Revising Law on Import and Export Duties: Amending the provisions on the tax rate bracket

VCN- To avoid many different interpretations, causing difficulties in the implementation of provisions on some commodity groups in the Export Tariffs according to the List of taxable commodity groups and the export duty bracket for each taxable commodity group, issued with the Law on Import and Export Duties,  the Ministry of Finance has proposed to amend provisions on some groups in the tax rate bracket in the draft Law amending and supplementing some articles of the Law on  Import and Export Duties No. 107 / 2016 / QH13. The Ministry of Finance has asked for an appraisal from the Ministry of Justice.
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revising law on import and export duties amending the provisions on the tax rate bracket
Professional activities at Thai Nguyen Customs Branch under Bac Ninh Customs Department. Photo: T.Trang

According to some local Customs authorities, they are being obstructed by the provision on the goods description of No. 73, Heading 27.10 of the Export Tariffs issued together with Law on Import and Export Duties No. 107/2016 / QH13. Under the provision, “petroleum of all kinds” are subject to the export tax rate of 0-40%.

However, the goods description of Heading 27.10 in the Export Tariffs is not consistent with the goods description in the Harmonized System 2017 (HS 2017) of the World Customs Organization, the List of Vietnam’s Import and Export Goods effective from 1 January 2018. This may lead to different interpretations of the scope of Heading 27.10 in the Export Tariffs.

In addition, another obstacle related to the tax rate bracket is that "Materials, raw materials and semi-finished products that are not defined above and have the value of natural resources and minerals plus energy costs, accounting for 51% or more of the product price, shall be subject to a tax rate of 5-20%" in the commodity group No. 211 in the Export Tariffs issued together with the Law on Import and Export Duties. According to the General Department of Customs, this provision should be amended and supplemented so as to effectively implement the law and remove problems arising during the implementation of the Law.

There is no provision on determining which goods are "materials, raw materials and semi-finished products" and how to determine and check the value rate of "mineral resources plus energy costs for product composition". Therefore, the Customs is encountering difficulty in identifying the goods under the HS code "materials, raw materials, semi-finished products produced from natural resources and minerals plus the energy costs, accounting for 51% or more of product price."

In fact, there are many cases where the same item is a product of this industry but it can be materials of other industries. For example: Clinker is a product of the construction materials industry but it is a material for cement production; bolts and screws are products of mechanical manufacturing industry but they are materials of the machinery and equipment production industry. Fiber and yarn are petrochemical products but they are materials of the garment and textile industry; Or cement is the product of the cement production industry but it is the input material of the construction works.

On the other hand, many items originate from raw materials as natural resources, minerals such as construction materials, petrochemicals, fiber, chemicals, metallurgy, plastics, etc. Thus, list of goods is not specified according to the HS code, both Customs and enterprises shall not have a basis to determine which goods are subject to export tax as stipulated in Heading 211 in the Export Tariffs.

Meanwhile, the Law on Import and Export Duties No. 107/2016 / QH13 and Decree No. 122/2016 / ND-CP do not provide specific guidance on determining the value rate of "natural resources, minerals plus energy costs for product composition, accounting for 51% or more of the product price”, such as a method and basis to determine this rate and application process, specific goods and group. For example, the determination of this rate is based on accounting books of the manufacturing establishment for those goods, so for newly established enterprises, what is the basis? Which authority is in charge of determining this rate when carrying out export procedures for Customs clearance (Customs or taxpayer or Tax authority) to ensure the consistency with the VAT policy.

Most of the enterprises involved in export-import activities are trading enterprises, doing business through many intermediate stages (not directly producing goods ). So, they cannot determine the tax rate of 5% of the value of the natural resources and minerals plus the energy costs in the product price in accordance with the provisions of the Law when exporting goods in Heading 211.

Actually, when implementing the provision for goods in Heading 211 in the Export Tariff issued together with the Law on Import and Export Duties, the Customs only collect export tax on clinker, cement and processed white marble from some enterprises on the basis of their self-declaration and self-responsibility. This is unfair in the export tax collection between cement manufacturing and exporting enterprises and white marble manufacturing and exporting enterprises.

Accordingly, the provision that "Materials, raw materials and semi-finished products that are not defined above and have the value of natural resources and minerals plus energy costs, accounting for 51% or more of the product price, shall be subject to a tax rate of 5-20%" is not feasible and causes difficulty in the implementation of the provisions of the Law on Import and Export Duties.

In order to remove difficulties and obstacles and ensure effective implementation and uniformity of export tax policies in the context where Law on Import and Export Duties and guiding documents under (Government’s Decree No. 122/2016 / ND-CP dated 01st September 2016) have not stipulated which goods are “materials, raw materials, semi-finished products” and the method to determine and check the value rate of mineral plus energy costs for product composition" so as to determine which goods under the HS code must pay export tax.

At the same time, in fact, trading enterprises do business through many intermediate stages (not directly producing goods ). When exporting goods in Heading 211, they cannot determine the tax rate of 5% of the value of the natural resources and minerals plus the energy costs of the product price in accordance with the Law. Therefore, the Ministry of Finance has proposed to amend and supplement as follow:

Revising the provision on No. 211 "Materials, raw materials and semi-finished products which are not specified above and have the value of natural resources and minerals plus energy costs accounting for 51% or more of the product price" shall be subject the tax rate of 5-20%" in the Export Tariffs issued together with the Law on Import and Export Duties in the direction of detailing goods codes and descriptions of a number of commodity groups processed from mineral resources subject to export tax rate of Heading 211.

revising law on import and export duties amending the provisions on the tax rate bracket Law on Import and Export Duties 2016 should be guided more clearly

VCN- According to the assessment of the provincial and municipal Customs, the application of the Law on ...

According to the analysis of the drafting committee, the above amendment and supplement is to comply with Vietnam's WTO commitments on export tax, to not need to determine the rate of 51%, leading to different interpretations, nontransparency, difficulty in the implementation

The draft Law amending and supplementing a number of articles of the Law on Import and Export Duties No. 107/2016 / QH13 will amend the description of the commodity group of No. 211 in the Export Tariffs, issued together with Law No. 107/2016 / QH13. Details are as follows: amending the name of commodity group of No. 211 "Materials, raw materials and semi-finished products which are not specified above and have the value of natural resources and minerals plus energy cost accounting for 51% or more of the product price” with the tax rate of 5% -20%” into, "Other commodities and groups which are not specified above and goods as natural resources and minerals processed into other products according to the enclosed list” with the tax rate of 0-20%.

This is the content proposed for amendment in the four contents which the Ministry of Finance has asked the Ministry of Justice to amend for the Law on Import and Export Duties 107/2016 / QH13. Currently, the Department of Tax Policy (the Ministry of Finance) and the General Department of Customs have been reviewing inadequacies to propose amendments to the Law on Import and Export Duties.

By Thu Trang/ Huyen Trang

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