Enterprises meet difficulties in exporting software

Tan Son Nhat Airport Customs officials inspecting imported software equipment. Photo: T.Hoa

That was the opinion shared by Mr. Quynh at the seminar to exchange ideas on "Export and Import of software and digital content - Status, difficulties, obstacles and proposed management plan" held by the Department of Information Technology (Ministry of Information and Communications) on 11th October 2016 in HCM City.

According to Mr. Nguyen Duc Quynh, Circular No. 14/2011/TT-BTTTT dated 7th June, 2011 of the Ministry of Information and Communications regulates that, radio transceiver devices must be licensed and must be in line with National radio frequency planning, is creating difficulties for enterprises’ software import and export operations. At the same time, the traditional rules are no longer suitable for the current trends of multifunctional integrated devices such as regulations on clocks but now clocks are attached to heart rate monitors, speakers with touchscreens, glasses with integrated sensor software etc. The rules do not clearly define whether the imported products are consumer products or tools to support production research.

In particular, the import process is very time consuming, the average processing time for administrative papers is about 30-40 working days for a shipment, including 30 days for permits from various agencies, 10 days for Customs clearance.

This directly damages production because of increased operating costs such as expenses for overtime, utility bills, car to pick employees, the cost of idle time (waiting for imported equipment) etc. Also, the delay also affects the import production schedule under the contract, enterprises are at risk of contractual penalty and compensation. Competitiveness in the region (in comparison with China, India, and the Philippines) is low because of the inappropriate procedures and legal framework.

Mr. Quynh proposes, for electronic, information technology equipment that serves the purpose of software research and development of the information technology industry, when needing to apply import processes just focus on one agency at the Ministry of Information and Communications in order to save the time of import. Moreover, this agency has a mechanism for receiving the problem arising from the businesses in the export and import of new equipment to meet the new technology trends.

One other obstacle that was shared by Ms. Trinh Thi Thanh Ha, representative of the Harvey Nash Vietnam company at the seminar is the VAT refund process, approximately 1 year after applying for tax refund. The businesses evade taxation because of the objective conditions, they only can eliminate the input VAT until the time of filing tax return. However, tax offices update information to the time of inspection and penalise enterprises, if any arise. The returns of equipment, computers for clients is difficult and impossible.

In addition, according to representatives of some enterprises who are facing difficulties such as the contractor tax provision for software and imported digital content is not clear. There are also no guidelines on procedures and documents for software export contracts through the Internet which makes it difficult for businesses to apply the income tax preferential policies for enterprises. There are no accurate statistics for export and import software and digital content etc.

According to representatives of the Department of Information Technology, software and digital content are intangible goods, but the import and export procedures are applied as tangible goods. Software and digital content is yet to have HS codes. The processing is on behalf of the information carrier, rather than on the software. This can cause difficulties and problems for both authorities and businesses. On that basis, the Government has assigned the Ministry of Information and Communications to study and build the Decision of the Prime Minister on pilot management for software, digital content and software services import and export operations.