Ministry of Finance answers voters about on-the-spot imported goods for export production

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Customs officers of Nghi Son Port Customs Branch at work. Photo: Phong Nhan

Thanh Hoa province's National Assembly delegation sent a proposal from the province's voters asking the Ministry of Finance to review the regulations on tax payment for on-the-spot imported goods used to produce exported goods, which do not encourage businesses with export production and created inequality between export processed goods and export manufactured goods, especially in the textile, garment and footwear industries.

Responding to voters' proposal, the Ministry of Finance said, based on current regulations (Clause 3 of Article 2, Clause 7 of Article 16, Clause 24 of Article 16 of the Law on Import and Export Tax; Point h, Clause 2 of Article 10, Point h Clause 2 of Article 12 Decree No. 134/2016/ND-CP dated September 1, 2016 amended and supplemented in Clause 4, Clause 6 of Article 1 of Decree No. 18/2021/ND-CP dated September 11 March 2021), on-the-spot imported products with customs declaration registration in the type of imported processing are exempt from import tax if the on-the-spot importer meets the provisions at Points a and b, Clause 2 of Article 10 of the Decree. No. 134/2016/ND-CP mended and supplemented in Decree No. 18/2021/ND-CP.

For on-the-spot imported products with customs declaration registration in other types (including export production), the on-the-spot importer shall declare and pay tax according to the tax rate and taxable value of the imported products at the time of declaration registration. When on-the-spot imported goods have been used to produce exported products which have been exported abroad, or into the non-tariff zone, the importer will be refunded the paid import tax according to the provisions of Article 36 of Decree No. 134. /2016/ND-CP.

According to the Ministry of Finance, provisions stated in Point h Clause 2 of Article 10, Point h Clause 2 of Article 12 Decree No. 134/2016/ND-CP are amended and supplemented in Clause 4 and Clause 6 Article 1 Decree No. 18 /2021/ND-CP following the provisions of the Law on Import and Export Tax

In addition, commercial and foreign trade laws do not have regulations on on-the-site export and import type and on-the-site export and import procedures of goods manufactured for export.

On the other hand, goods imported for processing and goods imported for export production have differences in ownership; specifically, for the imported goods for processing (including on-the-spot imports), the foreign party owns the raw materials and supplies imported for processing.

For imported goods for export production, imported goods are fully owned by Vietnamese enterprises. Export production enterprises have the right to proactively manage goods source (goods imported from foreign countries or imported from non-tariff areas or on-the-site import) as well as proactively choose sales plans (sell to customers abroad or sell to customers in non-tariff zones or export to customers as designated by the foreign traders in the form of on-the-site export or changing the purpose of use or domestic consumption) to ensure the most effective business operations.

Therefore, the provisions in Decree No. 18/2021/ND-CP on paying import tax on raw materials imported on the spot for export production, then receiving a tax refund corresponding to the amount of imported raw materials put into production, exported abroad or exported into non-tariff zones, still ensure the interests of businesses when importing on the spot according to the type of export production.

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The Ministry of Finance said that similar to the recommendations of voters in Thanh Hoa province, during the implementation of Decree No. 18/2021/ND-CP, the Ministry of Finance also received recommendations from associations, corporations, and businesses about this issue and the ministry has given specific answers. To unify the implementation and create equality in law enforcement among enterprises dealing with on-the-site import activities according to the type of export production, the Ministry of Finance also requested the Thanh Hoa Provincial National Assembly Delegation to provide the Ministry of Finance's response to voters and businesses to comply with the provisions of Decree No. 18/2021/ND-CP of the Government.