OFFICIAL LETTER NO. 4102/TCT-CS REGARDING THE TAX POLICY ON THE GRANT
Responding to Official Letter No. 1430/CTCMA-TTHT dated 01/7/2024 of the Tax Department of Ca Mau Province on tax policies for funded projects, the General Department of Taxation issued Official Letter No. 4102/TCT-CS guiding as follows:
Clause 7 Article 4 of the Government’s Decree No. 218/2013/ND-CP dated 26 December 2013 detailing and guiding the implementation of the Corporate Income Tax (“CIT”) Law stipulates that exempt incomes include the grants received are used for educational activities, scientific research, culture, art, charity, humanity and other social activities in Vietnam.
Additionally, clause 15 Article 7 of Circular No. 78/2014/TT-BTC dated 18 June 2014, issued by the Ministry of Finance (amended by clause 1 Article 5 of Circular No. 96/2015/TT-BTC dated 22 June 2015) stipulates that other incomes include:
Donations and gifts in cash or in kind;
Income received in cash or in kind from financing sources;
Income received from marketing support, expense support, payment discount, promotional prizes and other supports.
Based on the above regulations, the grant received in the form of standard certifications for products and facilities is not used for the purposes and therefore is not exempt from tax.
This grant is the other income, classified as an intangible fixed asset and the Company is obligated to declare, account for, and pay CIT as prescribed.
OFFICIAL LETTER NO. 4556/TCHQ-TXNK REGARDING THE APPLICATION OF VALUE ADDED TAX RATE
On 24 September 2024, the General Department of Customs issued the Official Letter No. 4556/TCHQ-TXNK in response to the inquiries regarding the application of value added tax (“VAT”) rate for specialized electronic equipment.
Specially, pursuant to Section IV, Part B Appendix III of Decree No. 72/2024/ND-CP dated on 30 June 2024 of the Government, in cases where goods are classified as specialized electronic equipment, they are not eligible for a VAT reduction and are subject to a standard tax rate of 10%.
The HS codes provided in column (10) of Appendix I, column (10) of Part A and column (4) of Part B of Appendix III of Decree No. 72/2024/ND-CP are intended for reference purposes only. The determination of HS codes for actual imported goods must be conducted in accordance with the classification regulations outlined in the Customs Law and relevant legal documents guiding the implementation of the Customs Law.
THE OFFICIAL LETTER NO. 4610/TCHQ-TXNK ON THE REQUEST FOR GUIDANCE ON IMPORT TAX REFUNDS FOR GOODS IMPORTED UNDER THE EXPORT RIGHTS, IMPORT RIGHTS, AND DISTRIBUTION RIGHTS OF EXPORT PROCESSING ENTERPRISES, WHICH ARE SUBSEQUENTLY SOLD ABROAD OR SOLD TO OTHER EXPORT PROCESSING ENTERPRISES.
On September 26, 2024, the General Department of Customs issued Official Letter No. 4610/TCHQ-TXNK providing guidance on the refund of import-export taxes for goods that need to be re-exported as follows:
1. Regarding the use of customs declaration form codes
In cases where the company has been granted import rights and imports goods under the import rights, the company should register with the customs declaration code A41 - Business import of enterprises exercising import rights.
When exporting goods originating from imported goods (without undergoing processing or manufacturing) to return to the owner, export abroad, or to a non-tariff zone/export processing enterprise, the company should apply the following codes:
Code B13 – Export of imported goods: This is applied when the exporter is the original importer or is authorized or entrusted by the original importer to export, and the goods meet the conditions for export tax exemption and import tax refund.
Code B11 – Business export: This is applied when the exporter does not apply for export tax exemption or import tax refund, or is not the original importer or the authorized or entrusted exporter.
2. Regarding tax policies
a, Regarding export and import taxes
According to Point c, Clause 1 and Clause 2, Article 19 of the Law on Export and Import Duties No. 107/2016/QH13 and Decree No. 134/2016/ND-CP, goods that have paid import tax but must be re-exported without being used, processed, or manufactured are eligible for import tax refunds and exempt from export taxes. The re-export must be carried out by the original importer or an authorized person.
b, Regarding Value-Added tax (VAT)
According to Article 60 of the Law on Tax Administration No. 38/2019/QH14 and Circular No. 06/2021/TT-BTC, if the taxpayer has overpaid tax, fines, or late payment fees, the excess amount will be offset against any outstanding tax liabilities or future tax obligations. If there are no outstanding taxes, the taxpayer may request a refund of the overpaid amount in accordance with the regulations.
OFFICIAL LETTER NO. 4111/TCHQ-GSQL ON CORRECTING WAREHOUSES, YARDS, LOCATIONS, AND EXPORT PROCESSING ENTERPRISES (EPES) WITH CAMERA SYSTEMS THAT DO NOT MEET CUSTOMS INSPECTION AND SUPERVISION CONDITIONS
On August 27, 2024, the General Department of Customs issued Official Letter No. 4111/TCHQ-GSQL, requesting the Customs Departments of provinces and cities to inspect and review the status of surveillance camera systems at warehouses, yards, and inspection locations of export processing enterprises (EPEs).
1. For warehouses and locations
Upon checking the access to the surveillance camera systems, it was found that the online camera systems at many warehouses and locations could not be accessed for customs inspection, supervision, and control. The Customs Departments of provinces and cities are required to inspect and review the entire camera system at warehouses and locations based on the access addresses provided.
If access is not possible, goods will not be allowed to undergo customs procedures to enter those warehouses and locations, and a notification will be sent to the businesses operating the warehouses and locations to address the issue.
Within 15 days from the date of notification, if the business does not resolve the issue, the provincial or city Customs Department will report and propose that the General Department of Customs proceed with the procedures to temporarily suspend or terminate the operation of those warehouses and locations.
2. For export processing enterprises (EPEs)
The provincial and city Customs Departments are required to:
Review and notify EPEs with camera systems that do not meet the regulations;
Require businesses to implement a surveillance camera system that complies with the requirements for online connectivity with customs authorities and data retention periods;
Strengthen inspection and supervision, increasing the level of scrutiny and risk assessment for subsequent shipments from businesses during the period when the surveillance camera system retains images at the EPE for less than 12 month;
Consider tax policy treatment for each specific case when the customs inspection and supervision conditions for EPEs, which are non-tariff zones, are not met.
Therefore, EPEs need to ensure compliance with regulations regarding surveillance camera systems to facilitate the inspection and review activities of the provincial and city Customs Departments and to maintain the operational processes of the business.
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