Circular No. 60/2019/TT-BTC

CIRCULAR

AMENDING AND SUPPLEMENTING CERTAIN ARTICLES OF CIRCULAR NO. 39/2015/TT-BTC DATED MARCH 25, 2015 OF THE MINISTER OF FINANCE ON CUSTOMS VALUE OF EXPORTED AND IMPORTED GOODS

Pursuant to the Law on Customs dated June 23, 2014;

Pursuant to the Law on Intellectual Property No. 50/2005/QH11 dated November 29, 2005 and the Law No. 36/2009/QH12 dated June 19, 2009 amending and supplementing certain articles of the Law on Intellectual Property;

Pursuant to the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade (GATT 1994);

Pursuant to Decree No. 08/2015/ND-CP dated January 21, 2015 of the Government detailing and providing measures for implementation of the Law on Customs regarding customs procedures, customs inspection, supervision and control; Decree No. 59/2018/ND-CP dated April 20, 2018 amending and supplementing certain articles of Decree No. 08/2015/ND-CP dated January 21, 2015 of the Government detailing and providing measures for implementation of the Law on Customs regarding customs procedures, customs inspection, supervision and control;

Pursuant to Decree No. 87/2017/ND-CP dated July 26, 2017 of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the request of the Director General of the General Department of Customs,

The Minister of Finance hereby promulgates the Circular amending and supplementing certain articles of Circular No. 39/2015/TT-BTC dated March 25, 2015 of the Minister of Finance on customs value of exported and imported goods.

Article 1. Amendments and supplements to certain articles of Circular No. 39/2015/TT-BTC dated March 25, 2015 of the Minister of Finance on customs value of exported and imported goods:

1. Clause 5 is amended; Clauses 15, 16, 17, 18 and 19 are added to Article 2 as follows:

“5. Application software means data, programs or instructions expressed in the form of commands, codes, schemes or any other form (application software) which, when installed on an automatic data processing equipment, for example a desktop computer, laptop or tablet, enables such equipment to perform a task or achieve a particular result desired by the user of the application software. Audio, film or image products are not regarded as application software under this provision.

15. Paid means that, at the time of customs valuation, the buyer has fulfilled the payment obligation to the seller in cash or by a non-cash payment method or by offsetting debts between the two parties, as evidenced by actual payment documents between the buyer and the seller.

16. Payable means that, at the time of customs valuation, the buyer has not yet fulfilled the payment obligation to the seller in cash or by a non-cash payment method or by offsetting debts between the two parties, and there are no actual payment documents between the buyer and the seller.

17. Direct payment means that the buyer pays the seller in cash or by a non-cash payment method directly without going through a third party. A credit institution providing payment services between the buyer and the seller is not regarded as a third party.

18. Indirect payment means that the buyer pays the seller in cash or by a non-cash payment method through a third party at the request of the seller, or the buyer requests a third party to pay the seller on the buyer's behalf, or payment is made by offsetting debts between the two parties. A credit institution providing payment services between the buyer and the seller is not regarded as a third party.

19. Operating software (also known as system software) means data, programs or instructions expressed in the form of commands, codes, schemes or any other form (operating system) which, when integrated into machinery or equipment, acts as an intermediary for communication between the user and the machinery or equipment, and provides an environment enabling the user to operate and control the functions of the machinery or equipment.”

2. Article 3 is amended and supplemented as follows:

“Article 3. Rights and obligations of customs declarants; responsibilities and powers of customs authorities

1. The customs declarant shall themselves declare and determine the customs value according to the principles and methods of customs valuation prescribed in the Law on Customs No. 54/2014/QH13 dated June 23, 2014, Decree No. 08/2015/ND-CP dated January 21, 2015 of the Government detailing and providing measures for implementation of the Law on Customs regarding customs procedures, customs inspection, supervision and control, Decree No. 59/2018/ND-CP dated April 20, 2018 amending and supplementing certain Articles of Decree No. 08/2015/ND-CP, and this Circular; be legally responsible for the accuracy and truthfulness of the contents they declare and the customs value they determine; submit and present documents and materials at the request of the customs authority, with the submission of documents and materials complying with the Circular on customs procedures; customs inspection and supervision; export duty, import duty and tax administration of exported and imported goods, and this Circular; participate in consultation to discuss and clarify the customs authority's doubts concerning the customs value determined by the customs declarant; request the customs authority to notify in writing the customs value and the basis and method used to determine the customs value where the customs value is determined by the customs authority.

2. When examining the declaration and determination of customs value of exported or imported goods by the customs declarant, the customs authority is entitled to request the customs declarant to submit and present documents and materials related to the customs valuation method as prescribed in the Circular on customs procedures; customs inspection and supervision; export duty, import duty and tax administration of exported and imported goods, and this Circular, in order to prove the accuracy and truthfulness of the customs value declared and determined by the customs declarant.

3. The customs authority shall determine the customs value in the following cases:

a) The customs declarant is unable to determine the customs value by the methods prescribed in this Circular;

b) There are sufficient grounds and bases to reject the customs value declared and determined by the customs declarant;

c) There are grounds to determine that the customs value declared and determined by the customs declarant is inappropriate.

4. When determining the customs value, the customs authority must rely on the principles and the sequence of customs valuation methods, the customs value database, and the relevant documents and materials prescribed in this Circular, and issue a written notice of the customs value using Form No. 04/TGHQ in Appendix II enclosed with this Circular.

5. The customs authority shall examine and handle discounts within 05 working days from the date of receipt of a complete dossier as prescribed at Point d, Clause 2, Article 15 of this Circular.”

3. Article 4 is added as follows:

“Article 4. Principles and methods of customs valuation of exported goods

1. Principles:

a) The customs value is the selling price of the goods up to the border gate of exportation, exclusive of international insurance cost (I) and international freight cost (F), determined by applying in sequence the methods prescribed in Clauses 2, 3, 4 and 5 of this Article and stopping at the first method by which the customs value can be determined.

b) Customs valuation must be based on objective and quantifiable documents, materials and data.

c) Apportionment principles:

The costs mentioned in Clause 2 of this Article shall be calculated for each type of exported goods. Where a shipment consists of different types of goods but the costs have not been itemized for each type of goods, they shall be apportioned in one of the following ways:

c.1) By the selling price of each type of goods;

c.2) By the weight, volume or quantity of each type of goods.

