Vietlaw Weekly Newsletter No. 369
Analysis - Classification
New procedures for classification of imports and exports
Decision No. 1921/QD-TCHQ dated June 28th, 2018 of the General Department of Customs on issuing the procedures for classification of commodities and imposition of tax rates on imports and exports
One of the new noticeable points of the new Procedures is the addition of entities exempt from collection of samples for analysis, classification (Clause 4 Article 5).
Accordingly, imports/exports which belong to these cases shall be exempt from the collection of samples for analysis, classification:
1. The goods have their nature that may be determined as a basis for classification through attached technical materials and documents thereof, or the goods may be classified through their information declared on the MHS system;
2. The exported or imported goods are in the “List of goods exempted from sampling for analysis for the classification purpose” in Appendix II attached with the Procedures (the earlier List was promulgated in Official letter No. 11310/TCHQ-TXNK);
3. Goods which have received the Notification of the results of classification or the Notification of the results of analysis with their HS codes;
4. The exported or imported goods are eligible for tax exemption or tax-free policies.
This Decision takes effect from the date of its signing.
To abolish Decision No. 2134/QD-TCHQ dated July 31st, 2015; Decision No. 2135/QD-TCHQ dated July 31st, 2015; Articles 52, 53, and 54 on customs procedures for exports and imports issued together with the Decision No. 1966/QD-TCHQ dated July 10th, 2015; Official letter No. 143/TCHQ-TXNK dated January 7th, 2016; Official letter No. 11310/TCHQ-TXNK dated December 1st, 2016; Point 1, Point 3 and Point 4 of the Official letter No. 3511/TCHQ-TXNK dated May 26th, 2017.
QD1921_28062018TCHQ[ENGLISH].pdf (English translation)
Provision of foreign loans shall be gradually reduced before it is wholly stopped
Directive No. 04/CT-NHNN dated August 2nd, 2018 of the Governor of the State Bank of Vietnam (SBV) on continuing to effectively implement the key tasks and solutions of the banking sector in the last 6 months of 2018.
In the last 6 months of 2018, the SBV requests banks to continue to closely follow the motto of "proactive, safe, flexible and effective".
In particular, it is required to only focus mainly on production, business and priority areas, concurrently strictly control credit provided for areas with potential risks such as real estate, securities, BOT, BT transport projects, credit for consumer spending, especially in relation to real estate, etc.
In addition, the SBV also requests to strictly control the provision of loans in foreign currencies, gradually reduce and develop a roadmap to stop the provision of loans in foreign currencies.
This Directive takes effect from the date of its signing.
CT04_02082018NHNN[VLO].pdf (English translation)
Regarding refund of duty on goods imported/exported on the spot
Official letter No. 4532/TCHQ-TXNK dated August 1st, 2018 of the General Department of Vietnam Customs regarding settlement of duty on goods imported/exported on the spot
Relating to policy on exemption from or refund of import duty on materials imported for processing, production of goods for export and products are exported on the spot, the General Department of Vietnam Customs assumes that it will propose the authorities to amend, supplement to Decree No. 134/2016/ND-CP in line with actual situation.
However, at the present, the policy on exemption from or refund of import duty on materials shall be still complied with the regulations in Clause 1 Article 36 of Decree No. 134/2016/ND-CP.
Accordingly, only when products are processed, manufactured and exported abroad or exported into non-tariff zones, import duty on materials shall be exempted or refunded. In contrast, if products are exported in the form of export on the spot (they are delivered in Vietnam under designation of the foreign party), import duty on materials shall not be exempted or refunded.
CV4532_01082018TCHQ[VLO].pdf (English translation)
Certificate of Origin (C/O)
Issues relating to C/O form AANZ
Official letter No. 2395/GSQL-GQ4 dated August 6th, 2018 of the General Department of Vietnam Customs regarding issues relating to certificate of origin (C/O) form AANZ
According to the regulations on C/O form AANZ provided in Annex V-A of Circular No. 31/2015/TT-BCT, information about transport means and routes, in which the information about date of loading goods onto board is not compulsory, it is only declared as far as known.
Accordingly, in case information about date of loading goods onto board at box number 3 of the C/O is different from that stated on the bill of lading, customs authority shall still consider accepting the C/O for enjoyment of incentives if the explanation contents are suitable, other information on the C/O is appropriate to the customs documentation and there is no double about goods origin.
