New regulations on import and export duties of Vietnam

On 6 April 2016, Vietnam’s 13th National Assembly passed a new law on export and import duties – Law No. 107/2016/QH13 (the “New Law””) in the progress to accelerate integration into international economy. Notable guidance of the New Law includes:

1. New regulations on tariffs and cases entitled for duty exemption

– Official allowing the application of special preferential tariffs on goods manufactured in non-tariffs zones if they meet the corresponding rules of origin.

– Material, supplies, components imported for manufacturing of export products shall no longer be subject to duty payment (timeline of 275 days) but subject to duty exemption instead. It means that, material, supplies, components imported for manufacturing of export products under the New Law shall enjoy the same duty treatment apply to goods imported for the processing of export goods.

– While goods which temporary imported for exporting currently are subject to import duty then refund when exported, shall be, under the New Law, duty exemption if having guarantees of credit institutions or already deposited the equivalent amount with import duty for these goods.

– Removing duty exemption on goods in the following cases:

• Goods imported to form fixed assets of ODA funded-projects;
• Equipment imported for the first time for the projects of hotel, office, apartment for lease, house, commercial central, investment projects in natural resources exploit, manufacturing projects in which the total value of natural resources and energy account for greater than 51 percent of the prices of products, etc…as such sectors are not incentive for investment under the 2014 law on investment.

– The New Law adds other cases that are entitled to duty exemption such as: imported goods with the value or duty payable below a minimum stipulated by the Government; imported on non-commercial goods that belong to prototypes, photos or videos of prototypes, advertising publication in low quantities; seeds, livestock breeds, fertilizers, pesticide products which have not yet to be manufactured in Vietnam; goods which have not yet manufactured in Vietnam for production and assembly for medical equipment for research and manufacturing priorities, environment protection, direct service education.

2. New regulations on anti-dumping duties, countervailing duties, and safeguard duties

The New Law, for the first time in Vietnamese tax legislation, a separate chapter on antidumping duties, countervailing duties and safeguard duties as such duties are currently governed by the three separate Ordinances issued by the Standing Committee of the National Assembly, namely Ordinance on Antidumping No. 20/2004/PL-UBTVQH11 dated 29 April 2004, Ordinance on Countervailing Duty No. 22/2004/PL-UBTVQH11 dated 20 August 2004 and Ordinance on Safeguard Measures No. 42/2002/PL-UBTVQH10 dated 11 June 2002.

The New Law, basically, repeats the relevant provisions under the three existing Ordinances mentioned above. Accordingly, anti-dumping duties, countervailing duties, and safeguard duties are in addition to normal import duties (if any), and are applied only after an investigation into the matter has been properly conducted and has resulted in an affirmative determination. The lesser duty rule is also applied. Anti-dumping duties and countervailing duties are to be imposed for a period of up to five (5) years, and maybe extended. With respect to safeguard duties, a period of maximum 10 years (including the original period of four (4) years and any extensions thereof) is applied.

The Ministry of Industry and Trade is responsible for making decision on applying anti-dumping duties, countervailing duties and safeguard duties. The Ministry of Finance shall handle the declaration, collection and refund of any duties. The New Law shall take effect from 1 September 2016, replacing the Law on Import, Export Duties No. 45/2005/QH11.