2. Method of determining the selling price of goods up to the border gate of exportation

a) The selling price of goods up to the border gate of exportation is the selling price stated in the goods sale contract or commercial invoice plus the costs related to the exported goods up to the border gate of exportation consistent with the relevant documents, if such costs are not already included in the selling price of the goods.

b) Method of determination:

b.1) Where the exported goods are delivered at the border gate of exportation: the selling price of the goods up to the border gate of exportation is the selling price stated in the goods sale contract or commercial invoice plus the costs related to the exported goods up to the border gate of exportation consistent with the relevant documents, if such costs are not already included in the selling price of the goods.

b.2) Where the exported goods are not delivered at the border gate of exportation:

b.2.1) If the place of delivery is outside the territory of Vietnam, the selling price of the goods up to the border gate of exportation shall be determined on the basis of the selling price stated in the goods sale contract or commercial invoice, minus the international insurance cost (I, if any) and international freight cost (F) from the border gate of exportation to the place of delivery;

b.2.2) If the place of delivery is inside Vietnam, the selling price of the goods up to the border gate of exportation shall be determined on the basis of the selling price stated in the goods sale contract or commercial invoice, plus the following costs:

b.2.2.1) Inland freight costs and costs related to the transport of the exported goods from the place of delivery to the border gate of exportation, including costs of goods consolidation, warehouse and yard rental, and loading, unloading and stowing goods onto and off means of transport up to the border gate of exportation;

b.2.2.2) Insurance cost for the exported goods from the place of delivery to the border gate of exportation (if any);

b.2.2.3) Other costs related to the exported goods arising from the place of delivery to the border gate of exportation (if any).

c) Documents and materials for customs valuation by this method include (01 photocopy of each document):

c.1) The goods sale contract or commercial invoice;

c.2) Documents and materials related to the costs of the exported goods up to the border gate of exportation (if any);

c.3) Other documents and materials related to the selling price of the goods up to the border gate of exportation (if any).

3. Method based on the selling price of identical or similar exported goods in the customs value database

a) The customs value of exported goods under this method is determined from the selling price of identical or similar exported goods in the customs value database, after conversion to the selling price of the goods up to the border gate of exportation at the time nearest to the registration date of the export declaration of the shipment being valued.

b) Cases requiring conversion:

b.1) Differences in distance;

b.2) Differences in mode of transport.

c) Conditions for application:

c.1) The customs value of exported goods is determined by this method provided that the identical or similar exported goods were declared by an enterprise under the method prescribed in Clause 2 of this Article and accepted by the customs authority, or their value was determined by the customs authority under one of the methods prescribed in Clause 8, Article 1 of Decree No. 59/2018/ND-CP;

c.2) Conversion for differences in distance or mode of transport shall only be made where there are objective and quantifiable documents and materials under this method;

c.3) Where two or more values of identical or similar exported goods are determined at the same time, the customs value shall be the lowest value of the identical or similar exported goods; customs values of identical or similar shipments whose declared values are under doubt as prescribed shall not be used.

d) Documents and materials for customs valuation by this method include (01 photocopy of each document):

d.1) The export customs declaration of the identical or similar exported goods;

d.2) The transport contract or documents showing the freight cost of the identical or similar exported goods (if this cost is adjusted);

d.3) Other documents and materials related to the selling price of the identical or similar exported goods in the customs value database.

4. Method based on the selling price of identical or similar goods in the Vietnamese market

a) The customs value of goods under this method is determined from the selling price of identical or similar goods in the Vietnamese market stated in the sales invoice at the time nearest to the registration date of the export customs declaration of the shipment being valued, plus inland freight costs and other related costs for bringing the goods to the border gate of exportation.

b) The selling price of goods identical or similar to the exported goods in the Vietnamese market must be shown in accounting books and accounting documents and be recorded and reflected in accordance with the law on accounting of Vietnam. Where there are multiple selling prices at the same time, the selling price with the largest cumulative sales quantity shall be used.

c) Inland freight costs and related costs for bringing the goods to the border gate of exportation shall only be added to the customs value where there are objective and quantifiable documents and materials.

d) Documents and materials for customs valuation by this method include (01 photocopy of each document):

d.1) The sales invoice as prescribed by the Ministry of Finance;

d.2) Documents and materials on inland freight costs and other costs used for customs valuation as prescribed at Point a of this Clause.

5. Method based on the selling price of exported goods collected, compiled and classified by the customs authority

a) The customs value of exported goods is determined by using the selling price of goods compiled from the information sources prescribed in Article 25 of this Circular, after conversion to the selling price up to the border gate of exportation of the exported goods being valued.

b) Where there are multiple customs values after conversion, the lowest customs value shall be used; customs values of identical or similar shipments under doubt as prescribed shall not be used.

c) Documents and materials for customs valuation by this method include documents and materials related to the selling price of goods from the information sources and materials for conversion to the selling price up to the border gate of exportation (01 photocopy of each document).

6. Customs valuation of exported goods in special cases

For exported goods without a sale contract and without a commercial invoice, the customs value is the declared value. Where there are grounds to determine that the declared value is inappropriate, the customs authority shall determine the customs value according to the principles and methods of customs valuation prescribed in this Article.”

4. Article 5 is amended and supplemented as follows:

“Article 5. Principles and methods of customs valuation of imported goods

1. Principles:

a) The customs value of imported goods is the price actually payable up to the first border gate of importation, determined by applying in sequence the methods from Point a to Point e of Clause 2 of this Article and stopping at the first method by which the customs value can be determined;

b) Where the customs declarant so requests in writing, the order of application of the deductive value method and the computed value method may be interchanged;

c) Customs valuation must be based on objective and quantifiable documents, materials and data.

2. Methods of customs valuation of imported goods:

a) The transaction value method for imported goods;

b) The transaction value method for identical imported goods;

c) The transaction value method for similar imported goods;

d) The deductive value method;

dd) The computed value method;

e) The fallback method.”

5. Article 6 is amended and supplemented as follows:

“Article 6. Transaction value method for imported goods

1. The customs value of imported goods determined by this method is the transaction value of the imported goods.

2. The transaction value of imported goods is the price actually paid or payable by the buyer to the seller for purchasing and importing the goods, after adjustments in accordance with Articles 13, 14 and 15 of this Circular.

