Customs Alert - March 2021 - New guidance on tax treatment for export-production model with outsource processing -

Customs Alert - March 2021 - New guidance on tax treatment for export-production model with outsource processing

Tin Hải Quan - Tháng 3, 2021 - Hướng dẫn xử lý thuế đối với hàng hóa nhập khẩu để sản xuất xuất khẩu có đưa đi thuê gia công ngoài

Mazars Vietnam

24th March 2021

Following Resolution No. 178/NQ-CP, on 23/02/2021 the General Department of Customs issued Official Letter No. 879/TCHQ-TXNK guiding the tax treatment for imports being materials used for export-production in which part of the production process is being outsourced to 3rd party vendor.

Following the Government's Resolution No. 178/NQ-CP dated 12/12/2020, on 23/02/2021 the General Department of Customs (“GDC)” issued Official Letter No. 879/TCHQ-TXNK guiding the tax treatment for imports being materials used for export-production in which part of the production process is being outsourced to 3rd party vendor.

We would like to highlight below the notable content of this letter.

1. Guidance on tax policy

For cases where materials are imported under export-production mode, belonging to Customs import declaration sheets registered as from 01/09/2016 onwards, part of which is handed to a 3^rd party vendor for processing, then the Company would get back the semi-finished or finished products to continue the production or to export, such imported materials will be fully exempted from import duty as prescribed in Clause 7, Article 16 of the Law on Import and Export Tax No. 107/2016/QH13.

2. Guidance on handling past transactions

In case of no tax imposition decision yet: The Customs authority will not issue such decision.
In case where tax imposition decision has been issued: The Customs authority will amend and/or revoke such decision(s). Tax amount paid by the Company under such decision(s) will be treated as over-payment of tax/interest/penalty and settled accordingly under the prevailing regulation.

Particularly for the imposed Value-added tax (“VAT”) which has already been paid by the Company and yet been refunded by the local Tax authority, this will be fully refunded by the Customs authority to the Company.

In the coming time, Customs departments of provinces and cities shall increasingly and closely perform the checking of Customs finalization reports on the use of duty-free material, conduct post-clearance Customs audit for high-risk cases, and regularly report to the GDC on the result in implementing this Official Letter.

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