Continue to adjust many tax rates in draft preferential import tariff

VCN  - Since the middle of March 2019, the Ministry of Finance has twice sent comments for the Draft Decree amending and supplementing Decree No. 125/2017 / ND-CP on the Tariff Schedule and preferential import tax to seek opinions of organizations and individuals. However, by mid-September, newly arising petitions continue to be sent. Currently, the Ministry of Finance has explained, absorbed and consulted again before submitting to the Government the final version.
tin nhap 20191002160732 Will Chinese HRC steel benefit if Vietnam raises tax?
tin nhap 20191002160732 When is the preferential import and export tariffs in the CPTPP issued?
tin nhap 20191002160732 Issuing Preferential Import Tariffs and Preferential Export Tariffs to implement CPTPP
tin nhap 20191002160732
Dairy products have not been considered for tax reduction. Source: Internet.

No reduction inc import tax

One item that is of interest to businesses is milk. The US Dairy Export Council offers a preferential import duty (MFN) reduction for the following products: skimmed milk powder; whole milk powder; cheese and curd; albumin milk. The reason given is that US dairy products are competitively priced, while US suppliers are the preferred supplier and current partner in developing and expanding to the international market of domestic dairy industry and domestic companies. In addition, Vietnamese milk suppliers are at high risk in ensuring sufficient supply for dairy products, while the lack of access to imported products with competitive prices under the MFN implies a potential risk for price stabilization. Lowering the MFN tax on imported products will help strengthen Vietnam's dairy industry.

Regarding this issue, the American Trade Association in Vietnam (AmCham Vietnam) proposes to consider reducing the import tax rates for infant formulas (1901.10.20) and health nutrition products (1901.10.91, 1901.90.11, 1901.90.39, 1901.90.91). These products are currently subject to the MFN tax rate of 10% and proposed by AmCham to be reduced to 7%. At the same time, it is also recommended to reduce the MFN tax on food products intended for infants or infants lacking lactase (2106.90.81) and others (2106.90.89) from 15% to 10% and other health nutrition products (2106.90.96) from 10% to 7%.

In fact, at present, skimmed milk powder has a MFN tax rate of 5%; ATIGA (Tariff under ASEAN Trade in Goods Agreement) is 0%, AANZFTA (Tariff Schedule of ASEAN - Australia / New Zealand) is 0-5%. Import turnover of this commodity in 2018 was US$172.9 million, mainly from countries with MFN tax rates. Similarly, cheese and curd products have an MFN tax rate of 10%; ATIGA is 0%, AANZFTA is 0-4%, import turnover in 2018 is US$12.6 million, mainly from countries with AANZFTA tax rates. Albumin milk products with MFN tax rate of 5-10%; ATIGA is 0%, AANZFTA is 0-4%, import turnover in 2018 is US$16.3 million, mainly from countries with MFN tax rates.

Items for infant formulas and medical nutrition products (1901.10.20, 1901.10.91, 1901.90.11, 1901.90.39, 1901.90.91) have an MFN tax rate of 10%-15%. Import turnover in 2018 was US$277 million, of which 63% was imported from ASEAN countries (Singapore, Thailand, Malaysia, Philippines). The special preferential tax rates for the above-mentioned goods codes for each ATIGA, VKFTA (Vietnam - South Korea) Agreement, AKFTA (ASEAN - South Korea Tariff) and AANZFTA are 0%. Particularly, the item number 1901.90.39 under the AKFTA Agreement is 20% in 2019, in 2021 it is 5%.

Newborn preparations for infants and young children (2106.90.81, 2106.90.89) have an MFN tax rate of 15%, WTO commitment of 20%; 2018 import turnover of the code 2106.90.81 is about US$600,000, mainly from the Netherlands and Portugal; code 2106.90.89 is about US$2 million, imported mainly from Korea, imported from the US is only about US$214,000. Other health nutrition products, item code 2106.90.96 has a MFN tax rate of 10% (WTO commitment is 15%). Import turnover of US$161 million mainly from Singapore and the USA. ATIGA's special preferential tax rate is 0%.

