Import duty/tax (or import tariff) is generally refers to the taxes and fees charged by the government when importers bring goods into the country.
The purposes of import duty
-Increase national budget revenue
-Reduce import by applying higher tax rate compared to the domestic substitutes, then reduce trade deficit
-Act of anti-dumping
-Protection for key manufacturing sectors
When the vehicles transport commodities to the border, the customs officer will check the commodities, compare to the customs declaration to calculate for import duty receivable. Import duty need to be paid before customs clearance for domestic commodity circulation.
Import duty rate
When importing goods to Vietnam, the most concerned thing is how many percent of the tax rate. For the commodities which cargo owner/company already imported before, we only need to apply same tax rate. However, for the imported cargo in different year or changes in tax policy recently, it is necessary to check and search for current tax rate for import goods.
For the first time imported cargo, searching and applying proper HS code is also an important thing to do. After identifying HS code, the taxpayer can determine the percentage of imported goods tax rate
According to current regulations, import tax rates are divided into 3 categories
Preferential tax rate: Preferential rates are applicable to imported goods from countries that have Most Favoured Nation (MFN, also known as Normal Trade Relations) status with Vietnam. Currently, Vietnam has Most Favoured Nation trade relations with more than 170 countries and territories all over the world, such as EU, Korea and Japan
Special preferential rates are applicable to imported goods from countries which have a special preferential trade agreement with Vietnam, determined by government or Ministry of Finance. For example, thanks to the strategic partnership between Vietnam and Japan, Vietnam has issued decrees specifying special preferential rates of Vietnam to implement agreement of economic partner between Vietnam and Japan from 2018-2023.
Ordinary rates are applicable to imported goods from countries which doesn’t have any special agreement of Most Favoured Nation (MFN, also known as Normal Trade Relations) status with Vietnam. Ordinary rates are applicable higher 50% than special preferential rates.
Calculations
Import duties are calculated by formula:
Import tax= Dutiable value of imported goods * Import duty rate
VAT= (Dutiable value of imported goods + import duty)* VAT rate
Therefore, if we only apply 2 those kind of duties, the actual tax you must pay for the cargo:
Total tax amount= Import duty + VAT
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