3. The price actually paid or payable for the imported goods is the total amount that the buyer has paid or will have to pay, directly or indirectly, to the seller for the purchase of the imported goods, including the following:

a) The purchase price stated on the commercial invoice;

b) Amounts payable by the buyer but not yet included in the purchase price stated on the commercial invoice, including:

b.1) Amounts paid or payable (for example: prepayments, advances for the goods, deposits for the production, sale, transportation or insurance of the goods);

b.2) Indirect payments to the seller.

c) Additions and deductions as prescribed in Article 13, Article 14 and Article 15 of this Circular.

4. The transaction value shall be applied if all of the following conditions are satisfied:

a) The buyer is not subject to any restriction on the disposal or use of the goods after importation, except for the following restrictions:

a.1) Restrictions imposed by Vietnamese law, such as: regulations requiring imported goods to be labelled in Vietnamese, goods subject to conditional importation, or imported goods subject to a form of inspection prior to customs clearance;

a.2) Restrictions on the geographical area in which the goods may be resold;

a.3) Other restrictions that do not affect the value of the goods. Such restrictions are one or more factors related directly or indirectly to the imported goods but do not increase or decrease the price actually paid or payable for such goods.

Example: A car seller requires the car buyer not to sell or display the imported cars prior to the launch of that car model on the market.

b) The price or the sale is not subject to any conditions or payments by reason of which the value of the goods whose customs value is to be determined cannot be determined.

Example: The seller sets the price of the imported goods on the condition that the buyer will also purchase a certain quantity of other goods; the price of the imported goods depends on the price of other goods purchased together with the imported goods.

Where the sale of the goods or the price of the goods is subject to one or more conditions, but the buyer has objective documents to determine the monetary effect of such dependence, this condition shall still be deemed satisfied; when determining the customs value, the amount attributable to the effect of such dependence must be adjusted into the transaction value.

c) After reselling, transferring or using the imported goods, except for the addition prescribed at Point e Clause 2 Article 13 of this Circular, the buyer is not required to pay any additional amount out of the proceeds derived from the disposal of the imported goods.

d) The buyer and the seller do not have a special relationship or, if they do, such special relationship does not affect the transaction value as prescribed in Article 7 of this Circular.

5. Where the imported goods are machinery or equipment accompanied by imported operating software: the customs value is the transaction value of the imported machinery or equipment and operating software.

a) Where the operating software is recorded or stored in carrier media for installation into the machinery or equipment after importation:

a.1) Where the value of the operating software is separated from the value of the carrier media, the customs value is the transaction value of the imported machinery or equipment and operating software, excluding the value of the carrier media. The value of the carrier media shall be determined in accordance with Clause 6 of this Article;

a.2) Where the value of the operating software is not separated from the value of the carrier media, the customs value is the transaction value of the imported machinery or equipment and operating software, including the value of the carrier media.

b) Cases in which the value of the imported operating software is not added to the customs value of the machinery or equipment:

b.1) The operating software is imported to upgrade or replace the operating software imported for the first time whose value has already been added to the value of the imported machinery or equipment;

b.2) The operating software is produced in Vietnam for installation into the imported machinery or equipment.

c) Where the buyer must pay for the right to use the operating software for installation into and operation of the machinery or equipment, the amount actually paid for the right to use the operating software must be included in the value of the imported machinery or equipment.

d) Declaration and inspection procedures:

d.1) Where the operating software is imported together with the machinery or equipment:

d.1.1) The customs declarant shall determine and declare the customs value of the machinery or equipment, including the value of the operating software; determine and declare the customs value of the carrier media (if any) on the import declaration of the machinery or equipment or the customs value declaration (if any);

d.1.2) The customs authority shall inspect and handle the inspection results in accordance with the Circular on customs procedures; customs inspection and supervision; export duty, import duty and tax administration applicable to exports and imports.

d.2) Where the operating software is not imported together with the machinery or equipment:

d.2.1) The customs declarant shall:

d.2.1.1) Where the operating software is imported before the importation of the machinery or equipment, the customs declarant shall declare and determine the value of the imported operating software as prescribed at Point a of this Clause, whereby in the box “Description of goods” the operating software used for the machinery or equipment expected to be imported must be declared; in the box “Goods code” the goods code of the machinery or equipment expected to be imported must be declared; and shall determine and declare the customs value of the carrier media (if any) on the import declaration of the operating software. Upon importation of the machinery or equipment, in the box “Value declaration details” of the import declaration of the machinery or equipment, the customs declarant must specify the number of the import declaration of the operating software;

d.2.1.2) Where the operating software is imported after the importation of the machinery or equipment, the customs declarant shall declare the goods code and customs value of the operating software and of the carrier media (if any) as prescribed at Point d.2.1.1; in the box “Value declaration details”, the customs declarant shall specify the number of the import declaration of the machinery or equipment.

d.2.2) The customs authority shall inspect the documents related to the value of the imported operating software and the carrier media (if any) and the declaration made by the customs declarant, and handle as follows:

d.2.2.1) Where the customs declarant fails to declare in accordance with Point d.2.1, the customs authority shall request the customs declarant to make additional declaration and impose penalties for violations as prescribed. If the customs declarant fails to make additional declaration within 05 working days from the date of receipt of the request for additional declaration, the customs authority shall determine the customs value, assess tax, collect in full the tax amount and late payment interest, and impose penalties for violations as prescribed;

d.2.2.2) Where the customs declarant declares and determines the value in accordance with Point d.2.1, the customs authority shall accept the customs value determined and declared by the customs declarant.

6. Where the imported goods are carrier media containing application software for data processing equipment, the customs value is the price actually paid or payable for the carrier media, excluding the value of the application software, provided that on the commercial invoice the value of the application software is separated from the value of the carrier media.

7. Documents for determination of the customs value under this method include (01 photocopy of each document):

a) The goods sale contract and the commercial invoice;

b) Documents demonstrating that the special relationship does not affect the transaction value as prescribed at Point a.2 Clause 4 Article 7 of this Circular, upon request of the customs authority;

c) Documents related to the amounts payable by the buyer but not yet included in the purchase price stated on the commercial invoice (if such amounts exist);

d) Documents related to the additions (if any additions exist);

dd) Documents related to the deductions (if any deductions exist);

e) Other documents related to the customs value declared and determined by the customs declarant.”

