LEARNING MATERIAL

EXPORT IMPORT
MANAGEMENT
(Chapter 3 & 4)

For internal usage

 CHAPTER 3: BUSINESS RISK MANAGEMENT AND COVERAGE

Learning Objectives:
After studying this chapter, you will be able to understand:
• The types of risks involved in export import business
• How to manage risks and & the quality aspects in international trade

3.1. RISK MANAGEMENT IN EXPORT IMPORT BUSINESS

Risk is an aspect of any organization‘s operation. When it is recognized, understood, and
managed, risk itself can set the stage for sustainable growth. Companies need to identify
risks within their operation (negotiation, contract signing, contract performance) and plan
a systematic approach to manage them. However, identifying and minimizing market,
financial, and operational risks while pursuing a high growth strategy is a difficult task. A
risk management process can help companies balance their risk/return objectives and
mitigate obstacles to achieve strategic goals.
Risk is inherent in every business, more so in the international arena. Success in business
depends largely on careful evaluation of risks and their subsequent minimization.
Eradicating all risks is, of course not possible, but an efficient risk management system can
help combat risks to a great extent.
3.2. TYPES OF RISKS
The different types of risks are as follows:
• Commercial risk
• Political risk
• Risks arising out of foreign laws
• Cargo risk
• Credit risk
• Foreign exchange risk

Commercial Risk
The general causes for commercial risks are as follows:
• Lack of knowledge about foreign markets
• Inadaptability of the product
• Longer transit time
• Varying situation, such as change in preferences and fashion
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• Competition
Commercial risks can be minimized by using forecasting techniques and by keeping a
careful watch on the changing business scenario in the concerned country, in particular, and
the world economy, in general. Exporters have to be prepared to face any eventuality;
wisdom lies in forecasting, anticipating, and of course, finally, speedily responding, at the
earliest hour.
Political Risk
Some of the common causes for political risks are the following:
• Changes in political power and hence policies
• Coups, civil wars, and rebellion
• Wars between countries
• Capture of cargo during war
Political risks can be avoided to a certain extend by judicious selection of countries to
which goods are exported. Insurance companies can agree to cover risks, if paid some
additional premium.
Risks Arising Out of Foreign Laws
Risks arising out of foreign laws can be due to:
• Different laws operating in domestic country
• Expensive and complex litigation
In case of any disputes arising out of contracts, these risks can be avoided by the
appointment of an arbitrator at the time of contract.
Cargo Risk
Most goods are transported by sea. Transit risks such as storms, leakage, fire, and
explosion can be classified under cargo risk. It is possible to transfer the financial losses
resulting from perils of sea and perils in transit to professional risk bearers, that is, cargo
risks can be covered by taking an insurance policy. Risks are termed as perils in marine
related literature.
The various types of perils are as follows:
Marine Perils
These are natural occurrences or manmade mishaps. Natural occurrences include
earthquakes, storms, lightning, and entry of sea water into the vessel, among others. Fire,
smoke, collisions, etc., are examples of manmade mishaps.
Extraneous Perils

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These are incidental perils. These perils are caused due to falls in loading, carrying and
unloading.

War Perils
These perils relate to losses due to war, including civil war.
Credit Risk
Selling on credit is becoming a common phenomenon. As these are many exporters
competing in international trade, importers are much sought after. So it is but natural that
importers dictate terms. At the same time, insolvency rates are on the rise and many
countries suffer from balance of payment difficulties.
The following two issues are important in relation to credit risks:
(a) The exporter must have sufficient funds to offer credit to the buyers abroad.
(b) The exporter should be prepared to take credit risks.
Foreign Exchange Risk
Foreign exchange risks occur when the invoice is prepared in foreign currency. If the
foreign currency depreciates in terms of VND, the exporter will receive lesser amount in
VND and vice versa. If the exporter bill is purchased or negotiated under an L/C and the
foreign currency undergoes fluctuation, the bank will bear the risk. If there is an intervening
difference in the exchange rate between the date of giving the bill for collection and the
date of realization, the exporter stands to lose or gain, depending on the trend in fluctuation.
Foreign exchange risk can be hedged by using forward contracts.
3.3. QUALITY AND PRE-SHIPMENT INSPECTION
Quality assumes the highest importance in penetrating, capturing, and sustaining share in
the international market. The international market is highly competitive and the quality of
produce is an important determinant in export business. One of the critical problems faced
by developing countries is quality or rather the lack of it. Therefore, improvement of
quality is one of the prerequisites in driving exports.
Quality Control
Quality control (QC) is a set of procedures intended to ensure that a product or service
adheres to defined quality criteria or meets the requirements of the client.

As part of an effective QC program, an enterprise must first decide the specific standards
that the product or service must meet. Then the extend of QC precautionary actions should
be undertaken (for example, the percentage of units to be tested from each lot). Next, real
world data must be collected based on past performance/experience (for example, the
percentage of units that fail). After this, corrective action must be taken. If too many unit
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failures or instances of proof service occur, a plan must be devised to improve the
production or service process. Finally, the QC process must be ongoing to ensure that
remedial efforts, if required, have produced satisfactory results.
Pre-shipment Inspection
Pre-shipment inspection is carried out by specialized agencies/councils as per the buyer’s
specifications, and quantity of exports. In many countries, government insist that
exportable items (if the item falls under the list of items placed for compulsory inspection
category) should be subjected to pre-shipment inspection as part of attempts to ensure the
quality of the item that originated in those countries. However, exporters with good track
record have been empowered to carry out such inspection on self-certification basis.
Advantages of Pre-shipment Inspection
Pre-shipment inspection facilitates transparency in trading activities. It ensures that goods
conform to contract specifications. It provides the government an effective means of
overseeing and controlling foreign trade through accurate statistics.
Methods of Quality Control and Pre-shipment Inspection
There are primarily three methods of quality control and pre-shipment inspection.
Consignment –wise Inspection
Each actual consignment in packed condition is inspected by export inspection agencies.
The agencies conduct inspection on the basis of statistical sampling plans. Certificates are
awarded after passing quality checks. Certificates carry a validity period before which the
item should be shipped. Most of the items undergo these inspections, except those which
have in-house quality control process.
In-process Quality Control
In-process quality control deals with continuous process industries, such as paints,
ceramics, printing ink, and so on. To become an approved “export-worthy” unit, a company
should possess the requisite infrastructure. Export units get inspection certificates based on
self-declaration.
Self-certification
It is a recent introduction to the compulsory inspection scheme. Manufacturing units
having in-built responsibility for quality control has the freedom to self-certify their
products.

CONCEPT REVIEW QUESTIONS

1. Discuss the reasons for mandatory inspection requirement of some commodities while
exporting.
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2. Why does an importer ask for an inspection certificate from an exporter?
3. Distinguish between the various types of risks involved in exporting.
4. Discuss how an exporter covers each type of risks involved in exporting.
5. Discuss how an exporter manages risks pertaining to quality.
6. Discuss the risks occur in a process of negotiation for a contract.
7. Discuss the risks occur in drafting and signing a contract.
8. Discuss the risks occur in every step of an export/import contract performance.

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 CHAPTER 4: CUSTOMS CLEARANCE OF IMPORT AND EXPORT CARGO

After studying this chapter, you will be able to understand

• The import & export cargo clearance mechanism
• The basis of customs valuation
• The various types of customs duties levied
• The harmonized system
Countries across the globe follow a certain set of procedures for customs clearance of
import and export cargo. The following are the objectives for working according to these
procedures:
• To determine if the goods offered for examination are allowed for import or export as
per the customs laws of the country.
• To determine if the owner of the goods has the permission/license from the relevant
authorities to import or export the goods.
• To determine if proper documentation for customs clearance has been carried out.
• To determine if any customs duty is levied on the import or export cargo. In every
country, customs duty is an important source of the government‘s revenues.
• To enable the government to gather statistical data of all the goods imported into and
exported from the country.
While subjecting the cargo to customs examination, it is to be ensured that cargo owners
are suitable guided regarding the procedures in order to avoid delay and inconvenience.
This help in a fair assessment of the value of the cargo by the customs authorizes for
calculation of the duty. Whereas some of the procedures may differ from country to
country, most countries follow a standard set of procedures for the convenience of cargo
owners and their agents operating in a global environment.

4.1. CUSTOMS FORMALITIES

Sending
Submitting goods for Making duty Being
Customs Declaring
documents physical payment, Cleared
declarant (1)
(3) verification charges, fees (9)
(5) (7)

Collecting Deciding
Receiving Conducting
Customs Verifying the duty, grant of
the physical
officer documents charges, customs
registration verification
(4) fees clearance
(2) (6)
(8) (10)

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4.1.1. The responsibilities of customs declarants, customs authorities and customs
officials:

(In accordance with Customs Law 2014, Art. 21)

1. While following the customs formalities, a customs declarant shall:

a/ Declare and submit customs declarations; submit documentary evidence of customs

documents

b/ Send goods and vehicle to proper places for physical inspection;

c/ Pay taxes and fulfill other financial obligations in accordance with the laws on taxes,
charges and fees and other corresponding regulations of law.