Through the aforementioned statistics, it can be seen that milk, curd, albumin are mainly imported from New Zealand, Singapore, Japan, USA, Australia and have enjoyed special preferential import tax rates under the free trade agreements signed by Vietnam (ATIGA, AANZFTA), and will continue to enjoy preferential treatment from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnam-Eurasian Economic Union (EAEUFTA). In the country, many businesses have been able to produce milk products and dairy products (Vinamilk, TH True Milk).

The Ministry of Industry and Trade has also issued a list of commodities that do not encourage imports, including milk products, and dairy products are on the list of price control and have a significant impact on consumption. In the past, the US and the European Chamber of Commerce have proposed several times to reduce tariffs on dairy products and then promoted the signing of the Vietnam-EU FTA and CPTPP. The United States is a party to the CPTPP, but has withdrawn from this agreement and is expected to negotiate a bilateral agreement with Vietnam.

Therefore, the Ministry of Finance proposed not to consider reducing taxes on commodities of groups 0402, 0406, 3502, 1901, and 2106 to promote FTA negotiations with the US. The Ministry of Finance proposes to keep the MFN import tax rates for dairy products and milk products in the categories 0402, 0406, and 3502 in order to support the domestic dairy industry to develop stably.

Tax breaks for diesel engines

Another product that has received much attention is cars. The Vietnam Automobile Manufacturers Association (VAMA) proposes to adjust the MFN tax rates for automotive engine products of codes 8408.20.22 and 8408.20.21 from 25% to 20% to ensure fairness for motor vehicle items (petrol and oil).

For oil engines with a cylinder capacity not exceeding 2,000cc under code 8408.20.21 and cylinder capacity of over 2,000cc but not exceeding 3,500cc code 8408.20.22, MFN tax rate is 25% and WTO commitment is 25 %, ATIGA is 0%, ACFTA is 20% (from 2019). Import turnover in 2018 was US$3.92 million, mainly from China and Japan. However, gasoline engines of heading 84.07 currently have a MFN tax rate of 20% (equal to the WTO ceiling commitment). Therefore, the Ministry of Finance proposes to reduce the import tax on goods with codes 8408.20.21, 8408.20.22 from 25% to 20% in order to agree with the tax rate for petrol engine products to unify the tax rate for goods that have the same nature, structure, utility and technical features (due to the 25% increase in petrol engine). In case of such tax reduction, the state budget revenue is expected to decrease by about VND49.4 billion.

Also related to cars, VAMA recommends clarifying the description in group 9845 (car gear box 9845.71.00 to 9845.80.00) to avoid misunderstandings for customs authorities as well as enterprises when applying because car gearboxes cannot be produced in Vietnam yet. Group 9845 prescribes tax rates for imported auto parts and components to implement Decision 229/QD-TTg of February 4, 2016, on mechanisms and policies for the implementation of the Strategy and Planning on development of the automobile industry.

According to the Ministry of Finance, these are domestically produced components and spare parts based on Circular No. 14/2015 / TT-BKHDT dated November 17, 2015 of the Ministry of Planning and Investment. Accordingly, the tax rate of 15% -25% is higher than the corresponding tax rates for these goods items in 97 Chapters of the Import Tariff. However, according to Circular No. 01/2018/ BKHDT (replacing Circular No. 14/2015 / TT-BKHDT), there are no names of gearboxes HS14, HS19, GT10, GT2, HDC (corresponding to the codes goods 9845.71.00 to 9845.75.00). Therefore, the Ministry of Finance proposed to remove the tax lines from 9845.71.00 to 9845.75.00. For reducer, screw, gear (code 9845.80.00), which are still listed in Circular 01/2018 / TT-BKHDT, remain in heading 9845.

Some other goods that can be produced domestically belong to key mechanical engineering, electricity - electronics and garments (Chapter 61, 62, 63, 84, 85, 87 Annex II - Preferential import tariff schedule) proposed by the Ministry of Industry and Trade to apply import tax rates according to the ceiling of the international commitments to which Vietnam is a member, since these are manufacturing sectors with great market potential. There is ample room for development to take advantage of the free trade agreements that Vietnam has signed.

Through review, the Ministry of Finance found that the tax rates for garment products of Chapter 61, 62, 63 were set by the ceiling of WTO commitments. For goods in the fields of mechanics, electricity - electronics in Chapter 84, 85, 87, the principle of promulgating the tax rates prescribed in the Law on Export Tax and Import Tax No. 107/2016 / QH13 is applied.

