Tax exemption of import automobile parts: Encountered due to the specialized list of Ministries

The Customs are facing some problems when implementing the tax exemption of the import automobile components. The illustration photo.

A code of goods, 2 scopes of application

Decree No. 125/2017/ND-CP dated November 16, 2017, on amending and supplementing a number of articles of the Government's Decree No. 122/2016/ND-CP of September 1, 2016, for the preferential import tax Tariff, the List of commodities and absolute tax rates, mixed tax and import tax outside the tariff quotas, including the program on preferential tax of import automobile parts in Article 7a of Decree 125/2017/ND-CP.

Specifically, Point b, Clause 3, Article 7a of Decree No. 125/2017/ND-CP stipulates that the imported automobile components used for the manufacture and assembly of automobiles must be on the list of 98.49 defined in Section II Chapter 98 of Appendix II issued together with this Decree, and which can not be domestically produced. The identification of components which have not been manufactured in the country shall be based on the regulations of the Ministry of Planning and Investment.

Accordingly, from November 16, 2017, (the enforcement date of Article 7a of Decree No. 125/2017/ND-CP) until May 14, 2018, the identification of components which have not been manufactured in the country can be based on Circular 14/2015/TT-BKHDT dated 17/11/2015 of the Ministry of Planning and Investment (replaced by Circular 01/2018/TT-BKHDT dated 30/3/2018, taking effect from 15/5/2018).

As reflected by the Customs Offices of some provinces and cities, Annex V of Circular No. 14/2015/TT-BKHDT dated November 17, 2015, of the Ministry of Planning and Investment, regulates the list of vehicle components and parts which have been produced in the country, but the contents of the appendix regulates components for both buses, cars and trucks. Therefore, many Customs units inquired whether the list of components and spare parts for buses, which have been produced in the country under the Circular No. 01/2018/TT-BKHTT, could apply for the components and spare parts used to assemble other vehicles.

The specific analysis about code 4016.93.20 in Appendix IV and Annex V of Circular No. 01/2018/TT-BKHT shows that, Annex IV on List of components and spare parts produced in the country in line 4016.93.20, with the description of replacement goods as “pads and ring frames”, is not written for automobiles, and not specified in the column “symbol on specifications, technical characteristic description”.

For this code, Annex V specifies the List of components and spare parts that could be manufactured in the country with the line 4016.93.20, and the description as “rear heat –insulation plank (rubber)”, with specification “under Toyota standard, for Innova car” in column “symbol on specifications, technical characteristic description”.

Thus, with the same code, 2 appendixes are different and the scope of application is different. Meanwhile, according to the List of Imports and Exports of Vietnamese Importers issued in conjunction with Circular 65/2017/TT-BTC, code 4016.93.20 describes them as “…pads and ring frames, kinds used for motor vehicles of 87.02, 87.03, 87.04 or 87.11”. Accordingly, the Customs authorities understand that the line “pads and ring frames” in code 4016.93.20 in Annex IV of Circular 01/2018/TT-BKHDT could be used to assemble cars or motorcycles, so, can they be determined for assembling common cars?

Therefore, for uniform application, the General Department of Customs considers that the Ministry of Planning and Investment should have specific guidance on whether line 4016.93.20, with the description of alternative names as "pads and ring frames" in Annex IV and line 4016.93.20 with the description as "rear heat-insulation (rubber)" in Annex V the components, whether or not spare parts manufactured in the country can be used for the assembly of common cars.

Many codes are no longer in Vietnam's List of export-import goods

According to many provincial/municipal Customs Departments, through the review of commodity codes in Appendix IV and Appendix V of Circular 01/2018/TT-BKHDT, many codes in 2 appendixes are no longer there, or have been converted into another code in the Vietnamese List of Export and Import Goods issued with Circular 65/2017/TT-BTC.

According to the General Department of Customs, there are 196 items for cars (less than 9 seats) with differences between Annex IV, Appendix V Circular 01/2018/TT-BKHTT and the Vietnamese List of export-import goods issued with the Circular 65/2017/TT-BTC, such as: registration stamps, tools to remove the rim, air conditioning, vacuum valves, batteries, motor bracket, cable support, insulation plate, rear hand brake, rear window glass, brake oil pipe, chassis ...

For example, the description in Annex IV and Appendix V of Circular No. 01/2018/TT-BKHDT, code 4204.11.00 is "rim removing tool” according to Toyota standard for Corolla; code 4016.99.14 is "cover (rubber)" according to Toyota standard for Vios; code 4016.99.14 according to Toyota standard for Corolla; code 8507.20.91 is "GS lead battery12V, discharge capacity 34 AH, height 22.7 cm"; code 8708.91.92 is "cooling net cover, bottom"; code 8483.40.00 is "Silver of spare parts"; code 8708.99.93 is "Tweezers"... However, in the Vietnam list of export-import goods issued with Circular 65/2017/TT-BTC, they have not been included these codes.

Need clearer guidance

Another item is also reflected by provincial Customs. Appendix V "List of components and spare parts produced domestically" in Circular 01/2018/TT-BKHTT, stipulates clearly the name of goods, commodity codes and symbols, specifications and technical characteristic description that are used for vehicle assembly lines or standards of specific manufacturers. Specifically, the ordinal number 47 of Annex V specifies clearly that the item “spring suspension bracket for rear system, right”, code 8708.80.92, the column for symbol, specification, technical character description is written as ‘goods’, “according to Toyota standard used for Vios”.

With the above definition, according to the understanding of the Customs authorities, only the item “spring suspension bracket for rear system, right”, goods code 8708.80.92 that have been produced domestically according to Toyota standards and only used for Vios, have not been produced by other standards and are not used for other vehicles exception Vios.

Accordingly, in order to ensure compliance with the provisions of Circular 01/2018/TT-BKHT, the Ministry of Planning and Investment should have specific guidance on the application of Annex V; should guide clearly whether the components and spare parts with symbols, specifications and technical characteristic description, are used for the assembly of specific vehicle lines, or under the standards of other manufacturers.