CIRCULAR

GUIDING THE DETERMINATION OF PRICES FOR THE CALCULATION OF IMPORT TAX AND SPECIAL CONSUMPTION TAX ON GOODS IMPORTED BY SUBJECTS ENTITLED TO TAX EXEMPTION AFTER THE REASON(S) FOR TAX EXEMPTION HAS CHANGED

Pursuant to Articles 7 and 15, Decree No.54-CP of August 28, 1993 of the Government detailing the implementation of the Laws on Import and Export Taxes;
Pursuant to Decree No.97-CP of December 27, 1995 of the Government detailing the implementation of the Law on Special Consumption Tax and the Laws on Amendments and Supplements to a Number of Articles of the Law on Special Consumption Tax;
Pursuant to the directions of the Prime Minister, stated in Official Dispatch No.2972/KTTH of June 13, 1997 of the Office of the Government;
After consulting the Ministry of Trade and the General Department of Customs, the Ministry of Finance provides the following detailed guidance on the re-determination of prices for the calculation of the import tax and special consumption tax arrears on import goods which were exempt from such taxes and already put into use but the reason(s) for tax exemption (liquidation, transfer, donation or gift, use for wrong purposes,...hereafter called transfer for short) has now changed:

I. OBJECTS AND SCOPE OF APPLICATION:

1. Non-refundable aid that has been used for a project program's purposes and is allowed to be transferred to subjects not entitled to tax exemption on expiry of the project program's duration.

2. Goods of foreign invested enterprises entitled to tax exemption under the Law on Foreign Investment in Vietnam, which are now transferred to subjects not entitled to tax exemption;

3. Goods of subjects enjoying immunity status in Vietnam and now transferred to other subjects not entitled to tax exemption;

4. Goods imported in direct service of security and defense; scientific research and education and training, which were already exempt from import tax but not used for the said purposes, and are now transferred to subjects not entitled to tax exemption;

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6. Other subjects entitled to import tax exemption or reduction by decision of the competent agency when transferring their imported goods to subjects not entitled to tax exemption shall have to pay the import tax arrears and special consumption tax arrears (if any).

II. METHOD OF DETERMINATION OF PRICES FOR THE CALCULATION OF THE IMPORT TAX AND SPECIAL CONSUMPTION TAX ARREARS (IF ANY) IN THE ABOVE-SAID CASES

If the goods imported by subjects entitled to tax exemption or reduction as stipulated in Section I above have been put into use and are now allowed to change the tax exemption or reduction reasons (liquidation, transfer, donation or gift...), the concerned subjects shall have to pay the import tax and special consumption tax arrears (if any). The prices for the calculation of such import tax arrears and special consumption tax arrears (if any) shall be determined on the basis of the goods' remaining use value at the time of liquidation, transfer, donation or gift presenting, etc.

The goods' remaining use value at the time of liquidation, transfer, donation or gift presenting, etc., shall be determined on the basis of the results of the goods quality evaluation by the competent State evaluating agency. Basing itself on the use period and the depreciation rate as well as the actual state of the goods, the tax collecting agency may reject the evaluation results which it deems are not appropriate and request a re-evaluation of the goods' quality. The tax collecting agency requesting the re-evaluation shall have to bear the re-evaluation cost, if the re-evaluation results are the same as the results of evaluation requested by the concerned units or enterprises. The concerned units or enterprises shall have to pay the re-evaluation cost if the re-evaluation results differ from the results of evaluation requested by them.

Basing itself on the results of the goods quality evaluation conducted by the competent State evaluating agency, the Customs Office shall determine the prices for the calculation of import tax according to the following principles:

- If the goods' remaining use value is 30% (thirty percent) or lower, the tax calculation price shall be 10% (ten percent) of the goods' import price.

- If the goods' remaining use value is from 30% to 50%, the price for tax calculation shall be 20% (twenty percent) of the goods' import price.

- If the goods' remaining use value is from over 50% to 70%, the price for tax calculation shall be 30% (thirty percent) of the goods' import price.

- If the goods' remaining use value is from over 70% to 85%, the price for tax calculation shall be 45% (forty five percent) of the goods' import price.

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The goods' import price mentioned above shall be determined according to the CIF prices at the time of transfer. In case the goods subject to payment of tax arrears have no import prices, the minimum prices for the calculation of import tax prescribed in the current minimum price index for the calculation of import tax shall apply. If the minimum price is not available in the minimum price index for the calculation of import tax, the Customs Office shall set up a price bracket according to the principles provided for in Article 7, Decree No.54-CP of August 28, 1993 of the Government and then determine the prices for the calculation of import tax on goods subject to the payment of tax arrears in accordance with the above-said principles.

With regard to prices for the calculation of special consumption tax on import goods subject to the payment of the special consumption tax arrears, the formula stipulated in Point b, Item 2, Section II, Circular No.98-TC/TCT of December 30, 1995 of the Ministry of Finance shall apply. More concretely:

Price for calculation of special consumption tax = Price for calculation of import tax + Import tax

of which the price for calculation of import tax and the import tax shall be determined in accordance with the above-said stipulations.

III. HANDLING OF VIOLATIONS

If they make any false declaration in the transfer or fail to make a declaration so as to evade tax, those subjects defined in Section I above shall not only have to pay the import tax and special consumption tax arrears as prscribed above, but also be sanctioned in accordance with the provisions of the current Laws on Import and Export Taxes and the Law on Special Consumption Tax.

IV. ORGANIZATION OF IMPLEMENTATION

This Circular takes effect from the date of its signing.

The earlier provisions which are contrary to the provisions of this Circular are now annulled. In the course of implementation, if any problem arises, the units must report them to the General Department of Customs and the Ministry of Finance for consideration and adjustment.

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FOR THE MINISTER OF FINANCE
VICE MINISTER




Vu Mong Giao