FDI tax exemption delayed

The Ministry of Trade announced last week that FDI firms would directly settle importation of tariff-exempted equipment at customs offices instead of having to get an approval licence from a local trade department or industrial, export processing or hi-tech zone management board.
The MoT is drafting a circular providing guidance on import, export and processing activities for foreign investors operating under the Investment Law 2005. Until the issuance of the circular, the MoT requires the General Customs Department to instruct customs offices at borders to settle import-export procedures and import, exemption and asset liquidation for FDI enterprises without asking approved license from local trade authorities.
Ministries of Trade and Finance officials said that the circular would be launched at the beginning of January 2007. Until then all the FDI importation of tariff exempted machines and equipment would be delayed.
Dang Duong Anh, partner in Vilaf Law Firm, explained that although this was a step by the central authorities to simplify administrative procedures for businesses, it was not simple.
“Unless customs offices get guidance with specific steps, they will not deal with FDI firms’ import of tariff exempted machines and equipment,” Anh told Vietnam Investment Review.
He also explained about the “simplification” of the import registration file to be granted for FDI firms, which does not include a list of tariff exempted machines and equipment for fixed assets, and does not require an attachment of the company’s feasibility study as was demanded previously.
“This will make both businesses and customs offices confused about which kinds of products are on the tariff exemption list,” Anh said.
Nguyen Quoc Hung, vice head of the MoF’s import-export section - the General Customs Office’s governing body, explained the MoT’s announcement clearly regulated that foreign investors would take full responsibilities for declaring import tariff exemption procedures and submitting tax exemption files to the customs agencies in accordance with the MoF’s Circular No. 113/2005/TT-BTC dated December 15, 2005.
“FDI firms had previously relied on local authorities’ estimation for their tariff exemption on machines and equipment. Now they have to do all the tasks by themselves and the customs offices will be responsible to check the enterprises’ declaration list,” Hung said.
Some FDI firms, however, said that they have not yet received any instruction from the local department of finance or customs offices on how to evaluate which machines and equipment are among the list of tariff exemption.
An official in charge of import-export activities of Cargill Vietnam admitted this fact and its effect to the company’s operation.
She said the company is to carry out a plant construction project and has to import machines and equipment for installation. “The license for importation is suspended and we do not know exactly when we can receive the permission,” she complained.
Duong Anh warned that while there has yet to be a strong reaction from FDI firms still importing under the previously approved plans, there would be many more complaints if they face difficulties and complications caused by the guiding circular being issued late or the new guidance not being as simple as they hoped.




No. 790/December 4-10, 2006