Proposed changes to Vietnam’s in-country export and inport rules: GDC’S latest move

The General Department of Customs (GDC) has recently taken significant steps that could reshape the landscape of in-country export and import transactions in Vietnam. On May 29, 2023, the GDC issued official letters no. 2587/TCHQ-GSQL and 2588/TCHQ-GSQL, unveiling draft amendments to Article 35 of Decree 08/2015/ND-CP. This decree governs regulations surrounding in-country export and import transactions.

      1.  Current Definitions and Scenarios

Article 35 of Decree 08/2015 currently defines in-country import and export transactions, encompassing scenarios such as goods produced under toll manufacturing contracts with foreign traders and sold to local entities. It also includes buy/sell transactions between Vietnamese businesses and foreign organizations or individuals without a presence in Vietnam.

      2.  Proposed Changes and New Procedures

Under the proposed changes, the GDC aims to abolish the existing regulations outlined in Article 35. Instead, they propose alternative procedures, suggesting that in-country import and export transactions should be treated as domestic transactions. This proposal implies that foreign traders engaged in such transactions would need to designate a representative in Vietnam to handle their tax obligations.

Under the proposed changes, the GDC aims to abolish the existing regulations outlined in Article 35.

      3.  Potential Impacts on Businesses

If approved, this proposal could significantly impact companies involved in in-country export and import activities, particularly those engaged in toll manufacturing or contract manufacturing agreements with foreign parties. In addition to altering export and import procedures, several major issues need to be addressed. This includes concerns related to handling import duty exemption/refund for imported materials and determining the applicable VAT treatment for goods sold to foreign traders but ultimately delivered to other Vietnamese entities.

      4.  Challenges and Government’s Role

The proposed changes raise several important considerations that will require careful examination and solutions from the Government. TPG will closely monitor and provide updates on any major developments stemming from this proposal.

      5.  Preparation and Proactive Measures for Businesses

As businesses await the Government’s decision and potential policy changes, it’s advisable to conduct a thorough review of their existing business models. This proactive step will help assess the potential impacts on operations should the proposed changes be implemented. Companies can also reach out to TPG for assistance during this period of uncertainty.

Conclusion

In conclusion, the GDC’s proposed amendments to Article 35 could bring significant shifts to Vietnam’s in-country export and import landscape. Businesses are urged to stay informed and proactive in assessing their strategies while awaiting further developments from the Government. For any assistance or guidance, TPG stands ready to provide support.

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