Developing special preferential import tariff schedule to implement Vietnam - Laos Trade Agreement for 2024-2029

Special preferential import tariff for the implementation of ACFTA: The average tax rate for the period 2023 - 2027 is about 3.05%

Import and export activities across Lao Bao International Border Gate, Quang Tri.

In order to implement Vietnam's commitment on import tax under the Vietnam - Laos Trade Agreement, the Government issued Decree No. 127/2022/ND-CP stipulating the special preferential import tariff schedule to implement the Vietnam - Laos Trade Agreement, which took effect from December 30, 2022 to October 4, 2023. Currently, the Decree is invalid. According to the Ministry of Finance, the issuance of Decree No. 127/2022/ND-CP has been implemented in accordance with the roadmap of Vietnam's commitment to reduce special preferential import taxes under the provisions of the Vietnam - Laos Trade Agreement and the Vietnam’s Nomenclature of imports and exports, and contributed to supporting customs statistics on import and export, ensuring consistency and uniformity, creating a transparent business environment in terms of tax rates, facilitating businesses and customs authorities in implementation.

On April 8, Vietnam and Laos signed the Vietnam - Laos Trade Agreement, which will take effect for five years from the effective date. The development and promulgation of the Decree promulgating Vietnam's Special Preferential Import Tariff schedule to implement the Vietnam-Laos Trade Agreement for the period 2024-2029 is necessary to implement international commitments, ensure the consistency of the legal system and the Law on Export and Import Tax 2016.

The draft Decree is built on the basis of inheriting the provisions of Decree No. 127/2022/ND-CP dated December 30, 2022, including regulations that have been applied stably and have not arisen problems during the implementation. In addition, to implement Clause 3, Article 3 of the Agreement regulating the application of special preferential tax rates to the quota of sugar products, Article 7 of the draft Decree will supplement a provision specifying this content. List of goods originating from Laos under the Vietnam - Laos Trade Agreement, including 3 Appendices: List of goods eligible for 50% reduction of Vietnam's ATIGA tax rates under the Vietnam - Laos Trade Agreement (Appendix 1); List of goods not eligible for tariff incentives under the Vietnam - Laos Trade Agreement (Appendix 2); List of goods eligible for annual tariff quota regime under the Vietnam - Laos Trade Agreement (Appendix 3).

Regarding the regulation on imported goods subject to the special preferential import duty rate of 0%, Article 4 of the Draft stipulates that imported goods originating from Laos (except for imported goods in the list of goods in the 3 Appendices issued with the Decree) are subject to the special preferential import duty rate of 0% if they meet two conditions, including goods imported from Laos to Vietnam, and meet the regulations on origin of goods (including regulations on direct transportation) and have Certificate of Origin form S (C/O form S) issued by a competent authority of the Lao People's Democratic Republic in line with the provisions of the Vietnam - Laos Trade Agreement and current law.

Regarding the provisions on imported goods eligible for 50% reduction of the ATIGA tax rate, the Draft stipulates that imported goods originating from Laos in the list of goods specified in Appendix I issued with the Decree are eligible for a special preferential import tax rate of 50% of the ATIGA tax rate. If the ATIGA tax rate is higher than the preferential import tax rate prescribed in the Government's Decree on Export Tariff Schedule, Preferential Import Tariff Schedule, and List of commodities and their absolute, mixed, and out-of-quota import duty rates (MFN Tariffs), the special preferential import tax rate will be applied at 50% of the tax rate prescribed in the MFN Tariffs.

For unprocessed tobacco leaves and tobacco leaf waste, these commodities are in the tariff quota list under WTO commitments. According to the provisions of the Draft, in case of imports within the quota prescribed in Appendix 3, the tax rate of 0% will be applied, in case of imports exceeding the quota, the special preferential import tax rate under the Agreement will not be applied.

Sugar and related products (HS code 17.01) originating from Laos will enjoy 50% reduction of ATIGA tax rate when imported into Vietnam (specified in Appendix 1) if the quantity of imported sugar is within the tariff quota that Vietnam announces annually and applies to all WTO members, including Laos.