Tax rates on supplies

According to the Ministry of Finance, before Decree 57/2020 of the Government was issued, the Law on import tax and export tax only stipulated the Heading 211 including "Supplies and raw materials, semi-finished products” (referred to as goods) but did not stipulate the goods must have the aggregate value of natural resources and minerals plus energy costs accounting for at least 51% of their production cost and their HS codes and descriptions.

Decree 57/2020 of the Government details seven items of which the total value of natural resources and minerals plus energy costs from 51% or more of the product cost or the minerals are processed to a certain extent (like clinker cement) in the Heading 211 subject to export tax rate of 5%.

This has led to the understanding that the above seven items, although their names are detailed, must calculate the rate of the value of natural resources and minerals plus energy costs in product cost to apply the export tax rate of 5% (if the rate is 51% and more) or 0% (if the rate is less than 51%). Through customs inspection, the seven items are all raw minerals of which the total value of natural resources minerals is more than 51% of product cost.

Therefore, to limit fraud in declaration and determination of the rate of natural resources and minerals of the product costs and minimise procedures for customs authorities and businesses in customs clearance, the Ministry of Finance has proposed the Government amend Clause 2, Article 2 of Decree 57/2020, specifying items which have detailed codes and descriptions in the Heading 211, will apply the corresponding export tax in this group without determination of the value of natural resources and minerals plus energy costs in total product cost.

This means amending Article 4 on the Export Tariff according to the list of taxable items. The Export Tariff is set according to the list of taxable items specified in Appendix I issued together with this decree including goods code, description of goods, export tax rate prescribed for each group of goods, and goods subject to export tax.

If export goods are not listed in the Export Tariff, the customs declarant will declare the goods code corresponding to the eight-digit code of such goods according to the Preferential Import Tariffs specified in Section I of Appendix II attached with this decree and is not required to declare tax rates on the export declaration.

For items of which codes have been detailed in eight-digit form and the description has been detailed in the Heading 211 of the Export Tariffs, the customs declarant will declare the tax rate corresponding to the code specified in the Heading 211 and will not be required to determine the total value of natural resources and minerals plus the cost of energy in the total production cost specified at Point c, Clause 1 of this article.

For items of which codes have not been detailed in eight-digit form and description has not been detailed in the Heading 211 of the Export Tariffs, the customs declarant will declare the export code corresponding to the eight-digit code of such goods according to the Preferential Import Tariffs specified in Section I, Appendix II attached to this decree and the export tax rate of 5% if the goods meet two following conditions:

First, they are supplies, materials and semi-finished commodities products out of the headings from 1 to 210 of the Export Tariffs.

Second, they are goods made directly from raw materials that are mainly natural resources or minerals and of which the aggregate value of such natural resources plus energy costs accounts for at least 51% of their production cost. The determination of the aggregate value of natural resources and minerals plus energy costs accounting for at least 51% of production cost shall be subject to regulations in the Government’s Decree No. 100/2016 and the Government’s Decree No. 146/2017.

Along with that, export goods under the exclusions specified in Clause 1, Article 1 of Decree No. 146/2017 are not in the Heading 211 of the Export Tariffs attached to this decree.

Source: Customs News