Tax refund applied for imported raw material serving for export production

Shinhan Customs Vietnam Company Limited (SCV Ltd) questioned about the tax refund for imported goods serving for production and business but it was put in to export production. Thus, General Department of Vietnam Customs has provided a specific response.

Article 19, Clause 1, Point d of the Law on Export and Import Tax stipulates a tax refund for cases where: "The taxpayer has paid taxes on imported goods for production and business but has used them to produce exported goods and has exported the products."

Professional activities at North Thang Long Industrial Park Customs Branch (Hanoi Customs Department). Photo: T.Bình

Furthermore, Clause 3, Article 36 of Decree 134/2016/ND-CP stipulates the grounds for identifying goods eligible for duty refund including: Organisations or individuals producing products for export have facilities for export production in the territory of Vietnam; and have the right to own or use machinery and equipment at production facilities suitable to materials, supplies and components imported for export production; The value or quantity of imported materials, supplies and components eligible for duty refund is the value of the quantity of actually imported materials, supplies and components used for production of actually exported products; Exported products have undergone customs procedures applicable to export production; Organizations or individuals directly import goods and export products or entrust such import and export. Duty payers shall accurately and truthfully declare on customs declarations the exported products produced from previously imported goods.

Based on the customs procedure codes issued with Decision No. 1357/QD-TCHQ dated May 18, 2021 of Director General of Vietnam Customs, the following guidelines are provided:

Code E52 (export toll manufactured products to foreign traders) is applied for the following cases: manufactured products for overseas processing partners or deliver goods as specified by the ordering party; export self-supplied toll manufactured products; export toll manufactured products back to export-processing enterprises, enterprises in free trade zones; export meal rations of foreign airlines to aircrafts making exit.

Code E62 (export manufactured products) is applied for the case: export products manufactured from parts or all of imported materials to foreign countries or to free trade zones (including cases of exporting to foreign traders and delivering in Vietnam as designated); export meal rations to aircrafts of Vietnamese airlines

Comparation with current regulations, according to General Department of Vietnam Customs, imported goods used for production and business for which import taxes have been paid, which have been used to produce exported goods and have been exported abroad or exported to a free trade zone, are eligible for import tax refunds if they meet the conditions for determining refundable goods as stipulated in Article 36 of Decree 134/2016/ND-CP.

The customs authority receiving the refund application is responsible for verifying and determining the conditions for a refund and processing it in accordance with the regulations.