Scrap and waste products created in the process of production, processing and export to comply with regulations

VCN- The General Department of Customs has just issued guidance on the implementation of regulations on handling of scrap and discarded products formed in the process of production and export processing in order for the customs units of the provinces and cities to have a basis to guide businesses and customs declarants to strictly implement the provisions of Decree 18/2021/ND-CP (referred to as Decree 18) amending and supplementing a number of articles of Decree 134/2016/ND-CP.
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Officials of Ninh Binh Customs branch (Ha Nam Ninh Customs Department) inspect imported goods. Photo: H.Nu

For scrap and waste products created in the production process of imported goods for processing, processed products for export specified in Article 10 of Decree 134/2016/ND-CP as amended and supplemented in Clause 4 of Article 1, Decree 18.

Accordingly, goods imported for processing, processed products for export, scrap and discarded products created in processing are allowed to be destroyed in Vietnam and destroyed according to the provisions of the customs law, import tax exemption according to the provisions at point e, clause 1, point e, clause 2, Article 10 mentioned in clause 4, Article 1 of Decree 18.

Goods imported for processing, scrap and discarded products generated during export processing and paid to foreign parties for processing are exempt from import and export tax according to the provisions of Point e, Clause 2, Article 10 mentioned in Clause 4, Article 1 of Decree No. decision 18.

Scrap and discarded products formed during processing, when they are transferred for domestic consumption, are exempt from import tax, taxpayers do not have to complete customs procedures but must declare and pay VAT, excise tax, and environmental protection tax (if any) to the tax authority as prescribed in Clause 4, Article 10 of Decree 134/2016/ND-CP, as amended and supplemented in Clause 4, Article 1 of Decree 18.

The General Department of Customs said that, for scrap and discarded products created during processing that have been sold domestically before April 25, 2021 (the effective date of Decree 18), taxpayers have to declare VAT and payment to the Customs office according to the instructions in Official Letter No.5845/BTC-TCHQ dated May 22, 2019 of the Ministry of Finance, Official Dispatch No. 4344/TCHQ-TXNK dated July 1, 2019 of the General Department of Customs.

Regarding scrap and discarded products of goods imported for the production of export goods specified in Article 12 of Decree 134/2016/ND-CP amended and supplemented in Clause 6, Article 1 of Decree 18.

Accordingly, goods imported for production, manufactured products, scrap and discarded products created in the production process are allowed to be destroyed in Vietnam and actually destroyed in accordance with the provisions of the customs law are exempt from import tax according to the provisions of Point d, Clause 1, Point d, Clause 2, Article 12 mentioned in Clause 6, Article 1, Decree 18.

Scrap and discarded products created in the production and export process, when they are transferred for domestic consumption, are exempt from import tax, taxpayers do not have to do customs procedures but must declare and pay VAT, special consumption tax, environmental protection tax (if any) to tax authorities as prescribed in Clause 4, Article 12 of Decree 134/2016/ND-CP as amended and supplemented in Clause 6, Article 1 of Decree 18.

For scrap and discarded products created in the production process that have been transferred for domestic consumption before April 25, 2021 (the effective date of Decree 18/2021/ND CP), taxpayers still have to declare and pay tax and VAT with the customs authority as prescribed in Article 71 of Circular 38/2015/TT-BTC as amended and supplemented in Clause 49, Article 1 of Circular 39/2018/TT-BTC.

Regarding the document specifying the delivery of goods in Vietnam of foreign organizations and individuals, according to the General Department of Customs, Clause 5, Article 10, Clause 3, Article 12 of Decree 134/2016/ND-CP is amended, supplemented in Clauses 4 and 6, Article 1 of Decree 18 stipulates: "When carrying out on-spot export procedures for goods specified in this article, in addition to the tax exemption dossier prescribed in Article 31 of this Decree, on-spot exporters must submit additional documents specifying the delivery of goods in Vietnam from foreign organizations and individuals.”

Therefore, based on the above provisions, the General Department of Customs believes that, when carrying out export procedures on the spot, the exporter on the spot must submit additional documents specifying the delivery of goods in Vietnam of foreign organizations and individuals for the purpose of exporting goods for the case specified at Points a and c, Clause 1, Article 35 of Decree No. 08/2015/ND-CP.

When carrying out export procedures on the spot, the on-spot exporter does not have a document specifying the delivery of goods in Vietnam from a foreign organization or individual, it will not be identified as an on-spot export activity.

By NuBui /Quynhlan

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