Specifically: “Encouraging the import of raw materials and materials, giving priority to domestic types that do not meet demand; focus on developing high-tech field, source technology, energy saving and environmental protection. In line with the State's socio-economic development orientation and commitments on export tax and tax imported in international treaties to which the Socialist Republic of Vietnam is a member. Uniformly applying tax rates to goods of the same nature, structure, utility and similar technical features; import tax rates are reduced gradually from finished products to raw materials; Export tax rates increase gradually from finished products to raw materials."

In the view of the Ministry of Finance, the special preferential import tax stipulated in the Government's Decrees to implement bilateral and multilateral agreements is implemented in accordance with the roadmap of committing tax rates, not speeding up compared to with a commitment to support domestic production and boost exports.

By Hong Van/ Huu Tuc

Related News

Milk as a cover for illicit drug transportation on airlines

Milk as a cover for illicit drug transportation on airlines

VCN - Authorities have dismantled a drug trafficking ring from abroad to Vietnam by air, arresting one suspect.
Many cases related to production of fake food prosecuted

Many cases related to production of fake food prosecuted

VCN - The production of fake food products has become more complicated. The Environmental Crime Prevention Police Department (C05, Ministry of Public Security) has proactively taken measures to combat, prevent and prosecute many violations.
Fixing VAT rates with fertilizers brings dual benefits to "3 houses"

Fixing VAT rates with fertilizers brings dual benefits to "3 houses"

VCN - According to representatives of various businesses, the current regulations regarding value-added tax (VAT) rates on fertilizers have created significant challenges for these businesses. The proposed amendments to the VAT Law for fertilizers, if implemented, have the potential to alleviate many of these difficulties, providing enterprises with better opportunities to capture market share and foster a more equitable market environment.
Positive signal from industrial production in the first 7 months of the year

Positive signal from industrial production in the first 7 months of the year

VCN - Industrial production in July 2023 continued to show positive signs, with a growth of 3.9% over the previous month and an increase of 3.7% over the same period last year. The above figures show that the production situation of enterprises is recording good signals.

Latest News

Step up negotiations on customs commitments within the FTA framework

Step up negotiations on customs commitments within the FTA framework

VCN - Promoting negotiations on customs commitments within the framework of free trade agreements (FTAs) plays an important role in facilitating import and export activities. These commitments not only help optimize the customs clearance process but also minimize costs and risks for businesses, opening up great opportunities for Vietnamese goods to access deeper into the international market.
Proposal to amend regulations on goods circulation

Proposal to amend regulations on goods circulation

VCN - To perfect the policy on customs procedures, inspection and supervision, enterprises and associations have contributed many ideas from practical activities. Thereby, the Drafting Committee (General Department of Customs) has more perspectives to build policies to meet the goal of facilitating trade and ensuring state management of customs.
Review of VAT exemptions for imported machinery and equipment

Review of VAT exemptions for imported machinery and equipment

VCN - The General Department of Vietnam Customs has directed provincial and municipal customs departments to review, inspect, and address issues related to the implementation of VAT exemption policies for specialized machinery and equipment used in agricultural production.
Customs tightens oversight on e-commerce imports

Customs tightens oversight on e-commerce imports

VCN - The General Department of Vietnam Customs has issued new directives to enhance the management of imported goods transacted through e-commerce platforms, addressing ambiguities and ensuring consistent enforcement across provincial and municipal customs departments.

More News

Bringing practical experience into customs management policy

Bringing practical experience into customs management policy

VCN - At the workshop to collect opinions from Southern Customs units on the draft Decree amending and supplementing Decree 08/2015/ND-CP dated January 21, 2015 of the Government; the draft Circular amending and supplementing Circular 38/2015/TT-BTC dated March 25, 2015 and Circular 39/2018/TT-BTC dated April 20, 2018 of the Minister of Finance, organized by the General Department of Customs last weekend, many Southern Customs units contributed specific contents from practical operations in the locality.
Businesses anticipate new policies on customs procedures and supervision

Businesses anticipate new policies on customs procedures and supervision

VCN - With this year’s import-export turnover estimated at nearly US$800 billion and forecasting to surpass this milestone next year, the business community holds high expectations for upcoming amendments and supplements to customs management, procedures, and supervision policies. These changes are expected not only to facilitate trade but also to enhance state management efficiency and support economic development.
Do exported foods need iodine supplementation?

