Vietnam: “Royalty” fees for imported goods
On 23 August 2022, the General Department of Customs issued the Official Letter No. 3489/TCHQ-TXNK with new guidance on the declaration of royalty for imported goods.
1. Key concept
“Royalty” is defined as an amount of money that the buyer shall pay directly or indirectly to the intellectual property right holder for the use of or transfer of the right to use the subject matters of intellectual property rights.
2. Customs procedure of royalty
At customs clearance, the declaration and customs valuation of royalty is separated into two cases:
› For cases where the royalty can be determined:
The amount of the royalty fee shall be included in the customs value and declared in the declaration of imported goods.
› For cases where the royalty cannot be determined at the time of registering the import declarations because this fee depends on the sales of goods after the
importation, or other reasons specified in the sale contract, or separate agreements for payment of royalties:
The importer shall clearly provide an explanation for not declaring the royalty fee on the import customs declarations.
Within 05 working days from the time the royalty is determined, the importer shall:
– Declare the royalty fee on the supplementary declaration after customs clearance;
– Declare, calculate and fully pay the tax liabilities as regulated for such fees.
The importer must decide according to the relevant documents on the right time to declare and pay the adjusted royalty fee.
In case the royalty fee is paid in several installments depending on the quantity of imported goods distributed to Vietnam, the company must allocate, declare and pay the additional tax payment until all royalty fees related to imported goods are fully paid.
For the latest global customs insights from all over the world, please see: Global Customs Newsletter #1/2023