Clear policy is needed

In the case of export processing enterprises for foreign traders, at the end of processing contracts, enterprises generate some scrap, defective products (inside and outside norms) and some surplus raw materials. The outsourcing partner agrees to let the enterprise destroy all waste (scrap) and excess materials in Vietnam. Will the company dispose of excess scrap, waste products and materials? What are the procedures for disposing of enterprises and will they have to pay import tax and VAT?

In the case of enterprises processing garments for foreign partners, in the production process there are discarded materials in the wastes rate and enterprises sell those waste to the garbage collection company.

According to point 2 of Official Letter 14475 / BTC-TCHQ, from Sep 1, 2016, discarded materials and faulty products for domestic consumption must declare other taxes to Customs. Company inquiries: During the contract processing enterprises can sell scrap or not at the end of the processing contract and liquidate that contract is sold? If declare with Customs, how to declare? When liquidating the processing contract, the company will transfer the document has paid tax to the tax authority on the contract from September 1, 1616 to October 26, 1977 on the sale of scrap?

Many enterprises also have the same question: Raw materials, supplies, components NK surplus are allowed to be destroyed in Vietnam and actually destroyed is considered as raw materials, materials and components used to import Does the export processing contract? Will non-export processed products be allowed to be destroyed in Vietnam and actually destroyed are exempt from import tax?

Regarding the tax policy on wastes, waste products and raw materials, surplus materials, VASEP Association has also issued an official letter to the problem of enterprises when identifying and processing 3% co-processing. In that if the seafood companies implement the method of calculating and processing surplus raw materials according to Decree 134 enterprises can not meet. As usual in the process of processing, the waste, fishery products accounted for about 50% of the total amount of raw materials and materials imported. Accordingly, the provisions of Clause 4, Article 10 of Decree 134, including waste, faulty products and surplus raw materials, shall not exceed 3%.

With the characteristics of the fishery industry, the Association of VASEP proposed amendments to Article 12 of Decree 134 in the direction of import tax exemption for raw materials auxiliary materials for processing at other production facilities and for goods Imports for the production of export goods are destroyed on the basis of equality between the type of export production and the type of processing.

In response to the problems of enterprises, the General Department of Customs has provided answers and guided enterprises to implement tax policies for waste, waste products and raw materials and supplies in accordance with the provisions of the Law on Export Taxes, import tax and Decree 134. However, the recommendations of the General Department of Customs suggested that the amendment of Decree 134 be applied to the actual situation.

Abolishing 3% tax exemption

From actual import-export activities as well as assessing the impact of tax policy on customs management, the General Department of Customs analyzes, in Clause 4, Article 10: "Scrap, waste products and raw materials, Excess material imported for processing does not exceed 3% of the total quantity of each raw material or material imported under the processing contract, which is exempted from import tax when it is sold domestically, but must be declared and paid for Value Added Tax Value added tax (VAT), Special Consumption Tax (SST), Environmental Protection (Environmental Protection) tax (if any)) to Customs. "However, it is unclear whether the rate of 3% whether the materials are redundant or applied to both waste and scrap.

In addition, the General Department of Customs also said that the regulation of 3% applied uniformly for export processing industries is not suitable due to the characteristics of different industries (in the processing and export of aquatic products Normally, scrap and waste products occupy about 50% of the total imported raw materials and materials. In the textile and garment industry, the amount of surplus raw materials and materials imported for processing is more than 3% Total imports, such as 4.5% of total imports. This provision is also extended in comparison with the provisions of the Law on Export Taxes and Import Taxes.

During the process of dealing with problems, there are many opinions on the declaration of VAT, SCT on the rate of 3% (Vietnam Textile and Garment Group proposed not to declare VAT, SST (if any) for with raw materials and surplus materials (within 3% of allowable loss) in order to encourage domestic enterprises to save and have the ability to compete with imported goods right in the domestic market. the reduction of trade deficit of our country).

Under the Customs legislation, the settlement of import goods for export processing shall be based on the actual production norms, including discarded materials, waste and defective products in the actual production norms. Therefore, the Law on Customs, Export-Import Tax and the Ministry of Finance shall submit to the Government for amendment and addition to Clause 4 of Article 10 in the direction of abandoning the 3% tax exemption on waste and defective products. Raw materials and supplies have been imported for processing.

In addition, according to the provisions at Point f, Clause 1, Article 10 of Decree 134, the goods to be imported for processing, which are allowed to be destroyed in Vietnam and actually destroyed, are exempt from import duty. have destroyed the management of the Customs. After the destruction of new products, the new products are produced in the domestic market. If they are exported, they shall be subject to export tax according to the provisions of the import tax law and if they are sold to other organizations or individuals, VAT, SCT, environmental protection according to the provisions of law on VAT and environmental protection (if any).

Therefore, with the analysis of the General Department of Customs, in the draft Decree amending Decree 134, the Ministry of Finance will submit to the Government to specify the export tax for new products at the rate and value The taxation of new products shall be determined at the time of registration of export goods declarations.

Specifically, according to the draft decree amended above, the goods imported for processing but allowed to be destroyed in Vietnam and actually destroyed; Products processed under processing contracts are exempted from export duty and import duty as stipulated in Clause 6, Article 16 of the Law on Export Tax and Import Tax No. 107/2016 / QH13, if they satisfy the following provisions on duty-free establishments: Point 2, Article 10 of the above draft.

The value or quantity of raw materials, supplies and components eligible for tax exemption is the value or amount of raw materials, supplies and components imported in accordance with the actual production norms (including the value or amount of raw materials, For the production of actual processed products, the export value shall be determined when settling the management and use of raw materials, supplies and components imported for processing of export products according to the provisions of law. customs law.

In cases where the goods for processing as prescribed in Clause 1 of Article 10 are redundant, they must be re-exported or transferred to processing in Vietnam according to the provisions of law on foreign trade management or allowed to be destroyed according to regulations. Items specified at Point f, Clause 1 of Article 10 or used as gifts or presents as provided for at Point g, Clause 1 of Article 10, when submitting the settlement reports or the expiry of the processing term (for cases not Payment must be made according to the provisions of the customs law or the validity of the processing contract expires before the final settlement report.

According to vietnamtextile.org.vn