Do exported foods need iodine supplementation?

VCN - Currently, Vietnamese processed food products, including seafood products, have been exported to more than 160 countries, and no country has yet required that "salt used in food processing must be salt with added iodine".
Amendments to the Value-Added Tax Law passed: Fertilizers to be taxed at 5%

Amendments to the Value-Added Tax Law passed: Fertilizers to be taxed at 5%

VCN - With the majority of National Assembly deputies voting in favor, the National Assembly officially approved the revised Value-Added Tax (VAT) Law during its afternoon session on November 26, 2024, as part of the 8th session's agenda.
Proposal to change the application time of new regulations on construction materials import

Proposal to change the application time of new regulations on construction materials import

VCN - To comply with the circular on quality management of construction materials, many businesses importing this item are complaining about difficulties and asking for an extension of the implementation time.
Ministry of Finance proposed to reduce VAT by 2% in the first 6 months of 2025

Ministry of Finance proposed to reduce VAT by 2% in the first 6 months of 2025

VCN - In order to promote the early recovery and development of production and business activities, contributing back to the State budget, the Ministry of Finance proposed to continue reducing 2% of VAT on groups of goods and services currently subject to a tax rate of 10% in the first 6 months of 2025.
Hanoi Customs resolves tax policy queries for enterprises

Hanoi Customs resolves tax policy queries for enterprises

VCN - Queries regarding customs consultation procedures and tax refunds due to price reduction clauses were addressed by the Hanoi Customs Department, providing clarity for businesses.
Regularly check tax obligations to avoid temporary exit suspension

Regularly check tax obligations to avoid temporary exit suspension

VCN - In order to avoid the situation of arriving at the airport or border gate and only finding out that you owe taxes and being temporarily suspended from leaving the country by the Tax Authority, the Tax Authority recommends that taxpayers regularly look up their tax obligations to have a plan to pay taxes on time, not letting the tax debt situation drag on and drag on.
Implementing the SAFE framework in Vietnam: Assessment through the lens of international standards

Implementing the SAFE framework in Vietnam: Assessment through the lens of international standards

VCN - In June 2005, the World Customs Organization (WCO) developed and adopted the SAFE Framework of Standards to Secure and Facilitate Global Trade. The SAFE Framework plays a crucial role in encouraging countries to modernize, enhance security, and facilitate trade within global supply chain management and Authorized Economic Operator (AEO) programs. This approach introduces a comprehensive method for cross-border goods management and promotes closer cooperation between Customs, businesses, and stakeholders. The Customs News presents a two-part series on implementing the SAFE Framework in Vietnam.
Read More

Your care

Latest Most read
Step up negotiations on customs commitments within the FTA framework

Step up negotiations on customs commitments within the FTA framework

VCN - In addition to promoting negotiations on customs commitments within the framework of FTAs ​​under negotiation, the General Department of Customs actively supports businesses to effectively utilize commitments in signed FTAs, especially CPTPP, EVFTA,
Proposal to amend regulations on goods circulation

Proposal to amend regulations on goods circulation

VCN - The Vietnam Association of Maritime Agents, Brokers and Services has proposes to amend and supplement regulations related to the transport of goods subject to customs supervision.
Review of VAT exemptions for imported machinery and equipment

Review of VAT exemptions for imported machinery and equipment

The General Department of Vietnam Customs has directed provincial and municipal customs departments to review, inspect, and address issues related to the implementation of VAT exemption policies for specialized machinery and equipment used in agricultural
Customs tightens oversight on e-commerce imports

Customs tightens oversight on e-commerce imports

The General Department of Vietnam Customs has issued new directives to enhance the management of imported goods transacted through e-commerce platforms
Bringing practical experience into customs management policy

Bringing practical experience into customs management policy

VCN - At the workshop to collect opinions from Southern Customs units on the draft Decree amending and supplementing Decree 08/2015/ND-CP dated January 21, 2015 of the Government; the draft Circular amending and supplementing Circular 38/2015/TT-BTC dated
Mobile Version