Pursuant to the Law on Organization of the Government of September 30, 1992;

Pursuant to the Law on Special Consumption Tax adopted by the VIIIth National Assembly of the Socialist Republic of Vietnam on June 30, 1990; the Law on Amendments and Supplements to a Number of Articles of the Law on Special Consumption Tax adopted by the IXth National Assembly of the Socialist Republic of Vietnam on July 5, 1993; the Law on Amendments and Supplements to a Number of Articles of the Law on Special Consumption Tax adopted by the IXth National Assembly of the Socialist Republic of Vietnam on October 28, 1995;

At the proposal of the Minister of Finance,

DECREES:

Chapter I

SCOPE OF APPLICATION OF THE SPECIAL CONSUMPTION TAX

Article 1.- Organizations and individuals belonging to all economic sectors (hereunder referred to as unit) that produce or import goods subject to the special consumption tax are all subject to the special consumption tax.

Article 2.- Each item subject to the special consumption tax shall be taxed only once. This principle shall be applied concretely as follows:

1. An establishment producing goods subject to special consumption tax shall have to pay only this tax, not also the turnover tax in production when it sells these goods. If it has sale branches or shops, it shall have to pay the special consumption tax at the place of production and the turnover tax for commercial business activities at the sale branch or shop.

When paying the special consumption tax, a production unit shall be entitled to subtract the special consumption tax it has paid earlier (if any).

2. A unit which imports goods subject to special consumption tax shall have to pay this tax when importing these goods and the turnover tax when selling them.

Article 3.- Exemption from special consumption tax shall apply to the goods subject to special consumption tax when imported or exported in the following cases:

1. The goods are directly exported by the production unit, or are directly consigned to the unit for a foreign country.

2. The goods are sold by the production unit, or consigned by it to a business unit for direct export under an economic contract and export permit.

If the export business unit buys the goods subject to special consumption tax from a production unit for export and it does not export but sells them inside the country, it shall have to pay the special consumption tax beside the turnover tax levied on commercial business activities.

3. Non-refundable aid goods.

4. Imports subject to special consumption tax from a foreign organization or individual enjoying franchise privileges provided for by the Government in conformity with the international treaties which Vietnam has signed or adhered to.

5. Goods subject to special consumption tax which are trans-shipped, transited or transported through Vietnam's border by virtue of a treaty signed between the two Governments or branches or localities with permission from the Prime Minister and which have completed the necessary customs procedures.

6. Goods subject to special consumption tax which are temporarily imported for re-export ( including goods participating in exhibitions-fairs) shall be exempt from special consumption tax correspondingly with the goods which are actually re-exported within the tax payment time-limit (30 days). Past the said time-limit the portion which is not yet exported shall have to pay the special consumption tax, and reimbursement of the special consumption tax shall be made with regard to the portion of the goods which have been actually re-exported.

7. Goods subject to special consumption tax which are materials and raw materials imported for the production of export goods shall be exempt from the special consumption tax if they are actually exported within the tax payment time limit (90 days). Special consumption tax exemption shall be levied on the quantity of imported materials or raw materials correspondingly with the quantity of goods which are actually exported. Past the tax payment time-limit (more than 90 days) all the imported materials and raw materials shall have to pay the special consumption tax. When the newly made goods have been actually exported, the special consumption tax already paid for the quantity of materials and raw materials used for the production of the goods which have been exported shall be reimbursed.

The materials and raw materials used for the production of goods under consignment contracts with foreign countries shall be exempt from the special consumption tax.

8. Check-in luggage within the limit for entry and exit as prescribed by the Government.

With regard to import goods, special consumption tax shall be levied only on the goods which are actually imported. Reimbursement of special consumption tax shall be made for the declared goods in excess of the quantity which is actually imported.

All cases outside the cases of tax exemption mentioned above shall have to pay special consumption tax when imported. The Ministry of Finance shall provide concrete guidance.

Chapter II

BASES FOR CALCULATION OF SPECIAL CONSUMPTION TAX AND TAX RATES

Article 4.- The bases for calculating the special consumption tax are the quantity of goods, the tax per unit of goods and the tax rates.

Article 5.- The quantity of goods subject to special consumption tax is defined as follows:

1. For the goods produced in the country, this comprises the quantity and weight of the goods consumed including both the quantity and weight of the goods subject to special consumption tax which are put out for sale, exchange or donation or for internal consumption within the unit.

2. For the imported goods, this is the quantity and weight written in the declaration of imports of the organizations and individuals owners of the imported goods.

Article 6.- Prices for calculation of special consumption tax;

1. The price for calculating special consumption tax with regard to goods produced inside the country is the selling price set by the unit producing the goods subject to the special consumption tax at the place of production not including the special consumption tax.

