Thông tư 116/2008/TT-BTC hướng dẫn thủ tục hải quan đối với hàng hoá gia công với thương nhân nước ngoài do Bộ Tài chính ban hành

CIRCULAR

GUIDING CUSTOMS PROCEDURES FOR GOODS PROCESSED FOR FOREIGN TRADERS

Pursuant to Customs Law No. 29/2001/QH10 of June 29, 2001, and Law No. 42/2005/QH11 of June 14, 2005, Amending and Supplementing a Number of Articles of the Customs Law;
Pursuant to Import Tax and Export Tax Law No 45/2005/QH11 of June 14, 2005, and Tax Administration Law No. 78/2006/QH11 of November 29, 2006;
Pursuant to the Governments Decree No. 149/2005/ND-CP of December 8, 2005, detailing the implementation of the Import Tax and Export Tax Law;
Pursuant to the Governments Decree No. 85/2007/ND-CP of May 25, 2007, detailing the implementation of the Tax Administration Law;
Pursuant to the Government s Decree No. 154/2005/ND-CP of December 15, 2005, detailing the implementation of a number of articles of the Customs Law on customs procedures and customs inspection and supervision;
Pursuant to the Governments Decree No. 12/2006/ND-CP of January 23, 2006, detailing the implementation of the Commercial Laws provisions on international purchase and sale of goods and agency for purchase, sale, processing and transit of goods with foreign partners;
Pursuant to the Governments Decree No. 77/2003/ND-CP of July 1, 2003, defining the functions, tasks, powers and organizational stricture of the Ministry of Finance;
The Ministry of Finance guides customs procedures for goods processed for foreign traders as follows:

Section I.

GENERAL PROVISIONS

I. INTERPRETATION OF TERMS

1. Processing raw materials include principal raw materials and auxiliary materials for the creation of a processed product.

2. Principal materials are materials constituting the principal component of a product.

3. Auxiliary materials are raw materials used for the creation of a processed product but not constituting the principal component of the product.

4. Processing supplies are products and semi-finished products used in the process of producing a processed product but not directly constituting the product. Processing supplies include also packages or materials for making packages containing processed product.

5. Processing scraps are discarded or trimmed parts of raw material in the process of processing a raw material or semi-finished product; leased or borrowed machines and equipment used in the processing which are damaged and put out of production or processing.

6. Discarded processed products are products failing to meet technical standards (specifications, size, quality, utility, etc.) agreed upon in the processing contract/its annex and discarded during processing.

7. Processing wastes are raw materials and auxiliary materials discarded during processing and having no utility.

8. Processed product norm agreed in a contract includes:

8.1. Raw material use norm, which is the amount of raw material constituting a processed product unit.

8.3. Consumed supplies norm, which is the amount of supplies consumed in order to produce a processed product unit.

8.3. Raw material and supplies wastage percentage, which is the amount of raw material and supplies wastage (including also wastage in the creation of processing scraps, discarded processing products and processing wastes) calculated in a percentage (%) of raw materials constituting a product (for raw material wastage percentage) or of the amount of supplies consumed during processing (for supplies wastage percentage).

9. Processing machines, equipment and instruments are those included in a technological line to turn out processed products, which are leased or lent by the principal to the processor for the performance of the processing contract.

II. PROCESSING CONTRACTS

1. Form of processing contract

A processing contract must be made in writing or other forms of equivalent validity, including telegraph, telex, fax, data message and other forms prescribed by law.

2. Contents of processing contract

A processing contract must have all details as specified in Article 30 of the Governments Decree No. 12/2006/ND-CP of January 23, 2006.

3. Processing contract annexes

Annexes of a processing contract are an integral part of the processing contract.

3.1. Any modifications, supplements or adjustments to the terms of a processing contract must be expressed in a contract annex, which is to be registered with the customs office before or when the enterprise carries out export or import procedures for the first goods lot subject to that contract annex. Particularly for the value of imported raw materials and supplies for processing, the value indicated on the commercial invoice of the import dossier will be accepted and an adjustment annex is not required.

3.2. A processing contract which is valid for more than one year may be split into different annexes for performance. The period of performance of each annex must not exceed one year. In special cases in which the time of processing a product lasts for more than one year, the processing contract/its annex may be performed for each product (e.g., seagoing ship repair).

III. CUSTOMS CLEARANCE PLACES

1. Customs procedures for processing contracts shall be carried out at a border-gate/outside-border gate customs sub-department under the Customs Department of a province or city where the production establishment (including also re- processing establishment) of the processing contract-performing enterprise is based. An enterprise with many production establishments based in different localities may select a customs sub-department most convenient for customs clearance registration.

If there is no customs office in the locality where its production establishment is located, the enterprise may select a customs sub-department most convenient for customs clearance registration.

2. In case raw materials imported for processing are to be physically inspected at the border gate of importation at the request of a specialized state management agency but their processing contract and import declaration have been registered at an outside-border gate customs sub-department, the customs sub-department of the border gate of importation shall conduct physical inspection at the request of the outside-border gate customs sub-department.

IV. RESPONSIBILITIES OF ENTERPRISES AND CUSTOMS OFFICES

1. Enterprises:

1.1. To accurately and fully comply with regulations on processing contracts. Upon completion or expiration of a processing contract, to liquidate the processing contract and carry out liquidation procedures at the customs office under Article 35 of the Governments Decree No. 12/2006/ND-CP of January 23, 2006.

1.2. To use processing management software for their computer networks connected to the customs office.

1.3. To produce documents on payment of processing charges by the foreign partner to the customs office for liquidation and post-customs clearance inspection upon request.

1.4. When disposing of redundant raw materials and supplies, scraps, discarded products and leased or borrowed machines and equipment guided at Point 6, Clause XII, Section II of this Circular, to proactively declare them to and carry out procedures at the customs office according to regulations.

2. Customs offices:

To apply risk management techniques; to arrange specialized staffs to monitor enterprises in the process of performance of processing contracts; to promote the application of information technology, renovate customs supervision and management to facilitate and strictly manage the importation of raw materials and materials, the exportation of products and the liquidation of processing contracts.