CV2395_06082018TCHQ[VLO].pdf (English translation)
Regarding adjustment of price of a package construction contract
Official letter No. 1958/BXD-KTXD dated August 8th, 2018 of the Ministry of Construction regarding issues relating to construction contracts
“The lump-sum contract price” is the contract price which is kept unchanged throughout the course of contract performance, for the volume of jobs within the scope of the signed contract.
The package contract’s price shall be only adjusted in majeure events and changes of the scope of jobs to be done.
The adjustment of price of a package contract shall be carried out according to Clause 1 Article 3 of Circular No. 07/2016/TT-BXD.
CV1958_08082018BXD[VLO].pdf (English translation)
Copyright fees of films shall be subject to import duty
Official letter No. 4358/TXNK-TGHQ dated August 3rd, 2018 of the General Department of Vietnam Customs regarding copyright fees of films
Relating to import duty on copyright fees of films, the General Department of Vietnam Customs requests to carry out according to Official letter No. 808/TCHQ-TXNK dated February 25th, 2011.
Accordingly, copyright fees must be added to value of imported goods for calculation of duty.
CV4358_03082018TCHQ[VLO].pdf (English translation)
It is required to keep original copies of customs documents
Official letter No. 2368/GSQL-GQ1 dated August 2nd, 2018 of the General Department of Vietnam Customs regarding the keeping of customs documents
According to the new regulations at Clause 7 Article 1 of Circular No. 39/2018/TT-BTC, in principle, enterprises shall keep the original copies of documents in the customs documentation; the original copies may be presented in electronic or paper-based documents.
If the original copies are paper-based documents already submitted to customs authorities, enterprises shall keep the copies. With regard to electronic documents, it is required to shall keep the electronic files.
CV2368_02082018TCHQ[VLO].pdf (English translation)
Particular policies for investment, finance, budget and delegation of powers tailored for Can Tho city
Decree No. 103/2018/ND-CP dated August 7th, 2018 of the Government on providing particular policies for investment, finance, budget and delegation of powers tailored for Can Tho city
This Decree takes effect from October 10th, 2018 and replaces Decision No. 42/2006/QD-TTg dated February 16th, 2006.
ND103_07082018CP[ENGLISH].pdf (English translation)
Procedures for certification of goods, specialized vehicles to be exempt from import duty
Decision No. 30/2018/QD-TTg dated July 31st, 2018 of the Prime Minister on regarding procedures for certification of goods serving development of technology incubation, science and technology enterprise incubation and technological innovation; specialized vehicles used in technological line directly serving manufacturing activities of investment projects
Under Article 3 of this Decision, competence to certify goods serving development of technology incubation, science and technology enterprise incubation and technological innovation belongs to the People’s Committee of province where the investment project, the technology incubator, or the science and technology enterprise incubator is located or the supervisory Ministry of that investment project, technology incubator, or science and technology enterprise incubator.
With regard to goods serving technological innovation and specialized vehicles used in technological line directly serving manufacturing activities of investment projects, competence to certify shall belong to the Ministry of Science and Technology (Article 4, Article 6).
An application for certification may be submitted directly or by post and its compositions are specified in Article 2 and Article 5.
Imported goods for which procedures for certification are carried out under this Decision shall be exempt from import duty according to point b and point c Clause 4 Article 19 and point e Clause 2 Article 31 of Decree No. 134/2016/ND-CP.
This Decision takes effect from September 15th, 2018.
QD30_31072018TTg[ENGLISH].pdf (English translation)
Regarding VAT rate applicable to server leasing service
Official letter No. 2171/TCT-CS dated June 4th, 2018 of the General Department of Taxation regarding VAT rate applicable to server leasing service
According to Article 9 of Circular No. 219/2013/TT-BTC , services provided for foreign customers are considered to be exported services and eligible to apply 0% VAT only when they are consumed outside Vietnam.
Accordingly, with regard to the service of leasing server to a foreign customer but the server is located in Vietnam, this is not the exported service and not eligible to apply 0% VAT. This service shall be subject to 10% VAT.
