Once an investor has set up their trading company within Vietnam, it is important that their workers gain a strong understanding of the country’s import and export regulations and procedures. Below we lay out the key takeaways that companies must be aware of before starting their trading activities in Vietnam.
Import and Export Licensing Procedures
Vietnam does not require a company to have an import/export license in order to set up a trading company. However, in order to be able to conduct import/export business, a foreign investor must register with the Department of Planning and Investment (DPI). Additionally, foreign investors who wish to engage in import/export activities in Vietnam are required to obtain an Investment Certificate. Companies that wish to expand their current business operations in order to engage in import/export activities must follow the procedures for adjusting their Investment Certificates.
According to Circular 34/2013/TT-BCT, there are certain goods that foreign invested enterprises may not export from, or import into, Vietnam. Goods banned for export include petroleum oil. Goods banned from import into the country include cigars, tobacco, petroleum oils, newspapers and journals, and aircraft.
Certain goods require the trading company to obtain import and export permits from the government, these include:
- Goods subject to export control in accordance with international treaties to which Vietnam is a contracting party
- Goods exported within quotas set by foreign countries
- Goods subject to import control in accordance with international treaties to which Vietnam is a contracting party
- Explosive pre-substances and industrial explosives
All imports and exports must comply with the relevant government regulations on quarantine, food safety, and quality standards, and must be inspected by the relevant government agencies before clearing customs.
Most goods imported/exported across the borders of Vietnam, or which pass between the domestic market and a non-tariff zone, are subject to import/export duties. Exceptions to this include goods in transit, goods exported abroad from a non-tariff zone, and goods passing from one non-tariff zone to another.
Most goods and services being exported are exempt from tax. Export duties (ranging from zero percent to 45 percent and computed on free-on-board (FOB) price) are only charged on a few items, mainly natural resources such as minerals, forest products, and scrap metal.
Consumer goods, especially luxury goods, are subject to high import duties, while machinery, equipment, materials and supplies needed for production, especially those items which are not produced domestically, enjoy lower rates of import duties, or even a zero percent tax rate. Duty rates for imported goods include preferential rates, special preferential rates, and standard rates depending on the origin of the goods.
Import/export duties declaration are required upon registration of customs declarations with the customs offices. Export duties must be paid within 30 days of registration of customs declarations. For imported goods, import duties must be paid before receipt of consumer goods.
Depending on the trade conditions, Vietnam imposes a number of different types of duties on the import and export of goods. Companies wishing to find in-depth information on a range of goods would be well advised to visit the website of Vietnam Customs.
Vietnam imposes a tax on almost every type of product that is imported into the country. The import tax rates range depending on the type of product, for example, consumer products and luxury goods are highly taxed while machinery, equipment, and raw materials, tend to receive lower taxes and even tax exemptions. Imports are subject to import tax, Value-added tax (VAT) and, for certain goods, Special Consumption Tax (SCT).
Tax rates applicable to imported goods include preferential tax rates, special preferential tax rates, and ordinary tax rates:
- Preferential tax rates apply to goods originating from countries, groups of countries, or territories, which apply the most favored nation treatment in their trade relations with Vietnam
- Special preferential tax rates apply to goods originating from countries, groups of countries, or territories, which apply special preferences on import tax to Vietnam
- Ordinary tax rates apply to goods originating from countries, groups of countries, or territories, which do not apply the most favored nation treatment of special preferences on import tax to Vietnam. Ordinary tax rates will be no more than 70 percent higher than the preferential tax rates specified by the government
VAT rates range from zero to ten percent, with ten percent being the most common rate. Detailed information can be found in Decree No. 83/2014/TT-BTC.
Only certain commodities are liable for export tax. Export taxes range from zero to 45 percent. Many goods are also subject to Value-added Tax. In addition, the Law on Special Consumption Tax (SCT) stipulates that exporters who purchase SCT tax-liable goods for export, but instead sell the products domestically, are liable for SCT.
The export tax rates applicable to exported goods are specified for each item in the Export Tariff. For the year 2014, the tax tariff can be found in Circular 164/2013/TT—BTC; Circular 17/2014/TT-BTC and Circular 30/2014/TT-BTC. Whenever there is an update in the tax tariff, the Ministry of Finance will issue new Circulars which will either replace or supplement the previous ones. VAT on exported goods is zero percent.
Tax exempt goods
In certain situations, imported and exported goods are exempt from tax, these include the following:
- Goods temporarily imported for re-export or temporarily exported for re-import
- Goods imported for processing for foreign partners then exported or goods exported to foreign countries for processing for Vietnam then re-imported under processing contracts
- Goods imported to create fixed assets for projects entitled to investment incentives or investment projects funded with official development assistance (ODA) capital sources
- Goods imported in service of petroleum activities
- Goods imported for direct use in activities of scientific research and technological development
The payable import/export tax amount is equal to the unit volume of each actually imported/exported goods item. These are inscribed in the customs declarations and are multiplied by the tax calculation price and the tax rate of each item, which is stated in the tariff at the time of tax calculation.
The tax calculation methods are specified below:
- Payable Tax = unit volume of each actually imported/exported goods item x the tax calculation price x the tax rate of each item at time of calculation
- For goods items subject to absolute tax: Payable tax = unit volume of each actually imported/exported goods item x the absolute tax rate provided for a goods unit at time of tax calculation
This article was first published on Vietnam Briefing.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam, in addition to alliances in Indonesia, Malaysia, Philippines and Thailand, as well as liaison offices in Italy and the United States.