Are parallel imports on Black Friday subject to import tax in Vietnam?

What is parallel imports on Black Friday?

Currently, there is no specific regulation defining what parallel imports are. However, we can understand parallel imports on Black Friday as goods purchased directly from abroad and brought back to Vietnam via air, usually acquired by tourists, flight attendants, or relatives living overseas.

Are parallel imports on Black Friday subject to import tax in Vietnam? (Image from the Internet)

Are parallel imports on Black Friday subject to import tax in Vietnam?

According to Article 16 of the Law on Import and Export Duties 2016, which regulates goods exempt from import and export duties, the exemptions include:

Exemption from Tax

1. Exported and imported goods of foreign organizations and individuals enjoying preferential and exemption rights in Vietnam within the limits suitable to international treaties to which the Socialist Republic of Vietnam is a signatory; goods within the duty-free luggage of outbound and inbound travelers; imported goods for sale at duty-free stores.

2. Moving assets, gifts, and presents within the limit from foreign organizations and individuals to Vietnamese organizations and individuals and vice versa.

Moving assets, gifts, and presents exceeding the duty-free limit must be taxed for the excess, except where the recipient unit is a budget-funded body or organization approved for receipt by the competent authority or in cases for humanitarian or charitable purposes.

3. Goods for trading, exchange across borders of border residents within the category of goods and within limits for production and consumption of border residents.

In cases of purchasing, transporting goods within limits but not for production, consumption of border residents, or foreign traders' export-import goods permitted for business at border markets, taxes shall be paid.

4. Goods exempt from export and import duties under international treaties to which the Socialist Republic of Vietnam is a member.

5. Goods valued or tax amount due below the minimal level.

6. Materials, supplies, and components imported for processing export products; imported finished products assembled into processed products; exported processed products.

Export processing products made from domestic materials, supplies subjected to export duties are not exempted for the value corresponding to the domestic materials, supplies in the export products.

Goods exported for processing then imported are exempt from export and import duties on the export material value forming the processed product. Goods exported for processing then imported as resources and minerals, products with total natural resource, mineral value, and energy cost accounting for 51% or more of the product’s cost value are not exempt from tax.

7. Materials, supplies, and components imported for manufacturing export products.

8. Goods manufactured, processed, recycled, assembled in a duty-free zone without imported materials, components from abroad when imported into the domestic market.

9. Temporary import, re-export or temporary export, re-import of goods in a specific period, including:

a) Goods temporarily imported, re-exported, temporarily exported, re-imported for organizing or attending fairs, exhibitions, product introduction events, sports, cultural, artistic events or other events; machinery, equipment temporarily imported, re-exported for testing, product development research; machinery, equipment, professional tools temporarily imported, re-exported, temporarily exported, re-imported to serve work within a specific period or for processing for foreign traders, except for machinery, equipment, tools, means of transportation of organizations and individuals allowed to temporarily import, re-export for investment projects, construction installation, production support;

b) Machinery, equipment, components, spare parts temporarily imported for replacement, repair of foreign ships, aircraft or temporarily exported for replacement, repair of Vietnamese ships, aircraft abroad; goods temporarily imported, re-exported for foreign ships, aircraft docking in Vietnam ports supply;

c) Goods temporarily imported, re-exported or temporarily exported, re-imported for warranty, repair, replacement;

d) Revolving means temporarily imported, re-exported or temporarily exported, re-imported to contain exported, imported goods;

e) Goods temporarily imported for re-exported business in the temporary import, re-export time (including extension time) where credit guarantee or equivalent deposit of the import tax amount of temporary import, re-export goods is provided.

10. Goods not for commercial purposes in cases such as samples; images, films, models for sample substitution; small-quantity promotional prints.

11. Goods imported to create fixed assets of investment incentive beneficiaries as regulated by investment law, including:

a) Machinery, equipment; components, parts, assemblies, spare parts for complete assembly or simultaneous use with machinery, equipment; materials, supplies for machinery, equipment manufacturing or for manufacturing components, parts, assemblies, spare parts of machinery, equipment;

b) Specialized transport means in the technology line used directly for project production activities;

c) Indigenous construction materials not produced domestically.

Import tax exemption for imported goods as prescribed in this clause is applied for both new and expanded investment projects.

12. Plant varieties; animal breeds; fertilizers, plant protection agents that are not produced domestically, necessary for import as regulated by competent state authorities.

13. Materials, supplies, components not domestically produced imported for project manufacturing under the investment sector list, special investment incentive localities or socio-economic disadvantaged locations as prescribed by investment laws, high-tech enterprises, science and technology enterprises, scientific and technological organizations exempt from import tax for five years from production start.

Import tax exemption as stated in this clause does not apply to mining projects; projects producing goods with total natural resource, mineral value and energy costs accounting for 51% or more of product cost; projects producing, trading tax-paid goods under special consumption taxes.

