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

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The tax schedule for the implementation of ACFTA in the period 2022-2027 includes 11,459 tax lines. Illustration: T.Binh

Agreement on Trade in Goods under the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China (hereinafter referred to as the ACFTA Agreement for short), signed on November 29, 2004, in Laos and a Memorandum of Understanding between Vietnam and China on several issues in the Agreement on Trade in Goods between ASEAN and China, signed on July 18, 2005, in China, and entered into force on October 19, 2005.

Implementing Vietnam's commitment to import tax in the ACFTA Agreement, the Government issued Decree No. 153/2017/ND-CP dated December 27, 2017, promulgating Vietnam's special preferential import tariff to carry on the Agreement of ASEAN-China Trade in Goods for the 2018-2022 period, which took effect from January 1, 2018. The tariff schedule issued with the above Decree is built according to the ASEAN Harmonized Tariff List 2017 version. In the period of 2018-2022, the promulgation of Decree No. 153/2017/ND-CP followed the commitment schedule to reduce Vietnam's special preferential import tax following the provisions of the ACFTA Agreement and according to the List of Vietnam's import and export goods for 5 years, and contribute to the support of customs statistics on import and export, ensuring synchronization, uniformity, creating a transparent business environment on tax rates, creating favourable conditions for businesses and customs authorities in implementation. Therefore, the process of implementing Decree 153/ND-CP, dated December 27, 2017, did not cause problems or inadequacies.

On March 8, 2022, the Government issued Resolution No. 29/NQ-CP approving the List of ASEAN Harmonized Tariffs version 2022 (the AHTN 2022 List). Accordingly, to achieve consistency with the List of export and import goods Vietnam that deploys the List of AHTN 2022 and to continue implementing the commitments on import tax in the ACFTA Agreement, the Ministry of Finance has developed and submitted to the Government for signing to promulgate Decree No. 118/2022/ND-CP dated December 30, 2022, promulgating Vietnam's Special Preferential Import Tariffs for the implementation of the Agreement of ASEAN-China Goods Trade for the 2022-2027 period. The scope of the Decree will cover all member countries of the ACFTA Agreement for which the Agreement has entered into force, including 10 ASEAN countries and China.

In line with the subjects of implementation of the Law on Import and Export Tax and the Law on Customs, the Decree stipulates 3 applicable subjects, including Taxpayers under the provisions of the Law on Import Tax and Export Tax; Customs authorities, customs officers; Organizations and individuals have rights and obligations related to imported and exported goods. Vietnam's import tax commitments under the ACFTA Agreement are signed based on the AHTN 2022 Goods List. To implement the commitments in the ACFTA Agreement, comply with the relevant ASEAN Customs Agreements. Regarding the application of the ASEAN Harmonized Tariff Nomenclature (AHTN) version 2022 of ASEAN and the Harmonized Commodity Nomenclature 2022 (HS) version of the World Customs Organization, the Ministry of Finance has made implementing the conversion of the ACFTA tariff from AHTN 2017 to AHTN 2022 to serve as the basis for promulgating Vietnam's ACFTA special preferential import tariff for the period 2022-2027.

The ACFTA tariff under AHTN 2022 for the period 2022-2027 includes 11,459 tax lines, including 11,376 tariff lines at the 8-digit level and 83 tax lines detailed at the 10-digit level. The code and description of goods are updated according to the Circular of the Ministry of Finance on promulgating the List of exported and imported goods of Vietnam with effect from December 1, 2022. According to the commitments in the ACFTA Agreement, by the end of the 2020 roadmap, 85.4% of the tariff lines in Vietnam's normal tariff list will reach 0%. Vietnam has fulfilled its tax reduction obligations according to the committed schedule under ACFTA from 2020, so the committed tax rate for 2022 - 2027 has not changed over the years. According to the ASEAN - China tariff reduction roadmap, the average tax rate (counting lines with tax rates) for 2023 - 2027 calculated on the total tariff schedule issued by the Decree is about 3.05%.

Imported goods that are eligible for special preferential import tax rates under the ACFTA Agreement must fully satisfy the conditions to be included in the Special Preferential Import Tariff promulgated together with the Decree; be imported into Vietnam from countries that are members of the ACFTA Agreement, including goods from the free trade zone imported into the domestic market; meet the regulations on origin of goods (including regulations on direct transportation), have a Certificate of Origin (C/O) form E or have a document certifying the origin of goods according to regulations provisions of the ASEAN-China Trade in Goods Agreement and following the current provisions of law.

The promulgation of Decree No. 118/2022/ND-CP dated December 30, 2022, on Vietnam's special preferential import tariffs to implement the ASEAN-China Trade in Goods Agreement for the period 2022-2027 strictly implements the commitments of the ACFTA Agreement and ensure the compatibility of the Decree with international treaties that Vietnam has signed; including compliance with the commitments in the ASEAN Customs Agreement (Article 19 of the ASEAN Customs Agreement) on the application of ASEAN's 2022 AHTN List and the World Customs Organization's 2022 version of HS List when developing Vietnam's special preferential import tariff schedule for the implementation of the ACFTA Agreement.

The provisions of Decree No. 118/2022/ND-CP dated December 30, 2022, promulgating Vietnam's special preferential import tariffs to implement the ASEAN-China Trade in Goods Agreement in the period 2022 – 2027 inherit the provisions of Decree No. 153/2017/ND-CP dated December 27, 2017, promulgating the Tariff for the implementation of the ACFTA Agreement for the 2018-2022 period. Accordingly, during the implementation of the Decree, the Ministry of Finance did not record cases where enterprises and customs offices encountered problems with the provisions of the Decree.