514 import tariffs from Cuba to Vietnam cut to 0% from April 1

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The trade agreement between Vietnam and Cuba was signed on November 9, 2018. Photo: internet.

According to the Ministry of Finance, the Special Preferential Import Tariffsto implement the Vietnam-Cuba trade agreement from 2020 to 2023 issued together with the Decree includes 563 tariffs (AHTN2017 at the 8-digit level) with process of tariff reduction in four stages: From April 1, 2020 to December 31, 2020; from January 1, 2021 to December 31, 2021; from January 1, 2022 to December 31, 2022; and from January 1, 2023 to December 31, 2023.

Import tax rate with 514 tariffs (including some kinds of shrimp, fish, honey, some fruits (such as pineapple, avocado, guava, mango), cement, chrome ore, disinfectant, protective clothing, wireless network equipment and operating room lights will change to 0% as of April 1, 2020.

For the remaining tariffs (49), the decree specifies the commitment on reduction under the roadmap. Accordingly, commodities such as sugar (1701) and unprocessed tobacco (2401) will be cut within four yearsto a tax rate of 15% (in quota); cigarettes, cigars (2402) will be cut tax within four years to a tax rate of 70%; alcohol and alcoholic beverages (2204) will be cut within four years to a tax rate of 20%.

To enjoy the above special preferential tax rates, imported goods must meet four conditions, including: on the Special Preferential Import Tariffs promulgated together with this Decree; imported from Cuba to Vietnam; transported directly from Cuba to Vietnam and meet the rules of origin of goods in the Vietnam-Cuba Trade Agreement and have a Certificate of Origin (C / O) form VN-CU.

Particularly for the transport condition, the decree specified: transported goods do not pass through the territory of a non-member country; transported goods for the purpose of transit through a non-member country include or exclude transshipment or temporary storage in that country on the following conditions: Transit for geographical reason, delivery or transportation request; goods are not engaged in commercial or consumption transactions in the territory of a non-member country; goodsdo not undergo any other manufacturing or processing operations outside the territory of a non-member country, except unloading, reloading and splitting of consignments or any other necessary stages to store goods in good condition.

Earlier, talking to the Customs Newspaper about the impact on the budget revenue, the representative of the Department of International Cooperation, Ministry of Finance said, during the implementation of the tariffs, the average tax rate in the Vietnam-Cuba Trade Agreement gradually decreased from 3.43% to 2.12%. It is assumed that the import turnover over years remains and the rate of using certificates of origin of Vietnam - Cuba goods also remains, the reduction in special preferential import tax rate according to the Vietnam-Cuba Trade Agreement will lead to a reduction in revenue from import activities.

Thereby, if the growth rate of import turnover from the partner and the actual rate of using certificates of origin over years increase enough to make up for the reduction in import revenue from the partner, revenue from import activities will increase. And if vice versa, the revenue from import activities will decrease.

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If the rate of enjoying preference of goods origin of Vietnam - Cuba at 35% which is the high preferential rate compared to the average preferential rate in free trade agreementsin 2016 and 2017, the average rate of import tax reduction will be 22%.