CIRCULAR

GUIDING CUSTOMS PROCEDURES FOR DUTY-FREE SHOPS' OPERATION UNDER THE REGULATION ISSUED TOGETHER WITH DECISION No.205/1998/QD-TTg OF OCTOBER 19, 1998 OF THE PRIME MINISTER

A. GENERAL PROVISIONS

1. Import goods sold at duty-free shops shall be exempt from import tax, special consumption tax and value added tax but must be sold to the right objects and in fixed quantities.

Export goods sold at duty-free shops must comply with the commodity policy and the relevant tax laws and, at the same time, conform to the list of goods registered for duty-free sale as stipulated in the enterprises' certificates of duty- free goods trading qualifications.

2. The personnel of duty-free shops shall only be allowed to sell goods directly to the eligible subjects right at the shops' counters in fixed quantities.

Subjects being crew members shall be entitled to buy duty-free goods collectively at the goods order certified by the shipmaster or ship's representative.

3. Duty-free-shops' operations, including the goods export and/or import for sale, warehousing, goods sale at shops, the sale of re-export goods on domestic market or handling of damaged goods, shall all be subject to inspection, supervision and management by the customs authorities.

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The locations of duty-free shops must satisfy the requirements of the supervision and management work of the customs authorities. Locations of shops and warehouses as well as working conditions of the customs authorities must be approved by the General Department of Customs at the proposal of the Customs Departments of the provinces or cities where the concerned enterprises apply for the opening of duty free shops.

4.1. For international airports.

- Duty-free shops shall be located in boarding rooms (behind the customs control and passport control area) of departure lounges of international airports so as to sell goods to passengers on exit and in transit.

-Duty-free shops shall be located at arrival lounges of international airports. behind the passport control area and in front of the customs control area so as to sell goods to passengers on entry.

4 2. For international seaports:

Duty-free shops shall be located at international seaports so as to sell goods to passengers on exit and to crew members on board ocean liners (in cases where duty-free shops are located outside the international seaports, the consent of the People's Committees of the provinces and/or cities where such shops are located and the General Department of Customs' approval are required).

4.3. For international land-road border-gates:

Duty-free shops shall be located at international border-gates and in the areas reserved for those passengers who have cleared the exit procedures in order to sell goods to them, provided that they have passports and entry/exit laissez passers. Depending on specific conditions of each border-gate, the concerned provincial/municipal People's Committee shall stipulate the location of duty-free shop at the border-gate, which must, however, satisfy the requirement for customs' supervision and management and be approved by the General Department of Customs.

4.4. For inland duty-fee shops:

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- A downtown duty-free shop is a place where products are exhibited and showed, transactions are made and sale invoices are issued to passengers awaiting departure. Such a shop must encompass also an area for the direct delivery of goods to passengers who have cleared the exit procedures. The area of goods delivery shall be the boarding room of departure lounge of an international airport or seaport. The area of goods delivery must be approved by the provincial/ municipal Customs Department.

4.5. Duty-free shops at international airports or seaports may open kiosks for on-spot sale of goods to passengers awaiting departure or crew members on board the ships anchoring at ports. The General Department of Customs shall provide detailed guidance for such activities.

B. SPECIFIC PROVISIONS ON CUSTOMS PROCEDURES

I. PROCEDURES FOR EXAMINING THE OPERATION QUALIFICATIONS OF DUTY-FREE SHOPS

- A dossier to be supplied by an enterprise to the provincial/municipal Customs Department shall include:

+ An application for the opening of duty-free shop(s).

+ Documents proving the right to own or use shop(s), warehouse(s) and diagram on the locations of the whole system of shop(s) and warehouse(s).

- The provincial/municipal Customs Department shall examine the following specific conditions:

+ The qualification of the warehouse and shop system.

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+ The shop(s) being located in the right place(s) as prescribed.

If the above-said conditions are satisfied, the provincial/municipal Customs Department shall issue the enterprise a certificate of qualifications and report thereon to the General Department of Customs

II. CUSTOMS PROCEDURES RELATED TO GOODS SOLD AT DUTY-FREE SHOPS

1. For export goods (goods made in Vietnam and goods from lawful import sources):

- For goods subject to conditional export, the Ministry of Trade s permit is required, for goods subject to specialized management, permission from the functional agency is required; and for other Goods, the concerned enterprise shall fill the customs procedures itself (without having to obtain a Trade Ministry's permit) and shall not be subject to restrictions on goods quantity and value.

