Part of the materials assigned to other enterprises for production will not be subject to tax exemption

VCN – That was the answer of General Department of Vietnam Customs for the Vietnam Textile & Apparel Association about enterprise import materials and accessories for production but the production does not have enough capacity. Thus they have to take a part of the materials to another production base for processing.
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Manufacturing activities at Happytex Co., Ltd. Photos: H.Nụ

Vietnam Textile and Apparel Association said that, according to the provisions of the Law on Import and Export Taxes, the imported raw materials and accessories for production are subject to tax exemption. At present, many enterprises signed many large production orders but their production base does not have enough capacity. Hence they have to take a part of the imported material to small production bases for processing in order for timely delivery. Those production bases do not have the ability to directly sign contracts, and they have to re-outsource in order to get jobs for their employees. However, the part of materials which are taken for processing in other production bases are not enjoying tax exemption.

As a result, the Vietnam Textile and Garment Association has asked the Ministry of Finance and the General Department of Vietnam Customs to research the regulations and give specific guidelines for allowing raw materials and accessories which are processed at other production bases to enjoy import tax exemption.

According to the General Department of Vietnam Customs, the issue of the Vietnam Textile and Garment Association is clearly defined in Clause 7, Article 16 of the Law on Import and Export Taxes.

Also in the Clause 2, Article 12 of Decree 134/2016/ND-CP of the Government dated 1/9/2016, the basis for determining duty-free goods is organizations and individuals that produce export goods with their production base in the territory of Vietnam; Have the right to own or use machinery and equipment at production base that is appropriate with the imported raw materials and components for production of export goods and inform the production bases in accordance with customs law.

In the cases where enterprises import goods for export production but part of the materials are imported to other enterprises for production then receiving the products for export, it would not be exempt from tax in accordance with the provisions of Law on Import and Export Taxes and Decree No. 134/2016/ND-CP for materials assigned to other enterprises.

Therefore, the General Department of Vietnam Customs requested enterprises to comply with the above regulations. At the same time, the Ministry of Finance has taken note of the recommendations of enterprises in order to suggest the competent authorities for considering, amending and supplementing the Decree 134/2016/ND-CP to be appropriate with the reality.

By Đảo Lê/Thanh Thuy

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