Understanding the Duty and Tax Scheme in Vietnam: An Overview

Duty and Tax Scheme in Vietnam

Vietnam, a vibrant and rapidly growing Southeast Asian economy, offers numerous opportunities for businesses to expand and thrive. However, Vietnam has specific regulations and policies regarding duty and tax requirements for imported goods like any other country. This blog post will provide an overview of Vietnam's duty and tax scheme, shedding light on the essential aspects businesses should consider when engaging in import activities.

Import Duties:

Import duties are levied on goods brought into Vietnam from abroad. The rate of import duties varies depending on factors such as the type of goods, their origin, and the applicable trade agreements. The Vietnam Customs Department is responsible for administering and collecting import duties, typically calculated based on the customs value of the goods.

Value Added Tax (VAT):

Value Added Tax, commonly known as VAT, is a consumption tax imposed on the value added at each stage of the supply chain. The standard VAT rate in Vietnam is 10%, but certain goods and services may be subject to different rates or exemptions. Importers are generally required to pay VAT on the customs value of the imported goods.

Special Sales Tax (SST):

Certain goods, such as luxury items, automobiles, tobacco, and alcohol, are subject to Special Sales Tax in Vietnam. The SST rates vary depending on the type of goods and are applied in addition to VAT and import duties. Importers of these goods must factor in the SST when determining the total tax liability.

Preferential Tariffs and Trade Agreements:

Vietnam has actively engaged in various regional and bilateral trade agreements, including the ASEAN Free Trade Area (AFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and Free Trade Agreements (FTAs) with numerous countries. These agreements often provide preferential tariffs or exemptions for certain goods traded between Vietnam and partner countries, promoting international trade and investment.

Customs Procedures and Declarations:

To import goods into Vietnam, businesses must comply with customs procedures and submit accurate declarations to the Vietnam Customs Department. This includes providing detailed information about the imported goods, their value, origin, and relevant supporting documents. Failure to comply with customs regulations may result in delays, penalties, or even confiscation of goods.

Tariff Classification and Harmonized System:

Tariff classification is crucial in determining the applicable import duties for goods. Vietnam follows the Harmonized System (HS) for tariff classification, an internationally recognized system that assigns specific codes to different goods based on their characteristics and intended use. It is essential for importers to correctly classify their goods according to the HS codes to ensure accurate determination of import duties.

Understanding Vietnam's duty and tax scheme is vital for import business activities. Proper compliance with customs regulations, accurate declaration of goods, and awareness of preferential tariffs and trade agreements can help companies optimize their import processes and mitigate potential risks. Consulting with customs experts or professional service providers can further assist in navigating the complex landscape of duty and tax requirements in Vietnam, ensuring smooth and efficient import operations. Regarding import or export processing, Tron Chan is always available to support and smooth your process, primarily via our IoR and EoR service. Please don't hesitate to connect with us to explore more information.

Disclaimer: This blog post is intended for informational purposes only and should not be considered legal or professional advice. Businesses are encouraged to consult with relevant authorities or seek professional assistance for specific inquiries or concerns related to duty and tax obligations in Vietnam.