Section II.

CUSTOMS PROCEDURES FOR GOODS RECEIVED FOR PROCESSING IN VIETNAM FOR FOREIGN TRADERS

I. PROCEDURES FOR PROCESSING CONTRACT REGISTRATION

1. Responsibilities of enterprises:

At least 1 day before carrying out import procedures for the first goods lot under the processing contract, the enterprise shall register the processing contract with the customs office. A registration dossier comprises:

1.1. The processing contract and its annex (if any): To submit 2 originals (1 to be kept by the customs office and 1 to be returned to the enterprise after the contract is registered) and 1 copy of the Vietnamese version (if in a foreign language other than English).

1.2. The business registration certificate or investment license or investment certificate, for foreign-invested enterprises (if carrying out registration procedures for the first time): To submit 1 copy.

1.3. The import and export business code or tax identification number registration certificate (if carrying out registration procedures for the first time): To submit 1 copy.

1.4. The permit of the Ministry of Industry and Trade, for processed goods on the list of imports and exports subject to permits: To submit 1 copy and produce the original.

1.5. The certificate of eligibility for scrap import (in case of import of scraps for use as processing raw materials), issued by the provincial-level Natural Resources and Environment Service of the locality where the enterprises production establishment is based, under Joint Circular No. 02/2007/TTLT-BCT-BTNMT of August 30, 2007, of the Ministry of Industry and Trade and the Ministry of Natural Resources and Environment.

1.6. A document explaining and evidencing its production establishment(s), for enterprises undertaking processing for the first time, specifying the address of the enterprises head office, the address of the production establishment, management and production capacities, products, equipment line and design capacity (even in the case of processing hire); the account number and the name of the bank with which the enterprise deposits its money: To submit 1 original.

For the document explaining and evidencing its production establishment(s), the enterprise only needs to give explanation once and shall make additional explanation only when there are any changes in the explained contents.

From the time of registration to the time of complete liquidation of a processing contract, if there is any change in the legal person status, working office and address of its production establishment, the enterprise shall promptly notify in writing such change to the customs sub-department managing the processing contract.

1.7. The processing hire contract (for the case of hiring the processing of all products): To submit 1 copy and produce the original.

1.8. The document on registration of raw materials and supplies for the processing contract or annex, made according to a set form (applicable only to customs procedures carried out at a customs sub-department applying information technology to managing and liquidating processing contracts): To submit 2 originals.

2. Tasks of customs offices:

2.1. To receive and examine dossiers.

2.2. To make registration for processing contracts.

2.3. To return to enterprises 1 original of the processing contract and original documents already produced.

2.4. To inspect production establishments:

a/ Inspection shall be conducted in the following cases:

When an enterprise registers its processing contract or during production, if the customs office has any doubt about the production establishments address, management capacity, production capacity and matters related to the assurance of the performance of the processing contract, it shall inspect the enterprises production establishment.

b/ Time of inspection:

The customs office may conduct inspection when necessary at the following points of time:

b1. After the enterprise submits a complete dossier of registration of the processing contract to the customs office; or

b2. In the course of production of registered products by the enterprise.

c/ Leaders of the customs sub-department managing the processing contract are competent to decide on the inspection of an enterprises production establishment.

d/ Handling of results of inspection of a production establishment which show that conditions for the processing contract performance are not satisfied:

d1. In case a processing contract is not yet registered: The customs office refuses to make registration for the processing contract.

d2. In case a processing contract has been registered:

d2.1. If the production establishment fails to satisfy all conditions for production according to the prescribed production process, the customs office shall request the enterprise to make a written commitment to redress the problem within a certain period and suspend the clearance of import procedures for subsequent raw material and supplies lots under the processing contract until the enterprise redresses the problem.

d2.2. If there is no establishment production, the customs office shall stop clearing import procedures for raw materials and supplies for the performance of the processing contract and request explanation from the enterprise. Depending on the seriousness of the violation, it shall forward the dossier of the violation to an anti-smuggling or post-customs clearance inspection customs unit for verification, investigation and handling in accordance with law.

II. PROCEDURES FOR REGISTRATION, ADJUSTMENT AND EXAMINATION OF NORMS:

1. Registration of use norms, consumption norms and raw material and supplies wastage percentages (below collectively referred to as norms)

1.1. On the basis of norms agreed upon by the parties in their processing contract under Article 31 of the Governments Decree No. 12/2006/ND-CP of January 23, 2006, the enterprise shall register such norms with the customs office according to a set form. These norms must accord with those actually effected by the enterprise. When the processing contract does not specify a raw material and supplies norm, this norm is regarded as 0%.

1.2. In the course of performing a processing contract, if its actual norms are changed because of changed raw material characteristics, processing conditions or requirements of each export order, the enterprise may adjust the norms applicable to the goods item concerned and already registered with the customs office to suit new actual norms, and shall give written explanations for each adjusted norm. Adjusted norms are not applicable to products already exported.

When adjusting a norm of a goods item, the enterprise is not required to change the code of the goods item indicated in the processing contract. The enterprise and the customs office earning out procedures for the processing contract shall reach agreement on the addition of a secondary code for the goods item concerned in the table of adjusted norms and the export declaration for such goods item.

1.3. The units of calculation used in the table of registered norms must comply with Vietnamese laws and accord with those used in the registered processing contract.

2. Time of registration and adjustment of norms of goods items:

2.1. Time of registration of norms:

Registration of norms should be made at the same time with the registration of the processing contract or registration of the customs declaration for the first imported raw material and supplies lot under the processing contract.

2.2. Time of adjustment of norms: Before carrying out customs procedures for the exported products for which norms need to be adjusted.

3. Norms already registered or adjusted and registered with the customs office shall be used for processing contract liquidation.

4. Examination of norms:

4.1. Norms must be examined in the following cases:

Customs offices have doubts about registered norms of enterprises that perform processing contracts for foreign traders or about those that have been handled for norm-related frauds in the course of processing.

