New Guidance on Customs Procedures

On 25 March 2015, the Ministry Of Finance issued the Circular No.38/2015/TT-BTC guiding custom procedures; which entails custom audit and supervision, import and export duty and tax administration for imported and exported goods (“Circular 38”).

There are three significant changes provided by Circular 38 including (i) classifying and evaluating enterprises in terms of tax and customs regulations; (ii) reviewing the declared custom value and suspending the customs procedure solely in the event that a sufficient amount of proof is discovered, and (iii) review and approving the Certificate of Origin (C/O) shall be in conformity with the goods’ location of origin.

Regarding the goods’ value that is declared by enterprises, Circular 38 provides more details on this, which will help the involved parties to conduct the relating procedures more easily. Accordingly, clear requirements of the type of proof which need to be obtained are listed clearly.

The C/O will be reviewed on the basis of the principal of goods’ origin. As such, a C/O will only be rejected if the difference between the C/O and the customs declaration dossier is stipulated in this Circular 38. As a result, although C/O contents are not compatible with customs declaration dossiers, the declarer will have the opportunity to provide evidence as proof of such content.

In addition, goods shall only be suspended in the event that clear and sufficient proof on the difference between the C/O and the goods are provided.  Otherwise, such goods must be released and a consultation procedure would commence if necessary. This regulation helps the owner of the goods to avoid any delays during the customs declaration process without reason.

Another key point that should be noted is that the Circular 38 helps to abolish the registration requirement on material codes and consumption norms for export processing and manufacturing. Neither the processing contract, nor the norms registration procedure, nor the material products codes need to be notified.

Circular 38 provides more details on the customs procedures so that the declarer may follow easily. In addition, the Circular also provides some regulations in favor for the declarer to avoid any goods stuck without clear and sufficient evidence from the customs agency. This may help the customs procedure to function more smoothly, and cut down the time required by enterprises for the importation and exportation processes.

The Circular No.38/2015/TT-BTC will take effect on 01 April 2015.

By Vietnam Law Insight, LNT & Partners

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

Vietnam Structuring an Appropriate Transfer Pricing Policy

Compared to other countries, the Vietnamese tax authorities do not have extensive experience on dealing with transfer pricing.

However, transfer pricing recently has become one of the main concerns of the National Assembly (i.e. the Vietnamese Parliament) due to three factors.

The first factor is the increase of foreign investment in Vietnam, which according to official sources reached USD 30 billion in June 2008. The second is due to tax incentives and the rather underdeveloped tax regime in Vietnam. Last but not least, in preparation of Vietnam’s accession to the World Trade Organisation on 11 January 2007, the government liberalized the market and abolished trade barriers, such as the regulations on minimum prices for imported products.

These deregulations created various opportunities for multinational companies to do tax planning, whereby a correct transfer pricing policy is becoming more and more vital.

In 2007, the Ministry of Finance (MOF) reported that the tax collected from foreign invested enterprises (FIE) in 2006 missed its projected target by USD 122 million. Many sectors, such as automotive or pharmaceuticals, where the market price in Vietnam is higher than elsewhere in the Asian region, have actually reported losses. The MOF suspected that a large volume of business profits were shifted abroad due to transfer pricing issues. The fact that the British Virgin Islands (BVI), a tax haven, is among the top 5 “biggest foreign investors” in Vietnam is only one example.

As the Government suspects profit shifting by FIEs, transfer pricing becomes a challenge for multinational companies. However, transfer pricing regulations in Vietnam are not very clear, and therefore what might appear to be a correct transfer price on the date of conducting a transaction might later, in case of an audit, result in heavy tax penalty.

The Government is trying to catch up. The MOF has published transfer pricing examples and clarified its position on key topics. Circular 117/2005/TT-BTC dated 19 December 2005 (Circular 117) contains guidelines on how to calculate market prices in business transactions between affiliated parties.

By Vietnam Law Insight, LNT & Partners.

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://