14. Materials, supplies, components domestically not produced for medical equipment production assembly prioritized for research and manufacturing exempt from import tax for five years from production start.

15. Goods imported for petroleum activities, including:

a) Machinery, equipment, spare parts, specialized transport required for petroleum activities, including temporary import, re-export cases;

b) Components, parts, assemblies, spare parts for complete assembly or simultaneous use with machinery, equipment; materials, supplies for manufacturing machinery, equipment or making components, parts, assemblies, spare parts of machinery, equipment required for petroleum activities;

c) Necessary materials for petroleum activities not domestically produced.

16. Shipbuilding projects, facilities under the incentive sector list regulated by investment laws are tax-exempt for:

a) Imported goods to create fixed assets of shipbuilding facilities, including: machinery, equipment; components, parts, assemblies, spare parts for complete assembly or simultaneous use with machinery, equipment; materials, supplies for manufacturing machinery, equipment or making components, parts, assemblies, spare parts of machinery, equipment; transport means in the technology line serving directly for shipbuilding activities; indigenous construction materials not produced domestically;

b) Imported goods as machinery, equipment, materials, supplies, components, semi-finished products not domestically produced for shipbuilding;

c) Exported sea ships.

17. Machinery, equipment, materials, supplies, components, parts, spare parts imported serving printing, minting activities.

18. Imported goods as materials, supplies, components not domestically produced directly serving activities of information technology product manufacturing, digital content, software.

19. Goods exported, imported for environmental protection, including:

a) Machinery, equipment, transport means, specialized tools, supplies not domestically produced for collection, transport, treatment, processing of wastewater, waste, emissions, monitoring, and environmental analysis, renewable energy production; pollution treatment, responding to and handling environmental incidents;

b) Exported products produced from waste recycling, treatment activities.

20. Imported goods used specifically for education, not domestically produced.

21. Imported goods as machinery, equipment, spare parts, supplies used specifically not domestically produced, professional materials, scientific journals, and books used directly for scientific research, technology development, technology incubation activities, science and technology enterprise incubation, and technological innovation.

22. Imported goods used specifically directly for security, defense, including specialized transport means that must be types not produced domestically.

23. Goods exported, imported to ensure social security, overcoming natural disasters, catastrophes, epidemics, and other special cases.

24. The Government of Vietnam details this Article.

According to the regulations, imported goods to Vietnam are subject to taxes such as: Import Duty, Value Added Tax, Special Consumption Tax, etc. However, if parallel imports on Black Friday fall into any of the aforementioned tax-exempt cases, they will be exempt from import tax, otherwise, the parallel imports will still incur import-export taxes.

Additionally, if parallel imports on Black Friday are items within the luggage of outbound and inbound travelers, they are only duty-free within exemption limits, while any excess beyond the duty-free limit is subject to import-export duties.

What is the duty-free allowances for luggage for travellers in Vietnam?

According to Article 6 of Decree 134/2016/ND-CP, which regulates the duty-free limit on import and export with the luggage of outbound and inbound travelers, it is specified as follows:

(1) Travelers entering with a passport or documents replacing a passport (excluding laissez-passer for border crossing), issued by a competent state agency of Vietnam or of a foreign country, carrying luggage along, luggage sent before or after the trip is exempt from import duties each entry according to the following limits:

- Alcohol of 20 degrees or more: 1.5 liters or alcohol below 20 degrees: 2.0 liters or alcoholic beverages, beer: 3.0 liters.

For alcohol, if the traveler carries an original bottle, jar, can (hereinafter abbreviated as bottle) exceeding the specified volume but not more than 1 liter, the entire bottle is duty-free. If it exceeds 1 liter, the part exceeding the limit must be taxed according to law;

- Cigarettes: 200 or loose tobacco: 250 grams or cigars: 20;

- Personal effects in quantities, types suitable for the travel purpose;

- Other items besides the goods specified at points a, b, and c clause 1 Article 6 of Decree 134/2016/ND-CP (not on the list of prohibited imported goods, temporarily suspended imports or conditional imports) with a total customs value not exceeding VND 10,000,000;

If the limit is exceeded requiring tax payment, incoming travelers may select goods for duty-free exemption if their luggage includes multiple items.

(2) Aircraft pilots and crew members on international flights; train drivers and crew on international railway transport; officers, sailors working on sea vessels;

- Vietnamese drivers, workers working in neighboring countries sharing a land border with Vietnam do not benefit from duty-free luggage limits provided at points a, b, and d clause 1 Article 6 of Decree 134/2016/ND-CP for each entry but are exempt once every 90 days.

- Limitations provided at point a, point b clause 1 Article 6 of Decree 134/2016/ND-CP do not apply to persons under 18 years old.

(3) Persons departing with a passport or document replacing a passport granted by a competent state agency of Vietnam or a foreign country, carrying luggage along, luggage sent before or after the trip, not on the prohibited export, temporarily suspended export or conditional export list according to law, are exempt from export duties without regard to the limit.