Note enterprises on tax policies and customs procedures in CPTPP

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The speakers at the talk. Photo of Nguyen Hue

Strong tariff cuts

Speaking at the seminar, Deputy General Director of the General Department of Customs Nguyen Duong Thai said CPTPP countries committed to abolish 97% to 100% of tariff lines for imported goods from Vietnam that meet the requirements of origin as prescribed by the CPTPP (depending on the commitments of each country). That means Vietnamese goods exported to member countries will be exempted or reduced. Vietnam also committed to eliminate tariffs on 86.5% of tariff lines for goods imported from member countries within 3 years, but still maintains tariff quotas for some goods like sugar, eggs, salt and used cars.

Providing information on Vietnam's export and import tax commitments in CPTPP, Vu Nhu Thang, Director of International Cooperation Department, Ministry of Finance said Vietnam has deeply applied a tax cut roadmap in the CPTPP.

Regarding import tax in the CPTPP, it will eliminate nearly 100% of tariff lines according to the schedule of 65.8% of tax lines with 0% tax rate after the agreement takes effect; 86.5% of tariff lines have a 0% tax rate in the 4th year since the entry into force of the agreement (2021); 97.8% of tariff lines have a 0% tax rate for the 11th year since the agreement comes into effect (2029). The remaining items will have import tax abolished with the maximum tax elimination schedule in the 16th year or according to tariff quotas.

Along with that, Vietnam also committed to abolish export tax for most items currently applied export tax, the roadmap is from 5-15 years after the agreement comes into effect. However, some important commodity groups (about 70 items), such as coal, lignite, crude oil, gold, some kinds of ore, minerals; agricultural products include group of 12.11 plants and parts of plants used for processing pharmaceuticals, fragrances (ginseng roots, licorice roots, frankincense) continue to maintain export tax.

Particularly for the agricultural sector, according to Tran Van Cong, Deputy Director of Department of Processing and Developing Agricultural Products, Ministry of Agriculture and Rural Development, the CPTPP has a higher aperture and a wider number of items compared with previous trade deals.Japan, in the CPTPP, pledges to reduce taxes on goods imported from Vietnam higher than previously deals ​​such as the Vietnam - Japan FTA (VJFTA) and ASEAN - Japan FTA (AJFTA). In which, some items such as yellowfin tuna, melon tuna, etc. will get a deeper tax reduction.

In previous FTAs, the tax reduction roadmap was also effective after six to 11 years but with the CPTPP, many tariff lines were cut immediately after the agreement came into effect.

Businesses raise questions about the application of the CPTPP to speakers at the talk. Photo: Nguyen Hue

Many notes for businesses

Not a deeper commitment to tax incentives, the CPTPP has more progress than other FTAs. According to Deputy General Director of Customs General Department Nguyen Duong Thai, the CPTPP inherited the rules of origin and advanced origin procedures from the Trans-Pacific Partnership (TPP). Specifically, the rules of origin of the CPTPP encourage the integration of member states and promote the formation of a complete supply chain among member states.

In addition, the certification procedure of the CPTPP is simplified compared to other FTAs. For the first time Vietnam has joined an FTA where the origin of goods may be certified by the manufacturer, exporter or importer.

If in previous FTAs, the certificate of origin must be issued by the competent authority of the exporting country or the country that produced the goods, the CPTPP has a simpler approach in which the importers are allowed to receiving origin for goods on the basis of goods information provided by the manufacturer or exporter. However, the certificate of origin of the importer will not be applied to imports into Vietnam up to five years after the CPTPP takes effect.

Besides new points of origin, commitments on import tax and export tax of CPTPP also have many remarkable points. To implement Vietnam's export and import tax commitments under the CPTPP, the Ministry of Finance develops and submits to the Government for promulgating a Decree on Export Tariffs and tariffs on special preferential tariffs of Vietnam under each stage for the period from 14 January 2019 to December 31, 2022. It is expected that the Decree will be issued in June.

Regarding points to be noted in the implementation of the preferential tariffs of the upcoming CPTPP agreement, Vu Nhien Thang said that only seven countries have signed the implementation of CPTPP so they want to enjoy preferential treatment. Enterprises must find out whether the market has enforced the agreement. In addition, enterprises must review export products and import lines, how to cut the roadmap.

In addition, according to Hoang Thi Thuy, Head of Administration Department 4, Department of Management Supervision, General Department of Customs, Export Tariff, preferential import tax is expected to have about 300 items with lower tax rates than normal tax. However, in order to apply the preferential corporate tax rate, there must be a preferential C/O (a difference in C/O in CPTPP is that the certificate of origin can be issued to many lots with conditions of no more than 12 months and can be issued to many different importers).

Within 12 months from the date of the declaration form to register for import procedures, the enterprise must submit a tax refund dossier to the customs office, including a written request for tax refund, proof of direct transport, import declaration form with import shipments to CPTPP member countries. Customs declarants make additional declarations of initial documents on the e-customs system. Customs authorities will issue tax refund decisions within five days from the date of filing.

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According to the representative of the Ministry of Finance, in the Government Tariff, the Ministry of Finance and the General Department of Customs will try to make a tax rate comparison table according to FTAs ​​compared to CPTPP so that enterprises can compare and choose to select the appropriate preferential tax rates. Therefore, enterprises can choose a larger preferential tax rate in existing FTAs ​​if they meet the requirements of origin of goods.