CV2171_04062018TCT[VLO].pdf (English translation)
E-Customs - VNACCS
Regarding procedures for bonded warehouse transfer
Official letter No. 2420/GSQL-GQ1 dated August 7th, 2018 of the General Department of Vietnam Customs regarding issues arisen in the course of implementation of Circular No. 39/2018/TT-BTC
According to this Official letter, with regard to goods transferred from one bonded warehouse to another or goods stored in a bonded warehouse already transported to exporting border gate but they are not exported or only part of them is exported, if the customs declarant requests for bringing them back into the bonded warehouse at the exporting border gate (other than the bonded warehouse where the goods are stored previously), customs procedures shall be carried out according to Clause 5, Clause 11 Article 90 of Circular No. 38/2015/TT-BTC .
However, it is required to obtain the agreement in writing of the Director of the Customs Department directly managing the bonded warehouse where such goods are stored initially.
CV2420_07082018TCHQ[VLO].pdf (English translation)
Education - Training
Standards on general education school principals
Circular No. 14/2018/TT-BGDDT dated July 20th, 2018 of the Ministry of Education and Training on issuing regulations on standards for general education school principals
The standards on general education school Principals regulated in this Circular shall apply to Principals of primary schools, lower secondary schools, upper secondary schools and multi-grade general education schools, gifted schools, boarding general education schools for minority students, semi-boarding general education schools for minority students.
Accordingly, general education school Principals must ensure 5 basic standards on professional qualities; school administration; building of the educational environment; development of the relationship between the school, family and society and foreign language; and information technology usage
Those standards are specified into 18 criteria which are detailed from Article 4 throng Article 8
Each principal shall carry out self-assessment once a year at the end of an academic year. Concurrently, the direct management entity shall carry out the assessment of the Principal under its management twice a year at the end of an academic year.
This Circular takes effect from September 4th, 2018. To replace Circular No. 14/2011/TT-BGDDT dated April 8th, 2011 and Circular No. 29/2009/TT-BGDDT dated October 22nd, 2009.
TT14_20072018BGDDT[ENGLISH].pdf (English translation)
Regarding import of replacement components not included in investment registration certificate
Official letter No. 2945/TCHQ-TXNK dated May 28th, 2018 of the General Department of Vietnam Customs regarding taxonomy of goods
Regarding issues relating to procedures when a foreign direct investment enterprise (FDI enterprise) imports replacement parts/components with HS codes not included in the investment registration certificate, the General Department of Vietnam Customs requests to base on Clause 2 Article 26 of Decree No. 118/2015/ND-CP and contact with the Department of Planning and Investment of locality where the enterprise’s head office is located for having guidelines in details if it is required to make modifications to the investment registration certificate.
CV2945_28052018TCHQ[VLO].pdf (English translation)
Regarding PIT on taxi fares paid on behalf of foreign experts
Official letter No. 56281/CT-TTHT dated August 13th, 2018 of the Department of Taxation of Ha Noi city regarding taxi fares paid by a company in Vietnam on behalf of foreign experts that are seconded to Vietnam by the parent company
According to point dd.5 Clause 4 Article11 of Circular No. 92/2015/TT-BTC , the expenditure on shuttling employees shall be exempt from personal income tax (PIT).
Accordingly, in case a company pays taxi fares from foreign experts’ houses to the workplace on their behalf (the foreign experts are seconded to the company by the parent company) in accordance with the company's internal regulations, such expenditures shall be exempt from PIT.
CV56281_13082018CTHN[VLO].pdf (English translation)
Regarding withholding tax incurred by a foreign business advisor
Official letter No. 5006/CT-TTHT dated May 31st, 2018 of the Department of Taxation of Ho Chi Minh city regarding withholding tax
According to Clause 2.a Article 13 and Clause 2.a Article 13 of Circular No. 103/2014/TT-BTC, foreign organizations, individuals that earn incomes from services in Vietnam have to pay withholding tax, including 5% value added tax (VAT) and 5% enterprise income tax (EIT).
Accordingly, in case a company signs a contract to hire a foreign Group to act as a business advisor, before making payment to the foreign Group, the company has to withhold and pay 5% EIT and 5% VAT on behalf of the foreign Group.
CV5006_31052018CTHCM[VLO].pdf (English translation)
List of 81 medical equipment whose HS codes have been assigned
Circular No. 14/2018/TT-BYT dated May 15th, 2018 of the Ministry of Health on promulgating the nomenclature of medical equipment whose HS codes have been assigned in the Vietnam’s nomenclature of exports and imports
This Circular is to promulgate the nomenclature of medical equipment whose HS codes have been assigned in the Vietnam’s 2018 nomenclature of exports and imports promulgated together with Circular No. 65/2017/TT-BTC.