7. Clause 4 Article 7 is amended and supplemented as follows:

“4. Declaration and inspection procedures:

a) The customs declarant shall:

a.1) At the time of registration of the customs declaration, where the buyer and the seller have a special relationship that does not affect the transaction value, declare it on the import goods declaration and the customs value declaration (if any);

a.2) Provide documents demonstrating that the special relationship does not affect the transaction value upon request of the customs authority, specifically:

a.2.1) Documents demonstrating that the sale transaction is conducted in the same manner as sale transactions between persons without a special relationship (if any);

a.2.2) Documents demonstrating that the transaction value of the goods whose customs value is being determined closely approximates or equals the transaction value of identical or similar goods sold between parties without a special relationship (if any);

a.2.3) Other relevant documents demonstrating that the special relationship does not affect the transaction value (if any).

b) The customs authority shall inspect and handle as follows:

b.1) Where the buyer and the seller have a special relationship but the customs declarant fails to declare it on the customs declaration or the customs value declaration (if any), the customs authority shall request the customs declarant to make additional declaration as prescribed in Article 29 of the Law on Customs and impose administrative penalties as prescribed;

b.2) Where it is suspected that the special relationship between the buyer and the seller affects the transaction value of the imported goods, the customs authority shall compare the transaction value of the imported goods with the values prescribed at Point b Clause 2 of this Article.

b.2.1) If the transaction value satisfies the condition stated at Point b Clause 2 of this Article, the customs authority shall accept that the special relationship does not affect the transaction value;

b.2.2) If the transaction value does not satisfy the condition stated at Point b Clause 2 of this Article, the customs authority shall request the customs declarant to provide the information and documents stated at Point a.2 of this Clause as proof.

b.2.2.1) If there are sufficient information and documents to determine that the special relationship does not affect the transaction value, or there are insufficient grounds to determine that the special relationship affects the transaction value, the customs value determined and declared by the customs declarant shall be accepted;

b.2.2.2) If there are sufficient documents to determine that the special relationship affects the transaction value, the customs value determined and declared by the customs declarant shall be rejected; the customs value shall be determined in accordance with the principles and order of the methods prescribed in this Circular.

b.3) The customs authority shall not determine that the special relationship affects the transaction value if all of the following conditions are satisfied:

b.3.1) The customs authority has inspected and accepted that the special relationship does not affect the transaction value;

b.3.2) The transaction value of the imported goods whose value is being inspected remains unchanged from the transaction value of the identical imported goods whose transaction value was previously inspected and accepted.”

7. Article 12 is amended and supplemented as follows:

“Article 12. Fallback method

1. Cases of application: If the customs value cannot be determined under the methods prescribed in Article 6, Article 8, Article 9, Article 10 and Article 11 of this Circular, the customs value shall be determined under the fallback method, based on the documents and data available at the time of determination of the customs value.

2. The customs value under the fallback method shall be determined by sequentially and flexibly applying the customs valuation methods prescribed in Article 6, Article 8, Article 9, Article 10 and Article 11 of this Circular, stopping at the method by which the customs value can be determined, provided that such application complies with Clause 3 of this Article.

3. When determining the customs value under this method, the customs declarant and the customs authority must not use the following values to determine the customs value:

a) The selling price on the Vietnamese domestic market of goods of the same kind produced in Vietnam;

b) The selling price of goods on the domestic market of the exporting country;

c) The selling price of goods for export to a country other than Vietnam;

d) The cost of production of goods, except where the costs of production of the imported goods are used to determine the computed value under the computed value method;

dd) Reference prices in the List of imports posing customs valuation risk;

e) The value declared by the customs declarant where no purchase and sale of goods has taken place for the importation of the goods into Vietnam;

g) Use of the higher of two alternative values as the customs value.

4. The fallback method shall be applied as follows:

a) Flexible application of the transaction value method of imported goods: Where the customs value of goods cannot be determined under the transaction value method of imported goods because there are no documents or quantified data on the additions or deductions prescribed in Article 13 and Article 15 of this Circular, the data on such amounts confirmed in writing by the supplier to the customs declarant shall be used.

b) Flexible application of the transaction value method of identical imported goods or similar imported goods. If there are no identical imported goods or similar imported goods exported to Vietnam on the same day or within 60 days before or 60 days after the date of exportation of the shipment of imported goods whose customs value is being determined, identical imported goods or similar imported goods exported within a longer period, but not exceeding 90 days before or 90 days after the date of exportation of the shipment whose customs value is being determined, shall be selected.

c) Flexible application of the deductive value method in one of the following manners:

c.1) If, within 90 days from the date of importation, the unit price used for deduction cannot be determined, the unit price at which the goods are sold in the greatest aggregate quantity within 120 days from the date of importation of the shipment selected for deduction shall be selected;

c.2) If there is no unit price of resale of the imported goods themselves or of identical imported goods or similar imported goods to a person without a special relationship with the importer, the unit price of resale of the goods to a buyer having a special relationship with the importer shall be selected, provided that the special relationship does not affect the resale unit price.

d) The customs value of the imported goods shall be determined as the customs value of identical imported goods already determined under the deductive value method or the computed value method.

dd) The customs value of the imported goods shall be determined as the customs value of similar imported goods already determined under the deductive value method or the computed value method.

e) Where the value cannot be determined as prescribed from Point a to Point dd of this Clause, the flexible application of the customs valuation methods shall be based on the customs valuation database, provided that Clause 3 of this Article is not violated.

5. Documents for determination of the customs value under this method include (01 photocopy of each document):

a) Documents in which the supplier confirms the adjustment, in case of flexible application of the transaction value method of imported goods;

b) The customs declaration of identical or similar imported goods, in case of flexible application of the transaction value method of identical imported goods or similar imported goods;

c) The sales invoice of the importer, in case of flexible application of the deductive value method;

dd) Other documents related to the determination of the customs value under this method (if any).”

8. Article 14 is amended and supplemented as follows:

“Article 14. Royalties and licence fees

1. Royalties are amounts that the buyer must pay directly or indirectly to the intellectual property right holder for the licensing of the right to use objects of intellectual property rights.

a) Intellectual property rights are the rights of organizations and individuals to intellectual assets, including copyright, copyright-related rights, industrial property rights and rights to plant varieties;

a.1) Copyright is the right of an organization or individual to a work created or owned by such organization or individual;

a.2) Copyright-related rights are the rights of organizations and individuals to performances, audio and video recordings, broadcasts and encrypted program-carrying satellite signals;

a.3) Industrial property rights are the rights of organizations and individuals to inventions, industrial designs, layout designs of semiconductor integrated circuits, trademarks, trade names, geographical indications and trade secrets created or owned by such organizations and individuals, and the right to combat unfair competition;

a.4) Rights to plant varieties are the rights of organizations and individuals to new plant varieties that they have created, or discovered and developed, or of which they enjoy ownership.