- The customs authority shall clear customs procedures as for a lot of export goods, based on the commodity policy and relevant tax laws.

- For each duty-free shop, the customs authority shall have to open a book for the control of export goods brought for sale thereat.

Concrete procedures:

* The enterprise shall submit to the customs authority:

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- A goods purchase invoice (according to form issued be the Ministry of Finance);

- An import declaration, import tax receipt or other documents proving that the goods are imported lawfully (for import goods lawfully circulated on the domestic market).

* The customs authority shall:

- Examine dossiers and register declarations;

- Inspect the goods, calculate taxes and issue tax notices (if any):

- Certify the goods inspection and affix the "customs clearance" stamp.

- Supervise the warehousing of goods and seal up warehouse(s);

- Make book entry for the control of warehouse(s) of duty-free goods.

2. For import goods:

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* The enterprise shall have to submit to the custom authority the following papers:

- A permit issued by the Ministry of Trade or the specialized management agency (for goods subject to conditional import):

-The customs declarations (each category of goods with the same name shall be stated in the same declaration form, for example: televisions and cassettes of different kinds shall be declared in two different declaration forms: whisky and cognac of different kinds shall be declared in two different declaration forms; goods of small value but of the same category like cosmetics shall be declared in the same declaration form).

- The commercial contract (a copy with certification of the enterprise's Director) or the enterprise's goods order.

- Goods purchase invoice(s).

- Bill(s) of lading;

- Goods catalogue(s).

* The customs authority shall:

- Examine dossiers and register declarations:

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- Certify the goods inspection results, affix the "duty-free goods" and "customs clearance" stamps on the customs declarations:

- Supervise the warehousing of goods which have gone through the customs procedures, and seal up warehouse(s):

- Make book entry for the control of warehouse(s) of duty-free goods.

Customs authorities at border-gates through which duty-free goods of duty-free shops are imported shall create conditions and coordinate with customs authorities in charge of duty-free shops in quickly and conveniently clearing customs procedures for the goods.

2.2. Import goods of duty-free shops shall not be subject to quality control (the concerned enterprise shall take responsibility therefor before law), and beside the papers stipulated in Point 2.1 above. the enterprise shall not have to submit any other papers.

Enterprises doing business with duty-free shops shall be entitled to import goods for sale thereat in line with their business registration certificates and shall have to fill customs procedures as prescribed.

2.3. Duty-free shops in service of diplomatic immunity subjects shall be entitled to import goods for the sale thereat to meet the demand of those subjects.

- Only brand-new automobiles of left-hand drives and motorbikes of 175 cm3 or under shall be imported but at the advance orders of diplomatic immunity subjects. which must be approved by the customs authority in charge of duty-free shops in term of their quantities.

3. For re-export goods:

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+ The reasons for re-export:

+ The goods catalogue: their quantity(ies), names and value:

+ The goods imported under which declaration form and the serial number of the permit....

+ The border-gate where the goods shall be re- exported.

- The customs authority in charge of duty-free shops shall consider and compare the goods actually imported with the import dossier so as to determine that they are the goods imported by the duty-free shops.

- For the re-export of goods which have earlier been imported according to the Ministry of Trade's permits, the Trade Ministry's approval is required.

- The customs authority in charge of duty-free shops shall clear customs procedures and supervise the re-export of goods: in cases where the re-export border-gate belongs to another locality the customs authority in charge of duty-free shops shall have to supervise and escort the goods to the re-export border gate the hand them over to the border-gate customs authority for completion of the re-export procedures. After the goods have been re- exported, the customs authority at the final re- export border-gate shall have to make certification, affix signature and stamp on the declarations and forward them back to the customs authority in charge of duty-free shops for liquidation.

- Basing itself on the re-export dossier (with certification of the actual re-export), the customs authority in charge of duty-free shops shall liquidate declarations on the import of the lot of goods.

4. For Goods transferred for sale on domestic market

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- A document, clearly stating the reasons for the transfer of goods for sale on domestic market.

- A catalogue of the goods to be transferred for sale on domestic market (Goods' names, quantities and values).