The nomenclature of medical equipment whose HS codes have been assigned promulgated together with this Circular shall serve as a basis for making customs declaration upon export or import of medical equipment into Vietnam.
With regard to medical equipment that has been granted the free-sale registration number or import license as prescribed but whose HS codes have yet to be included in the Nomenclature promulgated together with this Circular, customs declaration shall be made according to its description and Vietnam’s nomenclature of exports and imports. After clearance, the exporter/importer shall submit a report on such exported/imported medical equipment to the Ministry of Health to consider adding such medical equipment to the Nomenclature.
This Circular takes effect from July 1st, 2018.
To replace the List of HS codes promulgated in Annex 1 issued together Circular No. 30/2015/TT-BYT dated October 12th, 2015.
TT14_15052018BYT[ENGLISH].pdf (English translation)
Microsilica shall be classified into HS code 2811.22.10
Official letter No. 4537/TCHQ-TXNK dated August 1st, 2018 of the General Department of Vietnam Customs regarding classification of Microsilica (Silica fume)
According to this Official letter, Microsilica or Silica fume, formed as a subsidiary product in the production process of silicon or ferrosilicon alloy, which includes at least 80% of weight being morphous ultrafine silicon dioxide particles and not exceeding 20% of weight being impurities (main impurities include carbonate, silicon, silicon carbide and base anhydride) is classified into heading 28.11, HS code 2811.22.10.
The aforesaid guidelines on classification shall be applied from June 6th, 2018 (the date on which the classification result is published by the World Customs Organization to update the Summary of 2017 classification opinions).
CV4537_01082018TCHQ[VLO].pdf (English translation)
New List of construction minerals permissible to be exported
Circular No. 05/2018/TT-BXD dated June 29th, 2018 of the Ministry of Construction guidance on export of minerals used in construction industry
This Circular replaces the List of construction minerals permissible to be exported and technical specifications and standard thereof.
This Circular takes effect from August 15th, 2018 and replaces Circular No. 04/2012/TT-BXD dated September 20th, 2012.
TT05_29062018BXD[ENGLISH].pdf (English translation)
Naptha shall be exempt from environmental protection tax
Official letter No. 54151/CT-TTHT dated August 2nd, 2018 of the Department of Taxation of Ha Noi city regarding declaration of environmental protection tax on Naptha.
Gasoline, oil subject to environmental protection tax as regulated in Article 3 of the Law on environmental protection tax No. 57/2010/QH12 do not include Naptha (solvent). As the result, this goods item shall not be subject to environmental protection tax.
CV54151_02082018CTHN[VLO].pdf (English translation)
Regarding customs value of waste, discarded products
Official letter No. 4556/TXNK-TGHQ dated August 10th, 2018 of the General Department of Vietnam Customs regarding customs value of waste, discarded products
“Waste” is material which is removed in the course of processing, production of goods for export and no longer has initial value, obtained to be used for other production process.
“Discarded products” are finished products, semi-products which fail to meet technical standards (specifications, dimension, nature, etc.) removed in the course of processing, production of goods for export and their quality is not met for export."
According to Clause 5 Article 17 of Circular No. 39/2015/TT-BTC , with regard to redundant raw materials for processing, export production given by the foreign party, there is no sale contract or commercial invoice, and therefore enterprise may itself declare value on the declaration of transfer of use purpose.
However, if there is evidence proving that the declared value is unconformable, the customs authority shall determine the customs value.
CV4556_10082018TCHQ[VLO].pdf (English translation)
Regulation on management, use and operation of national railway infrastructure
Decree No. 46/2018/ND-CP dated March 14th, 2018 of the Government on management, use and operation of national railway infrastructure
“The national railway infrastructure” regulated in this Decree is the railway infrastructure invested and managed by the State, including two types: the infrastructure associated directly with the train operation and the infrastructure not associated directly with the train operation.
The List of national railway infrastructure is regulated in Article 4 of this Decree.
According to Article 3 of this Decree, all national railway infrastructure and its value shall be reckoned up and accounted adequately; those at high risks of facing natural disasters, conflagration and other force majeure events are eligible for finance risk management through insurance or other instruments as prescribed by laws.
