3. Where foreign-invested enterprises or the business cooperation parties sell their products produced by themselves to other enterprises for direct production of products for export stipulated in Clause 2, Article 58 of Decree No. 24/2000/ND-CP.

The buying and selling among these enterprises shall comply with the provisions of the legislation on economic contracts. The customs office shall not make procedures for these activities.

When a (buying) enterprise exports products, abroad the Customs Office shall make procedures as with an export batch without requesting the goods owner to prove the origin of the raw material or semi-finished products for production of such products the various norms and it shall not have the responsibility to certify the actual norms.

4. Customs procedures for cases where foreign-invested enterprises export to foreign traders but the goods do not leave Vietnam, instead are delivered in Vietnam as instructed by the foreign trader (on-the-spot export):

4.1. Export procedures export (procedures of goods delivery):

4.1.a. The exporting enterprise (delivering enterprise): On the basis of the export contract signed with the foreign enterprise, the enterprise�s representative shall go to the customs office where it has filled in procedures for the import of raw and auxiliary materials to produce its products to open a declaration form and fill export procedures as with an ordinary export batch suited to the type of goods. The contract must include a clause providing for the delivery of the goods in Vietnam, with the name and address of the importing enterprise (receiving enterprise).

After the export declaration form is registered, the enterprise shall itself organize the delivery of goods to the importing enterprise on the instruction of the foreign buyer as stipulated in the contract.

4.1b. Task of the customs office making export procedures:

It shall make procedures to register the export declaration form and apply the tax policy for the batch of goods as in the procedures for other export batches, seal the customs dossier and hand it to the exporting enterprise. The latter shall produce it together with the goods to the customs office for the making of import procedures at the place of delivery and reception of goods between the two enterprises. After receiving back the declaration form on which the result of the goods inspection delivered by the customs unit making import procedures, the leadership of the customs office shall affix his/her signature certifying the completion of the customs procedures.

4.2. Import procedures (goods reception procedures):

4.2a. The importing enterprise (receiving enterprise): On the basis of the importing contract signed with the foreign country, the import enterprise shall open the import declaration form suited to the right type of import and the current import policies. If the batch of imported goods belongs to the type of processing and the raw material is imported to produce goods for export, the enterprise must register the declaration form and fill in the procedures at the customs unit that manages the processing contracts or manages the imported raw and auxiliary materials and export products (output and input) of this goods.

The contract must include a clause providing for the reception of goods in Vietnam and the name and address of the delivering enterprise.

4.2. b. Tasks of the customs office making the import procedures:

It shall make the procedures to register the import declaration forms suited to the right type, check and compare the import dossier with the export dossier sent by the customs office that makes the export procedures (through the delivering enterprise), check the real goods, write down the result of goods inspection, sign and stamp to certify the real exportation on the export declaration form and send the set of dossier to the customs office at the place where the export procedures are made, certify the real importation on the import declaration forms. If the reality of the goods does not match the dossier of the goods batch, the customs office shall make a written record to handle as prescribed.

- On certifying the real exportation, the customs office must clearly record the details of the on-the-spot import declaration form (serial number, date and place where the declaration form is made).

- On certifying the real importation, the customs office must clearly record the details on the on-the-spot declaration forms (serial number, date and place where the declaration form is made).

- The other procedures as well as the tax policies shall conform with the regulations on each type.

5. The settlement of accounts of the projects stipulated in Article 102 shall proceed as follows:

Within 30 days after the investment licensing agency issues the certificate of registration of the report on final account settlement of the project, the enterprise�s representative shall go to the customs office of the place where goods of these types are imported to fill in the procedures for settlement of accounts.

The dossier to be submitted comprises:

- The report (original copy) on final settlement of accounts of the project, already certified by the investment permit issuing agency.

- The document (original copy) approving the import plan by the Ministry of Trade or the agency authorized by the Ministry of Trade, enclosed with the monitoring card of the customs authorities for the whole project.

- List of quantities and values of imported raw materials, machinery and equipment

- Declaration form of imports.

Within 30 days after reception of the complete dossier, the customs office that has filled in the import procedures for the enterprise shall have to complete the settlement of accounts and certify this completion in writing.

For the goods imported to create fixed assets and allowed to change their use propose or goods not used up, the customs office shall base itself on the permit of the Ministry of Trade to make the procedures.

6. With regard to the processing or reprocessing by the foreign-invested enterprises stipulated in Article 75 of Decree No. 24/2000/ND-CP, the General Department of Customs provides the following guidance:

- The processing scope of shall comply with the above-said Article 75.

