Regulations on general regulations for imported goods of export processing enterprises according to Vietnamese law

Are export processing enterprises allowed to buy and sell wood scrap for production from domestic enterprises?

1. How must export processing enterprises comply with general regulations on imported goods?

Pursuant to Clause 50, Article 1 of Circular 39/2018/TT-BTC stipulating general regulations for imported goods of export processing enterprises as follows:

– Goods imported to serve the production of export products of an EPE must carry out customs procedures according to regulations and be used for the correct production purpose, except for the following cases where the EPE and its partners can choose to carry out or not to carry out customs procedures:

+ Goods bought, sold, rented, borrowed between EPEs. In case the goods are raw materials, supplies, machinery and equipment of processing contracts between EPEs, the provisions in Clause 3, Article 76 of this Circular shall comply;

+ Goods are construction materials, stationery, food, foodstuffs, and consumer goods purchased from the domestic market for construction projects, serving the operation of the office apparatus and daily activities of officials and workers working at the EPE;

+ Goods are circulated internally within an EPE, and between EPEs in the same export processing zone;

+ Goods of EPEs belonging to a group or company system in Vietnam, with dependent accounting;

+ Goods brought into or out of the EPE for warranty, repair or some stages in production activities such as: inspection, classification, packaging, repackaging.

In case of not carrying out customs procedures, the export processing company prepares and stores documents and detailed books to monitor incoming and outgoing goods according to the regulations of the Ministry of Finance on buying and selling goods, accounting and auditing regimes, clearly identifying the purpose and source of goods.

– For goods imported by EPEs from foreign countries that have fully paid all taxes and have fully implemented import goods management policies according to regulations such as imported goods without benefits and policies applicable to export processing enterprises, when exchanging and buying and selling these goods with domestic enterprises, customs procedures are not required.

For goods that EPEs purchase from the domestic market and have fully paid all taxes according to regulations, such as enterprises that do not enjoy the benefits and policies applicable to export processing enterprises, this purchase and sale activity does not require customs procedures. In case an EPE purchases from the domestic market goods with export tax rates, customs procedures must be completed, except in cases where these goods are used as raw materials and consumables in the production process of the EPE (For example: coal used in the process of burning furnaces for the EPE’s production).

2. Are export processing enterprises allowed to buy and sell wood scrap for production from domestic enterprises?

Pursuant to Article 5 of Decree 69/2018/ND-CP regulating goods banned from export and import as follows:

“Article 5. Goods banned from export and import

1. Goods banned from export and import comply with the provisions of current legal documents and the List of goods banned from export and import specified in Appendix I of this Decree.

2. Pursuant to Appendix I of this Decree, ministries and ministerial-level agencies shall announce details of goods banned from export and import along with commodity codes (HS codes) on the basis of exchange and agreement with the Ministry of Industry and Trade on the List of goods and agreement with the Ministry of Finance on HS codes.

3. The Prime Minister considers and decides to allow the export of goods banned from export; Allows the import of goods banned from import for special purposes, warranty, analysis, testing, scientific research, medicine, pharmaceutical production, national defense and security protection.”

And according to Appendix I issued attached to Decree 69/2018/ND-CP, wood scrap is not on the List of prohibited goods or conditional export, so it is allowed to be exported to export processing enterprises to serve production requirements according to the objectives specified in the granted Export Processing Enterprise Investment Certificate.

3. What type of customs declaration should an export processing enterprise be allowed to buy and sell wood scrap?

Pursuant to Clause 3, Article 75 of Circular No. 38/2015/TT-BTC (amended by Clause 51, Article 1 of Circular 39/2018/TT-BTC) regulates customs procedures for goods purchased and sold between EPEs and domestic enterprises such as following:

“Article 1. Amending and supplementing a number of articles in Circular No. 38/2015/TT-BTC dated March 25, 2015 of the Minister of Finance regulating customs procedures; customs inspection and supervision; export tax, import tax and tax administration for exported and imported goods:

…

51. Article 75 is amended and supplemented as follows:

“Article 75. Customs procedures for exported and imported goods; Processing of scrap, waste products and waste of EPEs

1. For raw materials and supplies imported for production, to build factories, offices, and install equipment for EPEs, imported goods to create fixed assets, imported consumer goods, exported products of EPEs.

Customs procedures are carried out according to the provisions of Chapter II of this Circular. The customs declarant must declare all customs declaration information on the System, except for information about tax rates and tax amounts.

In case the contractor imports goods to build factories, offices, or install equipment for EPEs, customs procedures shall be carried out at the Customs Branch managing the EPE; The import contractor shall declare the import customs declaration according to the instructions in Appendix II issued with this Circular, the indicator “Notes” declares contract number information as prescribed in Point g, Clause 3, Article 16 of this Circular and as soon as the goods are cleared, the goods must be brought directly to the export processing company. After 30 days from the end of the bidding contract, the EPE and the import contractor report the amount of imported goods to the customs authority that manages the EPE according to form No. 20/NTXD-DNCX/GSQL Appendix V issued with this Circular.

2. For goods purchased and sold between EPEs and domestic enterprises: EPEs and domestic enterprises carry out on-site export and import customs procedures according to the corresponding types specified in Article 86 of this Circular.

3. For goods purchased and sold between two EPEs: In case of choosing to go through customs procedures, carry out on-site export and import procedures specified in Article 86 of this Circular.

4. Handling of scrap and waste products of EPEs

a) For scraps and waste products allowed to be sold into the domestic market: Customs procedures are carried out according to the provisions of Chapter II of this Circular, whereby the EPEs carry out export procedures and domestic enterprises open customs declarations of imported goods according to the corresponding type;

b) For scraps and waste products allowed to be exported abroad: Export processing enterprises carry out export procedures according to the provisions of Chapter II of this Circular.

Thus, export processing enterprises that are allowed to buy and sell wood scrap will open customs declarations in the form of on-site import and export as above.