The management and use of national railway infrastructure must be done the Prime Minister and the Minister of Transport.
This Decree takes effect from March 14th, 2018.
ND46_14032018CP[ENGLISH].pdf (English translation)
Land area used for construction of commercial works within social housing project shall not be entitled to tax incentives
Official letter No. 46515/CT-TTHT dated July 4th, 2018 of the Department of Taxation of Ha Noi city regarding enterprise income tax (EIT) incentives for investment in construction of commercial works on 20% of the total land area within a social housing project
According to point d Clause 3 Article 19 of Circular No. 78/2014/TT-BTC , incomes from execution of social housing projects shall be entitled to EIT incentive with the tax rate of 10%.
However, such preferential policy is not applied to the land area used for construction of commercial works rather than selling to entities eligible to buy social houses.
CV46515_04072018CTHN[VLO].pdf (English translation)
Regarding fines imposed on incorrect declaration of tax exemption dossier
Official letter No. 4547/TCHQ-TXNK dated August 2nd, 2018 of the General Department of Vietnam Customs regarding a request for not imposing administrative penalties in the customs domain and late payment fines
According to Clause 2 Article 8 of Decree No. 127/2013/ND-CP , the act of failure to make a declaration or to provide correct contents in the tax exemption dossier shall be subject to a fine of 20% of the understated amount of tax payable, regardless of deliberate errors or unintentional errors.
Accordingly, although an enterprise only unintentionally declares incorrect tax exemption dossier, it shall be still subject to a fine of 20% of the understated amount of tax payable rather than being exempt from sanction.
In addition, according to point b Clause 1 Article 133 of Circular No. 38/2015/TT-BTC , there is no regulation on exemption from late payment interest in case of imposition of tax due to incorrect declaration of entity exempt from tax.
CV4547_02082018TCHQ[VLO].pdf (English translation)
Textile - Garment - Footwear
Napkin liners shall be no longer subject to the control over formaldehyde content
Circular No. 20/2018/TT-BCT dated August 15th, 2018 on amending Annex I "List of textile products subject to the Regulation" issued together with the National technical regulation QCVN: 01/2017/BCT at Circular No. 21/2017/TT-BCT dated October 23rd, 2017 of the Ministry of Industry and Trade
This Circular is to remove HS code 9619: "Sanitary towels (pads) and tampons, napkins and napkin liners for babies and similar articles, of any material" from the List of textile products subject to the limit of formaldehyde content under QCVN 01:2017/BCT.
Accordingly, sanitary towels, napkin liners and similar articles shall be no longer subject to limit of content of formaldehyde under QCVN 01:2017/BCT.
This Circular takes effect from January 1st, 2019.
TT20_15082018BCT[VLO].pdf (English translation)
Methods for determination of prices of irrigation services
Decree No. 96/2018/ND-CP dated June 30th, 2018 of the Government on provide guidelines for prices of irrigation products and services and financial support for use of public irrigation products and utilities
This Decree provides guidelines for prices of irrigation products and services and a roadmap to application of prices of irrigation products and services (including prices of irrigation products and services and prices of other irrigation services); entities, scope, methods; subsidies for use of public irrigation products and utilities.
This Decree applies to domestic and foreign organizations and individuals involved in irrigation operations within the territory of Vietnam, including irrigation project owners; irrigation project managers; organizations or individuals operating irrigation projects; public irrigation product and utility users and other relevant organizations and individuals.
This Decree takes effect from July 1st, 2018.
ND96_30062018CP[ENGLISH].pdf (English translation)
Electricity - Energy
Program for demand side management for the 2018 – 2020 period
Decision No. 279/QD-TTg dated March 8th, 2018 of the Prime Minister on approval of the national program for demand side management for the 2018 – 2020 period with vision towards 2030
This Decision takes effect from the date of its signing.
QD279_08032018TTg[ENGLISH].pdf (English translation)
Science - Technology
Scheme for development of smart cities in the 2018 – 2025 period
Decision No. 950/QD-TTg dated August 1st, 2018 of the Prime Minister on approving scheme for development of smart sustainable cities in Vietnam in the 2018 – 2025 period with orientations by 2030
This Scheme provides for objectives and measures for development of smart sustainable cities in Vietnam in the 2018 – 2025 period.
This Decision takes effect from the date of its signing.