2. While conducting customs formalities, customs authorities and customs officials shall:

a/ Receive the registration of customs declaration sheet/documents;

b/ Verify customs documents and conduct physical inspection of goods and vehicle;

c/ Collect taxes and other amounts payable in accordance with the laws on taxes, charges
and fees and other corresponding regulations of law;

d/ Decide grant of customs clearance for goods, release of goods and certification of
completion of customs formalities applied to vehicle.

4.1.2. Customs formalities:

(1) Declaring the customs

(In accordance with Customs Law 2014, Art. 29)

1. Customs declarants shall sufficiently, accurately and clearly fill all items in customs
declarations.

2. Customs declaration shall be made electronically, except that customs declarants may
fill in paper customs declarations as prescribed in regulations of the Government.

3. Registered customs declarations are valid for customs formalities. Policies on goods
management and taxes on imported goods and exported goods are applied when the
customs declaration forms are registered, unless otherwise provided by the law on import
duty and export duty.

4. If a customs declarant found that the declaration contains errors, he/she may make an
additional declaration in the following cases:

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a/ For goods undergone customs formalities: Before the customs authority notifies the
direct examination of the customs document;

b/ For goods granted clearance: Within 60 days from the date of customs clearance and
before the day on which customs authority decides to conduct post-customs clearance
inspection, unless additional declaration are related to the import or export permit;
specialized inspection in terms of quality, health, culture, animal quarantine, plant
quarantine and food safety.

If customs declarants detect errors in their customs declarations when the time limit
prescribed at points a and b has expired, they shall make additional declaration and their
errors shall be handled in accordance with the laws on taxes and handling of administrative
violations.

5. Customs declarants may submit incomplete declaration or documents in substitution of

declaration for customs clearance and shall complete declaration forms within 30 days
from the date of registration of incomplete customs declarations, and may make a single
customs declaration for multiple importation or exportation during a certain period of time
for certain goods items.

6. For goods which are undergone customs formalities or for which customs formalities
have been completed but which are still subject to customs supervision, customs
declarants may change the form of importation or exportation in accordance with the law
on customs.

Customs declaration is described in Art. 25, Decree No. 08/2015/ND-CP Providing

Specific Provisions And Guidance On Enforcement Of The Customs Law On
Customs Procedures, Examination, Supervision And Control Procedures as follows:

1. Customs declaration shall be carried out in the electronic. Customs declarants shall
register their customs declaration through the electronic customs procedures under the
regulations set out by the Minister of Finance.

2. Paper customs declaration is permitted if:

a) Cargos required to complete the customs declaration before being exported or imported
are those of border residents;

b) Exported and imported cargos are in excess of limits on tax exemption applied to
incoming and outgoing persons;
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c) Cargos are used for the purpose of emergency assistance and humanitarian aid;

d) Cargos are used as personal gifts, presents and property;

e) Cargos are equipment used for containing cargos according to the temporary importation
– re exportation or temporary exportation – re importation rotation method.

f) Goods to be temporarily imported and re-exported, or temporarily exported and re-

imported which are carried along by incoming and outgoing persons are used for work in
the pre-determined time;

g) Customs electronic data processing system or electronic customs declaration system

fails to carry out mutual electronic transactions which may be caused by the operational
failure of single or both system(s) or may result from any other reason.

In case customs electronic data processing system fails to carry out electronic customs
procedures, customs authorities shall be responsible for making an announcement on the
customs website at least 01 hour from the time when such failure takes place;

h) Other commodities stipulated by the Minister of Finance.

3. Customs declarants must provide sufficient, accurate and clear information required in
the customs declaration, decide their self-assessed taxes and other payments to the State
budget as well as take their full legal responsibility for their declared information.

4. When carrying out customs declaration, customs declarants shall be required to:

a) Input their information declared on the electronic customs declaration system;

b) Send their customs declaration to customs authorities through customs electronic data
processing system;

c) Receive feedbacks and follow instructions from customs authorities.

With regard to paper customs declaration, customs declarants are required to provide
sufficient information required in the customs declaration form, append their names and
signatures (except when customs declarants are individuals) in their declarations for
submission to customs authorities.

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5. If exports or imports are classified as regulated entities required to pay export, import
taxes, excise duties, value-added taxes, environmental taxes, or of which export or import
taxes are exempted or such tax exemption is under consideration, or of which the tax rate
is imposed according to the tariff quota, and cargos are customs released or cleared but
then subject to changes in entities that are not required to pay taxes or in purposes for which
exports or imports are exempted from paying taxes or under consideration for their tax
exemption; exports or imports are taxed at the rate that conforms to the tariff quota; imports
are raw materials used for processing or manufacturing exports or temporarily imported –
re-exported products that have been released or cleared under customs procedures but then
their use purpose has changed for domestic consumption, new customs declarations must
be submitted instead. Policies on management of exports and imports and policies on taxes
levied on exports and imports shall be implemented in the time when new customs
declarations are registered, except when all of policies on management of exports and
imports have been fully implemented at the time when the initial customs declaration is
registered.

6. Commodities to be exported or imported in different manners must be declared in

different export or import declarations that such commodities are required to carry out.

7. Customs declaration that commodities agreed in various commercial contracts or orders

are required to complete

a) Imports which are agreed in various commercial contracts or orders, or described in one
or many invoices issued by one seller under the same terms of commodity delivery,
payment, one-time shipment, and those with one bill of lading shall be declared in the same
customs declaration;

b) Imports which are agreed in various commercial contracts or orders under the same
terms of commodity delivery, payment, or sold to the same client and those under the
agreement on one-time shipment shall be declared in one or many customs declaration(s).

8. Registration of one-time customs declaration

Customs declarants who frequently export or import a single commodity at a specified time
as agreed upon in the same sale contract under which contracting parties are the same seller
or buyer, and whose commodities are exported or imported across the same border

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checkpoint shall be entitled to register their one-time customs declaration for a period of
below 01 year.

One-time customs declaration shall become invalid for further customs procedures when
any change to policies on taxation or management of exports or imports occurs.

9. Utilization of electronic customs declaration

Electronic customs declaration shall be valid for use when procedures for taxation,
certification of commodity origin, payment made at banks and other administrative
procedures as well as serve as evidence to show the legality of commodities to be traded
in the market are required to be completed. Relevant regulatory agencies shall use this
electronic customs declaration for their administrative purpose and shall not be allowed to
request customs declarants to submit paper customs declarations.

Customs authorities shall be responsible for providing information required in the customs
declaration in the form of electronic data for relevant regulatory agencies. These agencies
shall be responsible for installing necessary equipment for customs declarants to get access
to the data provided in the electronic customs declaration.

10. The Ministry of Finance shall set out detailed regulations on addition or cancellation
of customs declaration, register one-time customs declaration or complete a new customs
declaration for commodities of which the use purpose is changed or consumption market
is changed to domestic one.

Location of customs declaration registration

(In accordance with Art.19- Circular 38/2015/TT-BTC)

a) The customs declaration of exported goods shall be registered at the Sub-department of

Customs in the same administrative division as the headquarter or manufacturing facility
of the enterprise, or the Sub-department of Customs in the same administrative division
with the place where exported goods are gathered, or the Sub-department of Customs of
the checkpoint of export;

b) The declaration of imported goods shall be registered at the Sub-department of Customs

at the checkpoint in charge of the goods storage place or port of destination written on the
bill of lading, transport contract, or the Sub-department of Customs outside the checkpoint
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area in the same administrative division as the enterprise’s headquarter or the place to
which goods is delivered;

Time limit for submission of customs documents

(In accordance with Art.25- Customs Law)

1. The customs declarations shall be submitted:

a/ After goods are transported to places notified by customs declarants and at least 4 hours
before the exit of vehicle regarding to exported goods; at least 2 hours before the exit of
vehicle regarding exported goods delivered by express delivery services;

b/ Before goods arrive at border checkpoints or within 30 days after goods arrive at border
checkpoints regarding to imported goods;

2. Customs declaration sheet is valid for customs formalities within 15 days from the date
on which it is registered.

3. The time limit for submission of relevant documents in customs documents:

a/ Regarding to e-customs declaration, when customs authorities conduct examination of

customs documents and physical inspection of goods, customs declarants shall submit
paper documents in customs documents, except documents which are already available in
the national single- window communication system;

b/ Regarding to paper customs declarations, customs declarants shall submit relevant

documents when registering their customs declarations.

