Predetermine HS code: Some enterprises have records returned

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Many enterprises still had records returned by Customs officers due to lack of understanding of regulations on HS code predetermination. Photo: Thu Trang.

No full declarations on criteria of goods

In order to apply HS code pre-determination from an international standard to a public service of the Customs, the Ministry of Finance and the General Department of Vietnam Customs have legislated regulations on HS code pre-determination in the Customs Act 2014 and Article 24 of Decree No. 08/2015/ND-CP of January 21, 2015. The information of records on HS code pre-determination has also been defined in Circular No. 38/2015/ TT-BTC.

Recently, the General Department of Vietnam Customs issued 3,000 results of HS code pre-determination. Most records which are sent to the Export and Import Taxation Department are resolved within 30 days. For complex cases, records will be resolved within a maximum of 60 days. After a period of implementation, the number of records applying HS code pre-determination has increased compared to previous years.

Through the time of applying HS code pre-determination, disputes between Customs and enterprises about tax classification, value, and preferential tax rates have dropped significantly. Although the amount of work of the Export and Import Taxation Department has increased many times after applying HS code pre-determination, Customs has received positive feedback from the business community. Thus, it is considered to be a positive policy, which well supports export activities of enterprises. However, according to the Deputy Director of the Export and Import Taxation Department, Mr. Trinh Mac Linh, many enterprises still had records returned by Customs officers due to lack of understanding of regulations on HS code predetermination.

According to the provisions of Clause 3, Article 24 of Decree No. 08/2015 / ND-CP providing regulations and measures to implement the Customs Act on Customs procedures, inspections, supervision, and control, the General Department of Vietnam Customs can refuse HS code pre-determination for cases which lack vital conditions and records. Besides, Article 7 of Circular No. 38/2015/ TT-BTC prescribes that records applying HS code pre-determination must declare all the criteria in the application form and include samples for export or import.

For example, Apple Vietnam Limited Company proposed HS code determination for 3 items, but listed in only one application form. Besides, the company did not fill out the full criteria in the form. Therefore, Customs officers could not apply HS code determination due to lack of legal basis.

Another example is Vina Asahi Limited Company which proposed HS code pre-determination for "plank". Due to lack of criteria such as: name, structure, signs, types, content per weight, specifications and manufacturing processes, etc, the record of the company was returned.

Mr. Trinh Mac Linh said that the reasons for records returned by Customs authorities were lack of information related to commodities such as: composition, structure, utility, mechanism, or how to use. They were very important criteria for the classification of goods and HS code predetermination. Therefore, if enterprises lack any of the above criteria in the application form, the application will be rejected.

Errors of sending samples

Goods which are required for HS code pre-determination usually have complex structures or special shapes in the market. Thus, enterprises find it difficult to determine HS code when implementing Customs declaration and send the attached samples. However, most samples do not meet the requirements of Customs such as quantity of samples or packing of goods, etc.

For example, Vietnam Hitejinro Limited Company proposed HS code determination for alcohol named "Chamisul Soji" which had previously been sent for HS code pre-determination. However, the enclosed samples in the application were unlike the earlier samples for HS code determination. Therefore, the record of the enterprise was returned by Customs officers.

Or CPTM company and Import and export Thang Long Company have also had records returned by the the General Department of Vietnam Customs due to improper samples which have been preserved in a unsuitable condition for the classification of goods according to current regulations.

According to Circular No. 38/2015/ TT-BTC, records for HS code pre-determination must include an application form and two sealed identical samples. However, many enterprises do not attach samples but send the image of items without information related to components, properties, composition and utility of items. Or several enterprises send insufficient quantities. Or in some cases, enterprises send 2 samples but wrap and seal together in a box, which makes Customs officers unable to conduct Customs operations because they have to store 1 sample under current regulations.

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The notice of HS code pre-determination is valid for 3 years, but it does not take effect before the validity of notice. For rejected cases, the General Department of Vietnam Customs gives clear written notice, including specific guidance and procedures on how to send samples properly if enterprises continue to request for HS code pre-determination.