- The import goods declaration;

4.2. For goods imported under permits granted by the Ministry of Trade or the specialized management agency, the enterprise shall submit to the customs authority:

- The permit issued by the Ministry of Trade allowing the sale of goods on domestic market, for goods subject to conditional import.

- A written approval, for goods subject to the management by the specialized agency;

- A catalogue of goods to be transferred for sale on domestic market (goods names, quantities and values).

- The import goods declaration:

4.3. Customs procedures:

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- Provide guidance for the enterprise to declare the goods in the non-commercial goods declaration form.

- Clear the customs procedures for the transfer of goods into domestic market as for lots of import goods:

- Calculate and collect taxes levied on goods transferred into domestic market at the time the enterprise is allowed to make an import goods declaration for the fulfillment of customs procedures for the transfer of goods into domestic market.

- Liquidate the initial import goods declaration.

5. For goods which must be dealt with or destroyed at duty-free shops

5.l. For cracked, damaged goods and goods of poor quality.

- For goods cracked in the course of transport, loading and unloading, the enterprise shall have to make a report with certifications by itself and by the customs authority that inspects the goods or that escorts them.

- For goods left unsold in warehouses and at counters for a long period, thus resulting in the quality deterioration, they shall be dealt with on the basis of the enterprise's written proposal and the actual inspection.

The provincial/municipal Customs Department shall, together with the enterprise, organize a council for goods destruction supervised by the customs authority and enterprise's representative, and make a record on destruction to be certified by representatives of the concerned parties.

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III. THE GOODS SALE REGULATIONS

1. When selling goods, the duty-free shops’ personnel shall have to write down the following basic contents on sale invoices:

The purchaser's name:

- The serial number of the purchaser's passport and the date of its issue;

- The goods names, quality and value:

- The date of the sale of goods;

The goods seller's name.

2. Subjects entitled to purchase goods and the fixed quantity of goods allowed to be sold to each subject must comply with the provisions in Articles 7 and 8 of Decision No.205/1998/QD-TTg of October 19, 1998 of the Prime Minister.

3. The enterprise doing business with duty-free shops shall have to give the customs authority a copy of the goods sale invoice it has given to each goods purchaser. After every sale day, the enterprise shall have to make a sale report and submit a copy thereof to the customs authority in charge of duty-free shops (a sale day time shall be agreed upon by the customs authority and the duty-free shops).

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1. For import goods of duty-free shops (including a lot of goods of different categories), each category of goods with the same name shall be declared in a separate declaration form for convenient supervision of goods liquidation and final settlement after the goods are all sold.

At each duty -free shop, the enterprise and customs authority in charge of the shop shall have to open a book to monitor goods taken in and out of warehouses. Such a book shall include columns for goods supervision in term of the import goods declarations (their serial numbers, dates), good's names, quantities and prices...

Upon each warehousing of import goods, the enterprise shall have to make a warehousing note and give the customs authority in charge of duty-free shops a copy of such note.

- The book entry of import goods must be made according to the chapters, groups, divisions and codes of goods. For goods of the same category, they shall, after being classified in the same column of the book, be accrued so that the figure showing the quantity of the goods in stock is obtained.

-Book entry of goods taken out of warehouses for sale at shops counters;

All goods taken out of warehouses and put at counters must be accompanied with ex-warehouse notes and clearly recorded in book(s). The goods taken out of warehouses and sold at counters must conform with the ex-warehouse notes.

2. At each duty-free shop's counter, the enterprise and customs authority in charge of duty- free shops shall have to open a book to monitor the import goods ex-warehoused to the counter, which is similar to the above-mentioned warehouse book.

- At the end of every month, the enterprise and customs personnel shall make comparison and certify the amount of goods already sold and that of goods left unsold. The figures stated in documents, including sale invoices, and those in sales book must be consistent.

3. Export and import goods of lawful origin which are sold at duty-free shops shall be monitored in separate books. Such monitoring shall be similar to that for the warehoused import goods and the goods ex-warehoused to counters.

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-The unsold import goods at duty-free shops shall be liquidated on the basis of the amount of import goods stated in the customs declarations.

- According to the provisions in Points 2 and 3 above, declarations of the same category of goods shall be included in the same column of book on the basis of the amount of goods already sold and comparison between the sales book and the warehouse book. If the amount of actually sold goods in consistent with the goods amount stated in the declaration form, the import declaration shall be liquidated (following the order that the first import declaration shall be liquidated first).