(2) Receiving the registration

(In accordance with Art. 30.2 – Customs Law 2014)

Customs declarations may be registered after customs authorities accept the declaration of
customs declarants. The registration date shall be stated in customs declarations.

Receipt, examination, registration and handling of customs declarations

(In accordance with Art. 26, Decree No. 08/2015/ND-CP)

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1. The customs electronic data processing system shall receive, examine, register and
handle customs declarations within 24 hours a day and 7 days a week.

2. In case registration of customs declarations is rejected, customs authorities shall send a

notification to customs declarants through the customs electronic data processing system
in which reasons for such rejection must be clearly stated.

3. In case registration of customs declarations is accepted, the customs electronic data

processing system shall number and handle customs declarations, and then make a
response to customs declarants.

4. The Director of the General Department of Customs shall adhere to criteria for
classifying risk levels set out by the Minister of Finance in order to make a decision on
customs examination and make announcement through the customs electronic data
processing system according to one of the following forms:

a) Approve the information declared on the customs declaration system and permit customs
clearance;

b) Examine related documents included in the customs documentation of customs

declarations, or any other document stored in the national single- window communication
in order to decide customs clearance or conduct physical verification of commodities
before permitting customs clearance.

5. In case of paper customs declaration:

Registration of customs declarations is carried out immediately after customs declarants

complete their customs declaration and submit all of the required documents, and customs
authorities manage to examine their eligibility for registration of customs declarations,
including:

a) Examination of accuracy and legality of stated information and documents included in

the customs documentation;

b) Examination of compliance with the administration regime and policy, and tax policy
aimed at exports or imports;

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c) Examination of application of measures to impose the temporary suspension of customs
clearance. The Director of Customs Sub-departments where customs declarations are
received and handled shall refer to customs documentation and physical verification in
order to make a decision to deal with customs formalities.

In case customs declarants are eligible for registration of customs declarations, customs
authorities shall grant registration numbers and decide issues relating to regulated customs
examination.

In case customs declarants are not eligible for registration of customs declarations, customs
authorities shall immediately send a written notification of such ineligibility to customs
declarants.

6. Goods to be exported or imported within the effective time of customs declarations shall
be governed by policies on management of exports or imports, and policies on taxes levied
on exports or imports that come into effect at the time when customs declarations are
registered.

7. Uncompleted customs declarations required for commodities exported or imported by

priority-given enterprises shall consist of such information as name and address of the
exporter or importer; preliminary information about commodity description, quantity and
value; port of entry; transportation schedule.

Commodities on which duties are imposed shall be subject to the tax policy that takes effect
at the registration time and shall be required to enclose uncompleted customs declarations
for submission.

(3) Submitting documents

Documents required for customs clearance of import/export cargo

(In accordance with Art. 16- Circular No. 38/2015/TT-BTC on customs procedures,
customs supervision and inspection, export tax, import tax, and tax administration applied
to exported and imported goods)

 A customs dossier of exported goods consists of:

a) A declaration sheet of exported goods (containing the information mentioned in

Appendix II enclosed with Circular No. 38)

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In case of paper-based customs declaration, the declarant shall make and submit 02 original
copies of the declaration of exported goods using form No. HQ/2015/XK (in Appendix IV
enclosed with Circular No. 38);

b) Export license (if required): 01 original copy if it is one time export, or 01 photocopy
enclosed with a back minus monitoring sheet if it is partial shipments;

c) A notice of exemption from inspection or inspection result issued by a specialized

agency as prescribed by law: 01 original copy.

If the single-window system is applied to the documents mentioned in point b and point,
the regulatory body shall send the export license, the notice of inspection result or
exemption from inspection by a specialized agency in the digital form to the National
Single-window Information. The declarant is not required to submit such documents when
following customs procedures.

 A customs dossier of imported goods consists of:

a) A declaration sheet of imported goods (containing the information mentioned in

Appendix II enclosed with Circular No. 38).

In case of paper-based customs declaration, the declarant shall make and submit 02 original
copies of the declaration of imported goods using form No. HQ/2015/NK (in Appendix IV
enclosed with Circular No. 38);

b) Commercial invoices (if the buyer has to pay the seller): 01 photocopy.

If the goods owner buys goods from a seller in Vietnam and is instructed by the seller to
receive goods overseas, the customs authority shall accept the invoice issued by the seller
in Vietnam to the goods owner.

The declarant is not required to submit the commercial invoice in the following cases:

b.1) The declarant is a preferred enterprise;

b.2) Goods are imported to execute a processing contract with a foreign trader. In this case,
the declarant shall declare the provisional price in box "customs value” on the customs
declaration sheet;

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b.3) Goods are imported without invoices and the buyer is not required to pay the seller. In
this case, the declarant shall declare the customs value as instructed by the Ministry of
Finance.

c) The bill of lading or equivalent transport documents if goods are transported by sea, air,
railroad, or multi-modal transport as prescribed by law (unless goods are imported through
a land checkpoint, goods traded between a free trade zone and the domestic market,
imported goods carried in the luggage upon entry): 01 photocopy;

With regard to goods serving petroleum exploration and extraction transported on service
ships (not commercial ships), the cargo manifest shall be submitted instead of the bill of
lading;

d) Import license (if required); import license under tariff-rate quota: 01 original copy if it
is one time export, or 01 photocopy enclosed with a back minus monitoring sheet if it is
partial shipments;

dd) A notice of exemption from inspection or inspection result issued by a specialized

authorized authority as prescribed by law: 01 original.

If the national single-window system is applied to the documents mentioned in point d and
point dd, the specialized authorized authority shall send the import license, the notice of
inspection result or exemption from inspection in the digital form to the national single-
window information portal. The declarant is not required to submit such documents when
following customs procedures.

e) Value declaration: the declarant shall make the value declaration using the set form and
send it to the System in digital form or submit 02 original copies to the customs authority
(in case of paper-based customs declaration). The cases in which the value declaration is
required and the value declaration form are provided in the Circular of the Ministry of
Finance on customs valuation of exported goods and imported goods;

g) Documents certifying origins of goods (Certificate of Origin or Self-certification of

origin): 01 original or digital forms in the following cases:

g.1) Goods originate in a country or group of countries that enter agreements in application
of preferential tariff with Vietnam under Vietnam’s law and international agreements to
which Vietnam is a signatory, if the importer wishes to apply such preferential treatment;
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g.2) Goods that threaten social safety, public health, or environmental safety and need
controlling as announced by Vietnam or international organizations;

g.3) Goods are imported from the countries that are apply anti-dumping taxes,
countervailing tax, anti-discrimination tax, safeguard tax, and taxes applied within tariff-
rate quota;

g.4) Imported goods must comply with regulations on import management of Vietnam’s
law or the International Agreements to which Vietnam is a signatory.

In case an agreement on application of preferential tariff with Vietnam or an international

agreement to which Vietnam is a signatory require the submission of the C/O in the digital
form or documents certifying goods origins of the manufacturer/exporter/importer, the
customs authority shall accept such documents.

3. Customs dossiers of exported/imported goods eligible for exemption of export

tax/import tax:

a) If goods are exempted from export tax, apart from the documents mentioned above, the
declarant shall submit 01 photocopy and present the original of the list of tax-free goods
together with the back minus monitoring sheet registered with the customs authority (if
registration is required).

If the list of tax-free goods must be registered on the system, the declarant is not required
to submit the list and the back minus monitoring sheet.

b) If goods are exempted from import tax as prescribed in Article 103 of Circular
38/2015/TT-BTC, the declarant shall submit or present the following documents apart from
the documents mentioned above:

b.1) The list of tax-free goods enclosed with the back minus monitoring sheet registered
with the customs authority: submit 01 photocopy and present the original for comparison.

If the list of tax-free imported goods is registered on the system, the declarant is not
required to submit the list and the back minus monitoring sheet.

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b.2) Documents about transfer of goods eligible for tax exemption in case the goods of an
entity eligible for tax exemption are transferred to another entity who is also eligible for
tax exemption: submit 01 photocopy.

4. Customs dossiers of exported/imported goods that are not subject to tax:

If exported/imported goods are not subject to tax, the declarant shall submit or present the
following documents apart from the documents mentioned above:

a) A declaration of grant aid of a finance authority as prescribed by the Ministry of Finance

(if grant aid is goods that are not subject to import tax, special excise tax, and VAT): submit
01 original.

