Are goods in transit subject to export and import duties in Vietnam?

Are goods in transit subject to export and import duties in Vietnam?

First, it can be understood that export and import duties, also known as tariffs, includes two types of duties: export duty and import duty.

Export duty can be understood as a duty imposed on goods that the State wants to limit the export of.

Import duty is a type of duty that a country or territory imposes on goods originating from abroad in the process of importation.

Moreover, the subjects subject to export and import duties are stipulated in Article 2 of the Law on Export and Import duties 2016 as follows:

- Goods exported and imported through Vietnamese border gates and borders.

- Goods exported from the domestic market to non-tariff zones, goods imported from non-tariff zones into the domestic market.

- Goods exported and imported on the spot and goods exported and imported by enterprises exercising the right to export, the right to import, and the right to distribute.

- The following cases are not subject to export duty and import duty:

+ Transit goods, transshipped goods, and goods in transit;

+ Humanitarian aid goods, non-refundable aid goods;

+ Goods exported from non-tariff zones to abroad; goods imported from abroad into non-tariff zones and only used in non-tariff zones; goods transferred from one non-tariff zone to another non-tariff zone;

+ Part of the petroleum used to pay resource duty to the State when exported.

- The Government of Vietnam details this Clause.

Thus, it can be seen that goods in transit are not subject to export and import duties.

Are goods in transit subject to export and import duties in Vietnam ? (Image from the Internet)

What are regulations on subjects liable to export and import duties in Vietnam?

Based on Article 3 of the Law on Export and Import duties 2016, dutypayers are defined as follows:

- Owner of export and import goods.

- Entities receiving entrusted export and import.

- Persons who exit or enter the country carrying export or import goods, sending or receiving goods through Vietnamese border gates.

- Authorized persons, guarantors, and those paying duty on behalf of dutypayers, including:

+ Agents conducting customs procedures when authorized by dutypayers to pay export and import duties;

+ Enterprises providing postal services, international courier services when paying duties on behalf of dutypayers;

+ Credit institutions or other organizations operating in accordance with the Law on Credit Institutions in case of guaranteeing and paying duties on behalf of dutypayers;

+ Persons authorized by the goods' owner in case the goods are gifts or donations from individuals; luggage sent before or after the trip of persons exiting or entering the country;

+ Branches of enterprises authorized to pay duties on behalf of the enterprises;

+ Other persons authorized to pay duties on behalf of dutypayers in accordance with the law.

- Persons purchasing and transporting goods within the duty exemption limit for border residents but not using them for production or consumption, selling them in the domestic market, and foreign traders allowed to trade export, import goods at border markets as regulated by the law.

- Persons with export and import goods that belong to the non-duty, duty exemption subject but later change and shift to dutyable subject as prescribed by the law.

- Other cases as stipulated by the law.

Is the export and import duties calculated based on the taxable value in Vietnam?

Pursuant to Article 5 of the Law on Export and Import duties 2016, the basis for calculating export and import duties is stated as follows:

- The amount of export and import duty is determined based on the taxable value and the duty rate in percentage (%) of each item at the time of duty calculation.

- The duty rate for exported goods is specifically regulated for each item in the export duty schedule.

In the case that exported goods are to countries, groups of countries, or territories with preferential agreements on export duty in trade relations with Vietnam, the agreements will be followed.

- The duty rate for imported goods includes preferential duty rates, especially preferential duty rates, and ordinary duty rates, applied as follows:

+ The preferential duty rate applies to imported goods originating from countries, groups of countries, or territories imposing the most-favored-nation treatment in trade relations with Vietnam; goods from non-tariff zones imported into the domestic market meet the origin criteria from countries, groups of countries, or territories imposing the most-favored-nation treatment in trade relations with Vietnam.

+ The especially preferential duty rate applies to imported goods originating from countries, groups of countries, or territories with special preferential agreements on import duty in trade relations with Vietnam; goods from non-tariff zones imported into the domestic market meet the origin criteria from countries, groups of countries, or territories with special preferential agreements on import duty in trade relations with Vietnam.

+ The ordinary duty rate applies to imported goods not falling under the provisions of Points a and b of this Clause. The ordinary duty rate is set at 150% of the preferential duty rate for each corresponding item. In case the preferential duty rate is 0%, the Prime Minister of the Government of Vietnam decides on the application of the ordinary duty rate following the regulations set out in Article 10 of this Law.

It can be seen that the calculation of export and import duties will be based on two factors: [1] the taxable value and [2] the duty rate in percentage (%) of each item at the time of duty calculation.

Therefore, the calculation of export and import duties must be based on the taxable value as well as the duty rate in percentage (%) of each item at the time of duty calculation.