Tax policy with subcontracting process

General Department of Customs just issued official letter No. 6774/TCHQ-GSQL

dated on Oct 21, 2020 to instruct the customs departments of provinces and cities

to check the facilities of subcontractors.

The customs departments of provinces and cities are assigned to make post-audit at

the enterprise's establishment (in case post-audit finished, pursuant to the conclusion of the post-audit),

if identifying the processing enterprise with foreign traders that used raw materials

and supplies of processing contract and gave them to subcontractor but notifying

facilities of subcontractor and the subcontract processing late (pursuant to Article 62 of Circular 38/2015/TT-BTC (Amended and supplemented in Clause 41, Article 1 of

Circular 39/2018/TT-BTC), customs departments of provinces and cities will inspect the facilities of subcontractor.

In case, the conclusion show subcontractor have the factory, human of employees,

do processing etc and already return the processed products to the original

processors and the processed products exported, the original processors only take the penalty for notify to customs branch late.

In case of inspecting the facilities of subcontractor but it doesn’t not meet the

regulation, the original processor will be retrospectively collected tax according to

regulations.