What is the import tax rate applied to goods imported from free trade zones into the domestic market in Vietnam?

What is a free trade zone in Vietnam?

According to Article 4 of the Law on Export and Import Tax 2016, a free trade zone is an economic zone within the territory of Vietnam, established according to legal regulations, with defined geographical boundaries, separated from the outside area by a hard fence, ensuring conditions for inspection, supervision, and customs control of the customs authorities and related agencies for exported and imported goods, vehicles, and passengers entering and exiting;

The buying and selling relationships and the exchange of goods between the free trade zone and the outside area constitute export-import relations.

What is the import tax rate applied to goods imported from free trade zones into the domestic market in Vietnam? (Image from Internet)

What is the import tax rate applied to goods imported from free trade zones into the domestic market in Vietnam?

According to Article 5 of the Law on Export and Import Tax 2016:

Basis for calculating export and import tax for goods applying the percentage-based tax calculation method

1. The amount of export and import tax is determined based on the taxable value and the tax rate as a percentage (%) of each item at the time of taxation.

2. The tax rate for exported goods is specified for each item in the export tariff.

In cases where goods are exported to a country, group of countries, or territory with preferential export tax agreements in trade relations with Vietnam, the tax rates defined by these agreements shall apply.

3. The import tax rates include preferential tax rates, special preferential tax rates, and regular tax rates, applied as follows:

a) Preferential tax rates apply to imported goods originating from countries, groups of countries, or territories implementing the Most-Favored-Nation treatment in trade relations with Vietnam; goods from free trade zones imported into the domestic market that meet the origin criteria from countries, groups of countries, or territories implementing the Most-Favored-Nation treatment in trade relations with Vietnam;

b) Special preferential tax rates apply to imported goods originating from countries, groups of countries, or territories with special preferential import tax agreements in trade relations with Vietnam; goods from free trade zones imported into the domestic market that meet the origin criteria from countries, groups of countries, or territories with special preferential import tax agreements in trade relations with Vietnam;

...

To be specific:

Goods from free trade zones imported into the domestic market that meet the origin criteria from countries, groups of countries, or territories implementing the Most-Favored-Nation treatment in trade relations with Vietnam: preferential tax rates apply.

Goods from free trade zones imported into the domestic market that meet the origin criteria from countries, groups of countries, or territories with special preferential import tax agreements in trade relations with Vietnam: special preferential tax rates apply.

Vietnam: Is import tax required for goods assembled in free trade zones without using imported components?

According to Article 16 of the Law on Export and Import Tax 2016:

Tax Exemption

...

In cases of purchasing and transporting goods within prescribed limits but not for production or consumption by border residents and goods imported or exported by foreign traders permitted to do business in border markets, tax must be paid.

4. Goods exempt from export and import tax according to international agreements to which the Socialist Republic of Vietnam is a signatory.

5. Goods with a value or tax amount below the minimum threshold.

6. Materials, supplies, and components imported for the production of export products; finished products imported for attachment to processed products; processed products for export.

Processed products for export produced from domestic materials and supplies subject to export tax are not exempt from tax for the value of domestic materials and supplies contained in the export products.

Goods exported for processing and then imported are exempt from export and import tax based on the value of exported materials contained in the processed product. However, goods exported for processing and then imported that are resources, minerals, or products with the total value of resources, minerals, combined with energy costs accounting for 51% or more of the production cost, are not exempt from tax.

7. Materials, supplies, and components imported for the production of export goods.

8. Goods produced, processed, recycled, or assembled in free trade zones without using imported materials or components when imported into the domestic market.

...

Thus, the importation of goods assembled in free trade zones without using imported components is exempt from import tax.