Exemption of duties on imports that cannot be domestically manufactured

Illustrative photo

Facing the question of the centre for helping children with disabilities on tax policies for braille printer and soundproof server cabinet, the General Department of Customs said according to clause 20 of 16 of Law on Import and Export Duties: “Imports directly serving education that cannot be domestically produced are exempt from import duties.”

Article 21 of Decree 134/2016 of the Government stipulates: “Imports exclusively serving education that cannot be domestically produced are exempt from import duties as prescribed in Clause 20 Article 16 of the Law on import and export duties; criteria for identification of goods that cannot be domestically manufactured are regulated by the Ministry of Planning and Investment; and criteria for identification of imports exclusively serving education are stipulated by the Ministry of Education and Training; and procedures for duty exemption are described in Article 31 of this decree.”

Circular 01/2018 of the Ministry of Planning and Investment shall describe the list of machinery, equipment, spare parts, specialised means of transport, material and semi-products that can be domestically produced.Clauses 1 and 3 of Article 40 of Decree 134/2016 also specifies responsibility for implementation: “The Ministry of Planning and Investment shall issue a list of goods that can be manufactured domestically and the Ministry of Education and Training will issue a list or establish criteria for identification of goods exclusively serving education.”

Clause 1 of Article 2 of Circular 11/2018 of the Ministry of Planning and Education provides for criteria to identify specialised goods serving education specifies that “Specialised goods serving education are those used for nourishing, caring, teaching and scientific research of teachers and learners in educational institutions including equipment, machinery, materials, tools, chemicals, utensils, toys, books , documents, training programmes, textbooks, magazines, technology lines and other goods.”

Circular 11/2018 specifies the criteria: "Import Duty Exemption for specialised goods serving education meeting the following criteria: Goods complies with the prevailing regulations of Vietnam law; goods with components and features of specific use, are only used in educational institutions; goods on the list of teaching and learning equipment in preschool and compulsory education issued by the Ministry of Education and Training or goods on the list of procurement and bidding under approved investment projects, scientific research tasks in educational institutions according to the current regulations of Vietnam law; goods ensure pedagogical characteristic, match with the training objectives and programmes at all levels, or ensure the objectives of scientific research tasks; or goods meets the development trend of advanced science and technology in the region and the world.”

According to the regulations, the imported braille printer and soundproof server cabinet of the Centre for helping children with disabilities are not on the list of machinery or equipment that can be domestically produced described in appendix 2 of Circular 01/2018 of the Ministry of Planning and Investment and meet criteria of specialised goods serving education specified in Circular 11/2018 of the Ministry of Education and Training, so they are exempt from import duties.

Regarding VAT, pursuant to Article 3 of Law on VAT, “Goods, services used for manufacturing, business and consumption in Vietnam must pay VAT except for goods described in Article 5 of this law.”

Meanwhile, Article 5 of the Law on VAT does not include braille printers and soundproof cabinets of printers, thus the centre for helping children with disabilities must declare and pay the VAT for imported braille printers and soundproof cabinets of printers.