Giáo trình Taxation - Chapter 3: Export and Import Duties

learance or release. • Where a credit institution provides guarantee for the amount of tax payable, customs clearance or release shall be granted. ➢ However, late payment interest shall be paid for the period from the date of customs clearance or release to the tax payment date. ➢ The guarantee period shall not exceed 30 days from the day on which the customs declaration is registered. ➢ If the taxpayer fails to pay tax and late payment interest by the end of the guarantee period, the guarantor shall fully pay tax and late payment interest on behalf of the taxpayer. • Taxpayers given priority as prescribed by the Law on Customs shall pay tax on the customs declarations granted customs clearance or release in the month by the 10th of the next month. ➢ If the taxpayer fails to pay tax by the aforesaid deadline, the taxpayer shall fully pay outstanding tax and late payment interest. DUTY EXEMPTION 1. 1 1. Grant of duty exemption to goods of foreign entities enjoying diplomatic immunity and privileges (Article 5); 2. Duty-free allowances for luggage of inbound and outbound passengers (Article 6); 3. Exemption of duties on belongings (Article 7); 4. Exemption of duties on gifts (Article 8); 5. Exemption of duties on goods traded among border residents (Article 9); 6. Exemption of duties on goods imported for further processing and processed exports (Article 10); 7. Exemption of duties on goods exported for processing and processed imports (Article 11); 8. Exemption of duties on goods imported for manufacture of domestic exports (Article 12); 9. Exemption of duties on temporarily imported goods and temporarily exported goods (Article 13); 10. Exemption of duties on imported fixed assets of entities eligible for investment incentives (Article 14); 11. 5-year exemption from import duties on raw materials, supplies and components (Article 15); See details in the Decree No. 134/2016/ND-CP LO 3-5: Understand exemption, reduction and refund of Vietnamese EID. DUTY EXEMPTION (CONT.) 1. 112. Exemption of duties on imports serving petroleum activities (Article 16); 13. Exemption of duties on imports serving ship building and sea-going vessels for export (Article 17); 14. Exemption of duties on plant varieties, animal breeds, fertilizers and plant protection substances (Article 18); 15. Exemption of duties on imports serving scientific research and technological development (Article 19); 16. Exemption of duties on imports serving national defense and security purposes (Article 20); 17. Exemption of duties on imports serving education (Article 21) ; 18. Exemption of duties on goods manufactured, processed, recycled or assembled in a free trade zone (Article 22); 19. Exemption of duties on imported raw materials, supplies and components for manufacture or assembly of medical equipment (Article 23); See details in the Decree No. 134/2016/ND-CP DUTY EXEMPTION (CONT.) 1. 1 20. Exemption of duties on raw materials, supplies and components imported for manufacture or information technology products, digital contents or software (Article 24); 21. Exemption of duties on goods imported for environmental protection purposes (Article 25); 22. Exemption of duties on imports serving money printing and minting (Article 26); 23. Exemption of duties on goods imported for non-trading purposes (Article 27); 24. Exemption of duties on goods exported or imported for social welfare, recovery from a disaster, epidemic or other special incidents (Article 28); 25. Exemption of duties on exports or imports under an international treaty, goods of low values and goods sent by express delivery service (Article 29) ; See details in the Decree No. 134/2016/ND-CP DUTY EXEMPTION (CONT.) Example 3-5: Suppose Tan Phu Company receives an outsourcing contract of shirts from ABC Company (a foreign company). To implement this contract, Tan Phu has to import sewing machines and raw materials from ABC. After producing shirts, Tan Phu punctually exports to return these shirts and sew machines to ABC with the correct material consumption level as registered. Does Tan Phu Company pay import and export tax? Explain. • Sewing machines and raw materials imported from ABC Company are exempted import tax. • Shirts and sewing machines exported to ABC Company are exempted export tax. DUTY REDUCTION • Duties on exports and imports under customs supervision shall