Vietnam Tax - C3 Export and Import Duty - preclass.pdf

Vietnam Tax - C3 Export and Import Duty

1. Taxation and Tax System in Vietnam PhD. Tran Nguyen Chat
FTU-HCMC 1
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PhD. Tran Nguyen Chat
Foreign Trade University – Hochiminh City Campus
E-mail: [email protected]
FOREIGN TRADE UNIVERSITY
HOCHIMINH CITY CAMPUS
TAXATION AND TAX SYSTEM IN VIETNAM
Export and Import Duty
2
Chapter 3
Contents
3.1. Overview of Export – Import tariff
3.2. Vietnam’s legislation on Export – Import duty
3.3. Practice tests
Export – Import tariff
Concept
A tariff is an indirect tax imposed by a
government on goods across customs borders,
especially goods imported from other countries
that serves to increase the price and make
imports less desirable, or at least less
competitive, compared to domestic goods.
Export – Import tariff
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Concept
Tariffs are essentially border taxes charged on
imported or exported goods. They normally
don't apply to services. Tariffs are collected by
customs officials and go to the government
budget.
Export – Import tariff
Purposes
Governments may impose tariffs to raise revenue
or to protect domestic industries – particularly
infant ones –from foreign competition.
By making foreign-produced goods more
expensive, tariffs can make domestic-produced
ones more attractive.
Export – Import tariff
Purposes
By protecting these industries, governments can
also protect jobs.
Tariffs can also be used as an extension of
foreign policy: imposingtariffs on a trading
partner's main exports isa way to exert economic
leverage.
Export – Import tariff
Purposes
Tariffs are generally introduced as a means of
restricting trade from particular countries or
reducing the importation of specific types of
goods.
Export – Import tariff
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Unintended side-effects
Tariffs canmake domestic industries less
efficient by reducing competition.
An attempt to pressure a rival country using
tariffs can devolve into an unproductivecycle of
retaliation, known as a trade war.
Export – Import tariff
Unintended side-effects
Tariffs can hurt domestic consumers since a lack
of competition tends to push up prices.
Tariffs can generate tensions by favoring certain
industries over others, as well as certain regions
over others: tariffs designed to benefit
manufacturers in cities may hurt consumers
inrural areas, who do not benefit from the policy
and are likely to pay more for manufactured
goods.
Export – Import tariff
Law No. 107/2016/QH13 dated April 06, 2016
THE LAW ON EXPORT AND IMPORT DUTIES
Export – Import tariff
Export-import goods tariff nomenclature
(schedule):
oEach country has an export-import goods
tariff nomenclature/Schedule
oVN tariff is based on HS with 98 chapters
oThere are export tax rate & import tax rate
Export – Import tariff
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4. Taxation and Tax System in Vietnam PhD. Tran Nguyen Chat
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•Ad valorem duty means tax expressed as a
percentage of the taxable value of exports
and imports.
•Specific duty means a fixed amount of tax
imposed upon a unit of exports and imports.
•Mixed duty means the total amount of
percentage tax and specific tax.
•Optional duty
Export – Import tariff
Tax calculation for exported goods
AMOUNT OF TAX = VALUE OF GOODS X TAX RATE (%)
Export – Import tariff
Tax calculation for imported goods
Percentage tax rate:


Value of goods → transaction value → 6 methods
Specific tax rate:
Mixed tax rate = percentage tax rate + specific tax rate
Export – Import tariff
Payable amount
of import duty
=
Taxable value
of import duty
x
The import
tax rate (%)
Payable amount
of import duty
=
Taxable volume
of import duty
x
The specific tax
rate of import duty
Additional Import duty
•Anti-dumping duty
•Countervailing duty
•Safeguard duty
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Tax rates for imported goods:
a) Preferential tax rates:
Preferential tax rates are the rates applicable to
imports originating from a country, group of countries
or territories which have reached agreements on most-
favored-nation (MFN) treatment in trade relations with
Vietnam.