If the investor or main contractor of an ODA project with a grant element exports, imports
goods that are not subject to export tax, import tax, VAT, special excise tax as prescribed
by regulations of law on taxation, it is required to have the goods supply contract which
specifies the successful bids or prices for goods supply exclusive of import tax, VAT, and
special excise tax (if the successful bidder is an importer); or the import entrustment
contract which specifies the prices for goods supply exclusive of import tax, VAT, special
excise tax (in case of import entrustment): submit 01 photocopy;

b) The sale contract or goods supply contract which specifies the successful bids or prices
for goods supply exclusive of import tax, special excise tax, VAT on goods that are not
subject to import tax, special excise tax, and VAT (if any): submit 01 photocopy and
present the original upon the first import at the Sub-department of Customs where import
procedures are followed for the purpose of comparison;

c) The contract to sell goods to export-processing enterprises (EPEs) according to the

bidding result or the goods supply contract which specifies the successful bids or prices for
goods supply exclusive of import tax, special excise tax, VAT on goods that are not subject
to import tax, special excise tax, and VAT (if any) imported by contractors to serve the
construction of workshops and office buildings of the EPEs;

d) With regard to goods not subject to VAT being machinery, equipment, supplies that
cannot be manufactured in Vietnam and need to be imported to serve scientific research,
technological development; machinery, equipment, spare parts, specialized means of
transport, and supplies that cannot be manufactured in Vietnam and need to be imported to

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serve petroleum exploration and development; airplanes, oil rigs, vessels that cannot be
manufactured in Vietnam and need to be imported as fixed assets of enterprises or leased
from foreign parties to use for manufacturing, trading, or for lease, the following
documents must be provided:

d.1) The contract to sell goods to enterprises according to the bidding result or the goods
supply contract or service contract (specifying that the amount payable are exclusive of
VAT) if goods not subject to VAT are imported by the successful bidder, selected
contractor (through direct contracting) or service provider: submit 01 photocopy, present
the original upon the first import at the Sub-department of Customs where import
procedures are followed for the purpose of comparison;

d.2) The import entrustment contract which specifies that the prices under the entrustment
contract are exclusive of VAT (in case of import entrustment): submit 01 photocopy;

d.3) Documents issued by competent authorities to assign various organizations to execute

programs, projects, scientific researches, and technological development, or science and
technology contracts: submit 01 original.

d.4) Contracts with foreign parties for lease of airplanes, oil rigs, vessels that cannot be
manufactured in Vietnam and are used for manufacturing, trading, or for lease: submit 01
photocopy.

dd) The certification that goods are imported to directly serve national defense by the
Ministry of National Defense or security purposes by the Ministry of Public Security (if
goods are weapons and equipment directly serving national defense and security and not
subject to VAT): submit 01 original.

5. In order to apply 5% VAT tax to equipment and instruments serving teaching, research,
and scientific experiments, the declarant must submit the contract to sell goods to schools,
research institutes, or the goods supply contract or service contract: submit 01 photocopy,
present the original upon the first import at the Sub-department of Customs where import
procedures are followed for comparison purpose.

(4) Verifying the documents

(In accordance with Art. 32 – Customs Law 2014 and Art. 27 – Decree 08/2015/NĐ-CP)

19
When conducting the verification of customs documents, customs authorities shall
compare the accuracy and adequacy between the customs declaration statements and their
documentary evidence in customs documents, inspect the compliance with policies on
goods management and taxes on imported and exported goods and other corresponding
regulations of law.

The verification of customs documents shall be conducted through an e-customs data

processing system or directly by customs officials.

In the course of scrutiny conducted by customs officers, if the information provided in

customs declarations and the one provided in relevant documents as part of the customs
documentation are inaccurate, insufficient and incompatible, or if there are signs of
infringement upon policies on management of commodities, policies on taxes levied on
exports or imports as well as other relevant laws, the Director of the Customs Sub-
department where customs declarations are received or registered shall consider and make
a decision on physical verification of commodities.

In case examination of customs documentation is conducted by customs officers, the

Director of the Customs Sub-department shall take into consideration the request made by
customs declarants, and make a decision on extending the deadline for submission of
several original documents along with customs declarations within a period of under 30
days as from the date on which customs declarations are registered.

Time limit for customs authorities for the verification of dossiers

(In accordance with Article 23.1, 23.2a of the Customs Law 2014)

- Customs authorities shall receive, register and verify customs documents right after
customs declarants submit such dossiers.

- After customs declarants satisfy all requirements for carrying out customs formalities, the
time limit for customs officials to complete the verify dossiers is within 2 working hours
after customs authorities receive complete customs documents;

(5) Sending goods for physical verification

(6) Conducting physical verification of commodities

20
(In accordance with Art.33 – Customs Law 2014)

1. The following goods are exempted from physical inspection:

a/ Goods used for urgent demands;

b/ Goods exclusively used for national defense and security purposes;

c/ Goods used for other special cases as decided by the Prime Minister.

2. If there is any violation is detected in goods as prescribed in clause 1 above, such goods
shall be physically inspected.

3. For goods other than those as prescribed in clause 1 above, physical inspection shall be
conducted based on the application of risk management.

4. Goods which are live animals or plants, hard to be preserved or other special goods shall
be prioritized for inspection.

5. Physical inspection of goods may be conducted by customs officials manually or with

the aid of machines, technical equipment or by other professional measures.

The physical inspection of goods shall be conducted in the presence of customs declarants
or their legal representatives after customs declarations are registered and goods are
transported to places of inspection, except the cases of physical inspection of goods in the
absence of customs declarants in the following cases: For security protection; For hygiene
and environmental protection; Upon detection of law violation; The customs declarants
have not conducted customs formalities at the border checkpoint although the imported
goods arrive over 30 days; Other cases prescribed in regulations of law (in accordance with
the article 34 of Customs Law 2014).

6. The physical inspection of goods at places for joint inspection by Vietnamese customs
authorities and customs authorities of neighboring countries shall be conducted under
agreements between Vietnam and these countries.

7. The Minister of Finance shall provide guidance on the physical inspection of goods.

Physical verification

21
(In accordance with Art.29 – Decree 08/2015/ND-CP)

1. Physical verification activities shall include checking of commodity name, code,

quantity, weight, mass, type, quality, origin and customs value. Checking of actual physical
attributes of commodities in comparison with the information about commodities provided
in customs documentation.

2. Authority to make a decision on forms and levels of physical verification

In respect of exports or imports required to undergo physical verification, the Director of

Customs Sub-department where customs documentation is received and handled shall refer
to regulations as follows a) Approve the information declared on the customs declaration
system and permit customs clearance; b) Examine related documents included in the
customs documentation of customs declarations, or any other document stored on the
single-window portal in order to decide customs clearance or conduct physical verification
of commodities before permitting customs clearance, and commodity information in order
to decide forms and levels of physical verification.

In case any violation against the customs legislation is detected, the Director of Customs
Sub-department where customs documentation is received and handled, and the Director
of Customs Sub-department where commodities are preserved or the Head of the Customs
Authority who is in charge of manage concentrated commodity inspection places shall
make a decision on any change to the level or form of physical verification and bear their
responsibility for their decision.

3. Level of physical verification: Physical verification shall be conducted till the grounds
for determining the legality and conformity of all of the shipment with information about
such shipment provided in the customs documentation have been sufficient.

Customs officers shall conduct physical verification in accordance with the decision made
by the Director of Customs Sub-department and use commodity information as the basis
for such verification; take full responsibility for the result of physical verification that they
carry out.

4. Forms of the physical verification:

a) Customs officers’ direct checking;

22
b) Checking to be carried out by means of technical equipment and other professional
approaches;

c) Checking to be carried out with reference to the result of analysis and assessment of
commodities.

In the course of physical verification, when any change to the form of physical verification
is required, the Director of the Customs Sub-department where such verification take
places shall make his/her decision. The result of physical verification to be carried out by
means of electronic scanning and weighing equipment as well as other technical devices
shall serve as the basis for customs authorities' making decision on the customs clearance
of commodities.

5. In case, upon using equipment and devices available at Customs Sub-departments or

customs examination areas, customs officers who are charged with the physical verification
task fail to verify the provided information of customs declarants about commodity name,
code, type, quality, quantity, mass and weight, professional and specialized affiliates of
customs authorities shall be advised to carry out classification or assessment activities with
the aim of determining such information.

In case customs authorities are incapable of verifying the information provided by customs
declarants, customs authorities shall request the assessment carried out by assessment
service organizations in accordance with laws, and then use the result of such assessment
as the basis for customs clearance.

Time limit for completing the physical verification

(In accordance with Article 23.2b of the Customs Law 2014).

Complete the physical inspection of goods within 8 working hours after customs declarants
fully produce goods to customs authorities. For goods subject to specialized inspection of
quality, health, culture, animal quarantine, plant quarantine or food safety in accordance
with corresponding regulations of law, the time limit for completion of physical inspection
of goods shall be determined from the day on which specialized inspection results are given
as prescribed.

23
For lots of goods in large quantities and of many types or in case the inspection is
complicated, heads of customs authorities where customs formalities are carried out shall
decide to defer the time limit for physical inspection of goods for within 2 days;

Customs authorities shall carry out customs formalities for goods on public holidays and
weekends and overtime hours in order to ensure timely loading and unloading of imported
and exported goods, exit and entry of passengers and vehicle or at the request of customs
declarants and in conformity with practical conditions of customs operating locations.

