MINISTRY Of fiNANCE       SOCIALIST REPUBLIC Of VIETNAM
       *****             Independence-freedom-Happiness
   Ref.90/TC-TCT            
                               Hanoi, 4th November, 1994

CIRCULAR SUPPLEMENTING CIRCULAR 47/TC-TCT DATED JUNE O1, 1994 GUIDING PROCEDURES fOR THE EXEMPTION AND PAY BACK Of IMPORT DUTY IN RESPECT Of ENTERPRISES WITH fOREIGN INVESTED CAPITAL

In order to ensure consistence in considering the exemption and pay back of import duty in respect of enterprises with foreign invested capital in Vietnam in accordance with Circular 47/CT-TCT dated June 01, 1994 of Ministry of finance ("M of") and based on comments and recommendations of State Committee for Co-operation and Investment ("SCCI") Mof hereby makes guidance on supplementing and detailing a number of points in the said Circular as follows:

1- As regards economical - technical feasibility study: to consider any case, Mof shall focus on the preliminary economical-technical feasibility study which has been submitted to Mof on the evaluation of the project. The project investor apply ing for import duty exemption for each consignment of goods shall therefore not have to submit to Mof the economical-technical feasibility study as approved. In the event of projects to which the additional licence is granted or the economical-technical feasibility study of which is readjusted, SCCI shall for purposes of giving basis for carrying out import duty procedures forthwith send to Mof and Ministry of Trade (MoT) a written notice confirming the supplemen t made to the economical-technical feasibility study.

2- Means for production such as minor working tools and equipment, special fitter's tools, recycling fibre or plastic package which are deemed to be necessary for production and business activities of enterprises being on the initial per iod of production financed by invested capital allocated for fundamental construction purpose and which are listed in the relevant project's economical-technical feasibility study as approved, may be subject to consideration for one-time import du ty exemption in accordance with the Government's Decree 18/CP dated April 16, 1993 and Article 13 of its Decree 54/CP dated August 28, 1993. Volume and/or value of goods to be imported for the first time free of import duty should have be en predetermined in the project's economical-technical feasibility study and to that effect MoT should have issued a relevant import licence.

3- As regards imported items for production of export-oriented goods, Mof gives its detailed clarification as follows:

a) Production/business organizations carrying out assembling activity may be paid back import duty for materials, spare parts, single parts in a quantity registered for each product;
Example1:
In the event that car-related materials, parts are imported for the assembling of completely knocked down cars for export, then import duty imposed on the materials shall be paid back, namely that imposed on:
+ blocks of car parts, single car parts;
+ accompanying parts, including working tools, spare tires etc.
+ materials, comprising:
- paint for car trunk and outer cover (if the car is imported as CKD-1 item);
- brand and hoop steel, crushing nails (if the car is imported as CKD-2 item).

b) Production/business organizations carrying out processing/manufacturing shall be paid back import duty only for such materials which are used directly in production process, and not for such tools, equipment, parts and accessories which do not constitute the substance of the exp ort item.

Example 2:
In the event materials are imported for the production of garments for export, the items in respect of which the paid import duty shall be paid back are:
+ main material: cloth;
+ accessories: mex, lace, synthetic plastic mattress;
+ supplies: thread, button, strip lock, built-in steel button,
label, mark, plastic belt, and packaging for single units.

Example 3:
In the event materials are imported for production of food for export (for instance, pickles), the import duty imposed shall be paid back for the part of the following materials:
+ brand iron covered with tin;
+ vinegar liquid;
+ aroma substance;
+ label, mark.

4- Norms of materials and accessories consumption which is fixed with the purpose of considering the exemption and/or pay back of import duty in respect of export items produced by an enterprise shall be established by the enterprise and re gistered with provincial/municipal taxation and customs office. If any act of cheating in registration of norms, measures for collecting tax in arrears and measures of penalty shall be applied in accordance with law.

for Ministry of finance
Vice-Minister
VU MONG GIAO
(Signed)