4.2. Methods of norm examination:

a/ Examination at the customs office;

b/ Examination at the enterprises production establishment;

c/ Examination by a specialized assessment organization.

4.3. Time of norm examination:

a/ After the enterprise submits a norm registration dossier to the customs office, or

b/ During the production of products subject to the registered norms; or

c/ After exportation of the first lot of the product subject to the registered norms, or

d/ When the processing contract is liquidated, or

e/ When the post-customs clearance inspection is conducted (if there are grounds for inspection).

4.4. Responsibilities of enterprises in the course of norm examination:

a/ To give detailed explanations about the grounds and methods of elaborating norms of goods items already registered with the customs office, enclosed with product samples and their technical design documents (e.g., cutting diagram for garments);

b/ To produce accounting books and documents to the customs office upon request and create favorable conditions for the customs office to conduct norm examination in a quick and accurate manner;

c/ To comply with the customs offices decisions related to norm examination.

4.5. Tasks of customs officers conducting norm examination:

a/ To conduct examination quickly and strictly according to the prescribed process, without harassing or obstructing the enterprises production;

b/ To make a written record of the results of examination upon completion of examination, which must fully and truthfully reflect the facts of examination, and sign, together with a representative of the examined enterprise, the record.

4.6. Competence to decide on norm examination: Leaders of customs sub-departments managing processing contracts and customs sub-departments conducting post-customs clearance inspection.

III. PROCEDURES FOR IMPORTATION OF PROCESSING RAW MATERIALS AND SUPPLIES

1. For processing raw materials and supplies provided from abroad by the principal:

1.1. The customs procedures for importation of these raw materials and supplies are the same as those for commercial imports guided in the Finance Ministry’s Circular guiding customs procedures; customs inspection and supervision; import and export duties and tax administration with regard to imports and exports (below referred to as the Circular guiding customs procedures), without checking duty calculations.

1.2. For raw materials and supplies purchased by the principal and sent by a third party designated by the principal to the processor, the customs dossier of the imported lot must also contain a document of the principal notifying the processor of the receipt of such goods from the third party.

1.3. For finished products supplied by the principal for attachment to or packaging together with processed products into complete goods for export abroad, the customs procedures for these finished products are the same as those applicable to processing raw materials, provided the following conditions are met:

a/ The name of the finished product and the purpose of its supply, namely for attachment to or packaging together with processed products into complete goods for export abroad, are specified in the processing contract or its annex;

b/ The table of use norms of raw materials for the processed product contains the norm of this finished product.

1.4. Sampling and sample storage:

The taking and storage of samples of raw materials and processed products comply with the guidance in the Circular guiding customs procedures and specific guidance of the General Department of Customs.

2. For processing raw materials and supplies supplied by the principal in the form of on-spot import or export, applicable customs procedures comply with Article 15 of the Governments Decree No. 154/2005/ND-CP of December 15, 2005, and Clause VIII of Section II below.

IV. CUSTOMS PROCEDURES FOR RAW MATERIALS AND SUPPLIES SUPPLIED BY PROCESSORS THEMSELVES FOR PROCESSING CONTRACTS

1. For raw materials and supplies produced or purchased in the Vietnamese market by the processing enterprise:

1.1. Their names, norms, wastage percentages, quantities, unit prices and payment method and schedule must be agreed upon in the processing contractor its annex.

1.2. No customs procedures need to be carried out (except for export processing enterprises).

1.3. Before signing the processing contract, permission of a competent agency must be obtained, for raw materials and supplies supplied by the processing enterprise itself which are on the list of exports subject to permit. Enterprises may not supply raw materials and supplies on the list of goods banned or suspended from export.

1.4. The names and quantities of raw materials and supplies supplied by the processing enterprise itself and already used in the export production must be declared according to a set form upon clearance of export procedures.

2. For raw materials and supplies directly purchased by the enterprise from abroad for processing contracts:

2.1. Their names, norms, wastage percentages, quantities, unit prices and payment method and schedule must be agreed upon in the processing contract or its annex.

2.2. Before signing the processing contract, permission of a competent agency must be obtained, for raw materials and supplies supplied by the processing enterprise itself which are on the list of exports subject to permit. Enterprises may not supply raw materials and supplies on the list of goods banned or suspended from export.

2.3. The import procedures and import duty policy and refund procedures are the same as those applicable to raw materials imported for export production.

2.4. When carrying out export procedures for processed products, the enterprise shall declare in a set form the names and quantities of raw materials used for the production of the processed goods lot for export and the number and date of the import declaration of raw materials for export production.

V. CUSTOMS PROCEDURES FOR IMPORTED MACHINES AND EQUIPMENT FOR THE PERFORMANCE OF PROCESSING CONTRACTS

1. The import of leased or borrowed machines and equipment for the performance of a processing contract must comply with regulations and policies on import and export management.

2. For foreign-invested enterprises, the import of leased or borrowed machines and equipment for the performance of a processing contract must comply with the guidance in Circular No. 04/2007/TT-BTM of April 4, 2007, of the Ministry of Trade (now the Ministry of Industry and Trade).

3. Customs procedures:

3.1. For leased or borrowed machines and equipment to be directly used for processing which are exempt from import duty, customs procedures applicable to goods temporarily imported for re-export shall be carried out at the customs sub-department managing the processing contract.

3.2. For machines and equipment leased or lent by the principal but not directly used for processing, customs procedures applicable to commercial imports and exports prescribed in the Circular guiding customs procedures shall be carried out.

VI. CUSTOMS PROCEDURES FOR GOODS IMPORTED OR EXPORTED FOR USE AS PROCESSING SAMPLES (SAMPLES NOT FOR SALE)

1. For goods imported or exported for use as processing samples, customs procedures shall be carried out as for non-commercial imports and exports as guided in the Circular guiding customs procedures.