The contents of these rights shall comply with the Law on Intellectual Property.

b) Intellectual property right holder: The owner of intellectual property rights or an organization or individual to which intellectual property rights are transferred by the owner.

2. Licence fees are amounts of money that the buyer must pay directly or indirectly to the intellectual property right holder in order to carry out certain activities falling within the rights under industrial property rights.

3. Royalties and licence fees shall only be added to the value of imported goods if all of the following conditions are satisfied:

a) The buyer must pay royalties and licence fees for the use of, or the transfer of the right to use, the subject matter of intellectual property rights related to the imported goods whose customs value is being determined, as prescribed in Clause 4 of this Article;

b) The royalties and licence fees must be paid by the buyer directly or indirectly as a condition of the sale of the goods whose customs value is being determined as prescribed in Clause 6 of this Article, as shown in the goods sale contract, the licence contract or other agreements on the transfer of the right to use the subject matter of intellectual property rights;

c) They have not been included in the price actually paid or payable of the imported goods whose customs value is being determined.

4. Royalties and licence fees are related to the imported goods when:

a) The royalties and licence fees must be paid directly or indirectly for the use of a trademark, in conformity with the set of documents and records related to the agreement on and payment of the royalties and licence fees, if all of the following conditions are satisfied:

a.1) The imported goods are resold in their original state in the Vietnamese market or undergo simple processing after importation as prescribed in Clause 5 of this Article;

a.2) The imported goods bear the trademark when sold in the Vietnamese market.

b) The royalties and licence fees must be paid directly or indirectly for the use of an invention, trade secret, industrial design or layout design of a semiconductor integrated circuit, or for the right to use other subject matter of intellectual property rights, as shown in the sale contract, the licence contract or other agreements on the transfer of the right to use the subject matter of intellectual property rights, in one of the following cases:

b.1) The invention, trade secret or layout design of a semiconductor integrated circuit, or the right to use other subject matter of intellectual property rights, is used to produce the imported goods;

b.2) The imported goods incorporate an invention or industrial design, or the right to use other subject matter of intellectual property rights;

b.3) The imported goods are machinery or equipment manufactured or produced to apply an invention, trade secret or layout design of a semiconductor integrated circuit, or the right to use other subject matter of intellectual property rights.

Examples of royalties and licence fees satisfying the condition of being “related to the imported goods” are provided in Appendix I to this Circular.

5. Simple processing after importation includes:

a) Operations to preserve goods during transportation and storage (ventilation, spreading out, drying, chilling, immersing in salt, sulphur fumigation or adding other additives, removing damaged parts and similar operations);

b) Operations such as dusting, sifting, selecting, classifying (including making up into sets), cleaning, painting and dividing into parts;

c) Changing the packaging and breaking up or assembling consignments; bottling, packing in jars, bags, cases and boxes and other simple packaging operations;

d) Affixing marks, labels or other similar distinguishing signs on products or their packaging;

đ) Simple mixing of products, whether or not of the same kind;

g) Simple assembly of parts of products to form a complete product;

h) A combination of two or more of the operations listed in Points a through g of this Clause;

i) Slaughtering of animals.

6. Royalties and licence fees are regarded as a condition of the sale of the imported goods in one of the following cases:

a) The seller agrees with the buyer that the buyer must directly or indirectly pay royalties and licence fees related to the imported goods;

b) The seller has an agreement with the intellectual property right holder or the licensor to sell goods only to a buyer who directly or indirectly pays royalties and licence fees to the intellectual property right holder or the licensor;

c) The seller supplies goods to the buyer as designated by the intellectual property right holder or the licensor;

d) The seller supplies goods to the buyer according to technical standards approved by the intellectual property right holder or the licensor;

đ) The buyer pays royalties and licence fees to the intellectual property right holder, the licensor or another person as designated by the seller;

e) There is evidence that the buyer would be unable to purchase or receive the imported goods without paying the royalties and licence fees directly or indirectly.

Some examples of imported goods satisfying the condition of being “a condition of the sale of the imported goods” are provided in Appendix I to this Circular.

7. No addition shall be made to the customs value in one of the following cases:

a) Amounts that the buyer must pay directly or indirectly for the right to reproduce the imported goods or to copy works of art in Vietnam (for example: where a sample is imported and then used to produce copies exactly identical to the original imported sample, the amount that must be paid directly or indirectly in order to produce goods according to the imported sample is understood as being for the right to reproduce the imported goods);

b) Amounts that the buyer must pay directly or indirectly for the right to distribute or resell the imported goods, if such amounts are not regarded as a condition of the sale of the imported goods.

Where the amounts paid by the buyer directly or indirectly for the right to reproduce, distribute or resell the imported goods have been included in the price actually paid or payable, they shall not be deducted from the customs value when determining the value of such imported goods.

8. Declaration and inspection procedures:

a) Where the royalties and licence fees can be determined at the time of registration of the declaration:

a.1) The customs declarant shall declare the royalties and licence fees on the import goods declaration or the customs value declaration (if any);

a.2) The customs authority shall carry out inspection and handle the inspection results in accordance with Article 25 of the Circular providing for customs procedures; customs inspection and supervision; export duty, import duty and tax administration applicable to exports and imports.

b) Where the royalties and licence fees cannot be determined at the time of registration of the declaration because they depend on post-importation sales revenue or for other reasons specifically provided for in the goods sale contract or a separate written agreement on the payment of royalties and licence fees, the declaration and inspection procedures shall be as follows:

b.1) At the time of registration of the declaration, the customs declarant shall clearly state the reason why the royalties and licence fees cannot yet be declared in the “Value declaration details” box on the import goods declaration. Where the customs declarant has figures on the royalties and licence fees, such fees shall be declared on the import goods declaration at the time of registration of the declaration and tax shall be paid as prescribed;

Within 05 days from the date of actual payment, the customs declarant shall declare and calculate the tax payable on the royalties and licence fees actually paid on the post-clearance additional declaration, and at the same time pay the tax in full as prescribed.

b.2) The customs authority shall inspect the documents and records related to the royalties and licence fees and the customs declarant's declaration, and handle them as follows:

b.2.1) Where the customs declarant fails to correctly declare the royalties and licence fees as prescribed at Point b.1 of this Clause, the customs authority shall request the customs declarant to make an additional declaration and impose penalties for the violation as prescribed. If the customs declarant fails to make an additional declaration within 5 working days from the date of receipt of the request for additional declaration, the customs authority shall determine the customs value, assess the tax, collect the full amount of tax and late payment interest, and impose penalties for the violation as prescribed;

b.2.2) Where the customs declarant makes the declaration more than 05 days after the date of actual payment of the royalties and licence fees as prescribed at Point b.1 of this Clause, the customs authority shall impose penalties as prescribed;

b.2.3) Where the customs declarant declares and determines the value in accordance with Point b.1 of this Clause, the customs authority shall accept the declared value.