(7) Making duty payment and other charges, fees

(8) Collecting duty, charges, fees

Related to pay export import taxes, based on Law of tax administration 2019, Law of export
import duties 2016.

Time, exchange rate for calculating taxes on exported or imported goods

1. The time for calculating export tax, import tax, safeguard tax, anti-dumping tax, and
countervailing tax (within the effective period of the Decision of the Minister of Industry
and Trade) is the registration date of the customs declaration. Export tax, import tax shall
be calculated according to the tax rates, dutiable values, and exchange rates at that time.

If the taxpayer declares, calculates tax on the paper customs declaration before the
registration date with different exchange rate from the exchange rate applicable on the
registration date, the customs authority shall recalculate the tax payable according to the
exchange rate applicable on the registration date.

2. Exchange rates for tax calculation shall comply with Decree No. 08/2015/NĐ-CP.

a) The General Department of Customs shall cooperate with Vietcombank to update buying
rates in the form of wire transfer announced by the headquarter at the end of Thursdays (or
the day before if Thursday is a public holiday), announce the rate on the website of the
General Department of Customs, and update it on the System in order to apply to customs
declarations registered in the succeeding weeks;

b) With regard to the foreign currencies that are not announced by the headquarter of
Vietcombank, the General Department of Customs shall update the exchange rates

24
announced by the State bank of Vietnam posted on its website, announce it on the website
of the General Department of Customs, and update it on the System in order to determine
exchange rates for calculating taxes on exported or imported goods.

Basis and method for tax calculation at certain rates

1. Basis for tax calculation:

a) Quantity of each article of export/imported goods written on the customs declaration;

b) Customs values

c) Tax rates

d) if goods are imported into Vietnam beyond the limits, there are subsidies, dumping, or
discrimination against goods exported by Vietnam, countervailing tax, anti-dumping tax,
anti-discrimination tax, and safeguard tax shall be imposed.

2. Method for tax calculation:

a) According practical quantity of each article on the customs declaration, their dutiable
values, and tax rates, the amount of export tax, import tax payable shall be calculated as
follows:

Export tax, Quantity of each article Dutiable value Tax rate

import tax = written on the customs x of a unit of x on each
payable declaration goods article

Tax payment currencies

1. Taxes on exported or imported goods shall be paid in VND. If taxes are paid in foreign
currencies, only convertible foreign currencies are permitted. Exchange rates between
foreign currencies and VND.

2. If taxes have to be paid in foreign currencies but official prices are not available when
the declaration is registered:

a) The taxpayer may pay a provisional amount of tax in a foreign currency before customs
clearance or release of goods. After official prices are available and the taxpayer is paid in

25
foreign currency by the foreign client, the difference (if any) shall be paid in foreign
currency; or

b) The taxpayer may pay a provisional amount of tax in VND before customs clearance or
release of goods. After official prices are available and the taxpayer is paid in foreign
currency by the foreign client, the difference (if any) shall be paid in foreign currency; or
Exchange rates between foreign currencies and VND.

Locations and methods of tax payment

(In accordance with Art. 44 – Circular 38/2015)

Locations and methods of tax payment shall comply with Circular No. 184/2015/TT-BTC
of the Ministry of Finance on some procedures for declaration, payment, collection of
taxes, late payment interest, fines, and other receivables on exported or imported goods.

Payment and collection of customs fees

(In accordance with Art. 45 – Circular 38/2015)

1. Payers, rates, collection methods, management and use of customs fees shall comply
with Circular No. 274/2016/TT-BTC.

2. Payment method:

The declarant shall pay customs fees by monthly wire transfer or in cash. The Director of
the General Department of Customs shall organize the collection of electronic customs fees
via commercial banks or organizations authorized to collect by customs authorities
(hereinafter referred to as “authorized collectors”).

3. Payment locations:

Payers of customs fees shall transfer or pay money at State Treasuries, credit institutions,
authorized collectors, or customs authorities.

4. Procedures for payment:

a) If customs fees are paid monthly:

26
a.1) Within the first 10 days of the next month, the declarant shall fully pay the customs
fees of the previous month to the account of the customs authority where the customs
declaration is registered. The accounting system of the customs authority shall
automatically deduct the paid amount from the outstanding amount in chronological order
(first registered, first deducted);

a.2) The customs authority where the customs declaration is registered shall compare the
list of customs declarations that incur customs fees, record the receivable, paid, and
outstanding customs fees according to applicable regulations;

a.3) If a declarant pays customs fees via an authorized collector, the customs authority shall
provide the lists of declarations that incur customs fees of such declarant for the authorized
collector via the customs electronic payment portal on the 5th of every month;

a.4) According to the list sent by the customs authority, the authorized collector shall
collect customs fees and transfer it to the deposit account of the customs authority at a State
Treasury;

a.5) On the 10th of every month, the authorized collector shall make and submit a statement
of the amounts of receivable, paid, and outstanding customs fees of every declarant to the
customs authority.

b) Any declarant that does not pay customs fees monthly or does not regularly follow
customs procedures at a Sub-department of Customs shall pay customs fee every time it is
incurred according to the notice of customs fees on the system;

c) If a declarant pays customs fees in cash, the collecting customs official shall write a
receipt and record the collected amount as prescribed.

5. The customs authority shall not enforce payment if declarant has outstanding customs
fees. The declarant has the responsibility to fully pay customs fees by the deadline.

6. Management, monitoring of customs fees (if any) on the Concentrated Accounting

System:

a) When receiving the statement from the authorized collector, the Sub-department of
Customs where customs procedures are followed must carefully check the amounts of
customs fees collected and transferred to its deposit account at a State Treasury, compare
27
them with the practical payment confirmed by the State Treasury. In case of any difference
between the statement sent by the authorized collector and the amount confirmed by the
State Treasury, a record must be made to determine the reasons and accountability;

b) According to the amount of customs fees collected and transferred to the customs
authority by the authorized collector, receipts of payment to state budget, and confirmation
of payment made by the State Treasury, the customs authority shall record the amount of
customs fees collected and receivable in order to take appropriate actions.

7. Procedures, responsibilities, and funding for authorizing customs fee collection:

a) The authorization of customs fee collection shall be made into a contract (form No.
07/UNTH/TXNK Appendix VI enclosed Circular 38/2015) between the Director of the
General Department of Customs and the head of the organization authorized to collect
customs fees.

b) Responsibilities of the authorized collector:

b.1) Develop an information technology system connected with the customs electronic
payment portal to execute the concluded collection authorization contract.

The authorized collector must not authorize any third party to execute the collection
authorization contract with the customs authority;

b.2) Receive information about collection of customs fees from customs authorities; fully,
promptly collect and transfer customs fees to the deposit account of the customs authority
at a State Treasury. The amount of customs fees transferred to the customs authority’s
deposit account is the total collected amount on the receipts for customs fee collection:

b.3) Issue receipts for customs fee collection to the fee payer upon collection.

Make a list of receipts by payer and an order of payment to State Treasury;

b.4) Not later than the 10th of the next month, the authorized collector must make and send
a report on the amount collected and transferred in the previous month (form No
08/BCT/TXNK in Appendix VI enclosed Circular 38/2015) to the customs authority. The
report must reflect the amount receivable, collected, outstanding amount, reasons, and
proposed solutions;

28
b.5) Make and submit statements of collected customs fees to the customs authority.

c) Responsibilities of the authorizing customs authority:

c.1) Announce the authorized collector;

c.2) Issue notices of customs fees payable in the month requesting the authorized collector
to collect the fees by the 5th of the next month via customs electronic payment portal;

c.3) Instruct the authorized collector to collect customs fees as prescribed;

c.4) Provide funding for collection of customs fees for the authorized collector under the
concluded contract;

c.5) Inspect the collection and transfer of customs fees by the authorized collector.

d) Responsibilities of the State Treasury:

Send receipts for the amount collected and transferred by the authorized collector to the
customs authority for monitoring;

dd) Funding for collection authorization

The funding is extracted from the amount of customs fees collected by the customs
authority. The amount paid to the authorized collector must comply with the agreement
between the General Department of Customs and the authorized collector and suit the
practical situation.

Funding for collection authorization must be provided for the right consignees by wire
transfer to the authorized collector’s account at a credit institution or State Treasury. The
funding must not be provided in cash. The customs authority shall provide funding in full
for the authorized collector on the basis of the customs fees transferred to the customs
authority’s deposit account at a State Treasury.

8. Penalties for violations against regulations on customs fees:

Every act of the authorized collector that delays the transfer of collected customs fees to
the customs authority’s deposit account at a State Treasury shall be considered

29
appropriation of customs fees, and the authorized collector shall be dealt with according to
applicable regulations of law.