2. Goods used as processing samples must meet the following conditions:

2.1. They may only be used as processing samples and are of no commercial value (e.g., perforated goods or goods bearing the sample product mark, single shoes, one-sleeved shirts);

2.2. The goods lot document set evidences that they are sample goods;

2.3. For each sample goods category, only five product units may be imported or exported.

VII. PROCEDURES FOR EXPORTATION OF PROCESSED PRODUCTS ABROAD

1. The customs procedures comply with regulations on customs procedures for commercial exports provided in the Circular guiding customs procedures, without checking duty calculations. In addition, the following must be also carried out:

1.1. If the processed products for export contain raw materials and supplies supplied by the processing enterprise itself, when registering the export declaration, the enterprise shall fill in the declaration form as guided in Clauses IV, 1.4 and 2.4, Section II above; write the calculated export duty (if any) on the declarations annex, for raw materials and supplies purchased in Vietnam for the processing contract.

1.2. If the processed products are exported to a third partner whose name and address, however, are not yet specified in the processing contract, when registering the export declaration, the processing enterprise shall submit to the customs office a copy of the principals document designating the delivery of goods to a third partner and produce the original document for comparison.

1.3. For a goods lot which is subject to physical inspection before export, the enterprise shall produce, upon request, to the customs office the stored raw material samples (in case samples were taken) and the table of norms already registered.

If the enterprise has lost the samples or the custom office doubts that to be-exported products are produced from raw materials other than imported ones, the inspecting customs officers shall take samples of such products for assessment (or photograph the products for examination if sampling is impossible).

1.4. Immediately after the processing contract expires, if there remain processed products not yet exported, the enterprise shall make a commitment to the customs sub-department managing the processing contract that it will export all of these products within 30 days from the date of expiration of the processing contract.

The customs office shall register export declarations only for goods items with registered norms.

2. The customs procedures for processed goods lots transported from a border gate to another under customs supervision for export are the same as those applicable to goods transported from a border gate to another under customs supervision provided in Articles 16 and 18 of the Governments Decree No. 154/2005/ND-CP of December 15, 2005, and the Circular guiding customs procedures.

VIII. CUSTOMS PROCEDURES FOR ON-SPOT IMPORT AND EXPORT OF PROCESSED PRODUCTS

The conditions for on-spot export and import comply with the Governments Decree No. 127/2006/ND-CP of January 23, 2006. The specific customs procedures are as follows:

1. For processed products imported on spot for use as raw materials:

1.1. On-spot import procedures:

1.1.1. For exporting enterprises:

a/ To fill in all sections reserved for exporting-enterprises on 4 customs declarations, sign and seal them;

b/ To hand 4 customs declarations, goods and added-value invoices (customer original showing the name of the foreign trader, name of the exporting enterprise and place of delivery in Vietnam) to the importing enterprise.

1.1.2. For importing enterprises:

a/ After receiving 4 customs declarations, to fill in all sections reserved for importing enterprises on these declarations;

b/ To receive goods from the exporting enterprise at the place of delivery and preserve them until the customs sub-department carrying out on-spot import procedures decides on the form and level of inspection.

For goods exempt from physical inspection, to promptly put them into production; for those subject to physical inspection, to put them into production only after inspection;

c/ To submit the customs dossier together with samples of goods imported on spot (for goods imported on spot for use as raw materials for export processing or production, to the customs sub-department at which the enterprise carries out import procedures for carrying out on-spot import procedures according to regulations applicable to each form of import;

d/ After completing on-spot import procedures, to keep 1 declaration and hand 2 declarations to the exporting enterprise.

1.1.3. For customs offices carrying out on-spot import procedures:

a/ To receive and register customs declarations, decide on the form and level of inspection according to relevant regulations, check duty calculations (for dutiable goods) according to current regulations applicable to imports. To seal up goods samples (if any) and hand them over to the enterprise for preservation and presentation to the customs office upon request;

b/ To certify customs clearance, sign and seal 04 customs declarations;

c/ To keep 1 declaration and documents submitted by the enterprise, return to the importing enterprise 3 declarations and documents already produced by the enterprise;

d/ To issue a written notice to the tax agency directly managing the importing enterprise for information or monitoring, either in writing or via the computer network, if available.

1.2. On-spot export procedures:

1.2.1. After receiving 2 on-spot import/export declarations containing the certification of the customs office carrying out customs procedures, the exporting enterprise shall submit the customs dossier to the customs sub-department at which it carries out export procedures for carrying out on-spot export procedures.

1.2.2. The customs office carrying out on-spot export procedures:

a/ To receive the on-spot export customs dossier;

b/ To register the customs declaration according to the prescribed steps suitable to each form of import or export; to check duty calculations (if any). To certify the customs clearance, and sign and seal the customs declaration;

c/ To keep 1 customs declaration together with documents submitted by the enterprise and return to the enterprise 1 declaration together with documents produced by the enterprise.

2. For completely processed products imported on spot for local sale:

2.1. The customs procedures shall be carried out at the customs sub-department managing the processing contract with products for on-spot export. Specifically:

a/ The processing enterprise shall carry out on-spot export procedures as for export of processed products abroad;

b/ The enterprise importing on spot processed products shall carry out on-spot import procedures as for commercial goods and observe the policies on import duty and import of goods in full accordance with law. Its customs dossier is not required to include a bill of lading;

c/ The customs sub-department shall:

- Register on-spot export declarations as for export of processed products abroad (this declaration is valid for liquidation);

- Register on-spot import declarations as for commercial imports from abroad;

- Conduct physical inspection of goods only once during carrying out on-spot import procedures, in case physical inspection is necessary.

2.2. Completely processed goods imported on spot for local sale must comply with the Governments Decree No. 89/20067ND-CP of August 30, 2006, on goods labels.

2.3. In case the enterprise both processes products for a foreign trader and imports on spot these processed products, it shall carry out both procedures for on-spot export and import of the processed products.

3. For processed products used for paying processing charges:

The customs procedures shall be carried out as for on-spot import, with the sale and purchase contract replaced by the written agreement between the principal and the processor on the payment of processing charges in the form of processed products.

