The current Law on Export and Import Duties became effective as from January 1, 2006. The Law repeals the Law on Export and Import Duties of 1993, the Laws on Amendment of and Addition to a Number of Articles of the Law on Export and Import Duties of 1993 and 1998. It unifies all regulations on duty exemption and reduction previously found in the Law on Foreign Investment, Law on Domestic Investment, Petroleum Law, Law on Science and Technology and other laws.
Under the Law, all goods which are exported or imported across Vietnamese borders, or pass between domestic market and a non-tariff zone and vice versa are subject to export or import duty except goods in the following circumstances:
- Goods in transit;
- Humanitarian and grant aid goods;
- Goods exported abroad from a non-tariff zone, goods imported from abroad into a non-tariff zone for consumption there, and goods passing between non-tariff zones;
- Oil and gas exports which are subject to natural resources royalties.
Because export duty is charged on a few items; therefore, the summary of the Law hereinafter refers to import duty only.
Rates and Dutiable Value
Under the new Law on Export and Import Duties, the import duty rates are classified into three columns: preferential rates (MFN rates), special preferential rates (such as the rates applicable to the imports from ASEAN Free Trade Area member countries) and standard rates. The standard rate is equal to 150% of the preferential rate for the same goods. To be eligible for the preferential or special preferential rates, the imported goods must be accompanied by an appropriate Certificate of Origin (“C/O”). Without such a C/O or when goods are sourced from non-preferential treatment countries, the standard rate is applied.
The current average MFN import duty rates are 23.5% for agricultural produce, and 16.6% for industrial products. Vietnam has committed to reduce these average rates to 21% and 12.6% respectively within five years after the country becomes a WTO member.
In addition to ad valorem rate, which is a percentage of value of the merchandise and most often applied, absolute duty, which is a specified amount per unit of weight or other quantity, may also be applied to certain goods. Currently, used passenger cars fewer than 16 seats are subject to absolute tax.
Generally, dutiable value for imports will be the transaction value for the delivery of the goods to the first Vietnamese border-gate pursuant to the contract (Please see more at Trade Regime chapter).
Apart from import duty, imports may be subject to one of the following taxes:
- Safeguard taxes as provided in the law on self-protection in import of foreign goods,
- Anti-dumping duty as provided in the law against dumping of imports into Vietnam,
- Countervailing duty as provided in the law against subsidized imports, or
- Anti-discriminatory tax applicable to goods originated from countries/territories where Vietnamese products are discriminated.
Declaration and Payment
Businesses are responsible for declaring, calculating and paying duties on their own.
For imported consumer goods (as specified by the Ministry of Trade), import duty must be paid prior to receipt of the goods; in a case where the payment of import duty is guaranteed by a credit institution, the time-limit for duty payment will be the term of the guarantee, but not longer than 30 days as from the date of duty declaration; for goods which may be considered for duty exemption, the time limit is 30 days from the date of duty declaration.
For raw materials and supplies imported for the manufacture of export goods, import duty must be paid within 270 days from the date of duty declaration; in certain cases, the General Department of Customs may consider the request of importers to allow a longer time limit for payment of import duty consistent with the manufacturing cycle.
For goods temporarily imported for re-export, duty must be paid within 15 days as from the expiry of the period allowed for temporary import.
For other goods, import duty must be paid within 30 days from the date of duty declaration.
Import duty will be paid in Vietnamese Dong based on the average inter-bank exchange rate published by the State Bank on the date of duty declaration.
