Export goods for processing shall be subject to tax exemption
Customs operation at Vinh Phuc Customs Branch under Ha Noi Customs Department. Photo: T.Tr |
According to the analysis of the drafting committee, in Point a, Clause 1 Article 11 Decree 134/2016/ND-CP as well as provisions in Clause 1 Article 10, the scope of goods subject to export duty exemption is larger than those in provisions of the Law on Import and Export Duty (including semi-finished products, export machinery and equipment for processing, samples, export components and spare parts for warranty) and excludes export ancillary materials in the norm of tax exemption as per provisions in Decree 69/2019/ND-CP. Therefore, the draft decree amended and supplemented the phrase “ancillary materials”; and equipment and machinery temporarily exported for re-import for the implementation of processing contracts exempt from export and import duties into the scope of goods subject to tax exemption. Besides, Point a, Clause 1, Article 11, Decree 134 also stipulates that if export goods for processing are natural resources, minerals and products with total value of natural resources or minerals plus (+) energy cost accounting for at least 51% of the product price, and the export goods for processing are subject to export duty, they shall not be tax exempt. However, the Law on Import and Export Duty only stipulates that export goods for processing are natural resources, minerals and products in which the value of natural resources or minerals plus (+) energy cost account for at least 51% of the product price shall not subject to export duty exemption. So the content “tax exemption will not be granted for export goods for processing subject to export duty in Decree 134/2016/QH13” is narrower compared to provisions of the Law on Tax 107/2016/QH13. Thus, the Draft decree abolishing the provision that export goods for processing subject to export duty shall not be tax exempt, is to encourage the exports. Point d Clause 1 Article 11 Decree 134 stipulates that when products that are processed overseas are reimported into Vietnam, import duties on the value of raw materials, supplies and components incorporated into the processed products shall be exempted; the remaining value of the products shall be dutiable at the import duty rates applied to processed imports. However, this provision has not specified the remaining value of product, whether it includes export duty of exported raw materials, supplies and components incorporated into the reimported processed products or not. Hence, the Draft Decree supplements content in Point 1 Article 11 by specifying that only the additional value (including overseas processing expenses) of a product is subject to import duty at the import tax rate of re-imported processed products. Point a Clause 11 Decree 134 stipulates that export duties shall be charged on the value or quantity of raw materials, supplies and components corresponding to the quantity of processed products that are not re-imported at the duty rates applied to such raw materials, supplies and components, but it does not specify the time of applying tax rate for this case.
Point b Clause 2 Article 11 Decree 134 stipulates that when implementing tax finalization, the taxpayer shall declare the actual quantity of raw materials, supplies and components used for manufacture of the processed products that are actually reimported. However, the current law on Customs stipulates that the tax finalization of export processing contracts is according to the actual production norms. Article 11 in the draft Decree is amended and completed in the direction that the quantity of exported raw materials, supplies and components used for manufacture of the processed products that are actually reimported is subject to export duty exemption under the processing contract. |
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