The enterprise shall fully comply with the policies on import and export management and taxation applicable to goods imported from abroad and the provisions of the Governments Decree No. 89/2006/ND-CP of August 30, 2006, on goods labels. These processed products are allowed to be used for liquidating the processing contract.

4. On-spot import/export declarations are valid for liquidation when:

4.1. For exporting enterprises: The customs declaration has been fully filled in and bears the certification, signatures and seals of the four parties: exporting enterprise, importing enterprise, customs office carrying out export procedures and customs office carrying import procedures.

4.2. For importing enterprises: The customs declaration has been fully filled in and bears the certification, signatures and seals of the three parties: exporting enterprise, importing enterprise and customs office carrying import procedures.

4.3. If the exporting and importing enterprises carry out procedures at the same customs sub-department, this customs-sub-department shall sign and give certification in both the sections reserved for customs office carrying out export procedures and customs office carrying import procedures.

IX. CUSTOMS PROCEDURES FOR PROCESSING HIRE:

In case the Vietnam-based processor signs a processing contract with a foreign trader but hires another trader to undertake the processing (processing hire) under Point b, Clause 2, Article 33 of the Governments Decree No. 12/2006/ND-CP of January 23, 2006, the enterprise signing a processing contract with a foreign trader shall carry out the procedures for export, import and liquidation of the processing contract with the customs office and take responsibility for the performance of this processing contract. The enterprise that hires another trader shall notify in writing the name, office address and production establishment address of the processing-undertaking trader to the customs office for inspection when necessary.

Customs procedures are not required for goods delivered and received between Vietnamese enterprises.

X. PROCEDURES FOR DELIVERING AND RECEIVING INTERMEDIARY PROCESSED PRODUCTS OR RAW AND AUXILIARY MATERIALS:

1. Responsibilities of enterprises:

1.1. On the basis of the written designations by the principals, the enterprise delivering intermediary processed products (deliverer) and the enterprise receiving intermediary processed products (recipient) shall organize by themselves the delivery and receipt under Point 2 below.

1.2. The directors of the deliverer and the recipient are responsible before law for delivering and receiving the exact products as stated in the declaration of intermediary processed products (below referred to as intermediary declaration).

1.3. The director of the deliverer is responsible before law for the production of intermediary processed products from imported raw materials of the processing contract. The director of the recipient is responsible before law for the proper use of intermediary processed products for the processing purpose.

1.4. If the processing contract involving intermediary processed products (deliverers processing contract) and the processing contract using intermediary processed products as processing raw materials (recipients processing contract) are possessed by the same processing enterprise, such enterprise shall perform the tasks of both deliverer and recipient.

2. Process of carrying out customs procedures:

2.1. The deliverer fills in the customs declaration and delivers the goods to the recipient:

a/ The deliverer shall fully fill in all sections reserved for declaration by goods deliverer, sign and seal on 4 declarations (form HQ/2008-GCCT-Annex I).

b/ It shall deliver products together with 4 declarations and the original added-value invoice (customer original), or the ex-warehousing slip, for export processing enterprises, to the recipient; the delivery and receipt may take place at the recipients processing establishment or warehouse.

2.2. After fully receiving products and 4 customs declarations already filled in, signed and sealed by the deliverer, the recipient shall:

a/ Fully fill in all sections reserved for goods recipient, sign and seal on all 4 declarations.

b/ Register the customs declarations with the recipients customs office; a registration dossier comprises:

- Customs declaration: To submit 4 originals;

- The written designation issued by the principal: To submit 1 copy and produce 1 original;

- The added-value invoice (or ex-warehousing slip of the deliverer if the deliverer is an export processing enterprise or the warehousing slip of the recipient, if the recipient is an export processing enterprise): To submit 1 copy and produce 1 original;

- Samples of intermediary processed goods;

- Producing goods or records and documents related to the receipt of goods to the customs office for examination upon request.

2.3. The recipients customs office shall:

a/ Receive the customs dossier and samples of intermediary processed products;

b/ Register the declarations; make out a sampling card and seal up sample goods according to regulations;

c/ Physically inspect goods: only when doubting that the enterprises deliver and receive goods other than those declared on the intermediary processing declarations; if the enterprise has put goods into production, check records and documents related to the enterprises goods receipt;

d/ Certify the customs clearance, sign and seal all 4 declarations;

e/ Keep 1 declaration and copies of documents; return 3 declarations and the original to the recipient; hand over goods samples already sealed up by the customs to the recipient for preservation and production to the customs office when carrying out procedures for exporting processed products or in other cases upon the customs offices request.

2.4. After receiving 3 customs declarations bearing the customs clearance certification from the recipients customs office, the recipient shall keep 1 declaration and transfer the other two to the deliverer.

2.5. Immediately after receiving 2 customs declarations (already completely filled in, signed and sealed by the recipient and the recipients customs office) from the recipient the deliverer shall register the customs declaration with its customs office. A registration dossier comprises:

a/ Customs declaration: To submit 2 originals;

b/ The written designation issued by the principal: To submit 1 copy and produce 1 original;

c/ The ex-warehousing slip: To submit 1 copy and produce 1 original.

2.6. The deliverers customs office shall:

a/ Receive the customs dossiers;

b/ Register the declarations; certify the customs clearance; and sign and seal both declarations;

c/ Return to the deliverer-one declaration and original documents; and keep 1 declaration and copies of documents.

If the deliverers processing contracts and recipients processing contracts are managed by the same customs sub-department, such customs sub-department shall perform the tasks of both deliverers customs office and recipients customs office.

The procedures for delivering and receiving intermediary processed products above also apply to cases where the principals are different.

3. Intermediary processing declarations may be used as payment documents for liquidating processing contracts if meeting the following conditions:

3.1. For deliverers processing contracts:

a/ All the declarations sections are completely filled in, no erasure is permitted; the declaration bears the certification, signatures and seals of all 04 parties: recipient; deliverer; customs office managing the delivery processing contract (deliverers customs office); customs office managing the receipt processing contract (ilk recipients customs office);

b/ The deliverer visits its customs office to carry out customs procedures when the deliverers processing contract remains valid and within 15 days from the date the recipients customs office signs and certifies the customs clearance on the declaration. Past this time limit, if the declaration bears the customs clearance certification of the recipients customs office, the customs office shall make a written record of the violation and handle the violation according to regulations before further carrying out customs procedures without destroying the declaration.