(9) Clearing the customs

(10) Deciding grant of customs clearance

(In accordance with Art. 37 Customs Law 2014)

1. Goods shall be cleared from customs formalities after such formalities are completed.

2. In case customs declarants have completed customs formalities, but have not paid or
fully paid payable tax amounts within the regulated time limit, their goods may be cleared
from customs formalities when they have such payable tax amounts guaranteed by a credit
institution or enjoy a tax payment time limit in accordance with the tax law.

3. In case goods owners are fined by customs authorities or competent authorized authority
for their customs-related administrative violations and their goods are permitted for export
or import, such goods may be cleared from customs formalities if the goods owners have
paid the fines or have their payable fines guaranteed by a credit institution for
implementing the fining decisions.

4. For goods subject to inspection, analysis or assessment to determine whether or not they
fully satisfy the export or import requirements, customs authorities shall permit customs
clearance only after the goods are determined that to be eligible for export or import on the
basis of inspection, analysis or assessment conclusions or inspection exemption notices of
specialized inspection agencies in accordance with law.

According to Art. 32.2 – Decree 08/2015: In respect of exports or imports that have been
customs cleared but have not been moved away from the custom area, if customs
authorities detect any sign of violation, the Director of the Customs Sub-department shall
make a decision to check customs documentation, physical verification or impose proper
penalties for such violation in accordance with laws as well as shall have to pay any cost
incurred when detecting none of violations.

❖ Post Clearance Audit

(In Accordance with Article 77, 78, 79, 80, 81, 82 Customs Law 2014)

30
Post-customs clearance inspection

1. Post-customs clearance inspection means inspection carried out by customs authorities

of customs documents, accounting books and documents and goods-related documents and
data; and a physical inspection of goods where necessary and requirements which are
required to meet after such goods are granted clearance.

Post-customs clearance inspection aims to assess the accuracy and truthfulness of

documents and dossiers that are declared, submitted and produced by customs declarants
to customs authorities; and observance by customs declarants of the law on customs and
other laws related to the management of imported and exported goods.

2. Post-customs clearance inspection shall be carried out at customs authorities or premises

of customs declarants.

Premises of customs declarants include their head offices, branches, stores and goods
production and preservation establishments.

3. The time limit for post-customs clearance inspection is 5 years from the day on which
of customs declaration registration.

Cases of post-customs clearance inspection

1. Inspection in case there are violation of the law on customs and other laws relevant to
the management of imported and exported goods.

2. In cases other than those as prescribed in 1, post-customs clearance inspection shall be

carried out based on the application of risk management.

3. Inspection of law observance by customs declarants.

Post-customs clearance inspection at customs authorities

1. Directors of Customs Departments or heads of Customs Sub-Departments shall issue

decisions on post-customs clearance inspection, request customs declarants to provide
commercial invoices, bills of lading, goods purchase and sale contracts, certificates of
origin of goods, payment documents, dossiers and technical documents of goods related to
dossiers under inspection and explain relevant contents.

31
The inspection duration is determined in the inspection decision provided that it is not more
than 5 working days.

2. A decision on post-customs clearance inspection must be sent to the customs declarant

within 3 working days from the day on which of it is signed and at least 5 working days
before the inspection is conducted.

The customs declarant shall explain and provide documents and documentary evidence
related to the dossier under inspection at the request of the customs authority.

In the course of inspection, the customs declarant may explain and additionally provide
customs document-related information and documents.

3. The handling of inspection results is regulated as follows:

a/ If provided information and documentary evidence and explained statements prove that
customs declaration contents are correct, the customs document is accepted;

b/ If nothing proves that customs declaration contents are correct or the customs declarant
fails to provide documents and documents and give explanations according to inspection
requirements, the customs authority shall decide on handling in accordance with the laws
on taxes and on handling of administrative violations.

4. Within 5 working days after an inspection is completed, the inspection decision issuer
shall sign and send the notice of inspection results to the customs declarant.

Post-customs clearance inspection at premises customs declarants

1. Competence to make a decision on post-customs clearance inspection:

a/ The General Director of Customs and Director of the Department for Post-Customs
Clearance Inspection shall make a decision on post-customs clearance inspection
nationwide;

b/ Directors of Customs Departments shall make a decision on post-customs clearance

inspection in localities under their management.

32
In case of inspection of enterprises which are not located in administrative divisions under
their management, Customs Departments shall report to the General Department of
Customs for consideration and assignment of other units to conduct inspection.

The inspection and assessment of law observance of customs declarants must comply with
annual post-customs clearance inspection plans promulgated by the General Director of
Customs.

2. Duration of post-customs clearance inspection:

a/ The duration of post-customs clearance inspection shall be determined in the inspection

decision provided that it is not more than 10 working days. The inspection duration is
determined from the day on which the inspection begins. In case the scope of inspection is
large and matters are complicated, the inspection decision issuer may grant an extension
of the inspection duration once for not more than 10 working days.

b/ The decision on post-customs clearance inspection must be sent to the customs declarant
within 3 working days from the day on which it is signed and within 5 working days before
the inspection is conducted, except the cases of there are violation of the law on customs
and other laws relevant to the management of imported and exported goods

3. Order and formalities for post-customs clearance inspection:

a/ Announce the post-customs clearance, inspection decision before the inspection is

conducted;

b/ Compare declared statements with accounting books and documents, financial

statements, related documents and actual requirements of imported and exported goods
within the scope and content of the post-customs clearance inspection decision;

c/ Make a written record of post-customs clearance inspection within 5 working days after
the inspection is concluded;

d/ Within 15 working days after the inspection is concluded, the inspection decision issuer
shall sign the inspection conclusion and send it to the customs declarant. In case the
inspection conclusion requires expert opinions of a competent agency, the time limit for
signing the inspection conclusions is determined from the day on which the competent

33
agency gives its opinions. Competent professional agencies shall give their opinions within
30 days from the date of receiving requests of customs authorities;

e/ Handling according to the competence of customs officials or transferring the case to a

competent authority for handling according to inspection results.

4. If customs declarants fail to abide by inspection decisions, explain and provide

documents and documents within the prescribed time limit to customs authorities, customs
authorities shall base themselves on collected and verified documents and materials to
make a decision on handling in accordance with the laws on taxes and handling of
administrative violations or conduct specialized inspection in accordance with law.

Tasks and entitlements of customs officials in post-customs clearance inspection at

premises customs declarants

1. The General Director of Customs, the Director of the Department for Post-Customs
Clearance Inspection and Directors of Customs Departments have the following tasks and
entitlements:

a/ Issue inspection decisions and set up inspection teams;

b/ Extend the inspection duration where necessary;

c/ Issue inspection conclusions; handle inspection results; make a decision on handling in

accordance with the laws on taxation and handling of administrative violations or propose
competent persons to make a decision on handling in accordance with law;

d/ Settle complaints and denunciations in accordance with law.

2. Heads of inspection teams have the following tasks and entitlements:

a/ Organize and direct their team members to conduct inspection with contents, subjects
and within time limits in inspection decisions;

b/ Request customs declarants to provide information, documents and written explanations

about issues related to inspection contents, produce goods for inspection when necessary
and requirements permit;

34
c/ Make written records of, and report to competent authorities for handling on, custom
declarants’ acts of failing to abide by, obstructing or delaying the implementation of
inspection decisions;

d/ Temporarily seize and seal documents and material evidence in case customs declarants
show signs of dispersal and destruction of documents and material evidence related to law
violations;

dd/ Make and sign written records of inspection;

e/ Report on inspection results to inspection decision issuers and take responsibility for the
accuracy, truthfulness and objectiveness of their reports.

3. Inspection team members have the following tasks and entitlements:

a/ Perform tasks assigned by inspection team heads;

b/ Report on results of performance of their assigned tasks to inspection team heads; to be

held responsible before law and inspection team heads for the accuracy, truthfulness and
objectiveness of their reports;

c/ Make and sign written records of inspection as assigned by inspection team heads.

Rights and obligations of customs declarants in post-customs clearance inspection

1. Exercise the rights and fulfill the obligations.

2. Promptly, fully and accurately provide documents as required and take responsibility for
the accuracy and truthfulness of such documents.

3. Refuse to provide information and documents irrelevant to inspection contents or

information and documents involved in state secrets, unless otherwise provided by law.

4. Receive written inspection conclusions and request explanations about inspection

conclusions; to reserve their opinions in written inspection conclusions.

5. Request inspection team heads to produce inspection decisions, customs identity cards
in case of post-customs clearance inspection at head premises of customs declarants.

35
6. Comply with requests for post-customs clearance inspection and appoint competent
persons to work with customs authorities.

