Amendment of Special Preferential Import and Export Tariff Schedule to Implement CPTPP Agreement for the 2022-2027 Period

Photo: Collected

Previously, in order to implement Vietnam's export tax and import tax commitments under the CPTPP for the 2022-2027 period, the Government issued Decree No. 115/2022/ND-CP on preferential export tax schedules and special preferential import tax schedules of Vietnam for the 2022-2027 period and Decree No. 68/2023/ND-CP amending and supplementing a number of articles of Decree No. 115/2022/ND-CP.

These decrees apply to 10 member countries that have ratified the agreement, including Australia, Canada, Japan, Mexico, New Zealand, Singapore, Peru, Malaysia, Chile, and Brunei.

On June 25, 2024, the National Assembly passed Resolution No. 133/2024/QH15 on ratifying the document of accession to the CPTPP of the United Kingdom of Great Britain and Northern Ireland.

The Resolution assigns the Government to review relevant legal documents to promptly amend, supplement or issue new ones, ensuring the consistency of the legal system and the correct roadmap for implementing the commitments in the CPTPP Accession Document of the United Kingdom of Great Britain and Northern Ireland. The development and promulgation of a Decree amending and supplementing a number of articles of Decree No. 115/2022/ND-CP, which has been amended and supplemented by a number of articles under Decree 68/2023/ND-CP, is necessary to implement international commitments, ensure consistency of the legal system and be consistent with the Law on Export Tax and Import Tax 2016.

According to the Ministry of Finance, currently, the provisions of Decree No. 115/2022/ND-CP dated December 30, 2022 of the Government promulgating the preferential export tax schedule and special preferential import tax schedule of Vietnam to implement the CPTPP for the period 2022-2027 have been amended and supplemented by a number of articles under Decree 68/2023/ND-CP, but there are no provisions to implement commitments to the United Kingdom of Great Britain and Northern Ireland.

Therefore, the drafting of this Decree aims to supplement provisions applicable to the United Kingdom of Great Britain and Northern Ireland (including the three overseas territories of Guernsey, Jersey and the Isle of Man).

Accordingly, the draft proposes to supplement provisions on preferential export tax rates and special preferential import tax rates to apply to goods exported from Vietnam to the United Kingdom of Great Britain and Northern Ireland (including the three overseas territories above) or goods imported into Vietnam from the United Kingdom of Great Britain and Northern Ireland.

In addition, the Decree also supplements provisions on conditions for applying preferential export tax rates and special preferential import tax rates to apply to goods exported from Vietnam to the United Kingdom of Great Britain and Northern Ireland or imported into Vietnam from the United Kingdom of Great Britain and Northern Ireland.

According to the proposal of the Ministry of Finance, the Decree is developed according to a simplified order and procedure, and is expected to take effect from the date of signing.

In case the Decree is issued after the date of the Protocol requesting the UK to join the CPTPP Agreement takes effect, in order to facilitate businesses, the Ministry of Finance drafts regulations on handling excess tax payments in accordance with the provisions of the law on tax administration for customs declarations of goods exported from Vietnam to the United Kingdom of Great Britain and Northern Ireland or imported into Vietnam from the United Kingdom of Great Britain and Northern Ireland registered from the effective date of the Protocol to before the effective date of the amended Decree if they meet the conditions to enjoy preferential export tax and special preferential import tax prescribed in this Decree and Decree No. 115/2022/ND-CP, which has been amended and supplemented by a number of articles according to Decree 68/2023/ND-CP.

According to the Ministry of Finance, in 2023, the total bilateral trade turnover between Vietnam and the UK reached 7.14 billion USD (accounting for 1.05% of import-export turnover). Of which, export turnover reached 6.34 billion USD and import turnover reached 793.57 million USD.

Currently, according to the UK - Vietnam Free Trade Agreement (UKVFTA), the average tax applied to goods from the UK is 3.5%, of which 55.2% of tax lines are eliminated.

In the opposite direction, the UK is eliminating tariffs on 90.6% of tax lines for Vietnamese goods.

When joining the CPTPP, the UK will enjoy the same incentives that Vietnam currently offers to member countries with an average tax rate of 1.8% (of which 87.6% of tax lines are eliminated).

In contrast, the UK will eliminate tariffs on 94.4% of tariff lines for Vietnamese goods. With an import preferential rate of 15.2% and a low import proportion, the UK's accession to the CPTPP will not have much impact on the import and export structure of goods as well as import tax revenue.