3.2. For recipients processing contracts:

a/ All sections in die declaration are completely filled in, no erasure is permitted; the declaration bears the certification, signatures and seals of 3 parties (excluding the deliverers customs office);

b/ The recipient visits its customs office to carry out customs procedures when the recipients processing contract remains valid and within 15 days from the date the deliverer signs for certification on the intermediary processing declaration.

XI. PROCEDURES FOR RE-EXPORTING PROCESSING RAW MATERIALS AND SUPPLIES ABROAD DURING THE TIME OF PERFORMING PROCESSING CONTRACTS

1. A customs dossier:

1.1. The customs declaration: To submit 2 originals;

1.2. The enterprises written explanation (stating the reason for re-export; numbers and dates of the import declaration and the processing contract involving returned goods): To submit 1 original enclosed with a copy of the corresponding import declaration;

1.3. The principals written request for the return of goods : To submit the original.

2. Customs procedures: similar to those applicable to the re-export of redundant processing raw materials as guided in Clause XII.6.2.2, Section II below.

3. The customs procedures for exported processed goods which are returned for repair or reprocessing are as guided in the Circular guiding customs procedures.

XII. PROCEDURES FOR LIQUIDATING PROCESSING CONTRACTS

1. Liquidation dossier:

1.1. The general table of imported raw materials and supplies (made according to a set form): To submit 1 original.

1.2. The general table of exported processed products (made according to a set form): To submit 1 original.

1.3. The export declaration of products (including the on-spot export declaration; declaration of delivery of intermediary processed products) ensuring that the goods have been actually exported under the Circular guiding customs procedures: To produce the original (kept by the goods owner).

Documents on the principals payment of processing charges (except when the principal pays processing charges in the form of processed goods): To produce the original and submit a copy. If it has been agreed upon in the processing contract on a payment deadline beyond 45 days after the expiration of the contract, liquidation shall be still made for the processing contract and the leadership of the customs sub-department managing the processing contract shall consider and permit the late submission of payment documents, as agreed upon in the processing contract, within 30 days.

If a processing charge payment document is issued for more than one processing contract/annex, the enterprise shall enclose a document explaining in detail the sum of money paid for each contract/annex with a copy of the payment document

1.4. The general table of raw materials and supplies re-exported back to the foreign partner and transferred to another processing contract in the course of performance of the processing contract, made according to a set form: To submit 1 original.

1.5. The general table of raw materials and supplies supplied by the processor (if any), made according to a set form: To submit 1 original.

1.6. The declaration of self-supplied raw materials (declaration upon export of products, made according to a set form): To produce 1 original. If the customs office has doubts about the local origin of purchased raw materials, it may request the enterprise to additionally produce the purchase invoice and the principals payment documents of the supplied raw materials.

1.7. The general table of raw materials and supplies already used to produce exported products, made according to a set form: To submit 01 original.

1.8. The processing contract liquidation document, made according to a set form: To submit 2 originals (one of which will be returned to the enterprise after liquidation).

1.9. The general table of machines and equipment temporarily imported for re-export, made according to a set form: To submit 1 original.

1.10. The declaration of temporary import of leased or borrowed machines and equipment; the declaration of receipt of machines and equipment from another processing contract (if any); the declaration of re-export of machines and equipment: To produce the original (kept by the goods owner).

The enterprise director shall sign and seal (for private business households, sign and write the full name and the identity cards number and place of issue) on the above tables and take responsibility before law for the accuracy and truthfulness liquidation data.

2. Time limit for submission of liquidation dossiers:

Within 45 working days, counting from the date of completion or expiration of the processing contract (or its annex), the enterprise shall submits complete processing contract liquidation dossier (comprising also a plan to dispose of redundant raw materials, temporarily imported machines and equipment, scraps, faulty products and discarded products) to the customs sub-department managing the processing contract.

For a processing contract with different annexes to be performed separately the time limit for submission of the liquidation dossier for each annex is the same as for submission of processing contract liquidation dossiers.

3. Time limit for receiving, checking and comparing liquidation dossiers by customs office

3.1. For enterprises, which, according to the risk management system of the customs have office strictly observed the customs law: With 15 working days from the date the enterprise submits a complete and valid liquidation dossier the customs office shall check the completes and validity of the liquidation dossier and certify liquidation for the enterprise.

3.2. For enterprises other than those specified at Point 3.1 above: Within 30 working days after the enterprise submits a complete and valid liquidation dossier, the customs office shall thoroughly examine the liquidation dossier below certifying liquidation for the enterprise.

3.3. Examination of liquidation dossiers submitted and produced by enterprises mentioned at Points 3.1 and 3.2 above shall be conducted at customs offices. If an enterprise has many liquidation dossiers and files a written request for the examination of liquidation dossiers at its head office, the customs sub-department shall consider and make decision on a case-by-case basis.

4. Time limit for carrying out customs procedures for redundant raw materials, temporarily imported machines and equipment, scraps, faulty products and discarded products:

Within 30 working days after the customs office completes the examination and comparison of a liquidation dossier, the enterprise shall carry out customs procedures for handling redundant raw materials, temporarily imported machines and equipment, scraps, faulty products and discarded products (if any).