7. Explain related issues at the request of customs authorities.

8. Sign written records of inspection.

9. Abide by handling decisions of customs authorities and competent agencies.

Post Clearance Audit is also regulated in Circular 38/2015/TT-BTC as the following

articles:

Article 141. Collection of information and verification serving post-clearance inspection

Article 142. Post-clearance inspection at customs authorities

Article 143. Post-clearance inspection at the declarant’s premises

Article 144. Organizing a post-clearance inspection

Article 145. Responsibility to settle complaints about post-clearance inspection

4.2. CUSTOMS VALUATION

4.2.1. Definition
Customs valuation is the value of goods for the purpose of levying ad valorem duties of
customs.

When a consignment reaches or leaves a customs border of a country, it has to clear the
customs barrier, where the goods are assessed for their value and a suitable import/export
tariff is imposed. The customs valuation is essential to determine the correct amount of any
customs duty to be paid on imported/exported goods.

4.2.2. Legal bases

- WTO customs valuation agreement (The Agreement on Implementation of Article
VII of the GATT)
- Law on import tax and export tax 2016
- Law on Customs 2014 – Art.86

36
- Decree No. 08/2015/NĐ-CP on providing specific provisions and guidance on
enforcement of the customs law on customs procedures, examination, supervision and
control procedures – Art. 20, 21, 22
- Circular 38/2015/TT-BTC on customs procedures, customs supervision and
inspection, export tax, import tax, and tax administration applied to exported and imported
goods – Art.25
- Circular 39/2015/TT-BTC on customs value of imported goods and exported goods
4.2.3. Rights and obligations of customs declarants; responsibilities of customs
authorities
(In accordance with Art. 3 – Circular 39/2015/TT-BTC)

1.) Customs declarants shall declare and carry out customs valuation themselves according
to the rule and methods for customs valuation prescribed in the Law on Customs No.
54/2014/QH13 dated June 23, 2014, the Decree No. 08/2015/NĐ-CP dated January 21,
2015 by the Government and Circular 39/2015/TT-BTC; take legal responsibility for the
accuracy and honesty of the declaration and the result of customs valuation; submit or
present the documents at the request of the customs authority; carry out supervision and
inspection of customs procedures, import/export tax and tax administration for
imported/exported goods; take advices to resolve the doubts of the customs authority
relating to declared value; request the customs authority to make a written notification of
dutiable values, basic and methods for customs valuation in case the customs value is
determined by the customs authority.

2.) When inspecting the declaration and customs valuation of exported goods and imported
goods of a customs declarant, the customs authority may request the declarant to submit or
present the documents relating to the methods of determining declared value to prove the
accuracy and honesty of such declared value;

3.) The customs authority shall determine the customs value according to the rule and
methods for customs valuation, value database and relevant documents in the following
cases:

a) The customs declarant could not determine the customs value by using all methods in
Circular 39/2015/TT-BTC;

b) The following cases: (specified in Article 17.2 & 17.5 of Circular 39/2015/TT-BTC)

37
- Imported goods that were determined the non-taxable goods; goods eligible for tax
exemption or consideration for tax exemption are used in Vietnam and received change in
uses

- With regard to goods that are imported without sale contract or commercial invoice,
customs value is the declared value. If there is evidence proving that the declared value is
unconformable, the customs authority shall determine the customs value according to the
rules and methods for customs valuation.

4.2.4. Methods for Customs Valuation

Rule and methods for customs valuation applicable to exported goods

(In accordance with Art. 4 – Circular 39/2015/TT-BTC)

1. Rule: The Customs value is the selling price of goods at exporting checkpoint exclusive
of international insurance cost (I), international freight cost (F) and determined according
to the methods as below.

2. Methods for customs valuation:

a) The selling price of goods at exporting checkpoint is determined according to the selling
price agreed in the sale contract or others that have the similar legal value to such contract,
commercial invoices and relevant documents about the exported goods.

b) If the customs value could not be determined according to the provisions of point (a),
the customs value is the value of identical/similar exported goods contained in the value
database at nearest time from the day on which the exporting declaration of the goods
receiving customs valuation is registered, converted into the selling price at exporting
checkpoint. If there are more than one customs values of identical or similar exported goods
is determined, the lowest one shall prevail.

Rule and methods for customs valuation applicable to imported goods

(In accordance with Art. 5 – Circular 39/2015/TT-BTC)

1. Rule: The Customs value is the buying price of goods at the first importing checkpoint,
determined according to the methods provided as below.

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2. Methods for customs valuation: The buying price at the first importing checkpoint is
determined by applying successively 6 methods for customs valuation until the customs
value can be determined. These six methods are as follows:

1) Transaction value
2) Transaction value of identical imported goods
3) Transaction value of similar imported goods
4) Deductible value
5) Computed value
6) Deductive logic
If the customs declarant submit a written application, the method based on deductible
value and the method based on computed value are interchangeable.

• Method 1: Transaction value

- Transaction value is the actual or future payment for imported goods after being
adjusted according to additions and deductions.
- The actual or future payment for imported goods is the total amount that the buyer
has paid (or is about to pay) directly or indirectly to the seller to purchase the imported
goods, including:

a) Buying price on the commercial invoice;

b) The additions and reductions

c) The amounts payable by the buyer but not included in the buying price on the
commercial invoice, including:

c.1) Advance, deposit for the production, trade, transport and insurance of goods.

c.2) Indirect payments to the seller (for example: amounts that the buyer pays to a third
party at the request of the seller; or amounts paid by offsetting debts).

- The transaction value will be applied if all of the following conditions are satisfied:

a) The buyer does not have the right to dispose of or use the goods after the importation
restricted, except for the following ones:

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a.1) The restrictions prescribed in Vietnam’s laws such as the regulations that imported
goods shall have Vietnamese labels, regulations that conditioned imported goods or
imported goods shall receive inspection before be granted customs clearance;

a.2) The restriction on places where goods may be sold after import;

a.3) Other restrictions that do not affect the value of goods. These restriction above are one
or multiple factors that is directly or indirectly related to the imported goods without
leading to the increase or decrease of the actual price paying for such goods

For example: A car seller requests a buyer not to sell or display an imported car before
such model is announced.

b) Price or the sale of goods does not depended on the conditions or the payment but the
fact that they can not help determine the value of goods subject to customs valuation.

For example: The seller fixes the selling price of imported goods provided that the buyer
will buy a certain quantity of other goods; The price of the imported goods depends on the
prices of other goods which will be sold by the importer to the exporter.

In case the trade or price of the goods is dependent on one or several conditions but the
buyer possesses objective and valid documents for the determination of the pecuniary
impact of such dependence, this condition shall still be regarded as being satisfied. Upon
the customs valuation, the money amount reduced due to the impact of such dependences
must be added to the transaction value.

c) After reselling, transferring or using the imported goods, except for the additions
specified in point (e) clause 2 Article 13 of this Circular 39/2015, the buyer is not required
to additionally pay any sum from the money collected from the disposal of the imported
goods;

d) The buyer and the seller have no special relationship; if any, such relationship does not
affect the transaction value.

• Method 2: Transaction value of identical imported goods:

- Applicable cases: If the customs value could not be determined based on the
transaction value, the customs value of the imported goods shall be determined according
to the transaction value of the identical imported goods.
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- The customs valuation according to the transaction value of identical imported
goods is carried out according to the transaction value of similar imported goods.
• Method 3: Transaction value of similar imported goods
- Applicable cases: If the customs value could not be determined by using the method
1 and 2, the customs value of the imported goods shall be determined based on the
transaction value applicable to the similar imported goods, in which the similar imported
goods shall receive the approval of the customs authority for customs valuation according
to the transaction value and have the same trading condition and condition of time of
exportation as the ones of the imported goods receiving customs valuation as prescribed
below (*).
- In case there is not any similar imported goods with the same trading condition as
the one of the imported goods receiving customs valuation, a similar imported goods with
different trading condition may be chosen and shall be adjusted to the same trading
condition.

(*) Conditions for choosing similar imported goods:

a) Conditions of time of exportation:

Similar imported goods shall be exported to Vietnam on the same day or within 60 days
before or after the date of exportation of the goods receiving customs valuation.

b) Conditions of trading:

b.1) Conditions of commercial level and quantity:

b.1.1) Similar imported goods shall be at the same commercial level and in the same
quantity as the ones of the imported goods receiving customs valuation;

b.1.2) In case there is not any imported goods specified in point (b.1.1), a imported goods
with the same commercial level but different quantity may be chosen and the transaction
value of the similar imported goods shall be adjusted to having the same quantity as the
imported goods receiving customs valuation;

b.1.3) In case there is not any imported goods specified in points (b.1.1) and (b.1.2), a
imported goods with different commercial level but the same quantity may be choosen and

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the transaction value of the similar imported goods shall be adjusted to being at the same
commercial level as the imported goods receiving customs valuation;

b.1.3) In case there is not any imported goods specified in points (b.1.1), (b.1.2) and (b.1.3),
imported goods with different commercial level and quantity may be choosen and the
transaction value of the similar imported goods shall be adjusted to the same commercial
level and quantity as the ones of the imported goods receiving customs valuation;

b.2) Conditions of the distance and modes of transport and insurance:

The similar imported goods shall have or be adjusted to have the same distance and mode
of transport as the ones of the imported goods receiving customs valuation.

