Import and export taxes are relatively typical taxes in the tax system of each country. The specificity of import-export tax is reflected in the fact that it is directly related to foreign trade activities and becomes one of the tools and factors constituting the foreign economic policy of the state. To know more information about What is Export and Import Tax? Overview of export tax import tax? In the following article, Warren B would like to provide detailed information about these questions.
Import and Export Duties in Vietnam
Import and export duty rates are subject to frequent changes (normally being updated at the end of a calendar year).
Most goods imported into Vietnam are subject to import duty except when they meet the conditions for exemption.
Import duty is computed on an ad valorem basis, i.e. multiplying the imported good’s dutiable value by the corresponding import duty rate.
Import duty rates are classified into three categories: ordinary rates, preferential rates, and special preferential rates.
Preferential rates d goods from countries with the most-favored-nation (MFN, also known as normal trade relations) status with Vietnam. The MFN rates are in line with Vietnam’s World Trade Organization (WTO) commitments and are applicable to goods imported from other WTO member countries.
Special preferential rates apply to imported goods from countries with a special preferential trade agreement (or Free Trade Agreement) with Vietnam. Currently, effective free trade agreements (FTAs) to which Vietnam is a party include:
- The FTA between ASEAN member states;
- The FTA between ASEAN member states and Japan;
- The FTA between ASEAN member states and China;
- The FTA between ASEAN member states and Hong Kong;
- The FTA between ASEAN member states and India;
- The FTA between ASEAN member states and Korea;
- The FTA between ASEAN member states and Australia and New Zealand;
- The FTA between ASEAN member states and Australia, China, Japan, Korea, and New Zealand (i.e. the RCEP);
- The FTA between Vietnam and Japan;
- The FTA between Vietnam and Korea;
- The FTA between Vietnam and Chile;
- The FTA between Vietnam and Eurasian Economic Union (Vietnam and the Customs Union of Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan);
- The CPTPP pact or TPP-11 (i.e. the Comprehensive and Progressive Trans-Pacific Partnership agreement among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam);
- The FTA between Vietnam and the EU (i.e. the EVFTA); and
- The FTA between Vietnam and the UK (i.e. the UKVFTA).
In addition, negotiations on FTAs with the European Free Trade Association (Vietnam and Iceland, Liechtenstein, Norway, and Switzerland) and with Israel are in progress.
To be eligible for preferential rates or special preferential rates, the imported goods must be accompanied by an appropriate Certificate of Origin or an origin certification (e.g. a self-declaration by the exporter). When goods are sourced from non-preferential treatment/non-favoured countries, the ordinary rate (being the MFN rate with a 50% surcharge) is imposed.
Import VAT is also applied to imported goods at a rate most commonly of 10%.
In principle Vietnam follows the WTO Valuation Agreement with certain variations. The dutiable value of imported goods is typically based on the transaction value (i.e. the price paid or payable for the imported goods, and where appropriate, adjusted for certain dutiable or non-dutiable elements). Where the transaction value is not applied, alternative methodologies for the determination of the dutiable value will be used.
Import duty exemptions are provided for projects which are classified as in encouraged sectors/locations and other goods imported in certain circumstances.
Categories of import duty exemption include:
- Machinery & equipment, specialized means of transportation and construction materials (which cannot be produced in Vietnam) comprising the fixed assets of encouraged investment projects;
- Machinery, equipment, specialized means of transportation, materials (which cannot be produced in Vietnam), office equipment imported for use in oil and gas activities;
- Materials, supplies and components imported for the production of exported goods;
- Materials, supplies, components imported for processing of exports;
- Goods manufactured, processed, recycled, assembled in a free trade zone without using imported raw materials or components when imported into the domestic market;
- Materials, supplies and components which cannot be domestically produced and which are imported for the production of certain encouraged projects;
- Goods temporarily imported or exported for the purpose of warranty, repair, and replacement.
There are various cases where a refund of import duties is possible, including:
- Goods for which import duties have been paid but which are not actually physically imported;
- Imported goods that are not used and which must be re-exported;
- Imported materials that were imported for the production of goods for the domestic market but are later used for the processing of goods for export under processing contracts with foreign parties.
Export duties are charged only on a few items, basically natural resources including sand, chalk, marble, granite, ore, crude oil, forest products, and scrap metal. Rates range from 0% to 40%. The tax base for the computation of export duties is the FOB /Delivered At Frontier price, i.e. the selling price at the port of departure as stated in the contract or invoice excluding international freight and insurance costs. In case the customs values of the exported goods cannot be determined using the transaction value method, they will be determined by the customs authority using, sequentially, the following customs valuation bases: the transaction prices of similar exported goods in the customs authorities’ pricing database, the selling prices of similar goods in the local market with certain adjustments, or the selling prices of exported goods collected, classified & adjusted by the customs authorities.
Other taxes potentially imposed on imports
In addition to import duty and import VAT, there are other taxes that may be applied to imported goods. These taxes include SST, environment protection tax, anti-dumping tax, safeguard tax and anti-subsidy tax, which are applied to a limited number of goods.
The customs authorities perform post customs audits either at their offices or at the taxpayers’ premises. These inspections normally focus on issues including HS code classification, valuation, origin of goods, and customs finalization reports on duty exempted materials imported for processing or manufacturing of goods for export.
Warren B’s Tax & Accounting Services
Warren B provides Tax & Accounting Services for businesses throughout their business operations in Vietnam. Warren B’s custom support and streamlined operations will ensure a more successful trade for your business.Whether you want to establish a trading company or secure your import and export licenses in Vietnam, our team of professional consultants and legal specialists are at your disposal.