Enterprise, Customs face difficulties in implementing tax incentives for recycled products

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Recycling process at an enterprise. Photo: Ha Mai

Policies for export of recycled products

Facing difficulties of several enterprises regarding the implementation of policy on export tax incentives for products made from recycling and waste treatment activities, the General Department of Customs, legal documents on this content have been issued.

According to the Law on Import and Export Duties and Decree 134, from September 1, 2016, export products made from recycling and waste treatment activities are eligible for export tax exemption. The list of criteria to determine the export products made from recycling and waste treatment activities shall be issued by the Ministry of Natural Resources and Environment.

However, from September 1, 2016, to July 1, 2019, the Ministry of Natural Resources and Environment did not specify the list or criteria for the export products, so the Customs authority did not have grounds to implement export tax exemption for products obtained from recycling and waste treatment activities.

From July 1, 2019, to before January 10, 2022, export products obtained from recycling and waste treatment activities must comply with Clause 23, Article 2 of Decree 40, amending Clause 3, Article 44 of Decree 19/2015/ND-CP of the Government detailing the implementation of several articles of the Law on Environmental Protection. Accordingly, products from solid waste recycling and treatment activities, specified in Clause 12, Appendix 3, Section 2 of the Appendix issued together with Decree 40, are the products stated in the investment project, the investment registration certificate of the waste treatment facility.

Clause 12, Appendix 3, Section 2 of the Appendix issued together with Decree 40 stipulates: Production of products from solid waste recycling and treatment activities of the waste treatment facility is listed on the Environmental protection activities and prioritized and supported.

Therefore, the Customs should review the investment project and certificate of investment registration of the waste treatment facility to consider export tax exemption for recycled products following the Law on Import and Export Duties and Decree 134.

From January 10, 2022, Clause 1, Article 131 of Decree 08 stipulates the subjects eligible for enjoying incentives and support for environmental protection, include organizations and individuals that have invested in environmental protection works; environmental protection production, business and service activities in projects and sectors eligible for investment incentives, specified in Appendix 30 to this Decree. Also, under Clause 2, Article 134 of Decree 08, other incentives for taxes and fees shall comply with the provisions of the law on taxes, and charges, said the General Department of Customs

According to Point dd, Clause 2, Appendix 30 attached to Decree 08, enterprises that manufacture and supply technologies, equipment, products and services to meet environmental protection requirements, including products made from recycling and waste treatment activities and meeting the provisions of the law on the quality of products in the list of environmental protection activities, are eligible for incentives and support.

Therefore, from January 10, 2022, products produced from recycling and waste treatment activities meet the law on quality of products in the list of environmental protection activities shall receive incentives, support and tax incentives per the tax law.

The list of determining the recycled products has not been issued

According to the provisions of the prevailing law on environmental protection, to determine whether products produced from recycling and waste treatment activities are eligible for tax incentives, the Customs authority must base the list or criteria issued by the Ministry of Natural Resources and Environment. However, from September 1, 2016, to before July 1, 2019, the Ministry of Natural Resources and Environment has not issued the list or criteria. Therefore, the Customs authority has no grounds to implement export tax exemption for products obtained from recycling and waste treatment activities.

From July 1, 2019, to January 10, 2022, the Customs authority received Official Letter 2210/TCMT-QLCT dated May 24, 2019, from the Vietnam Environment Administration (Ministry of Natural Resources and Environment). The letter states: the Ministry of Natural Resources and Environment has advised and submitted to the Government for issuing Decree 40 amending and supplementing several articles of the decrees detailing and guiding the execution of the Law on Environmental Protection, including amendments to regulations on products obtained from recycling and waste treatment activities. Accordingly, Clause 3, Article 14 of Decree 19/2015/ND-CP is amended as follows: "products obtained from solid waste recycling and treatment activities of the waste treatment facility, specified in Clause 12, Appendix 3, Section 2, Appendix issued with this Decree are the products mentioned in the investment project, the investment registration certificate of the waste treatment facility."

Thus, producing products from solid waste recycling and treatment at the waste treatment facility is on the list of environmental protection activities and is given priority and support. The Customs authority has based on the provisions to determine recycled products to implement the export tax exemption.

The General Department of Customs said that legal provisions on tax are still in effect. Accordingly, the Government assigns the Ministry of Natural Resources and Environment to promulgate a list of criteria to determine export products produced from recycling and waste treatment activities.

Meanwhile, Decree 08 neither stipulates the list or criteria for determining export products from recycling and waste treatment activities according to the provisions of the tax law; nor stipulates the determination of products obtained from waste recycling and treatment activities as the products mentioned in the investment project, the investment registration certificate of the waste treatment facility as specified in the Decree 40. Therefore, from January 10, 2022, the Customs authority has no grounds to consider and handle export tax exemption under the tax law for products obtained from waste recycling and treatment activities.

To handle this problem, on June 21, 2022, the General Department of Customs and the Department of Waste Management (Ministry of Natural Resources and Environment) discussed this issue. Accordingly, on August 19, 2022, the Ministry of Finance issued Official Letter 8240/BTC-TCHQ requesting the Ministry of Natural Resources and Environment to issue a list or criteria for determining the products produced from recycling and waste treatment activities as the basis for implementing the export tax policy as prescribed.

If the list or criteria is not issued, the Ministry of Natural Resources and Environment has to specify the document's name as the basis for determining export products obtained from waste recycling and treatment activities. This document must contain specific information on the name of input materials, name of products obtained from recycling, waste treatment, the volume of input materials, capacity, and production scale of the waste treatment facility... so that the customs authority has a basis to implement provisions on tax.

However, so far, the Ministry of Natural Resources and Environment has not issued a list of criteria to determine export products produced from waste recycling and treatment activities, so from January 10, 2022, the Customs has not yet had a basis for handling export tax exemption for products obtained from recycling and waste treatment activities.

In order to solve the problems of some local customs units and businesses operating in this field and ensure export tax exemption, the General Department of Customs suggested that businesses can contact and work directly with the Ministry of Natural Resources and Environment to handle the problem mentioned above, as a basis for the Customs to exempt export tax as prescribed.