What you can and can’t do: KPMG answers tax queries
“Importation” of uniforms from a domestic supplier for use in an export processing zone will incur import duties and VAT, say KPMG consultants.

1. Our company is an export and processing enterprise. We plan to purchase uniforms from a domestic supplier for our employees to wear during the manufacturing process at our factory located in an export processing zone. Do we have to pay VAT and import duty on uniforms bought from the domestic supplier?
According to guidance from General Department of Customs, on the ground that the uniform is consumable goods that are used by the employees on daily basis and may be rotated in and out of the export processing zone regularly, there is no adequate basis to conclude that the uniform is used solely within the export processing zone. Therefore, upon importation of the uniform from a domestic supplier, your company must pay import duty and import VAT.
2. We are a 2018 established manufacturing company located at the An Phat Industrial Park in Hai Duong province. Based on regulations upon establishment, we are eligible to a CIT incentive package comprising of 2 years of exemption and subsequent 4 years of 50% reduction, which is applicable to new investment projects in an industrial park not located within a grade I urban area. On May 17, 2019, Hai Duong was recognized as a grade I urban area under Decision 580/QD-TTg issued by the Prime Minister. Due to the change in administrative boundary classification, can we still enjoy the aforementioned CIT incentive package?
According to guidance from the General Department of Taxation, because your company was established in 2018 and originally located at An Phat Industrial Park before the upgrading of Hai Duong province as a grade 1 urban area, the CIT incentive for your company should be assessed based on the prevailing CIT regulation as at your establishment date. In the other words, your company should still be eligible to enjoy the original CIT incentive package.
3. We have a question on non-cash payment condition. In 2020, we settled VND30 million ($1,250) by cash to a supplier for a goods purchase transaction. In 2021, we identified the above improper cash payment transaction and decided that the supplier would return us VND30 million via bank transfer to correct the cash payment transaction. After that, we settled another payment to the supplier via bank transfer to comply with non-cash payment requirement. Can we claim CIT deduction on the expense of goods purchased in 2020 after the correction in 2021?
According to guidance from the General Department of Taxation in a similar case, because the buyer settled payment by cash in 2020, which was completed and fully recorded in the accounting book of 2020, the correction by returning the cash and replacing it by a non-cash payment in 2021 cannot change the accounting record of the 2020 transaction. In other words, despite the correction in 2021, your company cannot claim CIT deduction on the goods purchase due to the violation of non-cash payment condition.
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