The MFN tax rates shall be applicable to goods from a
non-tariff zone imported into the domestic market if
imports could satisfy the conditions on origin.
Export – Import tariff
Tax rates for imported goods:
a) Preferential tax rates:
Preferential tax rates are specified for every
goods item in the Preferential Import Tariff
Schedule.
Export – Import tariff
-04/01/1995: applying to WTO
-07/11/2006: WTO’s approval for membership
-11/01/2007: officially becoming 150
th
member of WTO
Vietnam’s commitment
-Tariff binding: 10.600 tariff lines (the whole tariff table)
-Tariff reduction: 23% in comparison to the current
average tariff (MFN) from 17,4% to 13,4% during 5 - 7
years
Export – Import tariff
Tax rates for imported goods:
b) Special preferential tax rates:
Special preferential tax rates are the rates
applicable to imported goods originating from a
country, group of countries or territories with an
agreement on special preferential import duty in
trade relations with Vietnam (such as FTA,
customs union, common market and other
cases of special preferential treatment).
Export – Import tariff
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Tax rates for imported goods:
b) Special preferential tax rates:
The FTA tax rate shall be applicable to goods
imported from a non-tariff zone into the
domestic market and which satisfy the
conditions on origin.
Special preferential tax rates shall be applicable
specifically to every goods item according to the
provisions of the agreements.
Export – Import tariff
Tax rates for imported goods:
c) Ordinary tax rates:
•Ordinary tax rates are the rates applicable to
imported goods originating from countries or groups
of countries which have not reached any agreement
on MFN or special preferential import tax rates in
trade relations with Vietnam.
•Ordinary tax rate is 50% (fifty percent) higher than the
preferential tax rate of each goods item specified in
the Preferential Import Tariff Schedule (or equal
to 150% MFN rate)
In case preferential rate is 0%, the Prime Minister shall
decide the application of ordinary rate
Export – Import tariff
Tax rates for imported goods:
a) Preferential tax rates (MFN/WTO rates)
b) Special preferential tax rates (FTA rates)
c) Ordinary tax rates (for all)
Export-import Tax calculation
The Harmonized Commodity Description and
Coding Systems generally referred to as
"Harmonized System" or simply "HS" is a
multipurpose classificationsystemofgoods
developed by the World Customs Organization
(WCO).
INTRODUCTION OF HARMONISED SYSTEM
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1. Concept:
•The Customs value on imported goods is
determined mainly for the purpose of
applying ad valorem duties.
• Constitutes the taxable basis for Customs
duties.
•An essential element for trade statistics, for
monitoring quantitative restrictions, tariff
preferences and for collecting internal
national taxes, etc.
Customs valuation
2. The WTO Valuation Agreement:
•The Agreement on Implementation of
Article VII of the General Agreement on
Tariffs and Trade 1994 (GATT 1994)
•Establishes a Customs valuation system
that primarily bases the Customs value on
the transaction value of the imported
goods
•The price actually paid or payable for the
goods when sold for export to the country
of importation, plus certain adjustments
Customs valuation
3. Valuation methods:
Transaction value method:
•Thismethodistheprincipalvaluation
methodandutilisedinrespectofmorethan
95%ofallimportations.
•TheCustomsValue,[theCustomsValue
forduty]isthetransactionvalueofthe
importedgoodswhensoldforexportto
Vietnam.Itisessentialthatthereisan
identifiablesaleofthegoodstoVietnam
Customs valuation
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Rule and methods for customs valuation
applicable toexportedgoods
The Customs value is the selling price of goods at
exporting checkpoint exclusive of international
insurance cost (I), international freight cost (F)
and determined by applying the valuation
methods.
Customs valuation applicable
to exported goods
Rule and methods for customs valuation
applicable toexportedgoods
The selling price of goods at exporting checkpoint
includes the selling price stated in the goods sale
contract or commercial invoices and expenses
related to exported goods at exporting checkpoint
matching relevant documents if these expenses
are not included in the selling price.