- Customs management of processed goods shall comply with the provisions in Decree No. 57/1998/ND-CP of July 31, 1998 of the Government detailing the implementation of the Commercial Law regarding export, import activities, processing and acting as buying and selling agency with foreign countries, Official Dispatch No. 584/CP-KTTH of June 7, 1999 of the Government, guiding documents of the Ministry of Trade, the General Department of Customs and the concerned ministries and branches.

III. TAX GUARANTEE WAREHOUSES

1. Regarding the tax-guarantee warehouses stipulated in Article 79 of Decree No. 24/2000/ND-CP, the General Customs Department provides the following guidance for implementation:

The enterprise shall not yet have to calculate and pay import tax and other related taxes when it imports raw materials and materials for storage at the tax-guarantee warehouses to cater for production.

Imported raw and auxiliary materials and products stored at the tax-guarantee warehouse shall include only raw and auxiliary materials used to cater for production and products made by the same enterprise.

2. Conditions for the establishment of tax-guarantee warehouses are stipulated in Article 79 of Decree No. 24/2000/ND-CP. To ensure the management requirements of the customs office, the enterprises shall have also to meet the following demands:

a/ To strictly observe the prescriptions of law; to have clear business, financial and credit relations.

b/ To have in operation a system of books and vouchers to fully and closely monitor the export, import, deliveries from and receptions into the warehouses according to prescriptions of Vietnamese law, or a system of books and vouchers accepted by the competent State agency of Vietnam.

c/ The factory and warehouses must be located in areas convenient to the management and supervision by the Customs Service.

3. Procedures to apply for setting up a tax-guarantee warehouse:

3.1. An enterprise that wishes to set up a tax-guarantee warehouse shall have to send to the provincial or city customs office two sets of dossier composed of the following papers:

- An application for setting up a warehouse (according to the form issued by the General Department of Customs).

- The investment license (notarized copy).

- Map of the enterprise and map of the tax-guarantee warehouse.

- Operating rules of the tax-guarantee warehouse of the enterprise.

3.2. Within 10 days after receipt of the complete and valid dossier, the customs office of the concerned province or city shall make a survey and, if all conditions are met, shall make a written proposal to the General Department of Customs (attached to a set of dossier). The written proposal must record fully and concretely all the remarks on the conditions stipulated at Point 2, Part III of this Circular, on the applicant for setting up the warehouse, the local customs office�s capacity of supervising, managing and controlling the warehouse.

Within 20 days after receipt of the dossier and the proposal of the provincial or municipal customs office, the General Department of Customs shall issue the permit to set up the tax-guarantee warehouse or shall answer the enterprise in writing.

The permit to set up the tax-guarantee warehouse is valid for one year. On its expiry, if the enterprise still meets all the conditions and applies in writing for extension of the permit to the provincial or municipal customs office, the General Department of Customs shall consider the extension by one year each time.

In case the tax-guarantee warehouse expires its effective period, if the enterprise does not apply for extension, the raw and auxiliary materials still left in the warehouse shall be handled as follows:

- If the enterprise no longer needs to use these materials and makes a written proposal, the customs office shall make procedures for re-export or destruction.

- If the enterprise makes a written proposal to change to the form of import of raw material to produce goods for export or for domestic consumption, the enterprise shall register a new customs declaration form. The customs office shall calculate the tax and issue a tax notice. The time to register the declaration form and to calculate the tax is the expiry of the effective time of the tax-guarantee warehouse. The grace period shall comply with prescriptions of the Law on Export Tax and Import Tax for each type of goods.

3.3. To get the permit to set up and extend the permit for the tax bonded warehouse, the enterprise shall have to pay a fee stipulated in the Joint Circular No. 71/2000/TTLT-BTC-TCHQ of July 19, 2000 of the Ministry of Finance and the General Department of Customs.

4. Customs procedures for taking goods into and out of the tax-guarantee warehouse:

Customs procedures for imported raw and auxiliary materials taken into the tax-guarantee warehouse and for export products are the same as for batches of ordinary imported or exported goods. Particularly, the tax calculation and payment for imported raw and auxiliary materials shall comply with the following:

4.1. The enterprises must open separate declaration forms for the imported raw and auxiliary materials that enjoy tax guarantee. A separate declaration form must be opened for the raw and auxiliary materials imported for production for domestic consumption.

The basis for determination of the percentage of imported raw materials that enjoy tax guarantee is the percentage of products for export recorded in the investment license (if the enterprise conducts its export according to the percentage stipulated in its investment license) or the percentage determined by the enterprise which must not be lower than 50% of the products that are turned out. In both cases, the enterprise must send a written registration to the customs office of the province or city that manages the tax -guarantee warehouse and the General Department of Customs prior to the first of January each year.

