Further completing Customs policies for processing and production for exports

Operational activities at the Investment and processing Customs sub-department. (Hanoi Customs Department). Photo: N.Linh.

They are: Regulations on notifying the manufacturing facilities; locations of Customs procedure implementation for goods processed and manufactured for export; inspection of the situation on using the total stock of raw materials, materials, machinery, equipment and export goods; and settlement reports. These contents attracted many opinions of enterprises at the consultative conference on the draft Circular amending and supplementing the Circular 38/2015/TT-BTC held by the General Department of Customs on March 10, 2017.

Changes in location of Customs procedure implementation

According to the current regulations, Enterprises have the right to choose to implement the Customs procedures at a Customs sub-department, including: Customs sub-departments where the headquarters, branches’ headquarters and manufacturing facilities of the enterprisesare located; inland Customs sub-Departments of import and export ports; and Customs sub-departments managing of goods processed and manufactured for exports under Customs Department where manufacturing facilities and import border gates are located.

However, to focus on the management and implementation of import procedures of raw materials and materials in a sub-department where enterprises have manufacturing facilities, the Drafting Committee is studying theoption: if goods are raw materials, materials and machinery and equipment imported for processing; and raw materials and materials imported for export production, they will be implemented the Customs procedures at a Customs sub-departments as below:

a.1, Customs sub-departments where organizations and individuals are headquartered; a.2, Customs sub-departments managing of goods processed and manufactured for exports under a Customs Department where manufacturing establishmentsare located. If an organization and an individual has many manufacturing facilities in many different locations, that organization and individual can choose to implement Customs procedures at a Customs sub-department as described in point a.1, a.2 or at a Customs – sub-department where the organization and individual has headquarters, branches or manufacturing facilities, or at a Customs sub-department managing goods processed and manufactured for exports under a Customs Department where an import border gate is located.

Besides, the second option issued by the Drafting Committee is that if goods are raw materials, machinery and equipment imported for processing; and raw materials imported for export production, they will be implemented the procedures at a convenient Customs sub-departments. This option will facilitate enterprises to register at convenient Customs sub-departments, but the management will be implemented by Customs sub-departments where enterprises are headquartered (a place where enterprises notify their manufacturing facilities and submit the settlement reports to). This is the option which is approved and supported by experts and enterprises for drafting the Circular.

Should settlement reports be implemented annually or every three months?

One of the content that also received many comments is the settlement report. According to the current regulations, the settlement reports of enterprises are submitted according to the fiscal year (once a year) and the reportsare made according to the total value of the raw materials and products in the accounting books.

However, these regulations should be amended due to some new points in tax policy for this type in the Government Decree No. 134/2016/ND-CP; furthermore, currently, thesettlement reports are made according tothe value while the Customs agencies and Customs administrators mainly manage the volume.

Therefore, if Customs wants to inspectand determine, they must come to enterprises to inspect. This takes time and costs for both parties. In fact, in enterprise administration, there are some enterprises not managing theorigin in the accounting book system, leading to difficulties for making settlement reports. Also, the annual report causes difficulties for enterprises, because it is not a regular work and only reviewed at the end of year, which leads to errors.

In the Draft amending and supplementing the Circular No. 38/2015/TT-BTC, Article 60 is planned to be amended and supplemented as follows: the frequency of settlement reportsis changed in every quarter and contents of the settlement report are in line with the situation of management of raw materials management of enterprises and create conditions for Customs agencies to apply information technology to the Customs management system

The examination of settlement reports is approved to be implemented in accordance with the principle that the Customs agencies shall inspect the settlement reports on the basis of the application of risk management to assess the observance of the law of organizations and individuals; Theinspection content clearly states the inspection of report making. During the inspection, if the Customs agencies discover unspecified signs, the inspection contents shall be extended until there issufficient basis for conclusion.

According to a representative of the Vietnam Association of Seafood Exporters and Producers, Circular 38 currently stipulates that the settlement report is submitted according to the fiscal year. If required to submit quarterly, it will cause additional pressure for enterprises. On the other hand, the time of 15 days is very short, enterprises will find it difficult to implement the above regulation because in the first days of a month, enterprises have to do a lot of works at the same time such as making settlement reports, tax reports and inventory examination. The Association proposes to remain the regulations for submission of settlement reports according to the fiscal year as in Circular 38. This is also the opinion of many enterprises for this content. In addition, enterprises also said that if the settlement reports are submitted manually (in paper), the volume of papers will be very large.

A new point in the draft Circular amending and supplementing Circular 38/2015 / TT-BTC is the provision on processing contracts. At present, enterprises do not have to inform the processing contract with the Customs agencies when carrying out the processing.However, according to Decree 134/2016 / ND-CP, the basis for determining the exemption for raw materials, materials, machinery and equipment of processing activities are processing contracts, when declaring Customs, the declarants must declare information on the contracts in the Customs declaration.

The Customs agencies have basis to manage the use of raw materials and the liquidation of processing contracts. Therefore, if the provision is expected to supplement, before importing raw materials, machinery and equipment for processing contracts with foreign traders, enterprises are responsible for notifying the processing contracts to the Customs sub-departments managing the area where the organization or individual is headquartered. And supplementing provisions on provisions on declaring contract information in the Customs declaration.

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Receiving comments from experts and enterprises, Mr. Au Anh Tuan- Deputy Director Deputy Director of Customs Control and Supervision Department (General Department of Customs) said that the Customs agencies will continue to amend the regulations to fit the actual operations of enterprises, but also to ensure the control of Customs agencies. Regarding the comments on the large volume of papers when implementing the reports in volume, Mr. Tuan stated that Customs agencies will build information technology systems to ensure the submission of finalization of reports by electronic mode.