DRAFT DECREE ON VIETNAM’S PREFERENTIAL IMPORT-EXPORT TARIFFS FOR IMPLEMENTATION OF EVFTA
Europe-Vietnam Free Trade Agreement (EVFTA) was signed on June 30th, 2019. It was approved by the European Parliament on February 12nd, 2020 and by Vietnam on June 8th, 2020. This agreement will come into effect on August 1st, 2020.
To realize Vietnam’s commitment to opening commodity market in EVFTA, the Ministry of Finance (Vietnam) is drafting a Decree on Vietnam’s preferential export tariff schedule, specific preferential import schedule tariff for implementation the Free Trade Agreement between the Socialist Republic of Vietnam and European Union for the period of 2020-2022.
1. The preferential export tariff schedule
Schedule of preferential export tariff is prescribed in Appendix I attached in the Draft Decree on Vietnam’s preferential import-export tariffs for implementation of EVFTA. Preferential export tariff rates are separated into three periods, in 2020, 2021 and 2022.
- The contents of Appendix I:
The Appendix I stipulates 19 groups of commodities which are enjoyed the preferential export tariff schedule accordance with EVFTA as follows:
- Plants and parts of plants; Hydrogen and rare gases are enjoyed the lowest tax rate (0%).
- The tax rate of synthetic rubber and substitute for rubber is 1% and does not change during the duration from 2020 to 2022.
- 5% and 10% are tax rates applied to raw hides of animals. They remain unchanged over three years.
- There are three levels of tax rates applied to wood and articles of wood, wood charcoal. They are 0%, 5% and 10%; However, the tax rate of sleepers of wood reduces from 18.1% (in 2020) to 14.5% (in 2022); the average tax rate of wood sawn or chipped lengthwise is 5%; the tariff schedule of other commodities in this group fluctuates from 14.5% to 20%, depending on each commodity and each year in the stage of tax reduction.
- The tax rate of diamonds ranges from 5% to 10%; the tax rate of precious stones and semiprecious stones is 5% and 10%.
- The tax rate of articles of jewelry and parts thereof, of precious metal or of metal clad with precious metal is 0% and 2%, depending on each good in this group.
- Metals are imposed the high tax, except for some types of metals of which tax rates are 0%; The tax rate of waste and scrap of metals is highest in this group and can reach 20.6%.
- Compared with the above commodities, minerals are imposed the highest tax; Tax rates of some commodities reach 40%
- Subjects shall be eligible for the preferential export tariff schedule under the EVFTA
- Goods exported to EU members or territories under the EVFTA, including the United Kingdom of Great Britain and Northern Ireland; Territories which are members of Europe Union, except for Ceuta and Melilla.
- Goods are not specified in the schedule of preferential export tariff in Appendix I but they are specified in export tariff of the List of taxable commodity headings regulated in Decree No. 125/2017/ND-CP, hence, they have still applied export duty 0% when they are exported to EU members countries and above-mentioned territories.
- The criterion for application of preferential export tax rate under the EVFTA:
- Goods imported into EU members and territories according to regulations.
- Transport documents (copy) showing that members of the European Union and prescribed territories are the destination.
- Customs import declarations of export consignment originated from Vietnam, importing to EU member countries and territories (copy and English or Vietnamese translation where the language used on the declaration is not English).
- Procedures for applying preferential export tax rate under the EVFTA:
- Firstly, declarants shall declare tax in the export declaration, applying export tariff rate, calculating the tax payable themselves, paying tax according to the schedule of the import tariff in Directory for taxable products in Decree No. 125/2017/ND-CP.
- Secondly, within 1 year since the date declarants fill export declarations, they must adequately submit commodities records (01 copy) and provide supplementary tax documents to apply preferential export tariff rates according to EVFTA.
- Thirdly, customs authorities conduct the verification of dossiers and tax rates. If commodities address the criterion for application of preferential export tax rate accordance with EVFTA, customs authorities will refund the difference to declarants following the provisions of Law on tax administration.
2. The specific preferential import tariff schedule
Vietnam’s schedule of specific preferential import tariffs for the implementation EVFTA is stipulated in Appendix II attached at the end of the Draft Decree on Vietnam’s preferential import-export tariffs for implementation of EVFTA.
- The contents of Appendix II:
Appendix II stipulates 97 groups of commodities which are enjoyed the specific preferential import tariff schedule accordance with EVFTA as follows:
- The tax rates of the type of commodities are 0%. They are Live animals, Products of animal origin; Vegetable plaiting materials; Salt, sulfur, earth and stone; plastering materials, lime and cement; Furskins and artificial fur; Pulp; Textile materials and textile products; Other base metals; Aircraft, spacecraft, and parts thereof; Musical instruments, parts and accessories of such articles.
- Some commodities are imposed the average tax rates such as Preparations of cereals, flour, starch or milk; pastrycooks' products; Preparations of vegetables, fruit, nuts or other parts of plants; Miscellaneous edible preparations; Articles of leather,...
- Meat and edible offal of the poultry; Beverages, spirits and vinegar; tobacco and manufactured tobacco substitutes are commodities imposed the highest tax rate in Appendix II. Specifically, the tax rates of cigars are very high. In the stage of tax reduction, it is reduced from 126.5% (in 2020) to 111.8% (in 2021) and 109.6% (in 2022).
- The remaining items have low tax rates, from 0% to 20.4%. Their tax rate obeys the clear stage of tax reduction through three years (2020, 2021, 2022).
- Subjects shall be eligible for preferential import tariff schedule under the EVFTA
Commodities are imported to Vietnam from:
- Members of EU, except for Ceuta and Melilla;
- Principality of Andorra;
- The Republic of San Marino;
- United Kingdom of Great Britain and Northern Ireland;
- The Socialist Republic of Vietnam (Commodities are imported from the non-tariff zones to the domestic market).
- The criterion for application of preferential import tax rate under the EVFTA:
- Goods present in the list of special preferential import tariff schedules which prescribed in Appendix II of the Draft Decree;
- They are subjects applied special preferential import tax rates under the EVFTA;
- They meet rules of origin, having the certificate of origin according to EVFTA.
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