To: Units affiliated to the General Department of Customs

The Ministry of Finance have recently received enquiries from local customs authorities and enterprises regarding the implementation of Circular No. 38/2015/TT-BTC dated March 25, 2015 of the Ministry of Finance on customs procedures, customs supervision and inspection; export and import duties, and tax administration of exported or imported goods.  The Ministry of Finance hereby provides the instructions below:

1. Regarding customs declaration (Article 18):

If imported goods are sea transport vehicles, the declarant may decide to follow entry procedures first and import procedures later, or all of them at the same time.

2. Regarding addition of customs documents (Clause 1 of Article 20):

The declarant may provide additional documents in the cases specified in Point b and Point d Article 20 of Circular No. 38/2015/TT-BTC, except for additional declaration related to the export license or import license, specialized inspection of goods quality, health, culture, animal quarantine, plant quarantine, or food safety.

3. Addition of container number during export procedures (Point a.5 Clause 3 of Article 20):

While following export procedures, if there is no container number or the container number is changed and the declarant submits a list of container numbers (form 31/BKCT/GSQL in Appendix V of Circular No. 38/2015/TT-BTC) to the supervisory customs official at the border checkpoint, the customs official shall check the list and only update it on the System in the following cases:

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b) If the container number on a customs declaration granted clearance is changed, the declarant shall present documents certifying the reason for changing such number (note of provision or replacement of empty container, etc.) The customs authority shall request the shipping company to certify the provision of empty container according to risk management criteria to decide whether to update the container number on the System.

In other cases, the Sub-department of Customs at the checkpoint shall instruct the declarant to follow procedures for making an additional declaration at the customs official where the declaration is registered before following procedures for certifying goods granted clearance from the customs controlled area.

4. Taking goods to warehouses (Article 32):

The declarant that wishes to take goods to the warehouse shall submit the following documents to the Sub-department of Customs where the declaration is registered:

a) A request form No. 09/BQHH/GSQL in Appendix V of Circular No. 38/2015/TT-BTC which specifies the declaration number and location of the warehouse (2).

b) )1 photocopy of the registration of specialized inspection. The original shall be presented to the customs authority for comparison.

In consideration of the aforementioned documents, the Director of the Sub-department of Customs shall decide whether to permit goods to be taken to the warehouse in accordance with Article 32 of Circular No. 38/2015/TT-BTC.

5. Regarding transport of goods under customs supervision:

When declaring goods in transit under customs supervision as prescribed in Article 50 and Article 51 of Circular No. 38/2015/TT-BTC, the owner of the container freight station (CFS) or air logistic services (ALS) must be a customs agent as prescribed in Clause 5 Article 5 of Decree No. 08/2015/NĐ-CP.

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Where an export processing enterprise (EPE) hires a domestic enterprise to process goods, the latter may decide whether to follow customs procedures at the supervisory Sub-department of Customs of the EPE or another location according to Article 58 of Circular No. 38/2015/TT-BTC.

7. Regarding annual statement of processed goods, goods for export, and EPE (Article 60):

In order for enterprises to provide accurate figures for customs authorities as prescribed in Article 60 of Circular No. 38/2015/TT-BTC, Customs Departments of provinces shall instruct enterprises as follows:

a) Figures on the annual statement of raw materials, supplies, finished products derived from imported goods are the same as those on the enterprise's accounting figures;

b) The time for determining unused raw materials is the ending date of the fiscal year (For instance: If a enterprise's fiscal year is from January 01, 2015 to December 31, 2015, the day for determination of unused raw materials shall be December 31, 2015);

c) The value on the annual statement is the total value of imported raw materials and finished products derived from imported goods in the fiscal year (For instance: In a fiscal year from January 01, 2015 to December 31, 2015, a enterprise has 1000 declarations of imported raw materials for manufacturing goods for export, the total value of imported raw materials recorded in the accounting book may be written in column (5) on the annual statement form No. 15/BCQT/GSQL.

8. Regarding customs procedures, customs supervision and inspection of goods processed under contracts with foreign traders; imported raw materials/supplies  for manufacturing of goods for export; exported or imported goods of EPEs (Article 64):

a) While executing the processing contract, if the processer wishes to have the excess raw materials, machinery and equipment returned, transferred to another contract, sold, gifted, or destroyed in Vietnam, a prior written notification must be sent to the customs authority; customs procedures are specified in Clause 3 Article 64 of Circular No. 38/2015/TT-BTC;

b) Regarding regulations on 3% of excess raw materials/supplies  specified in Clause 5 Article 64 of Circular No. 38/2015/TT-BTC:

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When reporting a plan for settlement of excess raw materials/supplies specified in Clause 1 Article 64 of Circular 38 using form 17/XL-HĐGC/GSQL, it is required to specify the amount of each type that does not exceed 3% of the total amount of imported raw materials/supplies.

c) If processed products are used as payment for processing, the procedures in Article 86 of Circular No. 38/2015/TT-BTC and regulations of the Government's Decree No. 89/2006/NĐ-CP shall be followed.

d) The destruction of raw materials, wastes and rejects of a EPE shall comply with Point d Clause 3 Article 64 of Circular No. 38/2015/TT-BTC;

c) The destruction must comply with the Law on Environment protection 2014 and the Government's Decree No. 38/2015/NĐ-CP on management of rejects. To be specific:

- Destruction of machinery, equipment, wastes, rejects that are hazardous wastes or contain hazardous substances shall comply with regulations on management of hazardous wastes in Chapter II of Decree No. 38/2015/NĐ-CP and Circular No. 36/2015/TT-BTNMT.

- Destruction of machinery, equipment, wastes, rejects other than hazardous wastes shall comply with regulations on management of common wastes in Chapter IV of Decree No. 38/2015/NĐ-CP.

f) The destruction shall be supervised in accordance with Point d .2 Clause 3 Article 64 of Circular No. 38/2015/TT-BTC. The customs authority shall directly supervise the destruction of machinery, equipment, raw materials of processors and EPEs (except for preferred enterprises).

9. Regarding procedures for liquidating machinery, equipment, vehicles that are fixed assets of a EPE (Article 79):

The EPE may decide whether to apply Article 79 or Article 86 of Circular No. 38/2015/TT-BTC (indirect export). To be specific:

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b) If Article 86 of Circular No. 38/2015/TT-BTC is applied, the enterprise shall send a document specifying the reason for liquidation, liquidation method, and amount of assets to be liquidated to its supervisory Sub-department of Customs and register a corresponding declaration; the domestic enterprise shall follow import procedures and pay taxes. Regulations on management of exported or imported goods shall not apply to goods sold domestically unless they are subject to certain conditions or standards and have not undergone a specialized inspection on importation; goods managed by license are subject to written approval by the import-licensing agency.

10. Regarding regulations on hiring overseas processors other than Section 3 Chapter III of Circular No. 38/2015/TT-BTC

a) Responsibility of the hirer:

a.1) Before hiring an overseas processor, the hirer must notify the processing contract to the Sub-department of Customs where procedures for exporting raw materials, supplies, machinery, and equipment and imported products are intended to be followed (not including the manufacturer).  The processing contract must contain all information specified in Article 29 of Decree No. 187/2013/NĐ-CP;

a.2) A statement of used raw materials, supplies, machinery, and equipment must be made right after the execution of the processing contract is complete. If the contract is executed in more than one fiscal year, within 90 days from the end of each fiscal year, the hirer shall submit a report on the progress in that fiscal year, which specifies:

- The amount of each type of exported raw materials/supplies and numbers of corresponding export declarations;

- The amount of exported raw materials/supplies that have to be destroyed or sold overseas;

- The amount of unused raw materials/supplies kept by the processor;

- The amount of processed products imported and numbers of corresponding import declarations;

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b) The customs authority shall:

b.1) receive the notification of the processing contract, statements, and follow customs procedures in accordance with Section 4 Chapter III of Circular No. 38/2015/TT-BTC;

b.2) Monitor and inspect the use of used raw materials, supplies, machinery, and equipment; inspect the statements similarly to inward processing.

11. Regarding the trading of goods not given incentives between a EPE and the domestic market according to Clause 2 Article 74 of Circular No. 38/2015/TT-BTC

a) If taxes on goods imported by the EPE have been fully paid and regulations on management of exported or imported goods are complied with, customs procedures are exempt when such goods are traded with domestic enterprises.

b) If taxes on goods purchased from domestic enterprises by the EPE have been fully paid, such purchases are exempt from customs procedures.

12. Regarding the use of invoices when exercising the right of an EPE's to buy or sell goods (Article 77)

Pursuant to Clause 6 Article 3 of Circular No. 219/2013/TT-BTC,  Article 77 of Circular No. 38/2015/TT-BTC, Article 6 of Circular No. 08/2013/TT-BCT, invoices shall be made and used as follows:

a) EPEs must separate purchases of goods from domestic entities for export;

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c) When an EPE purchases goods from a domestic enterprise, the domestic enterprise shall issue an VAT invoice to the EPE which specifies VAT rate (5% or 10%);

d) When exporting goods, the EPE shall follow the same procedures as a domestic enterprise that exports goods and apply 0% VAT. Input VAT might be refunded if all conditions are satisfied.