Customs valuation applicable
to exported goods
Rule and methods for customs valuation applicable
toimportedgoods
The customs value of imported goods is the actual price
of goods at the first importing checkpoint, determined by
applying 6 valuation methods in succession until the
customs value is determined.
If the customs declarant submits a request in writing, the
deductive value method and the computed value method
are interchangeable;
The customs value must be determined based on
documents, objective and quantifiable data.
Customs valuation applicable
to imported goods
1.The transaction value of the imported goods
2.The transaction value of identical goods;
3.The transaction value of similar goods;
4.The deductive value method;
5.The computed value method;
6.The fall-back/ residual method.
Customs valuation applicable
to imported goods
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Transaction value of imported goods is the price actually paid
or payable by the buyer to the seller for purchase and
importation of the goods after being adjusted according to
additions (taxable factors) and deductions (non-taxable
factors) stipulated by the legislation.
“actually paid” means, at the time of customs valuation, the buyer
has paid the seller in cash or via non-cash means of payment or offsetting
of liabilities between both parties as shown in actual payment documents
between the buyer and the seller.
“payable” means, at the time of customs valuation, the buyer has
yet to pay the seller in cash or via non-cash means of payment or
offsetting of liabilities between both parties and there is no actual payment
records between the buyer and the seller.
TRANSACTION VALUE
The price actually paid or payable is the total payment
made or to be made by the buyer for imported goods,
either directly or indirectly, to the seller to purchase the
imported goods.
“direct payment” means the buyer directly pays the seller in
cash or via non-cash means of payment without the involvement of a
third party. Credit institutions providing payment services for buyers
and sellers are not considered a third party.
“indirect payment” means the buyer pays the seller in cash or
via non-cash means of payment via a third party at the request of the
seller or when the buyer requests a third party to represent the buyer to
pay the seller or via offsetting of liabilities between both parties. Credit
institutions providing payment services for buyers and sellers are not
considered a third party.
TRANSACTION VALUE
The price actually paid or payable is the total payment
made or to be made by the buyer for imported goods,
either directly or indirectly, to the seller to purchase the
imported goods, including:
a) Buying price on commercial invoice;
b) The amounts payable by the buyer but not yet included in the
buying price on commercial invoice, including:
b.1) Amounts actually paid or payable (e.g. advance for goods,
deposit for the production, trade, transportation and insurance of
goods);
b.2) Indirect payments to the seller.
c) Additions (taxable factors) and deductions (non-taxable factors)
TRANSACTION VALUE
04 conditions for application:
(a) There are no restrictions as to the disposition or use of
the goods by the buyer except for the following ones:
a.1) The restrictions prescribed in Vietnam’s laws;
a.2) The restriction on places where goods may be sold after
importation;
a.3) Other restrictions that do not affect the value of the goods.
These restrictions are one or multiple factor(s) that is/are directly
or indirectly related to the imported goods without leading to
increase or decrease of the price actually paid or payable for such
goods.
TRANSACTION VALUE
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04 conditions for application:
b) The sale or price is not subject to some condition,
payment or consideration for which a value cannot be
determined with respect to the goods being valued
In case the sale or price of the goods depends on one or
several condition(s) but the buyer possesses objective and
valid documents for the determination of the pecuniary impact
of such dependence, this condition shall still be regarded as
being satisfied.
Upon customs valuation, the adjustments of the pecuniary
impact of such dependence must be added to or deducted
from the transaction value.
TRANSACTION VALUE
04 conditions for application:
c) No part of the proceeds of any subsequent resale,
disposal or use of the goods by the buyer will accrue
directly or indirectly to the seller, unless an appropriate
adjustment can be made in accordance with the
legislation.
After reselling, transferring or using the imported goods, except for
the additions stipulated by the legislation, the buyer is not required to
pay any additional sum from the amount of money collected from the
disposal of the imported goods.
d) The buyer and the seller have no special
relationship; if any, such relationship does not affect
the transaction value.