For the consigned goods, goods used as donation and goods for internal consumption, the price for calculating special consumption tax is the price for tax calculation of the goods of the same category or equivalent goods.

If the production unit pays the tax on the basis of the assigned quantity of produced and consumed goods, the Tax Office in the province or city shall base itself on the market price to set the selling price and the price for tax calculation.

2. The price for calculating the special consumption tax for imported goods is the price for calculating the import tax plus (+) the import tax. With regard to the imports which are entitled to import tax exemption or reduction, the price for calculating the special consumption tax shall have to contain all the elements of the import tax.

Article 7.- Following are the table and tax rates of the goods subject to special consumption tax:

1

2

3

4

5

a/ Filter cigarettes produced mainly from imported raw materials

b/ Filter cigarettes produced mainly from domestic raw materials

c/ Non-filter cigarettes and cigars produced in the country

d/ Imported cigarettes and cigars

a/ Medicated liquors

b/ Other liquors (including ethylic alcohol)

- Above 40% vol

- From 30% to 40% vol

- Under 30% vol, including fruit wines

- Especially canned beer

- Cars of under 5 seats

- Cars from 6 to 15 seats

- Cars from 16 to 24 seats and other cars and vehicles designed to transport both passengers and cargoes, three-wheeled vans



1. Filter cigarettes produced mainly from imported raw material are cigarettes with 51% and more of the raw material being imported tobacco.

2. The alcoholic beverages, beer, fireworks (except firecrackers) and petrol products subject to special consumption tax may be produced in the country or imported.

3. The medicated liquors which are subject to a tax rate of 15% must be provided with licenses and operating permit of the production establishment issued by the Ministry of Health. Without these conditions they shall be subject to special consumption tax at the tax rates applied to the alcoholic beverages of the corresponding volumes.

4. Imported automobiles and other vehicles (whole or in SKD form) subject to special consumption tax are those in the category of goods codenamed 8703 of the current Imports Tariff.

The Ministry of Finance shall discuss with the concerned branches to provide details of the goods subject to special consumption tax in the category "petrol of various kinds, naphtha, derivative compounds and other compounds for petrol mixtures."

Chapter III

REGISTRATION, DECLARATION FOR TAX PAYMENT AND TRANSPORTATION OF GOODS

Article 8.- An establishment which produces or imports goods subject to special consumption tax shall have to make a declaration and register with the Tax Office about the capital, labor force, commodities, place of production and business five days at the latest before starting its operation or before it conducts integration, splitting or change of site. In case of dissolution or a change in the business line, it must make a declaration with the Tax Office five days at the latest before it conducts dissolution or the change of the business line.

Article 9.- An establishment which produces or imports goods subject to special consumption tax shall have to make a declaration for tax payment according to the following regulations:

1. For the goods subject to the special consumption tax and produced in the country, the production establishment shall submit its special consumption tax returns in the previous month to the Tax Office within the first 5 days of the next month and pay fully the tax still due as notified by the Tax Office.

Even if there is no special consumption tax involved, the production establishment still has to file its overall tax returns to the Tax Office as prescribed.

2. For the imported goods, the date for declaration and calculation of the special consumption tax is the date of registration of the imported goods. Within 8 hours after filing the declaration of imports, the Tax Collection Office shall officially notify the tax payer of the tax to be paid.

Article 10.- The production and import establishment must strictly abide by the regime of book-keeping, accountancy, receipts and other vouchers as currently prescribed.

When the Tax Office asks for documents, data and other bases related to the inspection and control of the tax calculation, the production and business establishment has the duty to:

1. Supply fully and on time these dossiers, documents, data and bases related to the calculation of the special consumption tax.

2. Explain and clear the doubts about the unclear points in the tax returns, in the accounts books and accountancy vouchers.

A production and business establishment shall not use the pretext of professional secret or any other pretext to refuse to produce and supply or explain the documents as required by the Tax Office.

The Tax Collection Office shall have to keep the confidentiality of the documents supplied by the production and business establishment.

Article 11.- The special consumption tax shall be paid by the production or import unit. The place for the payment of tax is the place to complete the import procedures for imported goods and the place where the goods are directly produced if these are goods produced in the country. In case of small and scattered production, the special consumption tax may be paid by the purchasing organization or individual on behalf of the producer under the guidance of the Ministry of Finance.

Article 12.- The payment of the special consumption tax is prescribed as follows:

1. An establishment with a large amount of taxable goods must declare and pay the special consumption tax when it sells its goods and delivers the consigned goods whenever it receives the tax notice of the Tax Office. The Tax Office shall send its personnel to conduct regular control and to urge the unit to pay the tax on time to the State budget.

