Answering FDI enterprises’ queries on tax refund for on-spot export

Professional activities at Hai Phong port area 1 Customs Branch. Photo: T.Bình

According to Article 34, Article 36, Decree 134/2016/ND-CP amending and supplementing Decree 18/2021/ND-CP: "Imported goods that paid import duty but must be re-exported, shall be refunded and not subject to pay export duty, including goods imported but must be re-exported to abroad. For example, export goods return to goods owners, exporting goods already imported abroad or exported to a non-tariff zone for use in a non-tariff zone. Taxpayers who have already paid import duty on goods imported for production and business but have put them into production for export and have exported products to abroad, or exported to a non-tariff zone, will be refunded the paid amount of import duty."

According to VBF, as stipulated above, in case goods are exported to foreign countries or into non-tariff zones, enterprises will be entitled to a tax refund. In the case of on-spot export (foreign enterprise appointed to deliver goods to a domestic enterprise), tax shall not be refunded for imported raw materials, which are used in the production of goods for on-spot export.

Meanwhile, if importing under the type of export processing/production from the beginning, they are still exempt from tax (point g, clause 2, Article 10 and point e, clause 2, Article 12 of Decree 134, respectively amended in Articles 1.4 and 1.6 of Decree 18).

VBF also proposed the General Department of Vietnam Customs have synchronous guidance on tax refunds for on-spot export. Specifically, goods imported under the type of business that are put into production for export and have been exported abroad exported to a non-tariff zone or on-spot, the enterprise will be entitled to a tax refund for imported goods constituting in the exported product.

Besides that, for goods that are imported, but then re-exported to a foreign country include the export to return goods back to the owner, export of goods that have been imported to a foreign country, or export of goods into a non-tariff zone for use in a non-tariff zone or on-site export, the enterprise will be refunded the import tax.

Responding to the proposal of VBF, according to the General Department of Vietnam Customs, on tax refund for imported goods under the type of business import and put into production for export: Pursuant to Article 36 of Decree No. 134 stipulating that taxpayers have paid import tax on goods imported for production but have been put into production for exported goods and exported products abroad, or exported into a non-tariff zone, shall be refunded the paid import tax.

Also based on the above provisions, in the case of imported goods according to the type of business import which has been paid import tax, the enterprise has put into production of exported goods and has exported the products abroad or exported the products to the non-tariff zone for use in the non-tariff area, the import tax will be refunded.

Other cases that do not export to foreign countries or do not export to non-tariff zones are not eligible for import tax refund.

As for imported goods and then re-exported, according to the General Department of Vietnam Customs, based on Article 34 of Decree No. 134, which is amended and supplemented in Clause 17, Article 1 of Decree 18, goods are imported but must be re-exported to abroad including exporting to return to goods owners, exporting goods that already imported to abroad or exporting into non-tariff zones for use in non-tariff zones. The re-export of goods must be done by the original importer or the person authorized by the original importer to entrust the export.

Thus, for imported goods that have paid import tax but are not re-exported abroad or are not re-exported into a non-tariff zone but are re-exported on the spot as designated by foreign traders for other domestic enterprises, they are not eligible for import tax refund.

On the other hand, taxpayers have paid import tax on goods imported for production and business but put into production of export goods (including goods delivered for processing) and have exported products (including on-spot exports): Pursuant to Article 36 of Decree No. 134 stipulating that taxpayers have paid import tax on goods imported for production and business but have been put into production of exported goods and have exported products to foreign countries, or exported products into the non-tariff zone for use in the non-tariff zone, the paid import tax shall be refunded.

Thus, Article 36 of Decree 134 does not stipulate that goods imported for production and that are delivered to another organization or individual to reprocess a part of the production process are exempt from import tax as for goods imported for processing, production for export specified in Articles 10 and 12 of Decree 134/2016/ND-CP. Therefore, in case an enterprise has paid tax on imported goods but then does not directly put into production of export goods but delivered to process a part of the production stage, it is not exempt from import tax.

Also, according to the provisions of Article 36 of Decree 134, in the case of imported goods according to the type of business import, for which import tax has been paid, the enterprise has put the export goods into production and has exported the products abroad or exported the products into non-tariff zones for use in a non-tariff zone, import tax will be refunded.

For the cases of not exporting products to foreign countries or not exporting products to non-tariff zones, it will not be eligible for import tax refund.