13. Liquidation, repurposing of duty-free imported goods of foreign-invested enterprises (Article 85)

For the purpose of resolving difficulties in procedures for liquidation or repurposing specified in Point c Clause 3 Article 85 of Circular No. 38/2015/TT-BTC, the Ministry of Finance hereby provides instructions as follows:

With regard to duty-free goods that are liquidated or repurposed after the expiration of the customs dossier retention period (5 years) and liquidated or repurposed goods that are tools or instruments (not managed by the enterprise according to import declaration number) before the expiration of the customs dossier retention period, the enterprise is not required to provide the declaration number upon liquidation or repurposing of such goods.

14. Regarding customs places for temporary import for re-export, temporary export for re-import of goods of entities in free trade zones of checkpoint economic zones for repair purposes

Procedures for temporary import for re-export, temporary export for re-import of goods of entities in free trade zones of checkpoint economic zones for repair purposes shall be carried out at the Sub-department of Customs in charge of the free trade zone.

15. Customs management of goods taken in and out of a bonded warehouse (Article 91):

Additional procedures for changing the checkpoint of export or taking goods back to the bonded warehouse if all or part of the goods cannot be exported after they arrive at the checkpoint of export:

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a.1) An independent transport declaration;

a.2) A written request for permission to take goods back to the bonded warehouse pending export which specifies the name and address of the bonded warehouse, intended duration (the total period of retention in Vietnam must not exceed the limit specified in Clause 1 Article 61 of the Law on Customs);

a.3) A notice of transport declaration approval (when goods are transported to the checkpoint of export from the bonded warehouse).

b) Customs procedures are the same as those specified in Clause 1 Article 51 of Circular No. 38/2015/TT-BTC and instructional documents on independent transport declarations of the Ministry of Finance.

Sub-department of Customs at the checkpoint of export and Sub-department of Customs in charge of the customs must perform the additional tasks below:

b.1) If the shipment has not entered customs controlled area at the checkpoint of export: On the written request made by the enterprise, the Sub-department of Customs in charge of the bonded warehouse shall check the status quo and documents of the shipment to follow procedures for putting goods into the bonded warehouse as prescribed, send a notice to the Sub-department of Customs at the checkpoint of export in order to finalize the independent transport declaration on the system (BIA)

b.2) If the shipment has entered customs controlled area but the enterprise requests that it be taken back to the bonded warehouse: the Sub-department of Customs at the checkpoint of export shall check the quantity of goods that arrive at the checkpoint of export and request the declarant to register an independent transport declaration in order to take goods back to the bonded warehouse.  After the new independent transport declaration is approved, information about the shipment shall be updated following BIA process. Note: When applying BIA process, the permission for goods to be taken back to the bonded warehouse and the number of the new independent transport declaration must be written at "Note" box (for customs official);

b.3) If the shipment has entered customs controlled area and the enterprise requests that part of it be exported and the rest be taken back to the bonded warehouse: the Sub-department of Customs at the checkpoint of export shall inspect and monitor the quantity of goods exported through the checkpoint and request the declarant to register a new independent transport declaration for the remaining quantity of goods in order to be taken back to the bonded warehouse.  After the new independent transport declaration is approved, information about the shipment shall be updated following BIA process. Note: When applying BIA process, the quantity of exported goods through the checkpoint of export, quantity of goods taken back to the bonded warehouse, and number of the new independent transport declaration must be written at "Note" box (for customs official).

16. Regarding enquiries about operation of tax-suspension warehouse (Article 92)

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a.1) has engaged in exportation for at least 02 years;

a.2) does not commit any of the acts below to a punishable extent within the last 02 years before the application for permission to establish a tax-suspension warehouse:

- Tax evasion; tax fraud; smuggling and illegal trafficking of goods across the border;

- Administrative violations that leads to punishments beyond the power of the Director of the Sub-department of Customs or a person holding an equivalent title.

b) Shutdown of existing tax-suspension warehouses

b.1) Tax-suspension warehouses that are established before the effective date of Decree No. 08/2015/NĐ-CP and not satisfy conditions specified in Article 92 of Decree No. 08/2015/NĐ-CP may keep operating until June 30, 2016;

b.2) If the owner of the tax-suspension warehouse proposes wishes to shut down the tax-suspension warehouse, or it is not put into operation after 6 months from the issuance date of the decision on establishment without acceptable explanation, or the enterprise has committed 03 customs offences within 01 year for which fines are beyond the power of the Director of the Sub-department of Customs, the Director of Customs Department of the province where the tax-suspension warehouse is located shall send a written request for shutdown of such tax-suspension warehouse to the Director of the General Department of Customs.

c) Regarding management of raw materials/supplies retained in a tax-suspension warehouse for more than 12 months from the time they are put therein or after the production cycle which has been granted extension by Director of the Sub-department of Customs and have not been used for manufacturing or export:

c) Regarding the quantity of raw materials/supplies retained in a tax-suspension warehouse for more than 12 months from the time they are put therein or after the production cycle which has been granted extension by Director of the Sub-department of Customs, taxes shall be paid as prescribed. The quantity of raw materials on which taxes have been paid and that are used for manufacturing and export according to Article 119 of Circular No. 38/2015/TT-BTC.

