What is customs duty? How much is the transit guarantee in Vietnam?

What is customs duty in Vietnam?

Pursuant to Clause 11, Article 3 of Decree 46/2020/ND-CP defining customs duty as follows:

Terminology Explanation

In this Decree, the following terms are understood as follows:

1. ACTS System is an integrated information technology system developed and connected by ASEAN member countries to exchange information electronically for transit procedures, control the transit of goods through the territories of ASEAN member countries, support customs authorities of ASEAN member countries in calculating customs duties, guaranteeing funds, and exchanging information to recover customs debt as stipulated in Protocol 7 on the transit customs system (hereinafter referred to as Protocol 7).

2. The customs transit declaration form is an electronic customs declaration form containing information that the customs declarant must declare when carrying out transit goods procedures through the ACTS System.

A customs transit declaration form can only be used to declare goods in transit transported by one mode of transport on one transit journey through the ACTS System.

3. Transit Accompanying Documents (abbreviated as TAD) are the customs transit declaration forms approved and printed by the departure customs authorities from the ACTS System.

4. Transit journey refers to the transportation of transit goods from a departure customs authority to a destination customs authority through the ACTS System.

5. Transit guarantee is the guarantor's assurance about the payment of potential customs duties arising during the transit journey.

6. Single journey guarantee is the guarantor's commitment to fully fulfill obligations regarding all potential customs duties arising during a transit journey.

7. Multiple journey guarantee is the guarantor's commitment to fully fulfill obligations regarding all potential customs duties arising from multiple transit journeys.

8. Guarantor refers to a legal entity or individual who commits to the departure customs authority, transit customs authority, and destination customs authority to pay any potential customs duties as required by the customs authorities involved in the transit journey of goods.

9. Guarantor in Vietnam (in the case where transit goods originate from Vietnam through other ASEAN countries) is a credit institution or a foreign bank branch operating under the Law on Credit Institutions that ensures commitment with Vietnamese customs authorities, transit customs authorities, and destination customs authorities to fully perform the obligation of paying potential customs duties arising during the transit journey of goods.

10. Guarantee authority is the authority designated by ASEAN member countries participating in Protocol 7 to approve guarantors and supervise guarantees during the transit transport of goods. The guarantee authority in Vietnam is the customs authority.

11. Customs duty refers to import duties, other taxes, and fees that must be paid arising concerning transit goods during transportation.

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Thus, according to the above regulation, customs duty can be understood as import duties, other taxes, and fees that must be paid arising concerning transit goods during transportation.

What is customs duty? How much is the transit guarantee in Vietnam? (Image from the Internet)

How much is the transit guarantee for customs duty in Vietnam?

Pursuant to Clause 2, Article 24 of Decree 46/2020/ND-CP regulating the transit guarantee as follows:

Transit Guarantee

1. Before registering a customs transit declaration for goods originating from Vietnam, the customs declarant shall select either a single journey guarantee or a multiple journey guarantee and submit a guarantee letter from a credit institution or foreign bank branch to the customs authority where the declaration is registered for updating through the ACTS System. The guarantee is valid for countries involved in the transit journey of goods.

In case the customs declarant is recognized as a prioritized transit enterprise, it shall comply with the provisions of Article 26 of this Decree.

2. Method of determining the guarantee amount:

a)** The guarantee amount for a customs transit declaration is 110% of the maximum potential customs duty arising in the countries involved in the transit journey. The ACTS System assists in determining the guarantee amount of each customs transit declaration;

b) The multiple journey guarantee amount is determined based on a reference amount equivalent to the customs duties potentially arising from transit consignments undertaken through the ACTS System within at least a 07-day period.

The multiple journey guarantee is reduced and restored corresponding to the guaranteed customs duties completed for the transit transport journey of goods, where no irregularities occur, or corresponding to the customs duties that the customs declarant or guarantor has paid when irregularities occur;

c) Import duty rates and other taxes are calculated according to the highest rate stipulated by the tax laws of the country related to the transit goods journey. The import duty rate in Vietnam is calculated according to the Most-Favored-Nation (MFN) tariff schedule;

d) The calculation of import duties and other taxes (if any) in Vietnam shall comply with the provisions of tax laws.

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Thus, according to the above regulation, the transit guarantee is 110% of the maximum potential customs duties arising in the countries involved in the transit journey.

What is the currency for payment of customs duties in Vietnam?

Pursuant to Clause 3, Article 24 of Decree 46/2020/ND-CP regulating the transit guarantee as follows:

- Currency of guarantee and currency for tax payment:

+ Currency of guarantee: In the case where goods originate from Vietnam and transit through ASEAN member countries, the currency stated in the guarantee letter is Vietnamese Dong.

In other cases, the currency stated in the guarantee letter conforms to the regulations of the departure country.

+ Currency for tax payment: The currency for paying customs duties to the Vietnamese customs authority is Vietnamese Dong, except in cases where it is permitted to declare and pay taxes in freely convertible foreign currency as regulated by the Law on Tax Management.

The exchange rate for tax calculation follows customs law regulations.