5. Handling of cases of failing to submit .liquidation dossiers or carry out procedures for redundant raw and auxiliary materials and supplies and temporarily imported machines and equipment within prescribed time limits:

5.1. Handling of cases of late submission of liquidation dossiers:

a/ Within 20 working days from the expiration of the time limit for submission of liquidation dossiers, the customs office managing a processing contract shall:

a1. Send a letter inviting the enterprise director to the customs office for making a record of the violation for handling according to regulations; send such a letter only once, if the director fails to appear, make a record by itself to serve the handling of the violation;

a2. Calculate and fix the payable tax amount and a fine for late tax payment for the amounts of raw materials and supplies and machines under the processing contract not yet liquidated, counting from the date of registration of the import declaration of these raw materials as for commercial imports.

b/ The enterprise shall pay the tax and a fine for late tax payment for imported goods of the processing contract not yet liquidated, into a temporary collection account indicated in the customs offices tax payment notice, and comply with the administrative sanctioning decision according to law;

c/ Past 90 days from the expiration of the time limit for submission of liquidation dossiers, if the enterprise fails to submit a liquidation dossier and/or pay tax according to the customs offices tax payment notice, it will not be entitled to tax exemption for subsequent processing contracts and will be subjected to coercive measures as prescribed;

d/ If the enterprise submits a dossier and completes the liquidation after having paid the tax amount and a late tax payment fine, it will be refunded the tax amount and fine under the guidance in the Circular guiding customs procedures.

5.2. Handling of cases of failing to carry-out procedures for redundant raw and auxiliary materials and supplies and temporarily imported machines and equipment:

a/ The customs office managing the processing contract shall:

a1. Make a record of the violation as a basis for handling according to regulations;

a2. Calculate and fix the tax amount for redundant raw and auxiliary materials and supplies and temporarily imported machines and equipment under the processing contract not yet liquidated, counting from the date the customs office completes liquidation comparison procedures.

b/ The enterprise shall pay the tax amount into a temporary collection account indicated in the customs offices tax payment notice, and comply with the administrative sanctioning decision according to law;

c/ Past the tax payment deadline, the enterprise that fails to pay tax will be subjected to coercive measures as prescribed by law.

5.3. Extension of the time limits for submission of liquidation dossiers, and carrying out of customs procedures for redundant raw materials, temporarily imported machines and equipment, scraps, faulty products and discarded products:

Extension of the time limit for submission of liquidation dossiers is given in the following cases:

- The enterprise simultaneously performs many processing contracts which all expire at the same point of time so the enterprise cannot prepare dossiers on time.

- There is a dispute between the principal and processor over the processing contract;

- There arises a force majeure event that makes the enterprise unable to observe the liquidation deadline.

On the basis of the enterprises written explanation, the director of the customs sub-department managing the processing contract shall consider and extend the time limit for submission of liquidation dossiers specified at Point 2 of this Clause. Extension may be given only once and must not exceed 30 days.

6. Customs procedures for disposing of redundant raw materials, scraps, faulty products, discarded products, leased or borrowed machines and equipment

6.1. Forms of disposal:

Pursuant to the agreement in the processing contract and Vietnamese laws, redundant raw materials, scraps, faulty products, discarded products, leased or borrowed machines and equipment for processing shall be disposed of as follows:

a/ Selling on the Vietnamese market (on-spot import and export);

b/ Re-export to foreign parties;

c/ Transfer to another processing contract in Vietnam;

d/ Donation in Vietnam;

e/ Destruction in Vietnam.

6.2. Customs procedures:

6.2.1. Customs procedures for the sale of redundant raw materials and supplies, scraps, faulty products, leased or borrowed machinery and equipment in the Vietnamese market are the same as those applicable to on-spot import and export under the guidance in Clause VIII, Section II of this Circular.

6.2.2. The customs procedures for the re-export abroad under the principals designation are the same as those applicable to commercial exports. When carrying out customs procedures, customs officers shall physically inspect goods lots, compare raw materials re-exported abroad with the samples taken upon importation (if samples were previously taken); and compare the categories and codes of machines and equipment shown on the temporary import declaration, for re-exported machines and equipment.

6.2.3. The customs procedures for the transfer of redundant raw materials and supplies and leased or borrowed machines and equipment to another processing contract under the principals designation are the same as those applicable to the delivery and receipt of intermediary processed products guided in Clause X, Section II of this Circular. In addition, the following shall be performed:

a/ The procedures for the transfer of redundant raw materials and supplies and leased or borrowed machines and equipment to another processing contract may be carried out after the leadership of the customs sub-department managing the processing contract gives certification in the enterprises written request upon processing contract liquidation;

b/ In case of transfer of redundant raw materials and supplies and leased or borrowed machines and equipment to another processing contract performed by another enterprise:

b1. The recipient shall produce raw materials received from another processing contract and raw material samples taken upon importation to the recipients customs office for comparison;

b2. The recipients customs office shall compare the raw material samples taken upon importation with the transferred raw materials. If they are the same, it shall take new samples for the raw material-receiving contract (the sample comparison and sample taking will take place at the enterprise). In the course of comparison, if detecting signs of sham delivery and receipt or delivery of insufficient raw materials compared to data on the intermediary processing declaration, it shall examine the whole goods lot and handle violations (if any) according to law;

b3. For leased or borrowed machines and equipment or raw materials without samples taken, the recipients customs office shall physically inspect the goods when detecting signs of sham delivery and receipt or delivery of insufficient raw materials compared to data on the intermediary processing declaration. The leadership of the recipients customs sub-department shall decide on cases subject to inspection.

c/ In case of transfer of redundant raw materials and supplies and leased or borrowed machines and equipment from one processing contract to another performed by the same enterprise:

c 1. When carrying out customs procedures for transferring redundant raw materials from one processing contract to another, the enterprise shall produce the raw material samples under the deliverers processing contract;

c2. The customs sub-department managing the processing contract shall transfer these samples to the new processing contract by making a new sample-taking card and seal up the transferred samples together with this card;

c3. The customs sub-department managing the processing contract shall inspect the enterprise when detecting signs of untruthful transfer of the goods stated on the customs declaration.

d/ Transfer of raw materials and supplies to another processing contract is disallowed in the following cases:

d1. The enterprise has imported raw materials and supplies but does not perform any processing contract and applies for permission to transfer these raw materials and supplies to another enterprise;

d2. The enterprise has received raw materials and supplies from the previous processing contract but does not put them into processing and further applies for permission to transfer them to another processing contract.