9. Where the royalties and licence fees are calculated partly on the basis of the imported goods and partly on the basis of other factors not related to the imported goods:

a) Where there are figures enabling the portion of royalties and licence fees related to the imported goods to be distinguished and separated, such portion shall be added to the transaction value;

b) Where the portion of royalties and licence fees related to the imported goods cannot be distinguished and separated, the customs value shall not be determined under the transaction value method, and the next method shall be applied.”

9. Point b of Clause 2, Clause 5 and Clause 9 are amended, and Clause 11 of Article 17 is added, as follows:

“2. Imported goods which have been used in Vietnam and whose use purpose has been changed from the purpose for which they were determined to be not subject to tax or eligible for tax exemption:

b) Other imported goods:

b.1) Where the goods are repurposed for destruction, the customs value is the declared value;

b.2) Where the goods are repurposed for sale: the customs value is the declared value determined on the basis of the actual selling price. Where the customs authority has grounds to determine that the declared value is inappropriate, it shall determine the customs value according to a valuation method prescribed in this Circular that is appropriate to the actual goods;

b.3) In cases other than those mentioned at Points b.1 and b.2 of this Clause, the customs value is the declared value. Where the customs authority has grounds to determine that the declared value is inappropriate, it shall determine the customs value according to a valuation method prescribed in this Circular that is appropriate to the actual goods.

5. For imported goods without a goods sale contract and commercial invoice, and imported goods transported to Vietnam by postal or express delivery services without a sale contract and commercial invoice, the customs value is the declared value. Where the customs authority has grounds to determine that the declared value is inappropriate, it shall determine the customs value according to a valuation method prescribed in this Circular that is appropriate to the actual imported goods.

9. For imported goods that are leased goods, the customs value is the declared value determined on the basis of the price actually paid or payable for leasing the goods and other costs that the lessee must pay to bring the goods to the first border gate of importation, consistent with the documents and records related to the leased goods.

For imported goods that are borrowed goods, the customs value is the entirety of the costs that the borrower must pay to bring the goods to the first border gate of importation, consistent with the documents and records related to the borrowed goods.

Where the customs authority has grounds to determine that the customs declarant has declared an inappropriate value, it shall determine the customs value according to a valuation method prescribed in this Circular that is appropriate to the actual imported goods.

11. Goods which have not been used in Vietnam and whose use purpose has been changed from the purpose for which they were determined to be not subject to tax or eligible for tax exemption:

a) Where the goods are repurposed for destruction, the customs value is the declared value;

b) Where the goods are repurposed for sale: the customs value is the declared value determined on the basis of the actual selling price. Where the customs authority has grounds to determine that the declared value is inappropriate, it shall determine the customs value according to a valuation method prescribed in this Circular that is appropriate to the actual goods;

c) In cases other than those mentioned at Points a and b of this Clause, the customs value is the declared value at the time of importation. Where the customs authority has grounds to determine that the declared value is inappropriate, it shall determine the customs value according to a valuation method prescribed in this Circular that is appropriate to the actual goods”.

10. Article 21 is amended and supplemented as follows:

“Article 21. Customs value database

1. The customs value database is information related to the determination of the customs value of exports and imports, collected, compiled and classified by the customs authority. The customs value database shall be built by the General Department of Customs in a centralized, uniform manner and shall be regularly updated, and includes:

a) The customs value data management system;

b) The List of exports and imports posing valuation risk and the accompanying reference prices;

c) The List of enterprises posing customs valuation risk.

2. Sources of information forming the customs value database:

a) Information from customs dossiers: Information available on the electronic system or in customs dossiers (in the case of declaration on paper customs declarations), declared by customs declarants or created by the customs authority in the course of carrying out customs procedures and after the goods have been cleared;

b) Information from the List of exports and imports posing valuation risk and the List of enterprises posing customs valuation risk as prescribed in this Circular;

c) Information on enterprises' compliance with law: Information related to enterprises' compliance with legal policies in the declaration and determination of customs value, and the number and severity of violations, compiled and analysed by the customs authority on the risk management system;

d) Other sources of information: Sources of information collected by the customs authority or provided by other relevant agencies, the reliability of which has been verified.

3. The customs value database is used to:

a) Build the List of exports and imports posing valuation risk and the List of enterprises posing customs valuation risk;

b) Inspect the customs value of exports and imports;

c) Serve the state management of the export and import of goods and other fields.

4. The Director General of the General Department of Customs shall promulgate the regulation on the exploitation, building, management, operation and use of the customs value database.”

11. Article 22 is amended and supplemented as follows:

“Article 22. Competence to build, add to and amend, and principles of using, the List of exports and imports posing valuation risk and the reference prices, and the List of enterprises posing customs valuation risk

1. The Director General of the General Department of Customs shall organize the building of, addition to and amendment of:

a) The List of exports and imports posing valuation risk, built on the criteria prescribed in Article 24 of this Circular. The List of exports and imports posing valuation risk includes the following information items: code, name of goods, detailed description of goods, unit of measurement, origin of goods and reference price;

b) Reference prices of goods in the List of exports and imports posing valuation risk shall be developed on the basis of the information sources prescribed in Article 25 of this Circular;

c) The List of enterprises posing customs valuation risk shall be developed on the basis of the results of enterprise risk assessment under risk management principles. The List of enterprises posing customs valuation risk shall include the following information items: enterprise identification number, enterprise name, and place of registration of customs declarations.