If the establishment has not collected the money after exporting the goods, the deadline for the tax payment is the date when the establishment collects the money but not later than 15 days after the Tax Office issues the notice on tax collection.

For a small production establishment, on the basis of the quota for the quantity of goods to be produced and consumed, the special consumption tax shall be paid periodically on the 10th, 20th and the last day of the month according to the notice of the Tax Office.

In case the special consumption tax is levied on the purchasing unit, the latter must make a tax declaration with the Tax Office where the purchase takes place or according to each consignment of goods before its transportation. The price for tax calculation in this case is the purchasing price at the place of the purchase minus the special consumption tax.

2. An import establishment shall pay its special consumption tax according to the tax notice of the Tax Office, but the payment shall be made not later than 30 days after it receives the tax notice.

The special consumption tax levied on non-commercial imports and cross-border trade goods shall be paid right upon their importation into Vietnam. The Tax Office shall issue a receipt when collecting tax in these cases.

Article 13.-

1. The goods produced in the country and subject to the special consumption tax on the way of transportation must be provided with a receipt of payment of special consumption tax or the sale receipt already registered at the Tax Office.

2. The imported goods subject to special consumption tax while on the way of transportation must be provided with the voucher of payment of special consumption tax or the notice of payment of special consumption tax attached to the declaration of the imported goods already inspected and certified by the Tax Office.

Article 14.- The Ministry of Finance shall issue and manage the various kinds of vouchers and declarations on special consumption tax.

Chapter IV

REDUCTION AND EXEMPTION OF SPECIAL CONSUMPTION TAX

Article 15.- The reduction and exemption of special consumption tax is defined as follows:

1. An establishment producing goods subject to special consumption tax which meets with difficulties due to natural calinities, enemy sabotage or unpredictable accidents shall be considered for reduction of special consumption tax. The level of reduction shall be made proportionally to the percentage of damage in property but must not exceed 50% of the tax to be paid, and the total reduction shall not exceed 30% of the value of the damaged property. The duration for the tax reduction shall not exceed 180 days after the occurrence of the damage and the date when the establishment has produced goods.

2. A newly founded production establishment or an establishment which expands its production or applies new technologies shall be considered for reduction of the special consumption tax on a year by year basis if it has suffered losses after paying the tax.

The level of tax reduction shall correspond with the actual losses in each year (on the solar calendar) but must not exceed 30% of the tax to be paid for this year. The duration of the reduction shall not exceed two years (24 months).

A newly founded establishment is one which has newly received investment for construction and has been issued with a permit for operation. Those establishments which were founded earlier but which are now split up, merged, renamed or dissolved and re-established shall not come under the category eligible for tax reduction under this provision.

For an establishment which expands its production or applies new technologies, the tax reduction shall apply only to the quantity of goods produced in excess of the earlier quantity.

3. With regard to the small production establishments, if they cannot pay fully the tax as prescribed, the Ministry of Finance shall base itself on the actual situation of their production and business and the market prices to decide the level and duration of the tax exemption or reduction for each specific case.

4. For other cases, the Ministry of Finance shall submit to the Government proposal for tax exemption or reduction for each specific case.

The Ministry of Finance shall work out the procedures for the application for tax exemption and reduction as well as the procedures and competence in considering such exemption and reduction as stipulated in Items 1, 2 and 3 of this Article.

Chapter V

FINAL PROVISIONS

Article 16.- The Government shall issue separate provisions concerning the regime of commendation and reward for the organizations and individuals that have made meritorious services in the implementation of the Law on Special Consumption Tax, and the sanctions against those organizations and individuals who violate the Law on Special Consumption Tax.

Article 17.- This Decree takes effect on January 1st, 1996 and replaces Decree No.56-CP of August 28, 1993 of the Government providing details for the implementation of the Law on Special Consumption Tax and the Law on Amendments and Supplements to a Number of Articles of the Law on Special Consumption Tax.

All earlier regulations on the special consumption tax which are contrary to the provisions of this Decree are now annulled.

Article 18.- The Minister of Finance shall provide guidance for the implementation of this Decree.

The Ministry of Finance shall empower the General Customs Department to organize the collection of the special consumption tax on imported goods together with the collection of taxes on imports.

The Ministers, the Heads of the ministerial-level agencies, the Heads of the agencies attached to the Government, the Presidents of the People's Committees of the provinces and cities directly under the Central Government shall have to implement this Decree.

On behalf of the Government

For the Prime Minister

Deputy Prime Minister