-Every month, the customs authority in charge of duty-free shops shall, together with the shops, make comparison to ensure balance between the ex-warehoused goods, unsold goods, already sold goods, re-exported goods, goods allowed to be sold on domestic market, cracked and damaged goods and goods destroyed due to poor quality. The comparison of ex-warehoused goods is made to determine the goods in stock. On the basis of the above data, the enterprise doing business with duty-free shops shall make a report and submit it to the provincial/ municipal Customs Department alter getting certification thereof from the customs authority in charge of duty-free shops.

Liquidation procedures:

+ Every 3 months, upon the full sale of goods of the same category corresponding to the amount of goods stated in the same declaration form, the duty-free shop enterprise shall send to the provincial/ municipal Customs Department that manages its duty-free shops a document asking for the liquidation of the goods; such document is certified by the customs authority in charge of duty-free shops (depending on the specific conditions of the locality. the provincial/ municipal Customs Department shall determine the customs authority competent to make the liquidation).

The provincial/municipal Customs Departments shall inspect and approve the liquidation. After liquidation, the customs authority in charge of duty-free shops shall affix the "already liquidated" stamp on the customs declarations.

5. Time-limit for sale of import goods at duty-free shops

To ensure the supervision and liquidation of import goods sold at duty-free shops, if after 2 years (24 months from the date of import) the goods remain unsold, the enterprise shall have to fill the procedures for their re-export or consumption on domestic market. The provincial/municipal Customs Department may consider the extension of this time -limit but such an extension must not exceed 1 year.

V. PROVISION ON DUTY-FREE GOODS WAREHOUSES

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2. For each time of warehousing or ex-warehousing goods, the enterprise shall have to make a warehousing goods, the enterprise shall have to make a warehousing or ex-warehousing note and deliver a copy of it to the customs authority in charge of duty-free shops. The customs authority in charge of duty-free shops shall supervise the warehousing of goods, the ex-warehousing of goods to counters and make book entry of the goods warehoused, ex-warehoused as well as the goods sold at counters. Before the goods are ex-warehoused to counters for sale, they must be stamped as prescribed by the Ministry of Finance.

3. The duty-free goods warehouses shall have to comply with the regulations on customs sealing-up.

4. Every moth, the enterprise shall have to make a final settlement report on unsold goods, which must be certified by the customs authority in charge of duty-free shops. Every quarter and year, the enterprise shall have to inventory the goods warehouses under the customs supervision and make final settlement reports on goods in stock and submit them to the General Department of Customs after getting certification thereof from the provincial/municipal Customs Department.

VI. ORGANIZATION OF IMPLEMENTATION

1. Once every six months, the provincial/municipal Customs Departments shall organize the inspection of the liquidation of declaration, examine and compare books, ex-warehousing and warehousing notes, notes on goods reception at counters, sale invoices, and daily, monthly and quarterly reports. The inspection results shall be reported to the General Department of Custom.

2. In the course of management of duty-free shops. if it is detected that any staff member of a shop breaches the goods sale regulations or brings goods into domestic market for sale; any customs officer commits act of violation in goods purchase at duty-free shops or abuses his/her functions and/or power to cover, act in complicity with persons with negative attitudes to bring goods to domestic market for sale or to sell goods to wrong subjects... such breaches or violations shall be recorded in minutes on spot while their nature and seriousness shall be quickly determined for handling.

Enterprises that violate the provisions of Decision No. 205/1998/QD-TTg of October 19, 1998 of the Prime Minister and this Circular shall , depending on the seriousness of their violations, be subject to administrative sanctions or examination for penal liability. The directors of the provincial/municipal Customs Departments shall report violations to the General Department of Customs so that the latter may issue decisions on the temporary suspension of operation of duty-free shops.

VII. IMPLEMENTATION PROVISIONS

This Circular takes effect from the date of its signing.

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The directors of Customs Departments of the provinces and cities where duty-free shops are located shall have to organize and direct the implementation of Decision No. 205/1998/QD-TTg of October 19, 1998 of the Prime Minister and this Circular and implement them.

FOR THE GENERAL DIRECTOR OF CUSTOMS
DEPUTY GENERAL DIREC




Nguyen Van Cam