Is countervailing duty an additional import duty in Vietnam?

Is countervailing duty an additional import duty in Vietnam?

According to Clause 6, Article 4 of the 2016 Law on Export and Import Duties, the countervailing duty is defined as follows: The countervailing duty is an additional import tax applied in cases where subsidized goods are imported into Vietnam, causing or threatening to cause significant damage to the domestic production industry or preventing the establishment of a domestic production industry.

In addition, according to Clause 2, Article 83 of the 2017 Foreign Trade Management Law, the countervailing duty is a measure against subsidies.

Therefore, based on the above provisions, the countervailing duty is indeed an additional import tax or can be considered a measure against subsidies according to the Foreign Trade Management Law.

Is countervailing duty an additional import duty in Vietnam? (Image from the Internet)

What are the two conditions for applying countervailing duty in Vietnam?

According to Clause 1, Article 13 of the 2016 Law on Export and Import Duties, the two conditions for applying countervailing duty include:

[1] Imported goods are determined to be subsidized according to the law;

[2] Imported goods cause or threaten to cause significant damage to the domestic production industry or prevent the establishment of the domestic production industry.

Additionally, the principles for applying the countervailing duty are stipulated in Clause 2, Article 13 of the 2016 Law on Export and Import Duties as follows:

- The countervailing duty is only applied to the necessary and reasonable extent to prevent or limit significant damage to the domestic production industry;

- The application of the countervailing duty is conducted after an investigation and must be based on the conclusions of such investigation according to the law;

- The countervailing duty is applied to subsidized goods imported into Vietnam;

- The application of the countervailing duty must not harm the national socio-economic interests.

Also, according to Clause 3, Article 13 of the 2016 Law on Export and Import Duties, the duration of applying the countervailing duty does not exceed 05 years from the date the application decision takes effect. In necessary cases, the decision to apply the countervailing duty can be extended.

What are regulations on the retroactive application of countervailing duty in Vietnam?

According to Article 89 of the 2017 Foreign Trade Management Law:

Application of Countervailing  Measures

1. The temporary application of the countervailing duty is decided by the Minister of Industry and Trade based on the preliminary conclusions of the investigative agency. The temporary countervailing duty rate must not exceed the subsidy level in the preliminary conclusions.

The duration of applying the temporary countervailing duty is no more than 120 days from the date the temporary countervailing duty application decision takes effect. The Minister of Industry and Trade may extend the application of the temporary countervailing duty, but not exceeding 60 days.

2. The application of commitment measures is carried out as follows:

a) After the preliminary conclusions and before the end of the investigation, organizations, individuals producing, exporting the investigated goods, or the Government of the country subsidizing the goods may make commitments with the investigative agency to voluntarily cease subsidies, reduce the subsidy level, commit to adjust the export price, or apply other appropriate measures;

b) The investigative agency may accept, refuse, or suggest adjustments to the commitments based on the opinions of organizations or individuals representing the domestic production industry.

3. The application of countervailing duty is carried out as follows:

a) If no commitments as stipulated in Clause 2 of this Article are reached, after the conclusion of the investigation, the investigative agency will publish the final conclusions on the investigated contents as defined in Article 88 of this Law. The final conclusions of the investigative agency and the main grounds for issuing the final conclusions must be appropriately notified to the relevant parties;

b) Based on the final conclusions of the investigative agency, the Minister of Industry and Trade shall decide whether to apply the countervailing duty;

c) The countervailing duty rate must not exceed the subsidy level in the final conclusions;

d) The duration of applying the countervailing duty is not more than 05 years from the date the countervailing duty application decision takes effect, unless extended according to Clause 2, Article 90 of this Law.

4. The retroactive application of countervailing duty is carried out as follows:

a) In the event that the final conclusion of the investigative agency determines significant damage or threatens significant damage to the domestic production industry, the Minister of Industry and Trade may decide to retroactively apply the countervailing duty;

b) The countervailing duty is retroactively applied to imported goods within 90 days prior to the application of the temporary countervailing duty if the imported goods are determined to be subsidized; if the volume or quantity of subsidized imported goods to Vietnam rapidly increases abnormally from the investigation period to the temporary countervailing duty application and causes unrecoverable damage to the domestic production industry.

5. The application of other anti-subsidy measures is carried out according to the provisions of international treaties to which the Socialist Republic of Vietnam is a member or according to the principles of international law.

Thus, the retroactive application of the countervailing duty will be implemented in two cases:

[1] If the final conclusion of the investigative agency determines significant damage or threats of significant damage to the domestic production industry, the Minister of Industry and Trade may decide to retroactively apply the countervailing duty;

[2] The countervailing duty is retroactively applied to imported goods within 90 days prior to the temporary countervailing duty application if the imported goods are determined to be subsidized; if the volume or quantity of subsidized goods imported to Vietnam rapidly increases abnormally from the investigation period to the temporary countervailing duty application, causing irreparable damage to the domestic production industry.

Which authority in Vietnam has the power to apply countervailing duty?

According to Article 15 of the 2016 Law on Export and Import Duties:

Application of Anti-Dumping Tax, countervailing duty, and Safeguard Tax

1. The application, modification, or abolishment of anti-dumping tax, countervailing duty, and safeguard tax are carried out according to the provisions of this Law and the laws on anti-dumping, anti-subsidy, and safeguard.

2. Based on the tax rate, quantity, or value of goods subject to anti-dumping tax, countervailing duty, and safeguard tax, the customs declarant is responsible for declaring and paying taxes according to the provisions of the law on tax administration.

3. The Ministry of Industry and Trade decides on the application of anti-dumping tax, countervailing duty, and safeguard tax.

4. The Ministry of Finance regulates the declaration, collection, payment, and refund of anti-dumping tax, countervailing duty, and safeguard tax.

5. In cases where the interests of the Socialist Republic of Vietnam are harmed or violated, based on international treaties, the Government of Vietnam reports to the National Assembly to decide on the application of other appropriate protective tax measures.

Therefore, based on the regulations, the Ministry of Industry and Trade is the authority responsible for applying the countervailing duty, and the Ministry of Finance is the authority responsible for regulating the declaration, collection, payment, and refund of the countervailing duty.