Overall, enterprises must submit import duties when these companies import goods to Vietnam. There are four cases to apply import duties to goods: ordinary tariff, preferential tariff, special preferential tariff, and supplementary tariff.
Moreover, depending on each type of product, enterprises might have to pay at least one duty among these kinds of taxes: Value-added Tax (VAT), Special Consumption Tax, and Environmental Protection Tax.
I. Import Duties
1. Definition:
Import duties are fixed tax rates issued by customs of a special country or a continent for goods imported from other countries and continents.
2. Effects:
- Increase the government revenue
- Reduce competition with domestic goods
- Achieve a balance of trade
- Prevent dumping activities
3. Characteristics:
- Imported duties are indirect taxes levied on goods. The tax cost is included in the selling price.
- Import tax is only applied to products, not services.
- All enterprises that legally import goods into Vietnam must fulfill the obligation to pay import tax.
4. Four cases for imposing import duties:
Basically, Vietnamese businesses need to consider one of the following four cases before applying import duties to goods imported to Vietnam.
a. Ordinary tariff rates:
According to Decision No. 45/2017/QĐ-TTg, ordinary taxes are applied for imported goods. For products with a 0% preferential tariff, the Prime Minister shall determine the particular tariff rate based on Article 10 of the law.
b. Preferential tariff rates:
Vietnam applies preferential tariff rates for imported merchandise originating from countries, groups of countries, or territories that have committed to Most-Favored-Nation MFN/ WTO treatment. This policy is also extended to goods from non-tariff zones if they meet the rules of origin from countries, groups of countries, or territories that have committed to MFN treatment.
c. Special preferential tariff rates:
A special preferential tariff rate applies to imported goods originating from countries, groups of countries, or territories that have a special preferential agreement on commercial relationships with Vietnam. This principle also applies to goods from non-tariff zones imported to the domestic market if they meet the same rules of origin.
d. Supplementary tariff rates:
Regarding supplementary tariffs, Clause 5,6,7 Article 4 of the 2016 Law on Export and Import Taxes defines that:
- Anti-dumping tax is an additional import tax that is applied in case dumped products are imported into Vietnam causing or threatening to cause significant damage to the manufacturing or prevent the establishment of producing industry.
- Countervailing tax means an additional import duty shall be imposed when subsidized goods, that are imported to Vietnam, result in or threaten to cause significant damage to the manufacturing industry or prevent the formation of this industry.
- Safeguard tax is an additional import duty imposed when items are over-imported into Vietnam resulting in catastrophic damage or threatening to cause catastrophic damage to domestic manufacturing industries or prevent the formation of these businesses.
In general, additional duty is applied to imported goods in the following two circumstances:
When the selling price of imported goods in Vietnam is considerably lower than the ordinary value of the products, often due to dumping or export subsidies, causing difficulties for domestic industries in Vietnam.
When imported products originate from countries that have discriminatory solutions against import duty or Vietnam products.
With many years of experience in customs consulting, UNI is a trusted partner for businesses in customer procedures and taxation. Contact UNI to get optimal support in tax reduction, tax exemption, and tax refund.
II. Other Vietnam’s Import Tariffs for Goods Imported to Vietnam
In addition to the import duties discussed above, businesses may be required to pay at least one of the following taxes upon importing goods into Vietnam:
1. Special Consumption Tax (SCT)
Special Consumption Taxes are indirect taxes levied on certain types of luxury products and services to regulate the production, importation, and consumption levels. While these taxes are paid by direct manufacturers of these goods, the ultimate burden falls on the consumer.
For a more detailed understanding of the goods subject to Special Consumption Tax, please refer to Article 2 of the Special Consumption Tax Law and Clause 2 of Decree 108/2015/ND-CP.
To learn about the goods that are exempt from Special Consumption Tax, refer to Article 3 of the Special Consumption Tax Law and Clause 3 of Decree 108/2015/ND-CP.
2. Value-added Tax (VAT)
Based on Article 2 of the Value-added Tax Law 2008, the Value-Added Tax (VAT) is the tax levied on the added value of goods and services generated throughout the production, distribution, and delivery of consumers.
To learn more about taxable and non-taxable entities, taxpayers, and calculation methods, deductions, refunds, and the place to pay value-added tax, please refer to Circular 219/2013/TT-BTC.
3. Environmental Protection Tax (EPT)
According to Clause 1 of Article 2 of the 2010 Environmental Protection Tax Law, the Environmental Protection Law is an indirect tax levied on products and merchandise whose use has a negative the environment. The taxpayers are manufacturers and businesses, but the ultimate burden of tax falls on the consumer.
Read the Environmental Protection Law 2010 more carefully to understand the taxable and non-taxable entities, taxpayers, basis for tax calculation, tax declaration, tax payment, and environmental tax refund.