Binh Phuoc Customs answered questions about duties and C/O

Director Nguyen Van Lich answered questions of enterprises. Photo: N.H

Binh Phuoc Joint Stock Company (BPC) stated that their business activities encompass the entire agricultural-food value chain, from animal feed production and livestock raising to food processing and final product export to international markets. In the course of producing animal feed and processed food, the company utilizes imported raw materials and spices such as corn and soybean meal.

Seeking clarity on the applicable tax policies for imported raw materials used in export products, BPC contacted the Binh Phuoc Customs Department. In response, the representative of Binh Phuoc Customs Department outlined two scenarios:

Scenario 1: Import under the production and business model and pay import duties. Subsequently, if the company meets the relevant tax refund regulations, it can claim a refund under Article 36 of Decree 134/2016/ND-CP.

Scenario 2: Import raw materials and supplies duty-free under export production model. As per Article 12 of Decree 134/2016/ND-CP, amended and supplemented by Decree 18/2021/ND-CP, imported raw materials, supplies, semi-finished products, and components directly incorporated into the final product or involved in the production process but not directly forming the final product are eligible for import tax exemption and are not subject to value-added tax (VAT).

The specific quota regulations are stipulated in Article 55 of Circular 38/2015/TT-BTC, amended and supplemented by Circular 39/2018/TT-BTC. Accordingly, based on the production process from the raw materials and supplies used to produce animal feed, followed by livestock raising and resulting in the final product for export, a quota for each stage is established. This helps determine the quantity of raw materials and supplies that constitute the final product, thereby defining the input raw material quota and determining whether the company's raw materials meet the conditions for tax exemption.

Binh Phuoc Customs Department has outlined additional considerations for businesses engaged in export production activities: enterprises are subject to Customs supervision throughout the entire process, encompassing initial imports, actual production, and subsequent exports, regular annual reporting and settlement are mandatory; compliance with the aforementioned conditions is crucial for businesses to qualify for tax exemptions. Tax benefits are applicable only to goods, raw materials, and supplies that have undergone actual production and have been physically exported abroad or to special economic zones.

Enterprises participated in the dialogue . Photo: N.H

Regarding C/O (Certificate of Origin), Bach Dat Vietnam Company Limited (BDV) stated that the company imported fabric-forming adhesive and submitted a C/O form E with an origin criterion of PE (entirely produced from originating materials). When submitting the documents, the company presented a C/O form E stating the origin criterion of PE. However, during the actual goods inspection and sample collection for analysis and assessment, the Customs authority re-determined the name and code of the goods.

Based on the above situation, BDV raised a question: Article 16 of Circular 33/2023/TT-BTC has regulations on handling HS code discrepancies between the Certificate of Origin of goods and customs declaration. Therefore, can the company be accepted this C/O to enjoy the preferential tariff treatment?

Response to BDV: The representative of Binh Phuoc Customs Department stated that in this case, the C/O with the origin criterion of PE is regulated in Clause 2 of Article 16 of Circular 33/2023/TT-BTC. Accordingly, if there is a code difference that does not affect the validity of the Certificate of Origin, the Customs authority will consider accepting it, provided that there are no other doubts about the accuracy of the information declared on the Certificate of Origin of the goods.

Binh Phuoc Customs Department also stated that based on the guiding document No. 2011 dated May 9, 2024 of the General Department of Vietnam Customs, in case the Customs authority has sufficient grounds to determine that the name of the goods on the Certificate of Origin of goods of the enterprise is different from the name declared on the customs declaration, the Customs authority will reject the Certificate of Origin of goods. In case the Customs authority does not have sufficient grounds to determine that the name of the goods on the Certificate of Origin of goods is different from the name declared on the customs declaration, it will follow Article 16 of Circular 33/2023/TT-BTC.

The representative of Binh Phuoc Customs Department also reminded businesses that when declaring on customs declarations, they should keep the original English content as per transaction documents to avoid inconsistencies in Vietnamese translation. Because the documents on the C/O will be based on the English part on other documents.

In response to the enterprise's question about the investment incentive policy for processing enterprises, the representative of Binh Phuoc Customs Department stated that according to Article 26 of Decree 35/2022/ND-CP, processing enterprises will enjoy investment incentives and tax policies for special economic zones from the time the investment objective for establishing the processing enterprise is recorded in the Certificate of registration of processing enterprise issued by the competent investment registration authority. After completing the construction process, the processing enterprise will be certified by customs authority to meet the conditions for customs inspection and supervision following the regulations.

If the processing enterprise is not certified to meet the conditions for customs supervision, it will not be entitled to the tax policies applicable to special economic zones. The verification and confirmation of the completion of customs supervision conditions for processing enterprises will be carried out in accordance with the regulations on export and import duties. Thus, although in the investment certificate, the enterprise is entitled to the rights of a processing enterprise, but the enterprise must also meet the conditions and be confirmed by the Customs authority to officially apply the tax exemption regime.

In addition, Binh Phuoc Customs Department has also recorded and answered questions from enterprises about customs procedures for goods transferred from domestic to processing enterprises; processing enterprises leasing factory roofs from domestic enterprises for investment in solar power projects; procedures for reprocessing cases; regulations on domestic consumption of imported raw and auxiliary materials for export production.