Earlier this month, the Dong Nai Department of Customs issued a decision suspending priority customs treatment for Panasonic. The decision does not specify exactly what the well known Japanese brand failed to do, only citing Article 45 of the Customs Law. The company has been suspended for 60 days from accessing priority customs treatment.
Whereas this is not good news for Panasonic, it does raise awareness about this largely underutilised clause in the Custom Law 2014–just 75 companies receive priority customs treatment. So what is it and how does a company access it?
What is priority customs treatment in Vietnam?
Priority customs treatment is a way to fast track customs procedures for importing and exporting goods, out of and into Vietnam. Essentially this reduces the time goods spend in Vietnam’s ports and, depending on the volume of trade a business is doing through said ports, can be a significant time-saving measure. This incentive program is outlined in the Law on Customs 2014 but is implemented through a series of decrees and circulars.
What are the benefits of priority customs treatment in Vietnam?
The benefits companies that are approved for priority customs treatment in Vietnam receive are detailed in Circular 72/2015/TT-BTC. These include:
Fewer inspections
Firms are exempt from having their goods or documentation inspected in most instances. This does not, of course, apply in the case that there are suspicions the law has been or is being broken. Furthermore, inspections may be carried to ensure compliance with the rules and regulations of priority customs treatment.
Forms don’t need to be complete
Firms accessing Vietnam’s priority customs treatment can submit incomplete customs declarations. Note, however, that they must provide the completed documents within the following 30 days. Failure to do so may result in a suspension of priority customs treatment.
Faster service
Goods are prioritised for delivery and receipt procedures as well as inspections if necessary. In the event goods are sent for inspection they will be given priority access to customs’ scanners. If there is a problem with customs clearance, firms should receive details from the customs authorities within eight working hours. Furthermore, goods will be prioritised for loading and unloading at ports and warehouses.
Tax refunds can also be arranged based on a firm’s own calculations and should be issued within one business day.
Easier post customs procedures
Furthermore, customs will avoid post customs inspections on approved firms unless they believe the firm may be breaking the law. In lieu of said sign of violations of the law, post customs clearance inspections will be limited to not more than once every three years.
How do you get priority customs treatment in Vietnam?
There are several criteria a firm needs to meet in order to receive priority customs treatment in Vietnam. These are skewed toward favouring goods made in Vietnam and include:
- A firm must not have violated customs or tax law or have any outstanding overdue tax.
- The firm must have US$100 million in import export turnover per year; or
- US$40 million in exports of goods manufactured in Vietnam each year; or
- US$30 million in export turnover of agricultural or aquaculture products made in Vietnam, each year.
These numbers are based on the firm’s turnover for the two years preceding its application for priority customs treatment.
Responsibilities of firms receiving priority customs treatment in Vietnam
Firms that qualify for priority customs treatment in Vietnam are required to make sure that they keep up their end of the bargain. Essentially, where they are permitted to complete customs documentation only partially in order to have their goods shipped, they must make sure the remaining details are filled in within the prescribed time frame. If a company fails to meet these deadlines customs has the authority to suspend priority treatment for up to 60 days, as appears to be the case with Panasonic.
What’s next?
Priority customs treatment at Vietnam’s ports can save firms time and money. This little known section of the Customs Law, however, looks to currently be somewhat underutilised with just 75 firms currently a part of the program. For importers and exporters that are not receiving priority customs treatment but believe they may be eligible, getting expert advice is the next best step→let us connect you with an expert.
Firms should also make sure they are abreast of the latest regulatory updates and incentive programs available to importers and exports in Vietnam by subscribing to the-shiv.