Procedures for import tax incentives for non-domestically produced raw materials and components

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Officers of Thuy An Customs Branch (Thua Thien Hue Customs Department) inspect goods. Photo:N.L

The GDVC cites Clause 13, Article 16 of the Law on Import and Export Duties as saying that raw materials and components which cannot be domestically manufactured and are imported serving the manufacturing of investment projects eligible for investment incentives or in an extremely disadvantaged area prescribed by regulations of law on investment, high technology enterprises, science and technology enterprises, science and technology organizations are exempt from import duty for five years from the commencement of manufacture.

The exemption of import duty specified in this Clause does not apply to mineral extraction projects; projects for manufacture of products where total value of natural resources or minerals plus energy costs makes up at least 51% of the product price; projects for manufacture or sale of goods/services subject to the Excise Tax.

Appendix III on the List of areas eligible for investment incentives attached to Decree 31/2021/ND-CP of the Government stipulates economic zones and high-tech zones in an extremely disadvantaged area.

Article 2 of the Law on Excise Tax provides that Under-24 seat cars, including cars for both passenger and cargo transportation with two or more rows of seats and fixed partitions between passenger holds and cargo holds are subject to the Excise Tax.

Article 15 of Decree 134/2016/ND-CP amended and supplemented in Clause 8, Article 1 of Decree 18/2021/ND-CP of the Government, stipulates raw materials, supplies and components that cannot be domestically manufactured and are imported to serve manufacturing activities of investment projects specified in Points a, b, c of this Clause are exempt from import duty for five years from the manufacture commencement date as prescribed in Clause 13 Article 16 of the Law on Export and Import duties.

a) Investment projects in the List of business lines eligible for investment incentives specified in Appendix 1 of Decree 118/2015/ND-CP and documents amending, supplementing, and replacing (if any).

b) Investment projects in the List of Extremely disadvantaged areas specified in Appendix II of Decree 118/2015/ND-CP and documents amending, supplementing and replacing (if any) or investment projects specified in Points a and c, Clause 2, Article 16 of Decree 118/2015/ND-CP and revised and replaced documents (if any).

c) Investment projects of high-tech enterprises, science and technology enterprises, science and technology organizations under the provisions of law on high technology and Law on science and technology.

The manufacture commencement date is the day on which the manufacture process is officially commenced, excluding the experimental manufacture period. The taxpayer shall declare the manufacture commencement date and notify the customs authority where application for duty exemption is received before following customs procedures.

When the 5-year period expires, the taxpayer shall fully pay duties on the amount of imported raw materials, supplies and components that were exempt from import duties but are not used.

Pursuant to current regulations, the GDVC said that Kim Long Motors Hue Joint Stock Company imports raw materials and components which cannot be domestically manufactured and are imported serving the manufacturing of investment projects in an extremely disadvantaged area prescribed by regulations of law on investment are exempt from import duty for five years from the commencement of manufacture. This import tax exemption does not apply to projects for manufacture or sale of goods/services subject to the Excise Tax.

The basis for determining raw materials, supplies and components that cannot be produced domestically will comply with regulations of the Ministry of Planning and Investment. Tax exemption documents and procedures comply with the provisions of Articles 30 and 31 of Decree 134/2016/ND-CP amended and supplemented in Clauses 13 and 14, Article 1 of Decree 18/2021/ND-CP.

The GDVC requests Kim Long Motors Hue Joint Stock Company, based on the area, objectives, and scale of the investment project, refer it with the regulations and contact the Customs where the goods are imported to given specific instructions.