CIRCULAR

GUIDING THE CONSIDERATION FOR EXEMPTION OF IMPORT AND EXPORT TAX FOR THE VARIOUS FORMS OF INVESTMENT UNDER THE LAW ON FOREIGN INVESTMENT IN VIETNAM ACCORDING TO DECREE No.191-CP ON THE 28TH OF DECEMBER 1994 OF THE GOVERNMENT

In execution of Article 14 of Decree No.191-CP on the 28th of December 1994 of the Government on the promulgation of the Regulation on the evaluation and implementation of foreign direct investment projects which stipulates that "the Ministry of Trade shall issue import permits that clearly stipulate the amount of goods exempt from tax by prescription of law",

After receiving suggestions from the Ministry of Trade, the General Customs Department and the State Committee for Cooperation and Investment (SCCI), the Ministry of Finance provides the following guidance for considering export-import tax exemption for the various forms of investment under the Law on Foreign Investment in Vietnam :

I. SUBJECTS AND CONDITIONS ELIGIBLE FOR EXEMPTION OF EXPORT-IMPORT TAX

- The enterprises with foreign-invested capital, the partners to joint ventures operating on the basis of business cooperation contracts, the oil and gas product-sharing contracts set up under the Law on Foreign Investment in Vietnam (hereafter referred to as foreign-invested enterprises).

- Equipment, machinery, accessories, means of production and business (including transport means), and materials imported into Vietnam for investment in infrastructure construction to build the enterprises, or to create the fixed assets to carry out the business cooperation contracts (hereunder called commodities).

The means of production and business such as tools, small working tools, specialized fixtures for production; packaging, reusable plastic containers which are the means necessary for production and business operations of an enterprise which is put into operation for the first time with its own initial investment capital and already recorded in the initial economic-technical feasibility study of the approved project, are eligible for exemption of export-import tax under Point 1 of Article 76 of Decree No.18-CP of the Government. The amount and value of the commodities, which are imported for the first time eligible for exemption of import tax, must be determined in the initial technical economic feasibility study of the project, and must be granted import license by the Ministry of Trade.

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- The transport means shall comply with the norms defined at official dispatch No.1412/UB/DK on the 27th of July 1994 of the State Committee for Cooperation and Investment concerning the importation of tourist cars by the foreign-invested enterprises.

- All machinery, equipment, materials and transport means imported into Vietnam for the infrastructure construction to set up the enterprises, or to create fixed assets to carry out the business cooperation contracts exceeding the prescribed level compared with the economic and technical feasibility studies and the explanations of the technical designs, shall not be exempted from import tax.

- With regard to the projects which have been issued permits to amend or adjust the economic and technical feasibility studies, the State Committee for Cooperation and Investment shall send to the Ministry of Trade a complementary economic and technical explanation, as a basis for filling procedures to consider the issue of plans for the importation of commodities exempt from import tax.

- In case the foreign-invested enterprise has the need to replace or reinvest to renew its equipment and transport means which are fixed assets already exempt from import tax for the first time (including cases in which the depreciation cost of fixed assets is used), they shall not be exempt from import tax.

II. COMPETENCE AND PROCEDURES OF CONSIDERING EXEMPTION OF EXPORT AND IMPORT TAX

The Ministry of Trade shall examine and approve the plan for the importation of commodities, determine the number of kinds of commodities free from import tax for the subjects stipulated in Section I. The procedures for compiling the dossier shall comply with the provisions of Circular No.3-TM/DT on the 2nd of July 1993 of the Ministry of Trade guiding the implementation of Chapter VII of Decree No.18-CP on the business organization of the foreign-invested enterprises.

The General Customs Department shall direct and guide the Customs Service in the provinces and cities to process the commodities and account for the specific concrete amount of exempted import tax, on the basis of the plan for importation of tax-free commodities issued by the Ministry of Trade, compared with the actual imported commodities. It shall have to monitor and control the tax-free imports in order to ensure their accuracy and uniformity, and to avoid losses to the State Budget.

The Ministry of Finance shall, together with the concerned branches, direct the control of the situation of import tax exemption, with regard to the various forms of foreign investment under the Law on Foreign Investment in Vietnam, in conformity with the prescriptions of law.

Annually, and each time after the completion of the initial investment project or each phase of the project, the foreign-invested enterprise must file a report on the situation of commodity import, the situation of the use of the commodities exempt from import tax, and send it to the direct tax control agency, the Ministry of Trade and the General Customs Department. The report must be sent within 30 days at the latest, after completion of the project, or the investment phase of the project, or the concluding day of the year. Without such a report, the Customs Service shall refuse to fill the procedures for tax exemption to the subsequent consignments of export-import commodities of the enterprise.

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This Circular takes effect from the 1st of April 1995, and replaces Article 1 of Circular No.47-TC/TCT on the 1st of June 1994, Points 1 and 2 in Circular No.90-TC/TCT on the 4th of November 1994 of the Ministry of Finance guiding the consideration for tax exemption and reimbursement of export and import tax for foreign-invested enterprises.

THE MINISTER OF FINANCE




Ho Te