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17. Regarding customs procedures applied to exported/imported goods on an all-inclusive declaration (Article 93)

Customs procedures applied to exported or imported goods that are delivered before the customs declaration is registered shall comply with Clause 2 Article 93 of Circular No. 38/2015/TT-BTC. Accordingly, tax shall be calculated and declared when the declaration is registered on the system, the declarant pays taxes fully as prescribed by law and is permitted to use the previous declaration which is granted customs clearance for each delivery of exported or import goods in reality.

18. Regarding procedures for submitting, receiving, and processing application for tax refund or tax cancellation (Article 129)

a) If the declaration is registered before April 01 but the application for tax refund is submitted afterwards:

In order to assist enterprises in accordance with Article 83 of the Law on Promulgation of legislative documents No. 17/2008/QH12 and Clause 1 Article 149 of Circular No. 38/2015/TT-BTC, the Ministry of Finance hereby provides the following instructions:

If applications for tax refund/tax cancellation of import declarations and export declarations made before the effective date of Circular No. 38/2015/TT-BTC (April 01, 2015) have been submitted in accordance with Circular No. 128/2013/TT-BTC, procedures for tax refund/tax cancellation shall be carried on in accordance with Circular No. 128/2013/TT-BTC. If application for tax refund/tax cancellation has not been submitted, procedures for tax refund/tax cancellation shall be carried out in accordance with Circular No. 38/2015/TT-BTC.

Applications for tax refund/tax cancellation of import declarations and export declarations made from the effective date of Circular No. 38/2015/TT-BTC (April 01, 2015) shall be processed in accordance with Circular No. 38/2015/TT-BTC.

b) Tax settlement in case goods are not exported by the deadline for paying tax (including raw materials/supplies imported for manufacturing of goods on declarations registered before April 01, 2015 but the deadline for paying tax is after April 01, 2015);

In order to ensure that taxpayers declare and pay taxes properly according to Point d Clause 2 Article 129 of Circular No. 38/2015/TT-BTC:

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The taxpayer shall send a document to the Sub-department of Customs where import procedures are followed specifying the quantity of unused raw materials and/or products in stock, numbers of corresponding import declarations, and reasons for such redundancy.

b.2) According to the taxpayer's declaration, the customs authority shall inspect the raw materials in stock at the taxpayer's premises on suspicion of raw materials being used improperly or sold domestically.

Inspection shall be carried out in accordance with Article 59 of Circular No. 38/2015/TT-BTC. If the inspection reveals that the raw materials are used improperly or sold domestically, Point b Clause 2 Article 21 of Circular No. 38/2015/TT-BTC shall apply.

19. Regarding inspection of tax refund (Article 130)

In case of inspection before tax refund or tax cancellation, in order for the inspection of tax refund to be transparent and facilitate the inspection process, the Ministry of Finance requests that the order below be followed and a decision on tax refund/tax cancellation be issued as soon as it is assured that goods have been exported or imported in reality and satisfy conditions for tax refund/tax cancellation:

a) Examine the customs dossier, application for tax refund/tax cancellation; examine the consistency and legitimacy of documents, compare the refund claimed with information on the customs authority' system, exported/imported goods in reality, accounting documents, delivery notes, and payment receipts;

b) Inspect the accounting works; material consumption norms; actual business operation of the enterprise;

c) Verify the transactions with relevant entities if the case is considered complicated and requires further inspection;

d) If the taxpayer is not eligible for tax refund or tax cancellation, the customs authority must provide explanation;

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20. Regarding the implementation of Article 147 of Circular No. 38/2015/TT-BTC (Transition)

In order to closely manage the processing contracts that are notified to customs authorities before Circular No. 38/2015/TT-BTC comes into force and have to be finalized before April 01, 2014 pursuant to Article 25 of Circular No. 13/2014/TT-BTC, such contracts must be finalized in accordance with Circular No. 13/2014/TT-BTC.

21. Regarding re-import of goods of EPEs that are meant to be exported for recycling but cannot be re-exported

The EPE shall follow customs procedures for selling them domestically or destroy them as if they are processed goods in accordance with Point a Clause 7 Article 47 of Decree No. 08/2015/NĐ-CP.

PP MINISTER
DEPUTY MINISTER




Do Hoang Anh Tuan