2. Principles of use:

a) The List of exports and imports posing valuation risk and the List of enterprises posing customs valuation risk are among the bases for identifying the subjects of customs value inspection during customs procedures or after goods have been cleared;

b) Reference prices of goods in the List of exports and imports posing valuation risk serve as the basis for the customs authority to compare, cross-check and inspect the declared value of the customs declarant during customs procedures or after goods have been cleared in accordance with regulations; they shall not be used to impose customs value; they shall be circulated internally and used uniformly within the Customs sector.”

12. Article 23 is amended and supplemented as follows:

"Article 23. Time limits and responsibilities for developing, adding and amending goods in the List of exports and imports posing valuation risk and the accompanying reference prices, and the List of enterprises posing customs valuation risk

1. Time limits for developing, adding to and amending the List of exports and imports posing valuation risk and the accompanying reference prices, and the List of enterprises posing customs valuation risk: at least once every six months on a periodic basis, or when necessary, on the basis of:

a) Recommendations of organizations and individuals;

b) Proposals of provincial and municipal Customs Departments and units under the General Department of Customs as prescribed in Clause 2 of this Article.

2. Directors of provincial and municipal Customs Departments shall organize the implementation of:

a) Updating the results of document inspection, results of physical inspection of goods, results of consultation and value determination, results of post-clearance audit, inspection and anti-smuggling investigation, information on handling of violations, enterprise profile information, results of legal compliance assessment, and results of risk level classification into the corresponding database systems.

b) Based on the results of document inspection, results of physical inspection of goods, anti-smuggling results, import-export turnover, export duty and import duty rates, and the situation of smuggling and trade fraud, proposing and reporting to the General Department of Customs:

b.1) Adding reference prices for exports and imports that are in the List of exports and imports posing valuation risk but do not yet have reference prices, using the Report proposing additions to the List of exports and imports posing valuation risk (form No. 02/DMBX/2015 in Appendix II to this Circular), on the basis of collecting information sources as prescribed in Article 25 (except Point h of Clause 1) of this Circular;

b.2) Amending reference prices where the declared prices and collected information show an increase or decrease of more than 10% compared with the reference prices in the List of exports and imports posing valuation risk, using the Report proposing amendments to the List of exports and imports posing valuation risk (form No. 03/DMSĐ/2015 in Appendix II to this Circular), on the basis of collecting information sources as prescribed in Article 25 (except Point h of Clause 1) of this Circular;

b.3) Adding goods to the List of exports and imports posing valuation risk and the corresponding reference prices where exports or imports meet one of the criteria prescribed in Clause 1 or Clause 2 of Article 24 of this Circular but have not yet been included in the List of exports and imports posing valuation risk, using the Report proposing additions to the List of exports and imports posing valuation risk, on the basis of collecting information sources as prescribed in Article 25 (except Point h of Clause 1) of this Circular;

b.4) Amending and supplementing the List of enterprises posing customs valuation risk where enterprises meet the criteria prescribed in Clause 3 of Article 24 of this Circular.

3. Units under the General Department of Customs shall, based on their functions and tasks of managing the information sources prescribed in Clause 1 of Article 25 of this Circular, update them into the corresponding data systems of the General Department of Customs.

4. The Import-Export Duty Department (the General Department of Customs) shall monitor, urge and direct provincial and municipal Customs Departments in updating information and reporting proposals for additions to and amendments of the List of exports and imports posing valuation risk together with reference prices, and the List of enterprises posing customs valuation risk as prescribed in Clause 2 of this Article.”

13. The title of Article 24 and Clause 3 of Article 24 are amended and supplemented as follows:

“Article 24. Criteria for developing, adding and amending goods in the List of exports and imports posing valuation risk and the List of enterprises posing customs valuation risk

3. Enterprises posing customs valuation risk:

a) At the time of assessment, being assessed by the customs authority as a non-compliant enterprise;

b) At the time of assessment, being classified by the customs authority as a high-risk enterprise or a very high-risk enterprise, or being an enterprise that has engaged in the export or import of goods for less than 365 days;

c) Within 730 days (02 years) prior to the date of assessment, being sanctioned by the customs authority for making false declarations of customs value leading to a deficiency in the tax amount payable or an increase in the tax amount eligible for exemption, reduction, refund or non-collection, with the sanctioning level and fine amount as prescribed in the Circular of the Ministry of Finance on risk management in customs operations; or being sanctioned by a state management agency for tax fraud or tax evasion.”

14. The appendices are amended and supplemented as follows:

a) Replacing Appendix I to Circular No. 39/2015/TT-BTC with Appendix I to this Circular;

b) Adding form No. 04/TGHQ to Appendix II to Circular No. 39/2015/TT-BTC.

Article 2. Responsibility for implementation

1. The Director General of the General Department of Customs shall, based on the provisions of this Circular, guide customs units in uniform implementation, ensuring both the facilitation of export and import activities and the effective performance of customs management.

2. Customs authorities, customs declarants, taxpayers and related organizations and individuals shall determine customs value in strict accordance with the provisions of this Circular. Should any difficulties arise, customs authorities, customs declarants and taxpayers shall report them specifically to the Ministry of Finance (the General Department of Customs) for consideration and guidance on resolution.

Article 3. Effect

1. This Circular takes effect from October 15, 2019.

2. Clause 15 of Article 1 of Circular No. 39/2018/TT-BTC dated April 20, 2018 of the Minister of Finance is annulled.

3. During implementation, if the relevant documents referred to in this Circular are amended, supplemented or replaced, the amending, supplementing or replacing documents shall apply./.

APPENDIX I

REPLACING APPENDIX I ISSUED TOGETHER WITH CIRCULAR NO. 39/2015/TT-BTC AS FOLLOWS: (Issued together with Circular No. 60/2019/TT-BTC dated August 30, 2019 of the Minister of Finance)

“APPENDIX I

SOME EXAMPLES OF ROYALTIES AND LICENCE FEES (Issued together with Circular No. 39/2015/TT-BTC dated March 25, 2015 of the Minister of Finance)

1. Examples of royalties and licence fees satisfying the condition of being “related to the imported goods” (as prescribed in Point a of Clause 3 and Clause 4 of Article 14 of this Circular)

Example 1: an example of the case mentioned in Point b.1 of Clause 4 of Article 14 of this Circular:

Company Y (the seller) in country B uses technical know-how (a trade secret) Z to manufacture brand-K motorcycle engines. Company X (the buyer) in Vietnam imports brand-K motorcycle engines from Company Y. In addition to paying for the imported goods, Company X must pay Company Y a fee for the right to use brand-K motorcycle engines.