Basing itself on the percentage of products for consumption on the domestic market as registered by the enterprise in the above-mentioned way, the customs office shall register the declaration form, calculate and collect the import tax on the raw and auxiliary materials for production of products to be consumed on the domestic market.

For the imported raw and auxiliary materials taken into the tax-guarantee warehouse to produce goods for export, the customs office shall not yet calculate and inscribe the tax on the declaration form but shall clearly determine the name of the goods, its type and quantity on the declaration form and must enter it in the monitoring book.

4.2. For the goods taken into the tax-guarantee warehouse that are damaged or have lost their quality and are no longer fit for production, they are allowed to go through customs procedures for re-export or destruction. The destruction shall proceed as follows:

- The enterprise shall send a written document to the customs office managing the tax-guarantee warehouse, stating the reason, the name of the goods, their type and the quantity of the raw and auxiliary materials that need to be destroyed and the serial number and date of the import declaration form made for such raw and auxiliary materials.

The enterprise shall itself organize and take responsibility for the destruction. The destruction shall be carried out under the supervision of the customs office, the tax office and the environment office.

The result of the destruction must be recorded in a certification paper. This paper shall be the voucher for the future settlement of accounts.

4.3. The question of keeping raw and auxiliary materials in the tax-guarantee warehouse: The enterprise is allowed to keep imported raw and auxiliary materials for production of goods for export and for domestic consumption in the tax-guarantee warehouse but must keep each kind separately. The customs office shall also manage these kinds separately. In the process of production, the enterprise may transfer part of the raw and auxiliary materials from one kind to another but must propose in writing to the local customs office and observe the registered export percentage.

When importing raw and subsidiary materials, the goods senders do not necessarily have to separate the vouchers and goods into two kinds but may send a common batch for both kinds. But when making import procedures they must make separate declaration forms for each kind.

4.4. At the end of the plan year (December 31) and on January 31 of the subsequent year at the latest, the enterprise must work out an sum-up table of the declaration forms and the total volume of the imported raw and auxiliary materials enjoying the tax guarantee regime, sum up the export declaration forms and the total volume of exports and send them to the customs office. After checking the accuracy of the report, compare it with the dossier kept at the customs office and basing itself on the registered percentage of products to be exported by the enterprise, the customs office shall proceed as follows:

a/ If the export percentage is lower than the tax guarantee rate, the enterprise shall immediately pay tax for the difference between the quantity of finished products to be exported and the quantity of actually-exported products. In addition, the enterprise shall be fined for tax payment delay as prescribed by law. If lower than 50% of the products are exported or if after three consecutive years, the enterprise still fails to achieve the committed percentage, the customs office of the province or city shall propose to the General Department of Customs to withdraw the tax-guarantee warehouse permit.

The applicable tax rates shall conform to the regulations of the Ministry of Finance at the time when the customs office issues the decision to collect tax.

b/ If the export percentage is higher than the tax-guarantee rate the enterprise shall be reimbursed the tax amount already paid for the difference between the actually exported amount and the amount for which it has paid tax.

c/ The enterprise having a tax-guarantee warehouse must take responsibility for the accuracy and completeness of the sum-up reports mentioned in this point.

4.5. The imported goods taken into the tax-guarantee warehouse are not allowed to be sold on the Vietnamese market. In case the Ministry of Trade allows their sale on the Vietnamese market, the enterprise must pay import tax and other taxes as prescribed by law.

5. Management of the tax-guarantee warehouses by the customs service.

In principle the tax-guarantee warehouses at the enterprises come under the regular control and supervision by the customs office. However, depending on concrete conditions, the heads of the provincial/municipal customs departments shall decide the direct supervision or shall determine the right to inspect and supervise but they shall not conduct direct regular supervision. The inspection and supervision by the customs service shall be conducted mainly when there are goods brought in or out of the tax-guarantee warehouses and through the following acts: making customs procedures for the exports and imports of the enterprises, settlement of accounts of each batch of goods; checking the reports of the enterprises; direct or unexpected inspection (including on the books, vouchers, the system of files on the computer networks, inventorying goods in the warehouses).

The enterprises shall have to organize the management of the warehouses and create all favorable conditions and to closely cooperate with the customs service in conducting the above inspection and supervision regime.

IV ORGANIZATION OF IMPLEMENTATION

1. This Circular takes effect after its signing. All the earlier stipulations which are contrary to this Circular are now annulled.

2. All acts of violating the provisions of this Circular and other relevant provisions shall be handled according to law.

For the General Director of Customs
Deputy General Director
DANG VAN TAO