LECTURE 4

IMPORT TAX AND EXPORT TAX

(TARIFF)
 Lecture 4: Import tax and export tax

1. Concept
2. Main regulations of import and export tax law of
Vietnam
1. Concept
o Tariff (import and export tax) – tax imposes on a good
when it crosses a national border
• Taxable objects?
• Taxpayers?
oTypes of tariff
specific tariff – fixed monetary amount per unit of the
exported/imported good
10.000 USD/one car
ad valorem tariff – fixed percentage of the value of the
exported/imported good
50% of the value of the car
compound tariff – combines the elements of specific
and ad valorem tariffs
10.000 USD/one car + 50% of the value of the car
One of the target of NAMA in Doha rounds (WTO): To
reduce or eliminate tariff barriers, including the reduction
or elimination of high tariffs, tariff peaks and tariff
escalations
 Tariff peaks?
 Tariff escalations?
oTariff peaks (Thuế đỉnh)
Ratio tariff peaks to total tariff
lines in some countries
Country 2009 2010 2011 2012
Argentina 25.2 24.3 21.2 20.9
Australia 5.7 0.0 0.0
Belgium 4.1 1.9 1.3 1.1
Bermuda 66.7 64.3 65.5 63.8
Brazil 26.3 26.4 27.5 28.1
Tariff peaks: high rate Canada 8.3 6.5 7.3
(>15%) , especially for China 13.5 11.2 13.6
sensitive products Denmark 4.1 1.9 1.3 1.1
Ethiopia 55.4 55.6 56.3 56.3
Germany 4.1 1.9 1.3 1.1
Japan 9.7 8.6 8.2 7.7
Lao PDR
Malaysia 16.9
Myanmar
South Africa 17.8 17.9 23.0 18.5
Thailand 20.5
UK 4.1 1.9 1.3 1.1
US 5.9 3.4 3.2 3.1
Vietnam - 23.6 - -
oTariff Escalation
o tariff escalation – higher tariffs on intermediate and finished goods
and lower tariffs on raw materials
o incentive for developing nations to expand production of raw materials

o disincentive for developing nations to compete in market for finished

goods
2. Main regulations of import and export tax law of
Vietnam

2.1 Taxpayers
2.2 Tax objects
2.3 Tax calculation
2.4 Tax incentives
Law No.107/2016/QH13 on Import & Export Tax
Decree No. 134/2016/NĐ-CP regulating in detail on import
and export tax law of Vietnam
Decree No 122/2016/NĐ-CP on Export tax & Preferential
Import tax, List of commodities with absolute rates, mixed
taxes, Import tax outside the tariff quotas
2.1 Taxpayers
1. Owners of exports and imports.
2. Entrusted exporters and importers.
3. People entering and leaving Vietnam carrying exports or imports,
sending or receiving goods through Vietnam’s border and border
checkpoints.
4. Taxpayers’ guarantors and other entities authorized to pay tax on behalf
of taxpayers
5. Any person who purchases or transports goods within the tax-free
allowance applied to border residents which are sold domestically instead
of being consumed or used for manufacture; foreign traders permitted to
deal in exports and imports at bordering markets as prescribed by law.
6. Owners of exports or imports that are initially tax-free but then taxed.
7. Other cases prescribed by law.

Article 3, Law No.107/2016/QH13 on Import & Export Duties.

2.2 Taxable objects:
1. Goods imported or exported through Vietnam's border-gates or borders;
2. Goods brought from the domestic market into non-tariff zones or from
non-tariff zones into the domestic market.
3. Goods indirectly exported-imported; goods exported and imported by
enterprises exercising their right to export, import, or distribute.
Objects not liable to tax:
1. Goods in transit or being transported across Vietnam's border-gates or
borders; goods transferred through border-gates as provided for by the
Government;
2. Humanitarian aid, non-refundable aid;
3. Goods exported from non-tariff zones to foreign countries, goods
imported from foreign countries into non-tariff zones for use in non-tariff
zones only, and goods transported from one non-tariff zone to another;
4. Goods being petroleum portions paid to the State in value as natural
resource tax when exported.
Article 2, Law No.107/2016/QH13 on Import & Export Duties.
2.3. Tax Calculation

(a) The actually imported or exported quantity of goods;

(b) Taxable value/Dutiable value;
(c) Tax rates
Ad-valorem rate

Specific rate
(b) Taxable/dutiable value
Taxable/dutiable value of exports shall be the selling price at the
border gate (FOB price, DAF price) excluding insurance (I) and
freight (F).

Taxable/dutiable value of imports shall be the actual price payable

calculated to the first import border gate.
Taxable/Dutiable value
 The Agreement on Customs Valuation would give customs
administrations the right to request further information of
importers where they have reason to doubt the accuracy of
the declared value of imported goods.
 If the administration maintains a reasonable doubt, despite
any additional information, it may be deemed that the
customs value of the imported goods cannot be determined
on the basis of the declared value, and customs would need
to establish the value taking into account the provisions of
the Agreement.
6 methods of determining
Taxable/Dutiable Value of Imports
Agreement on Customs Valuation (WTO):
 Trị giá giao dịch (Transaction value)
 Trị giá giao dịch của hàng giống hệt (Transaction value of
identical goods)
 Trị giá giao dịch của hàng tương tự (Transaction value of
similar good)
 Trị giá khấu trừ (Deductive Value)
 Trị giá theo tính toán (Computed Value)
 Phương pháp dự phòng (Fall-back method)
(c) Tax rate
Export tax rates:
Export tax rates are specified for every goods item in the Export Tax
Appendix I – Decree No. 122/2016/NĐ-CP (export tax of Vietnam)
Import tax rates: based on origin of goods
Appendix II – Decree No. 122/2016/NĐ-CP (preferential import tax of
Vietnam)
Ordinary tax rates shall be applied at the rate of 150% of the preferential tax
rate of each goods item specified in the Preferential Import Tax Tariffs.
Preferential tax rates: according to the most-favored-nation treatment
Special preferential tax rates: according to Vietnam’s commitment in FTAs:
 FTAs between ASEAN member states, between ASEAN members and Japan, ASEAN and
China, ASEAN and India, ASEAN and Korea, ASEAN and Australia - New Zealand,
Vietnam and Japan, Vietnam and Chile, Vietnam and Korea, Vietnam and Eurasian
Economic Union, Vietnam and the Customs Union of Russia, Belarus, Kazakhstan.
Tariff rate

Non-MFN and non -

preferential
Ordinary tax rates

MFN

Preferential tax rates

FTA, CU,
border trade,...
Special preferential tax rates
A Comparison of Tariff Rates
 Since the mid-90s tariff rates in most countries have fallen
 Generally, tariff rates in developing nations are higher than
developed nations
 However, developed nations often have highest tariffs in
agriculture, textiles, and other labor-intensive products –
the very products developing nations would like to export
 Average Tariff Rates for Low-,Middle-, and
High-Income Countries

Copyright © 2005 Pearson Addison-

6-19 Wesley. All rights reserved.
 Trends in Global Trade (1): Unilateral reduction of tariffs in
developing countries

Copyright © 2005 Pearson Addison-

6-20 Wesley. All rights reserved.
 Tax rate
Goods classification (Harmornised System)

Around 10,000 tariff lines at 10-digit HS level

 Safeguard duty

Addition to
Anti-dumping duty
tariff

Countervailing duty
2.4 Tax incentives
Tax exemption
Goods are provided for projects which are classified as encouraged sectors
and other goods imported in certain circumstances.
Imported or exported goods of foreign organizations and individuals enjoying
privileges and immunities in Vietnam
Assets transferred, gifts or presents in the norms of foreign organizations or
individuals to Vietnamese organizations or individuals or vice versa.
Machinery & equipment, specialized means of transportation and
construction materials (which cannot be produced in Vietnam) comprising the
fixed assets of encouraged investment projects;
Raw materials, supplies, components imported for processing of exports;
Goods temporarily imported or exported for the purpose of warranty, repair,
and replacement.
…..More details in article 16 of Law on export and import tax of Vietnam No.
107/2016

…
2.4 Tax incentives
Tax reduction
Imported/Exported goods which are damaged or lost in the
course of customs supervision and certified by a competent
authority are considered for tax reduction in proportion to
their actual damage or loss.
Local Customs Departments are responsible for considering
and making decisions on tax reduction based on the surveyed
quantity of actually lost and damaged goods.
2.4 Tax incentives
Tax refund
There are various cases where a refund of import duties is possible,
including for:
Goods for which import duties have been paid but which are not
actually physically imported;
Imported raw materials that are not used and which must be re-exported;
Imported raw materials that were imported for the production of
products for the domestic market but are later used for the processing of
goods for export under processing contracts with foreign parties.
… More detail in Article 19, Law on export and import tax of Vietnam No.
107/2016
2.5 Dodging Import Tariffs

o tariff avoidance – legal method of reducing or eliminating the amount

paid in tariffs
o example: Brazilian raw sugar shipped to Caribbean and refined there into ethanol then
imported to the U.S. duty free

o tariff evasion – illegal means of reducing or eliminating tariffs

o examples:

o false reclassification of products

o falsification of country of origin
o altering composition of product itself
 Exercises
Company A conducts some transactions as following, calculate the
export/import tax the company A has to pay as taxpayer?
1. Export 15,000 products at price of 45,000 VND/product
2. Authorize to export 10,000 products at price of 47,000 VND/product
3. Import 20,000 products at CIF price of 1USD/product,
4. Import 15,000kg raw material, FOB price at 1.4 USD/kg, international
transportation cost of 0.1USD/kg. Out of 15,000kg raw material, there are
5,000kg would be used for making products according to signed contract.
5. Import 10 second-hand automobiles at CIF price of 5,000USD/unit. During
transportation, there was 1 automobile was broken and lost 30% value
(according to inspection of customs).
Knowing that
 Export duty rate of 2% for products,
 Import duty rate of 10% for products and 1% for raw material; import
duty of 7,000/unit for second-hand automobile.
 Exchange rate 1 USD = 22,500VND