Duty is exempted for imports in the following circumstances:
- Goods temporarily imported for participation in trade fairs, exhibitions, and introduction of products that will be re-exported thereafter;
- Machinery, equipment and professional tools which are temporarily imported in order to service work within a specified period and will be re-exported thereafter;
- Goods imported for processing for a foreign party which are then exported pursuant with the processing contract;
- Goods imported in order to form fixed assets of encouraged investment projects or ODA-funded projects, comprising:
(a) Equipment and machinery;
(b) Specialized means of transportation of a technological line and means of transportation used for transporting employees;
(c) Components, parts, fittings, moulds and accessories accompanying the equipment, machinery and specialized means of transportation mentioned in items (a) and (b) above;
(d) Raw material and material used to manufacture equipment and machinery in technological lines or to manufacture components, parts, fittings, moulds and accessories accompanying the equipment and machinery mentioned in item (a) above;
(e) Construction materials which are not yet domestically produced;
(f) Equipment and facilities imported for the first time pursuant to the list stipulated by the Government on investment projects for hotels, offices, apartments for lease, residential housing, commercial centers, technical services, supermarkets, golf courses, tourist resorts, sporting resorts, entertainment areas, medical diagnosis and treatment establishments and entities being training, cultural, financial, banking, insurance, auditing, and consultancy services establishments;
The import duty exemptions mentioned in item (a), (b), (c), (d) and (e) above will also apply to cases of project expansion or technology replacement and renovation;
- Goods imported in order to support petroleum operations, comprising:
(a) Equipment, machinery, replacement accessories and specialized means of transportation which are essential for petroleum operations;
(b) Materials which are essential for petroleum operations and which are not yet produced domestically.
- Goods imported for direct use in scientific research and development of technology including machinery, equipment, accessories, materials and means of transportation which are not yet produced domestically, and technology which is not yet created domestically; and scientific books and data.
- Raw material, material and component parts imported for operation of projects on the list of sectors where investment is especially encouraged or on the list of regions with especially difficult socio-economic conditions will be exempted from import duty for 5 years from the commencement of production.
- Goods which are manufactured, processed, recycled or assembled in non-tariff zones without using raw materials or component parts which are imported from abroad on import into the domestic market; in cases where imported raw material and component parts are used to manufacture goods which then are imported into the domestic market, import duty must be paid on the imported raw material or component parts.
- Other cases as may be decided by the Prime Minister.
- Imports in the following circumstances may be considered for exemption from duty:
- Goods which are imported for specialized use directly servicing national defense and security, or education and training; and goods which are imported for specialized use directly servicing scientific research; the General Department of Customs has the authority to decide on exemption.
- Gifts and sample goods of foreign organizations and individuals given to Vietnamese organizations and individuals within the levels stipulated by the Government. Local customs offices have the authority to decide on exemption.
If goods imported with duty exemption are used for some other purpose than that for which duty is exempted, then full duty must be paid.
Imported goods which are damaged or lost in the process of supervision by the customs office, and where such loss are certified by the competent body or organization, will be considered for duty reduction corresponding to the ratio of the actual loss.
Duty will be refunded in the following cases:
- Imports for which duty has already been paid and which are stored or retained at the border-gate under supervision of the customs office, and which are to be re-exported;
- Imports for which duty has already been paid but which are not in fact imported;
- Goods for which duty has already been paid but the actually imported quantities are smaller;
- Raw material and material imported for purpose of export manufacturing for which duty had already been paid before the actual export of the manufactured goods;
- Goods which are temporarily imported and then re-exported for which duty has already been paid;
- Imports for which duty has already been paid where such goods must be re-exported;
- Machinery, equipment, tools or means of transportation belonging to an organization or individual which has been permitted to temporarily import such items for re-export in order to implement an investment project, to construct building works, to install and assemble building works, to service manufacture or for another purpose and for which duty has already been paid.
- Overpaid duty due to incorrect duty declaration or calculation if the mistake occurred within a period of 365 days prior to the date when the mistake was detected.
The time limit for duty refund is 15 days as from the date of receipt of a complete application requesting a refund of duty.
Special Sales (Excise) Tax
Special sales tax is a form of excise tax that applies to the production or importation of certain goods and the provision of certain services. Special sales tax ranging from 10% to 75% is currently levied on the following items regardless of domestic or imported goods:
- Merchandise: cigar (65%), cigarettes (2006 – 2007: 55%, as from 2008: 65%), liquors (20%, 30% and 65% depending on alcohol content), bottled and canned beer (75%), draft and fresh beer (2006 – 2007: 30%, and from 2008 40%), automobiles under 24 seats (under 5 seats: 50%, from 5 to 15 seats: 30%, from 16 to under 24 seats: 15%), gasoline (10%), air conditioners up to 90,000 BTU (15%) , playing cards (40%), votive paper (70%);
- Services: discotheque, massage, karaoke (30%); casino, jackpot and gambling (25%); golf clubs (10%); lottery (15%).
The taxable value of imported goods is the customs value plus import duty.