The payment for the right to use brand-K motorcycle engines is related to the imported goods, namely the motorcycle engines, and therefore satisfies the provision of Point b.1 of Clause 4 of Article 14 of this Circular.

Example 2: an example of the case mentioned in Point b.2 of Clause 4 of Article 14 of this Circular:

Company I in Vietnam signs a contract with Company J in country X for the importation of a medicine containing active ingredient A. Active ingredient A is a product manufactured under Patent B. Therefore, in order to purchase the medicine containing active ingredient A, the buyer - Company I - must pay Company J a royalty (calculated per unit of product). The royalty in this case is regarded as related to the imported goods as prescribed in Point b.2 of Clause 4 of Article 14 of this Circular.

2. Examples of cases where the buyer must pay, directly or indirectly, royalties and licence fees as a condition of the sale of the imported goods (as prescribed in Point b of Clause 3 and Clause 6 of Article 14 of this Circular)

All of the situations from 1 to 7 (except situation 2) satisfy the condition that the royalties and licence fees are paid by the buyer “as a condition of the sale of the imported goods”. Specifically as follows:

Situation 1:

Buyer B and Seller S agree in the sale contract that the buyer shall pay for the goods and pay a royalty. In fact, the buyer pays the seller for the goods and pays the royalty as agreed. Thus, the royalty paid by the buyer in this situation satisfies the condition of being “a condition of the sale of the imported goods” as prescribed in Clause 6 of Article 14 of this Circular, because Buyer B pays the royalty to Seller S (who is also the intellectual property rights holder) in order to purchase the goods.

Situation 2:

Buyer B and Seller S sign a contract for the sale of goods, which provides that the seller supplies the goods and the buyer pays for the goods. There is no agreement between B and S regarding any intellectual property rights object related to the goods traded between the two parties.

Under the sale contract, Buyer B pays Seller S for the goods; in return, Seller S delivers the goods to Buyer B.

On the other hand, in order to secure the lawful right to trade in goods incorporating an intellectual property rights object, Buyer B signs a licence contract for the use of the intellectual property rights object with intellectual property rights holder L and fulfils the obligation to pay royalties as agreed with L.

The royalty paid by Buyer B to L in this situation does not satisfy the condition of being “a condition of the sale of the imported goods” as prescribed in Point b of Clause 3 and Clause 6 of Article 14 of this Circular, because there is no agreement whatsoever that Buyer B must pay the royalty in order to purchase the goods from Seller S.

Situation 3:

Buyer B signs a contract for the sale of goods with Seller S, under which it is agreed that B must sign a licence contract for the use of the intellectual property rights object with Holder L and pay royalties to L.

B receives the goods from S and pays S for the goods.

B pays royalties to L under the signed licence contract for the use of the intellectual property rights object.

The royalty paid by Buyer B to L in this situation satisfies the condition of being “a condition of the sale of the imported goods” prescribed in Point b of Clause 3 and Clause 6 of Article 14 of this Circular, because Buyer B and Seller S have agreed that Buyer B must pay royalties to L in order to purchase the imported goods.

Situation 4:

Buyer B signs a contract for the sale of goods with Seller S, under which it is agreed that B must sign a licence contract for the use of the intellectual property rights object with intellectual property rights holder L and pay royalties to L. L is the parent company of S.

Buyer B receives the goods from S and pays S for the goods as agreed in the sale contract. Buyer B also pays royalties to L under the licence contract.

The royalty paid by the buyer in this situation satisfies the condition of being “a condition of the sale of the imported goods” as prescribed in Point b of Clause 3 and Clause 6 of Article 14 of this Circular, because Seller S and intellectual property rights holder L have a special relationship (parent-subsidiary) and the buyer may purchase the goods only upon payment of the royalty.

Situation 5:

Buyer B signs a contract for the sale of goods with Seller S, under which it is agreed that B must sign a licence contract for the use of the intellectual property rights object with intellectual property rights holder L and must pay royalties to L.

Buyer B has signed the licence contract for the use of the intellectual property rights object with L and fulfils the obligation to pay royalties to L.

Holder L and Seller S have an agreement whereby Holder L will sign the licence contract for the use of the intellectual property rights only if the buyer purchases goods from S; conversely, when signing the contract for the sale of goods, Seller S is only permitted to sell goods to a buyer that agrees to pay royalties to L.

The royalty paid by the buyer in this situation satisfies the condition of being “a condition of the sale of the imported goods” prescribed in Point b of Clause 3 and Clause 6 of Article 14 of this Circular, because Buyer B purchases the goods from Seller S as designated by intellectual property rights holder L.

Situation 6:

Buyer B signs a contract for the sale of goods with Seller S, receives the goods from S and pays for the goods as agreed. In the sale contract, the two parties agree that B shall pay S a fee for the right to use the intellectual property rights object, because S has an exclusive contract for the use of the intellectual property rights object signed with Holder L.

The royalty paid by the buyer in this situation satisfies the condition of being “a condition of the sale of the imported goods” prescribed in Point b of Clause 3 and Clause 6 of Article 14 of this Circular, because Buyer B may purchase the goods only upon payment of the royalty to Seller S.

Situation 7:

Buyer B signs an exclusive contract for the use of industrial property rights with intellectual property rights holder L, under which Holder L designates that Buyer B may purchase goods only from the seller being Manufacturer S. B pays royalties to L as agreed in the licence contract. As agreed with Holder L, Buyer B signs a contract for the sale of goods with Seller S, receives the goods from S and pays S for the goods.

The royalty paid by the buyer in this situation satisfies the condition of being “a condition of the sale of the imported goods” prescribed in Point b of Clause 3 and Clause 6 of Article 14 of this Circular, because Buyer B must pay the royalty in order to purchase the goods of Seller S, which meet the technical standards of intellectual property rights holder L.”

APPENDIX II

APPENDIX II ISSUED TOGETHER WITH CIRCULAR NO. 39/2015/TT-BTC IS SUPPLEMENTED AS FOLLOWS: (Issued together with Circular No. 60/2019/TT-BTC dated August 30, 2019 of the Minister of Finance)

“APPENDIX II

LIST OF FORMS (Issued together with Circular No. 39/2015/TT-BTC dated March 25, 2015 of the Minister of Finance)

Form No. 04/TGHQ is added as follows: