Inquire about scrap obtained during production?

Question: The enterprise is a joint-stock enterprise specializing in manufacturing garments according to the type of export production. So is the scrap collected during the production process within the rate of loss when carrying out customs procedures for destruction is exempted from import tax? Do scraps collected and then destroyed by combustion method pay an import tax?
Reply:
In this regard, according to the General Department of Customs, Clause 5 Article 25 of Decree No. 08/2015 / ND-CP (referred to as Decree 08) is amended and supplemented in Clause 12 Article 1 of Decree 59/2018 / ND -CP (hereinafter referred to as Decree 59) provides for the declaration and payment of taxes on goods that are repurposed. Also in Article 21 of Circular 38/2015 / TT-BTC (referred to as Circular 38) is amended and supplemented in Clause 10 Article 1 of Circular 39/2018 / TT-BTC (hereinafter referred to as Circular 39), the transfer of domestic consumption or change of the purpose of using goods for which import-export procedures have been carried out may only be completed after customs declarants complete customs procedures for a new customs declaration; For goods changing their use purposes or transferred for domestic consumption, taxpayers must declare and fully pay tax and fine amounts (if any) according to regulations.
Article 55 of Circular 38 is amended and supplemented in Clause 35, Article 1 of Circular 39 providing for norms of processed goods, export production; Article 71 of Circular 38 is amended and supplemented in Clause 49, Article 1 of Circular 39, scraps and faulty products collected during the production of export goods, when being sold or sold domestically, are exempt from import tax but must be declared, pay VAT, excise tax (if any) and environmental protection tax (if any).
According to the above stipulations, for scraps and waste products generated during the production process, which are within the actual norms meeting Article 55 of Circular 38, amended and supplemented in Clause 35, Article 1 of the Circular 39 when destroying, it is not required to declare and pay import tax.
Regarding VAT, according to Article 3 of the Law on VAT No. 13/2008 / QH12, goods and services used for production, business and consumption in Vietnam are subject to VAT. If discarded materials and faulty products are destroyed, they are not required to declare and pay VAT. Enterprises must pay VAT for discarded materials which are still valid and used in Vietnam in accordance with the law on VAT.
According to: General Department of Customs