Vietnam’s trade policies are heavily influenced by import taxes, which have an impact on both people and companies who import products. Vietnam is attempting to control international commerce, safeguard its own sectors, and raise money for the government by imposing these taxes. A summary of the main features of Vietnam’s import taxes can be found below.
Structure of customs duty
Vietnam has a multi-layered levy structure that is determined by the sort of items and where they come from. The following are the main tariff categories:
Most favored nation (MFN) tariffs
According to World trading Organization (WTO) accords, these are the standard rates that are applied to imports from nations with whom Vietnam maintains regular trading ties. These rates, which often range from 0% to 30%, vary according on the product type.
Preferential tariffs
Goods imported from nations with whom Vietnam has free trade agreements (FTAs) are subject to these reduced tariff rates. For example, products traded between ASEAN nations often enjoy lower or zero duties under the ASEAN Trade in products Agreement (ATIGA).
General tariffs
Imported products from nations with whom Vietnam has no trade agreements are subject to general tariffs. Generally speaking, these rates are more than MFN rates.
Value added tax (VAT) on imports
Vietnam imposes a Value Added Tax (VAT), usually 10%, on imported items in addition to import charges. The customs value of the items, the import duty, and any relevant excise tax are added together to determine the VAT. A reduced VAT rate of 5% may be applicable to certain necessities, such as medical supplies and agricultural items.
Excise taxes
In addition to import duties and VAT, certain products —, for example, luxury merchandise and things considered risky to the climate or human wellbeing — are subject to excise charges. For instance:
- Tobacco and alcohol are subject to hefty excise taxes, which often surpass 50%.
- Depending on engine capacity, motor vehicle taxes range from 10% to 150%.
Customs valuation and calculation
The CIF (Cost, Insurance, and Freight) cost of the items fills in as the reason for the customs value that is utilized to work out import charges. The following formula is used to determine import duties: Import Duty = CIF Value × Duty Rate. For instance, the import duty will be $500 if the imported machinery’s CIF value is $10,000 and the appropriate duty rate is 5%.
Exclusions and Rewards
Vietnam offers a number of import duty exemptions and reductions for certain industries and uses.
Investment projects
Imported machinery and supplies for government-supported investment projects in fields like high technology and renewable energy may be duty-free.
Processing and manufacturing
Under the duty drawback system, imported raw materials and components used to produce export products are often free from import taxes.
Free trade zones
Import taxes are often waived for goods brought into bonded warehouses or free trade zones for processing or reexport.
Personal use
Import taxes do not apply to some commodities that are imported for personal use, such as those that fall within travelers’ duty-free allowances.
Import licensing and restrictions
Chemicals, medicines, and agricultural products are among the items that are subject to import quotas or specific import permissions. To prevent delays or fines, importers must make sure that these conditions are met.
Recent developments
Vietnam has been aggressively revising its tariff laws to promote economic expansion and conform to global trade agreements. There is a use of diminished or zero tariffs on items under the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). MFN taxes on certain items are gradually reduced in order to encourage trade liberalization.
In Vietnam, import taxes are an essential part of the commercial system. They safeguard home industries and bring in money for the government, but they also cost enterprises money. Importers may maximize their operations and benefit from Vietnam’s trade advantages by being aware of the tariff structure, VAT consequences, and potential exemptions.
You may also find these articles helpful
