What is countervailing duty? How long is the application period for countervailing duty in Vietnam?

What is countervailing duty? What are the conditions and principles for applying countervailing duty in Vietnam?

Based on Clause 6, Article 4 of the Law on Export and Import Duties 2016, a countervailing duty is an additional import duty applied when imported goods into Vietnam are subsidized, causing or threatening to cause significant damage to the domestic production industry or preventing the formation of the domestic production industry.

According to Clause 1, Article 13 of the Law on Export and Import Duties 2016, the conditions and principles for applying countervailing duty are as follows:

* Conditions for applying countervailing duty:

- The imported goods are determined to be subsidized under the law;

- The imported goods cause or threaten to cause significant damage to the domestic production industry or prevent the formation of the domestic production industry.

* Principles for applying countervailing duty:

- Countervailing duty shall be applied only to the necessary and reasonable extent to prevent or limit significant damage to the domestic production industry;

- The application of countervailing duty is implemented after investigation and must be based on the investigation conclusions as per the law;

- Countervailing duty is applied to subsidized imported goods into Vietnam;

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

What is countervailing duty? How long is the application period for countervailing duty in Vietnam? (Image from Internet)

How long is the application period for countervailing duty in Vietnam?

Based on Clause 3, Article 13 of the Law on Export and Import Duties 2016, the application period for countervailing duty is no more than 5 years from the date the decision on application takes effect. If necessary, the decision to apply countervailing duty can be extended.

Which authority has the power to decide on applying countervailing duty in Vietnam?

Based on Clause 3, Article 15 of the Law on Export and Import Duties 2016, the regulations are as follows:

Application of Anti-Dumping Duty, Countervailing Duty, and Safeguard Duty

1. The application, modification, and removal of anti-dumping duty, countervailing duty, and safeguard duty shall be implemented according to this Law and the law on anti-dumping, countervailing, and safeguards.

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

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

4. The Ministry of Finance stipulates the declaration, collection, payment, and return of anti-dumping duty, countervailing duty, and safeguard duty.

5. If the interests of the Socialist Republic of Vietnam are harmed or violated, based on international agreements, the Government of Vietnam reports to the National Assembly to decide on the application of other appropriate safeguard measures.

Accordingly, the authority to apply countervailing duty belongs to the Ministry of Industry and Trade.

What is the application of countervailing duty in Vietnam?

Based on Clause 3, Article 89 of the Law on Foreign Trade Management 2017, the implementation of countervailing duty is as follows:

- If no commitment is reached as stipulated in Clause 2, Article 89 of the Law on Foreign Trade Management 2017, after the investigation ends, the investigating authority shall announce the final conclusion on the investigation contents stipulated in Article 88 of the Law on Foreign Trade Management 2017. The final conclusion of the investigating authority and the main reasons for the final conclusion must be notified appropriately to relevant parties.

- Based on the final conclusion of the investigating authority, the Minister of Industry and Trade issues a decision on whether to apply countervailing duty.

- The countervailing duty rate must not exceed the subsidy rate in the final conclusion.

- The application period for countervailing duty is no more than five years from the date the countervailing duty application decision takes effect, except when extended as stipulated in Clause 2, Article 90 of the Law on Foreign Trade Management 2017.

What are regulations on retroactivity of the countervailing duties in Vietnam?

Based on Clause 4, Article 89 of the Law on Foreign Trade Management 2017, the retroactivity of the countervailing duties is implemented as follows:

- If the final conclusion of the investigating authority identifies significant damage or a threat of significant damage to the domestic production industry, the Minister of Industry and Trade may decide to apply retroactive countervailing duty.

- The retroactive countervailing duty is applied to imported goods within 90 days before the temporary countervailing duty is applied if the imported goods are determined to be subsidized, and the volume or quantity of subsidized imports into Vietnam surges drastically from the investigation start date to the temporary countervailing duty application date, causing irreparable damage to the domestic production industry.