Changing 10 tariffs under FTA: The budget is impacted negligibly

Scene of the press conference.

Revise the Tariff to align with the List

Mr. Pham Tuan Anh, Deputy Director General of the International Cooperation Department, Ministry of Finance, said that in order to comply with the list of export and import goods of Vietnam and the implementation of the Customs Law, in the coming years, the Ministry of Finance has submitted to the Government for promulgation 10 Decrees of the preferential import tariff of Vietnam in the period 2018-2022/2023 , effective from 1st January, 2018.

The promulgation of these decrees aims to ensure the stability and traceability of enterprises; additional provisions on import duty rates inside and outside tariff quotas. For imported goods subject to duty quotas, the special preferential import tax rates applicable to the volume of imported goods within the tariff quotas are specified in the Table of Taxes attached to the Decrees. The import tax rate outside the quotas shall comply with the Government's regulations at the time of import. Annual import volume regulated by Ministry of Industry and Trade.

At the same time, four specific conditions for application of special preferential duty rates are as follows: Goods in the Preferential Import Tariff promulgated together with the Decree, imported from countries that are members of the Agreement into Vietnam, is transported directly from the country of export to Vietnam; meet the provisions on the origin of goods under the Agreement and have a Certificate of Origin (C/O) in accordance with current law.

These Decrees also supersede the provisions on general explanatory notes and rules explaining the classification of goods in accordance with the List of Vietnamese Exports and Imports and its implementing guidelines.

Not sure to reduce car prices

Answering the reporter's question about the reason for the re-issue of 10 tariffs to implement the FTA while the new tariffs were promulgated in 2016, Mr. Pham Tuan Anh said: decrees promulgating preferential import tariffs in particular, to implement the FTAs for the period 2016-2018, are based on the List of Vietnamese Exports and Imports under the ASEAN Harmonized Tariff Nomenclature (AHTN 2012).

In order to ensure compliance with international commitments and fulfill the tasks assigned by the Government Resolution on the implementation of the AHTN 2017, the Ministry of Finance issued Circular No. 65/2017 / TT-BTC on the List Export, import goods of Vietnam under AHTN 2017. Therefore, in order to unify the list of export and import of Vietnam and the provisions of the Customs Law, the Government should issue a new decree promulgating the tariff. Vietnam's special preferential treatment for the implementation of the FTAs 2018-2022 on the basis of AHTN 2017.

The AHTN 2017 list includes 10,813 rows at the 8-digit level. Compared to the 2012 AHTN List, the AHTN 2017 list has increased to 1,255 lines, keeping the description and code of the 7,810 lines, lumped 682 lines; Rip, transcode, and open the line with the new description of 2,321 lines. As a result, the preferential import tariff also changes in line with the number of tariff lines and some of the tariffs due to the tax break, transposition and the opening of new tariff lines.

Adhering to the principle of tariff development in FTAs, for commodity lines aggregated from many different tariff lines, the Ministry of Finance has implemented line details up to 10 digit levels to keep original commitment. However, splitting the line is not technically feasible for some commodity groups, leading to a change in tax rates.

Assessing the impact of the implementation of integration commitments, the International Cooperation Department confirmed that the effect is not much. When issuing tariffs from 2016, the Ministry of Finance has assessed the overall picture of joining the FTAs in order to define clear guidelines. From the perspective of the Ministry of Finance, in general, the adjustment will reduce the state budget revenues. However, this has been studied and reflected publicly by the Ministry of Finance's specialized agencies through forecasting and reporting in the course of budgeting and finalization.

Particularly for 10 new tariffs, Mr. Tuan Anh said that the main requirement of the issuance of 10 decrees is mainly derived from the change of the list, of which about 5% of tariff lines have the tax rate change, 5% adjusted due to AHTN conversion effect. Thus, the impact on state budget revenues of this change is not as great as the promulgation of the tariffs in 2016, in other words almost no impact.

As for auto items, when the import tax on ATIGA is 0% from 1st January, 2018, if other elements to calculate the sale price remain the same, the reduced tax will help reduce the selling price. However, whether the reality is reduced or not will need the overall assessment rather than be based solely on import tax.