6.2.4. Customs procedures for donation of leased or borrowed machines and equipment; redundant raw materials and supplies; scraps and faulty products:

A customs dossier comprises:

a/ The customs declaration (non-commercial goods declaration form), clearly stating goods are under processing contract No.... date.... processing enterprise....: To submit 2 originals;

b/ The principals donation document: To submit 1 original;

c/ The Industry and Trade Ministry’s written consent if the donated goods are on the list of imports subject to the Ministry’s permit or a line agency’s permit if the imported goods are subject to such agency’s permit: To submit 1 original.

The customs procedures and tax policy are the same as those applicable to donated goods. After completing customs procedures for a goods lot, the customs office shall duplicate the declaration, keep one duplicate and hand over another to the processing enterprise (if the done is not the processor).

6.2.5. Customs procedures for supervising the destruction of scraps and faulty products in Vietnam:

a/ The destruction shall be conducted during the performance or after the expiration of the processing contract/annex, including the case of destruction of processed products in Vietnam as requested by the principal;

b/ Customs procedures for supervising the destruction:

b1. The enterprise shall send to the customs sub-department managing the processing contract a written notice of the destruction time and place, enclosed with a written agreement of the principal and, if the enterprise directly destroys its products, a written approval of a competent environmental management agency.

If the enterprise hires another trader with the function of disposing of scraps and discarded products, there must be a destruction contract (1 original) and a competent agency’s written permission of this trader (1 copy);

b2. The enterprise shall organize the destruction and take responsibility before law for the environmental impacts of the destruction process;

b3. The customs sub-department managing the processing contract shall send two customs officers to supervise the destruction process;

b4. Upon completion of the destruction, the involved parties shall make a written record certifying that the destruction has been conducted in accordance with regulations. Such a written record must bear the signature of the director and the seal of the enterprise having their goods destroyed; and the full names and signatures of the customs officers supervising the destruction and persons assigned by the enterprise director to conduct the destruction.

7. Cases in which redundant raw materials and supplies, leased or borrowed machines and equipment; or processed products cannot be re-exported because they are abandoned by the principals

The processing enterprise shall pay taxes for domestic sale according to regulations or carry out procedures for destruction as guided at Point 6.2.5, Clause XII of this Section.

Section III.

CUSTOMS PROCEDURES FOR ORDERING GOODS PROCESSING OVERSEAS

I. PROCEDURES FOR REGISTERING PROCESSING CONTRACTS

1. Responsibilities of enterprises:

Before filling in the procedures for exporting the first goods lot under the processing contract, the enterprise shall register the contract. A dossier comprises:

1.1. The processing contract and annexes (if any): To submit 2 originals;

1.2. The business registration certificate or investment license or investment certificate: To submit 1 copy;

1.3. The export/import business code or tax identification number registration certificate: 1 copy;

1.4. The permit of a competent agency, if the goods exported for the performance of the processing contract and the imported processed products are on the list of imports and exports subject to permit: To submit 1 copy and produce the original.

2. Tasks of the customs office: As specified at Point 2, Clause IV, Section I of this Circular.

II. PROCEDURES FOR EXPORTING RAW MATERIALS

1. Customs dossiers are the same as dossiers of exported processed products; in addition, if raw materials are on the list of exports subject to permits of the Industry and Trade Ministry or a line management agency, a permit of the relevant competent agency must be produced to the customs office for reconciliation purposes.

2. The customs procedures are the same as those applicable to commercial exports guided in the Circular guiding customs procedures.

III. PROCEDURES FOR REGISTERING, ADJUSTING AND EXAMINING NORMS

1. Use norms, consumption norms of supplies and wastage percentages of processing raw materials and supplies must be specified in the processing contract and consistent with its actual performance.

2. Time of registration and adjustment of norms:

2.1. Before carrying out procedures for importing products, if processed products are imported into Vietnam.

2.2. Before carrying out procedures for liquidating the processing contract, if processed products are sold abroad.

3. The procedures for registering, adjusting and examining norms are the same as those applicable to the case of processing for foreign traders.

IV. PROCEDURES FOR IMPORTING PROCESSED PRODUCTS

1. Customs dossiers are the same as those required for commercial imports while customs declarations are registered like those required for goods imported for processing.

2. The customs procedures are the same as those applicable to commercial imports.

Upon physical inspection of goods, raw material samples taken upon their exportation must be compared with raw materials constituting the products.

V. PROCEDURES FOR LIQUIDATING PROCESSING CONTRACTS

1. A liquidation dossier comprises:

1.1. The general table of exported raw materials: To submit 1 original and produce the export declaration.

1.2. The general table of imported processed products: To submit 1 original and produce the import declaration.

1.3. The general table of processed products sold abroad: To submit 1 original.

1.4. The general table of raw materials used for the production of already imported processed products: To submit 1 original.

1.5. The general table of raw materials purchased overseas (if any) for the production of already imported processed products: To submit 1 original.

1.6. The written liquidation of the processing contract: To submit 2 originals.

The contents of the above lists are similar to these of the corresponding ones in the dossier of liquidation of processing contract for foreign trader guided in Clause XII, Section II of this Circular.

2. Liquidation procedures:

The time limit for the enterprise to submit a liquidation dossier, disposal of redundant raw materials and supplies, machines and equipment temporarily exported for the processing; and the time limit for the customs office to examine and certify liquidation dossier are as the same as those applicable to processing contracts for foreign traders.

Section IV.

ORGANIZATION OF IMPLEMENTATION

1. The General Director of Customs shall, in pursuance to this Circular, promulgate customs procedures which both facilitate, and ensure strict management of, export and import processing activities in accordance with law, for customs offices uniform implementation.

2. This Circular takes effect 15 days after its publication in CONG BAO and replaces the Finance Ministry’s Circular No. 69/2004/QD-BTC of August 24, 2004, and other documents contrary to this Circular.

3. The General Director of Customs, heads of units under and attached to the Ministry of Finance, and concerned organizations and individuals shall implement this Circular.

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