be reduced if the goods are damaged or lost because of inevitable causes. ➢ The damage or loss is verified by a competent organization. ➢ The level of reduction shall be proportional to the loss of goods. ➢ Tax is exempt if the exports or imports are completely damaged or lost. DUTY REFUND 1. Exported goods already paid export tax but are re-imported are entitled to export tax refund and are not required to pay import tax (Article 33) 2. Imported goods already paid import duties but are re-exported are entitled to import duty refund and are not required to pay export tax (Article 34) 3. Temporarily imported machinery, equipment, tools, vehicles already paid import duties are entitled to import tax refund when they are re-imported (Article 35) 4. Refund of duties on goods initially imported for business operation and already paid import duty but eventually used for manufacture of exports (Article 36) 5. Refund of import duty or export duty in case of no imports or exports; refund of overpaid export or import duty; no refund for cases of minimum duty amount (Article 37) See details in the Decree No. 134/2016/ND-CP DUTY REFUND (CONT.) • Example 3-6: Tan Phu Company produces clothing for export, production data are as follows: - Importing 15,000 meters of materials for producing shirts (for domestic sale) , the import tax was paid VND 300 million. - Using 10,000 meters of materials imported to manufacture 5,000 shirts. - Exporting 4,500 shirts from 5,000 shirts produced. What is the amount of import tax refunded? Import tax per material meter (m): 300 million / 15,000m = VND20,000/m Meters per shirt produced: 10,000m / 5000 shirts = 2m/a shirt Amount of import tax are refunded: 4,500 x 2 x 20,000 = VND180 million A BIG EXAMPLE Following are data from A Company in December 2016: Following are data from Vinatex Company in December 2016: 1. Exporting 50,000 products C, the selling price at the exporting checkpoint on the commercial invoice and foreign trade contract was US$ 79.2/unit (CIF price), I & F fees at 10% of FOB price. 2. Receiving 50,000 products D for the entrusted export service, the selling price at the exporting checkpoint on the commercial invoice and foreign trade contract was US$ 60/unit (FOB price), entrusted export commission at 2% of the selling price. 3. Exporting 10,000 products C to an enterprise located in an export processing zone for use as raw material for production, the selling price under the commercial invoice and foreign trade contract at the border gate of the export processing zone of US$ 20/unit. 4. Importing 80,000 products A, the purchase price at the importing checkpoint on the commercial invoice and foreign trade contract was US$ 30/unit (FOB price), I & F at 10% of the purchase price at the exporting checkpoint. A BIG EXAMPLE (CONT.) Following are data from A Company in December 2016:5. Importing a new car, the purchase price at the first importing checkpoint of Vietnam on the commercial invoice and foreign trade contract was US$ 15,000 (CIF price). Vinatex had to pay interest (simple interest) at 1% per month for the 6 month late payment which was stipulated in the contract. 6. Importing a second-hand car of 12 seats, cylinder capacity of 4,000cm³, the purchase price at the first importing checkpoint of Vietnam was US$ 20,000. 7. Receiving 30,000 products E for the entrusted import service, the purchase price at the first importing checkpoint of Vietnam on the commercial invoice and foreign trade contract was US$ 40/unit (CIF price), entrusted import commission at 2% on the purchase price. 8. Importing 1,000 products B from an enterprise located in an export processing zone, the purchase price at the export processing zone's border gate under the commercial invoice and the contract was US$ 30/unit. * Additional data: ✓ Vinatex sufficiently has contracts, valid export import documents and bank payment vouchers for its import and export activities; ✓ All of the goods are imported from countries which grant Most Favored Nation (MFN) treatment in trade relations with Vietnam; ✓ Import tax rates according to the Preferential Tariff: Cars: 70%; Product E: 5%; Product A: 25%; Product B: 20%; ✓ Export tax rates: Product C, D: 1%; ✓ Specific import tax on used cars of 12 seats, cylinder capacity of 4,000cm³: US$ 17,000 / car; ✓ Foreign exchange rate: 20,600VND/US$. Required: Calculate the export and import tax payable of Vinatex.