The significant difference in insurance cost shall be adjusted to the same insurance
condition as the one of the imported goods receiving customs valuation.

c) When applying the customs valuation based on the transaction value of the similar
imported goods, only if there is not any similar imported goods made by the same
manufacturer or a manufacturer and an authorized manufacturer, goods made by another
manufacturer with the same origin may be considered.

d) If multiple transaction values of similar imported goods are determined by using such
method, the lowest transaction value after adjusting to the same trading condition with the
goods receiving customs valuation shall be the customs value.

If during the customs procedures, the information for choosing identical/similar imported
goods to the imported goods receiving customs valuation is not sufficient, the customs
valuation prescribed in Articles 8 and 9 of Circular 39/2015 shall be skipped.

• Method 4: Deductible value

- Applicable cases: If the customs value could not be determined by using the above
methods, the customs value of the imported goods shall be determined by the deductible
value-based method according to the selling unit price of imported goods, identical
imported goods or similar imported goods on Vietnam’s inland market after deducting the
reasonable expenses and profits obtained from selling the imported goods.

• Method 5: Computed value

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- Applicable cases: If the customs value could not be determined by using
the transaction value-based above methods, the customs value of the imported goods shall
be determined according to the computed value. The computed value of imported goods
includes:
a) The direct expense for producing the imported goods: the cost price or value of raw
materials, expense for the manufacturing or other processing for producing the imported
goods.

b) General expenses and the profits from the sale of goods of the same class or category as
those of imported goods receiving valuation and made in the exporting country for selling
to Vietnam. The general profits and expenses shall be considered overall when determining
the computed value.

General expenses include all direct and indirect expenses for the manufacture and sale for
exportation of goods but not calculated according to the provisions of point (a).

c) The cost of transport, cost of insurance and the costs relating to the transport of imported
goods
• Method 6: Deductive logic

Applicable cases: If the customs value could not be determined by using the above
methods, the customs value of the imported goods shall be determined by the deductive
method according to the documents and data that is objective and available at the time of
customs valuation.

The customs value determined by the deductive method means the customs value
determined by applying successively and flexibly the methods for customs valuation
specified in method 1, 2, 3, 4, 5 until the customs value is determined.

4.3. CUSTOMS DUTIES

- Tax rates applicable to export goods shall be specified for each goods item in the
Export Tariff.
- Tax rates applicable to import goods include preferential tax rates, special
preferential tax rates and ordinary tax rates:

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a/ The preferential tax rates shall apply to import goods originating from countries, groups
of countries or territories, which apply the most favored nation treatment in their trade
relations with Vietnam;

b/ The special preferential tax rates shall apply to import goods originating from countries,
groups of countries or territories, which apply special preferences on import tax to
Vietnam;

c/ The ordinary tax rates shall apply to import goods originating from countries, groups of
countries or territories, which do not apply the most favored nation treatment or special
preferences on import tax to Vietnam. The ordinary tax rates shall equal 150% of the
preferential tax rates.

- If goods are imported from a free trade zone (including processed goods) into the
domestic market, the following conditions must be satisfied to apply special preferential
tax rates imposed by the Minister of Finance:
✓ The goods are on the list of special preferential import tariff schedule issued by the
Ministry of Finance;
✓ Goods have documents certifying goods origin as prescribed by the Ministry of
Industry and Trade.
- If MFN rate on an article on preferential import tariff schedule is lower than the
special preferential tax rate in the special preferential import tariff schedule, the MFN
rate shall apply.
- If goods are imported into Vietnam beyond the limits, there are subsidies,
dumping, or discrimination against goods exported by Vietnam, countervailing tax, anti-
dumping tax, anti-discrimination tax, and safeguard tax shall be imposed.
✓ Anti-dumping tax: In case of dumping, dumping, the central government can
impose anti-dumping duty equivalent to the margin of dumping
✓ Anti-subsidy tax: If a country is found to subsidize its goods for exporting to
Vietnam, the central government can impose countervailing duty equivalent to the amount
of such subsidy.
✓ Anti-discrimination tax: for goods imported into Vietnam from countries, groups of
countries or territories, which practice discrimination with regard to import tax or apply
other discriminatory measures, according to the provisions of law on the most favored
nation treatment and the national treatment in international trade.

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- Method for anti-dumping tax, anti-subsidy tax and anti-discrimination tax
calculation:

Practical quantity of each

Rate of anti-
anti-dumping tax, article written on the
dumping tax, anti-
anti-subsidy tax or customs declaration that Taxable
= x x subsidy tax or
anti- applies anti-dumping tax, price
anti-
discrimination tax anti-subsidy tax or anti-
discrimination tax
discrimination tax

Total amount of tax

payable on goods that Amount of anti-
Import tax payable
apply anti-dumping tax, = + dumping tax, anti-
calculated
anti-subsidy tax or anti- subsidy tax or anti-
discrimination tax discrimination tax
- Other taxes related to export and import taxes:
✓ Export goods: Some kinds of export goods are imposed VAT (value added tax)
✓ Import goods: Some kinds of import goods are imposed luxury tax/excise tax,
environmental protection tax and VAT
Excise tax payable price = import tax payable price + import tax
VAT payable price = import tax payable price + import tax + excise tax/
environmental protection tax (if any)

4.4. THE HARMONIZED SYSTEM

The Harmonized Commodity Description and Coding System, better known as the
Harmonized System or the HS, is one of the most successful instruments developed by the
World Customs Organization (WCO). There are 121 Contracting Parties to the HS
Conventions who use it as the basis for their Customs tariffs and international trade
statistics. HS is called the “language of international trade since it is also used in many
areas, such as trade policy, rules of origin, the monitoring of controlled goods, internal
taxation, transport tariffs, statistics, quota controls…

The importance of HS nomenclature can be highlighted by the fact that it has enabled the
harmonization of customs and trade procedures, and non-documentary trade data
interchange. The HS code employs the same numeric code on a worldwide basis for a given
commodity. This helps reduction in the international trading costs. Other benefits of this
system are as follows:

• Accuracy in the calculation of customs duty

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 • Fewer disputes between shippers and customs authorities

• Reduction in customs clearance time

• Reduction in transaction costs

• Easier trade negotiations

• Simplification of trade data analyses

• Better supply chain security

CONCEPT REVIEW QUESTIONS

1. Which steps are there in the customs procedure of export goods? Describe how the
exporter should do in each step?
2. Which steps are there in the customs procedure of import goods? Describe how the
importer should do in each step?
3. What is the importance and basis of valuation of import-export cargo?
4. How many methods are there in order to calculate the customs valuation of export goods
and import goods? Describe each method.
5. What are the different types of customs duties imposed in Vietnam? Discuss the reasons
for levying each type of duty.
6. Write short notes on Harmonized System.

EXERCISES

1. Company A in Vietnam imported consignment of toys from company S in France with

invoice price is USD 1,550. The actual price of this consignment that the company S sold
to Company A was USD 1,800. Because company S owed company A USD 250, S only
charged A USD 1,550.
Determine the customs value for this consignment.

2. Company B in Vietnam imported 800 MTS of wheat from company T in Thailand. The
selling price is USD 1,000/MT FOB port of Thailand. Company B was offered a discount
of 10 % as company B is a longtime customer of company T. Sea freight was 2 USD/MT.
Company B had to pay 0.5 % of the invoice value per 1MT of wheat as the insurance
premium.

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Before making customs procedures, goods were stored for 3 months in Vietnam and
Company B must pay 1USD/MT monthly warehouse rent to the warehouse‘s owners.

Determine the customs value for this consignment.

3. On Oct 15, 2015, Quoc An - an import export company in Phu Nhuan took deliver an
import consignment in Cat Lai port as follows:
- 200kg of chocolate, weight is over 2kg/box, made in Singapore, unit price is USD 10/
box, import tax rate is 5 %
- French wine, 200 bottles, unit price is 10 USD/bottle, import tax rate is 50 %
- 175cc motorcycles, new 100 %, made in Japanese. Quantity is 150 pcs. Unit price is
USD 2,380/unit, import tax rate is 75 %
- International commercial term is FOB port of Singapore, Incoterms® 2010
- International shipping freight and international insurance premiums is 5 % of the FOB
price.
- Exchange rate is 21,000 VND/USD
- VAT rate for all above goods is 10 %, excise tax rate for wine & motorcycles is 20 %
Requirements: Calculate import tax, excise tax (if any), and VAT for these transactions?

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