TRANSACTION VALUE
A seller and a buyer are regarded as in a special
relationship in any of the following cases:
a) Both of them are employees or one is an employee
and one is the director of another enterprise;
b) Both of them are general partner contributing capital
to the same business that is legally recognized;
c) One of them is a person hiring the other;
d) One has the power to control the other;
dd) They are both controlled by a third party;
e)Theybothcontrolathirdparty;
TRANSACTION VALUE
A special relationship in any of the following cases:
g) They have any of the following family ties: husband and
wife, parents and children recognized by law,
grandparents and grandchildren with consanguinity,
aunts/uncles and nephews/nieces, siblings,
brothers/sisters-in-law;
h) A third person owns, controls or holds at least 5% of the
voting shares of both parties;
i) Parties associated in business with one another where
one party is the sole agent, sole distributor or sole
franchisor of the other party will be regarded as in a
special relationship if the relationship is conformable with
the provisions.
TRANSACTION VALUE
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Additions (Taxable factors)
03conditionsfor application:
i.These additions shall be paid by the buyer and have
not been included in the actual or future payment;
ii.These additions shall be related to the imported goods;
iii.There shall be objective and quantifiable data
conformable with the relevant documents.
If theimportedgoodshave additions withoutobjectiveand
quantifiable datatodetermine customs value, such value
shallnot bedeterminedbythetransactionvaluebut the
nextmethod instead.
TRANSACTION VALUE
Additions (Taxable factors)
a) The sale commission costs, the brokerage fees.
b) Costs of packing associated with imported goods,
including buying price of packaging and other costs
relating to the trade and transport of packaging to the
place of packaging and preservation of goods.
TRANSACTION VALUE
Additions (Taxable factors)
c) The packaging costs, including:
c.1)The cost for packaging materials including the
buying price of packaging material and other costs
relating to the trade and transport of packaging material
to the place of package;
c.2) The cost for packaging staff, including the salaries
and costs relating to the employment of staff for
packaging the goods receiving customs valuation.
TRANSACTION VALUE
Additions (Taxable factors)
d) The aid: The value of goods and services that the
buyer provided free of charge or with discount are
transferred directly or indirectly to the manufacturer or
seller to produce and sell exported goods to Vietnam.
dd)Thecopyright fees, royalties/ license fees.
e) The sums that the importer shall pay, except for the
proceeds from resale and use of imported goods shall be
transferred directly or indirectly to the seller in any shape
or form.
TRANSACTION VALUE
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Additions (Taxable factors)
g) Transportation costs and any costs relating to the
transportation of imported goods to the first importing
checkpoint, exclusive of costs for loading, unloading and
arranging of goods taken from the transport vehicle to the
first importing checkpoint.
h)The insurance cost of the imported goods at the first
importing checkpoint.
TRANSACTION VALUE
Additions (Taxable factors)
i) The costs of transportation and insurance
mentioned in points (g) and (h) of this clause
are exclusive of payable added-value tax in
Vietnam.
Ifsuch tax isincludedinthetransportcost,
international insurance costorintheactualor
future payment,itwillbedeductedfromthe
customsvalueoftheimportedgoodsifthey
satisfysufficientlytheconditions.
TRANSACTION VALUE
Rules for fee/charge allocation
In case there are many types of goods without
specifications on the transportation contract or the
documents relating to the transport of goods, the customs
declarant shall apply any of the following methods for fee
allocation:
•Allocation on the basis of the transport price list provided
by the person in charge of transporting goods;
•Allocation by weight or volume of goods;
•Allocation according to the ratio/proportion of buying
value of each type of goods compared to the total value
of the shipment.
TRANSACTION VALUE
Deductions (Non-taxable factors)
03 conditionsfor application:
a)Thereshallbeobjectiveandquantifiabledata
conformablewiththerelevant documents which are
lawful and available at the time of valuation;
b)These deductions shall be included in the actual or
future payment;
c) The deductions shall be conformable with the
Vietnam’s legislation on accounting.
