Decree 18/2021/ND-CP specifying tax incentives for processing activities, export production

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Vung Ang Customs officers (Ha Tinh Customs) instruct enterprises to carry out customs procedures. Photo: H.Nu

Guidance on the implementation of the Law on Import and Export Taxes, effective from April 25, 2021, has concretized many provisions related to tax incentives for processing, export production, import and export activities. On the spot, goods are imported and exported according to international treaties.

Specifically, Decree 18 has amended and supplemented 21 groups of problems with the aim of reforming administrative procedures to create favorable conditions for import-export activities, improving national competitiveness, attracting investment, promoting export production with high added value.

Many new rules

According to the representative of the Import-Export Tax Department (General Department of Customs), Decree 18 was created to deal with problems arising in the implementation of Decree 134, and at the same time, overcome shortcomings of regulations on preferential import tax and export tax policies. Accordingly, Decree 18 has amended 17 existing articles in Decree 134 and added four new articles (including Article 28a, Article 29a, Article 31a and Article 37a).

Decree 18 has added regulations on conditions for customs inspection and supervision and applies tax policies to export processing enterprises that are non-tariff zones; additional regulations on tax exemption for import and export goods according to international treaties; supplement regulations on notification and inspection of the use of import duty-free goods and supplement regulations on non-collection of import and export tax for specific cases.

Regarding the regulations on applying tax rates to imports and exports specified in Decree 134 amended in Decree 18, the representative of the Import-Export Tax Department said that Decree 18 has added a provision for the application of tax rates to on-the-spot import-export goods for each case so that the customs offices as well as enterprises can compare and perform properly. Previously, Article 3 of Decree 134 did not have this regulation, so in order to deal with problems that have arisen recently, the General Department of Customs has reported to the Ministry of Finance and sent a letter to guide the units and enterprises to apply MFN tax to goods imported on the spot.

Accordingly, Decree 18 supplements the regulation of on-spot imported goods to apply MFN preferential import tax rates in accordance with Decree 125/2017/ND-CP and Decree 57/2020/ND-CP, Decree 122/2016/ND-CP (applicable to goods exported to foreign countries); supplementing the regulation that goods imported from the non-tariff zone into the domestic market, if the conditions for applying FTA special preferential tax rates and MFN preferential rates are not met, the normal import tax shall be applied (similar to goods imported from abroad). In particular, goods imported on the spot on the list of which tariff quotas are applied must apply the tariff rate quotas according to the provisions of Decree 125/2017/ND-CP and Decree 57/2020/ND-CP.

For regulations related to conditions for customs inspection and supervision and the application of tax policies to export processing enterprises that are non-tariff zones, Decree 18 also specifies conditions such as having hard barriers; camera surveillance system; commodity management software.

In addition, Decree 18 also details inspection procedures, confirming the ability to meet customs supervision and inspection conditions for each specific case.

Decree 18 also added Article 29a to exempt import and export goods under treaties to which Vietnam is a member. The basis for determining tax-exempt goods includes: Types and quantity of goods specified in international treaties; written certification of the proposing agency for signing or joining a treaty or a specialized management agency in case the international treaty does not specify tax-exempt categories and quantities.

In case an international treaty does not specify the category and quantity of tax-free goods, the applicant shall request in writing the proposing agency to sign or join the treaty, the specialized management agency shall confirm receiving categories and quantities of goods exempt from import tax and export tax. Within 15 days from the date of receipt of the written request, the above agencies shall send written confirmation to the organization or individual or send a written refusal in case the goods requested for tax exemption are inconsistent with the international treaty.

According to the representative of the Import-Export Tax Department, in Article 31a of Decree 18 relating to notification and inspection of the use of import duty-free goods, they are also strictly regulated from the subject, the time and the deadline for notification to the specific cases, it must be notified according to each milestone.

Particularly for Article 37a, the provision of no import and export tax for goods subject to tax refund but not yet paid tax as prescribed in Articles 33, 34, 35, 36, 37; does not collect tax on goods not subject to import and export tax as prescribed in Articles 33 and 34. In which, Article 37a clearly specifies the dossier and the time of dossier submission; procedures for submission, receipt and processing of dossiers.

Incentive policy close to reality

According to Deputy Director of General Department of Customs Luu Manh Tuong, Decree 18 is issued to ensure compliance with the Law on Export Tax, Import Tax and other legal documents on investment, foreign trade management and customs and has been amended and supplemented. Decree 18 also overcomes the inadequacies of the provisions on import and export tax incentives that occur in the process of professional performance of Customs and specialized management agencies.

The content of Decree 18 specifies and contributes to the reform of administrative procedures towards increasing the application of information technology, ensuring the effectiveness of policies to facilitate import and export activities in the spirit of the Government on improving the business environment, enhancing national competitiveness, solving difficulties for production and business activities of enterprises, making it more convenient for the management of tax revenue of Customs agencies.

In addition, Decree 18 helps to improve the legal basis for the effective implementation of the Law on Export Tax and Import Tax; tax policy regulations cover the diversified development of the reality of all types and import-export business activities in order to remove difficulties and problems for businesses.

In particular, Decree 18 also meets the goal of continuing to reform administrative procedures to facilitate import and export activities; enhancing national competitiveness; contributing to attracting foreign investment, promoting export production with high added value, contributing to economic growth; responding better to the requirements of the socialist-oriented market economy.