- On the basis of the report on violation assessment of the customs authorities, the enterprise shall accept or not in writing the recommendations of the customs authorities, measures to improve and ways to implement the recommendations.

- After synthesizing, analysing and reviewing reports of local customs and enterprise’s documents, if the enterprise still meets the conditions of prioritized enterprise or after the relevant authorities assess the enterprise’s acts of violation (not directly related to the goods, for example: personal income tax, business income, etc.) but still meets the conditions to comply with the law under the provisions of Circular No. 63 and 105, the group of PE management shall propose the Chairman of the assessment Council to request the General Director to issue the Decision to cancel a decision on temporary suspension.

2. Suspension of application of prioritized enterprise regime

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V. MANAGEMENT OF PRIORITIZED ENTERPRISE

1. Customs Department of cities and provinces

1.1. Customs Department managing area where the prioritized enterprise’s headquarters is located

- At the border gate Customs Sub-Departments: Appointing cadre in charge of procedure team. This cadre shall monitor the enterprise’s daily import and export activities in order to detect shortcomings, abnormal signs in the declaration of the enterprise, assess the compliance of the enterprise. Every week, make reports on prioritized enterprise and recommendations (if any) on the enterprises to the Sub-Department of Post Clearance Inspection (under the Form BC.CCHQ.01).

- The Sub-Department of Post Clearance Inspection shall assign cadre or division in charge (depending on the number of prioritized enterprises in the management area). This cadre (or division) shall generalize data from border gate Customs Sub-Departments, monitor and analyze the enterprise’s import and export activities: goods code, quantity, origin, commodity policy, value, etc in order to assess the enterprise’s regulatory compliance.

Periodically, on weekly Tuesday, make report (via e-mail) to the General Department of Customs (Group of PE management) on the prioritized enterprise, assess the enterprise’s regulatory compliance (under Form BC.CCHQ.01).

- In case there are difficulties arising or detecting problems, errors and violations, the Sub- Department (where problems detected or arising) in addition to handling under current regulations, shall quickly make reports and propose remedial measures (via email, phone, fax) to the Group of PE management.

If the arising problems go beyond the competence, the Department shall make report and propose remedial measures in writing by the fastest way to the General Department of Customs (Department of Post Clearance Inspection).

- Quarterly (within the first 05 working days of each quarter), the Department shall make written report, synthesize and assess the enterprise’s regulatory compliance, process, result of handling of problems, shortcomings and violations occurring to the General Department of Customs (Department of Post Clearance Inspection).

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1.2. Customs Department where prioritized enterprise registers declaration.

- At the border gate Customs Sub-Departments: Appointing cadre in charge of the procedure team. This cadre shall monitor the enterprise’s daily import and export activities in order to detect shortcomings, abnormal signs in the declaration of the enterprise, assess the compliance of the enterprise.

Periodically, on weekly Tuesday, make report on the prioritized enterprise, and recommendations (if any) on the enterprise to the Group of PE management (under Form BC.CCHQ.01).

- In case there are difficulties arising or detecting problems, errors and violations, the Sub- Department (where problems detected or arising) in addition to handling under current regulations, shall quickly make reports and propose remedial measures (via email, phone, fax) to the Group of PE management.

If the arising problems go beyond the competence, the Department shall make report and propose remedial measures in writing by the fastest way to the General Department of Customs (Department of Post Clearance Inspection).

- Proactively working with the Department of Post Clearance Inspection upon requirement.

2. Group of PE management - Department of Post Clearance Inspection

- Every week, the Group of PE management shall collect information from the sector’s database (STQ01 Software), hub of prioritized enterprise, sub-department of customs to assess the enterprise’s activities according to the criteria on the price, goods code, commodity policy, origin .... and take appropriate management measures.

- Quarterly (within 10 working days of the quarter), based on reports on prioritized enterprise of the local Customs Departments, the group of PE management shall compare data provided by the prioritized enterprise with data collected on the sectoral database to assess, monitor and report quarterly on results to the leaders of the Department and General Department. In case of discrepancy of information, coordinate with the enterprise for clarification to promptly remedy the errors. Actively making plan to work with the border-gate customs sub-department, the tax authorities (if necessary) in order to grasp the situation of the enterprise’s export and import activities.

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- Making report to classify prioritized enterprises (based on criteria to assess and classify enterprise). This is the ground and materials to consider the extension of priority regime of the enterprise.

- In the process of monitoring, if detecting the enterprise’sviolation, take handling measures under the steps in Part IV above mentioned.

- Studying, building and developing tools to support the management of prioritized enterprise classification.  

3. Responsibility of prioritized enterprise

- Appointing the enterprise’s key cadre in charge of implementation of observance of prioritized enterprise regime. This cadre shall work professionally and regularly, grasping import and export activities and other areas in enterprise’s operation in order to promptly notify any problem to the Group of PE management for consultation and handling.

- Making report (via e-mail, telephone and fax) on problems, violations or unusual affairs immediately after arising in relation to the enterprise’s operations to the Group of PE management - Department of post clearance inspection.

- Coordinating with the Group of PE management - Department of post clearance inspection to clarify technical contents as required.

- Periodically, within the first five working days of each quarter (3 months), make report under the Form 08a/DNUT and 08b/DNUT enclosed with Circular No. 63/2011/TT-. Particularly as follows:

+ Making statistics of export and import data of the enterprise;

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+ Report on violations which have been handled by the state management agencies (if any);

+ Report on difficulties and problems related to the customs area in the process of enterprise’s operation;

+ Changes and fluctuation (if any) of the enterprise in the management of export and import activities, including: the agent making customs procedures, trusted partners, import and export activities, management and use of exports and imports;

+ Annual financial statement: Balance sheet, report on business operation results, Notes to the financial statements;

+ Audit reports, inspection conclusions or other state management authorities

(if any). As for the audit reports, they must include the audit letter;

+ Report on recommendation situation of customs authorities (if any).

Exceeding the time limit, if the enterprise has not submitted its report, the Group of PE management shall notify to the enterprise (via e-mail or phone to the main contacts). Within 10 days after receiving a response from the Group of PE management, but the enterprise has not sent written report or has sent reports but not fully reflected the information about violations, the Group of PE management shall request the Standing Council to have rectifying official dispatch.

- Within 5 days from the end date of the financial year, the enterprise shall make a report to assess by itself the operation of the prioritized enterprise mechanism and send it to the Group of PE management - Department of post clearance inspection.

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- The relevant State management authorities include: Department of Taxation, Department of Planning and Investment or the Industrial Park Management Baord, Sub-Department of Market Management, Provincial Public Security where individual register permanent residence or Immigration Department if individual is a foreigner.

- During the time being recognized as prioritized enterprise, if the enterprise in the management area makes legal violation under the management functions of relevant state authorities, these agencies shall have written notice to the customs authorities (Group of PE management - Department of post clearance inspection- General Department of Customs). /.