TRANSACTION VALUE
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Deductions (Non-taxable factors)
a) Costs for the activities arisen after the importation,
including the cost for construction, architecture,
installation, maintenance or technical assistance,
technical consultancy, cost of supervision and similar
costs;
b)The costs of transportation and insurance when the
goods have been transported to the first importing
checkpoint. If such costs are related tomultiplegoods
withoutspecifications, theyshallbedistributedaccording
totheprinciple;
TRANSACTION VALUE
Deductions (Non-taxable factors)
c) The amounts of taxes, fees and charges payable in
Vietnam included in buying price of imported goods. If
the amounts of taxes, fees and charge concerning
differentgoodswithoutseparation, they shallbe
distributedaccordingtotherate of buying value of each
typeofgoods.
d) Discount
dd) Costs the buyer bears that relating to the marketing
of imported goods,
TRANSACTION VALUE
Deductions (Non-taxable factors)
e) Cost for inspection of quantity and quality of goods
before import.
If such cost is agreed by the buyer and the seller and is included
in the actual or future payment from the buyer to the seller, it shall
not be deducted from the transaction value;
g) Cost for opening the L/C, remittance fee for the
payment for the imported goods, if such cost is the
payment from the buyer to his/her representative bank.
h) The interest in proportion to the interest rate according
to the financial agreement of the buyer and relating to the
purchase of imported goods
TRANSACTION VALUE
Article 16. Tax exemption
Article 17. Conditions and procedures for tax
exemption
Article 18. Tax Reduction
Article 19. Tax Refund
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Article 18. Tax Reduction
1. Imports and exports which are damaged or lost
in the process of supervision by the customs
office, and where such damage or loss is certified
by a competent evaluation agency, shall be
considered for a reduction of duty.
The level of reduction of duty shall correspond to the
ratio of actual loss of the goods. If imports or exports
are entirely damaged or lost, then duty is not payable.
LAW ON EXPORT AND IMPORT DUTY
Article 18. Tax Reduction
2 Procedures for reduction of duty shall be
implemented in accordance with the provisions of
the law on tax management
LAW ON EXPORT AND IMPORT DUTY
Article 19. Tax Refund
1. Duty shall be refunded in the following cases:
(a) The taxpayer has already paid import or
export duty but in fact there are no goods
imported or exported, or the imports or exports
are in fact less than the quantity for which duty
has been paid;
(b) The taxpayer has already paid export duty
but the exports must be re-imported in which
case there shall be a refund of export duty and it
is not required to pay import duty;
LAW ON EXPORT AND IMPORT DUTY
Article 19. Tax Refund
1. Duty shall be refunded in the following cases:
(c) The taxpayer has already paid import duty
but the imports must be re-exported in which
case there shall be a refund of import duty and it
is not required to pay export duty;
(d) The taxpayer has already paid duty on goods
imported for the purposes of production and
business but has put such goods into production
of export goods and has already exported the
products;
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Article 19. Tax Refund
1. Duty shall be refunded in the following cases:
(dd) The taxpayer has paid duty on machinery,
equipment, tools and/or means of transportation
belonging to an organization or individual who was
permitted to temporarily import them for re-export,
except in a case of leasing such items in order to
implement an investment project, to carry out
construction or installation of works or to serve
manufacture, [the duty shall be refunded] on re-export
overseas or on importation into a non-tariff zone.
LAW ON EXPORT AND IMPORT DUTY
Article 19. Tax Refund
1. Duty shall be refunded in the following cases:
The amount of the refund of import duty shall be
determined on the basis of the residual use value of
the goods on re-export calculated in accordance with
the period of time that they were used and/or in
circulation in Vietnam. There shall be no refund of
import duty paid if the use value of the goods has
expired.
There shall be no refund of any item of duty below the
minimum refundable limit prescribed in Government
regulations.
LAW ON EXPORT AND IMPORT DUTY
Article 19. Tax Refund
2. The goods prescribed in sub-clauses (a), (b) and
(c) of clause 1 above shall be entitled to a refund of
duty when they have not been used or have not
been processed [including processing for other
parties].
3. Procedures for a refund of duty shall be
implemented in accordance with the provisions of
the law on tax management.
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