What is transit of goods? Is it subject to import duty in Vietnam?

What is the transit of goods in Vietnam?

According to Article 241 of the Commercial Law 2005, the definition of transit of goods is as follows:

Transit of goods

Transit of goods is the transportation of goods owned by foreign organizations or individuals through the territory of Vietnam, including transshipment, transloading, warehousing, splitting of the shipment, changing the mode of transport, or other works undertaken during the transit period.

Thus, it can be simply understood that the transit of goods is the transportation of goods owned by a foreign organization or individual through the territory of another country. During this process, the goods can undergo transshipment, transloading, warehousing, splitting of the shipment, or changing the mode of transport.

Additionally, according to Article 35 of the Decree 69/2018/ND-CP regarding the general regulations on the transit of goods, the following specific regulations apply:

- Transit of Goods

+ For goods such as weapons, explosives, precursors for explosives, support tools, the Ministry of Industry and Trade will lead and cooperate with the Ministry of National Defense, the Ministry of Public Security to report to the Prime Minister of the Government of Vietnam for considering and deciding on the transit permit.

+ For goods prohibited from export, prohibited from import; goods temporarily suspended for export, temporarily suspended for import; goods banned from trading according to the law, the Ministry of Industry and Trade shall consider issuing a Transit Permit for these goods.

+ For goods not included in the regulations at point a and point b, clause 1, Article 35 of the Decree 69/2018/ND-CP, the transit procedures shall be carried out at the customs authorities.

- Transshipment of Goods

In the case of goods as specified at point b, clause 1, Article 35 of the Decree 69/2018/ND-CP being transported by sea from abroad to the transshipment area at seaports, then foreign depot shipments can be transferred to other areas or seaports, the transshipment procedures follow the guidance of the Ministry of Finance, and do not require the permit of the Ministry of Industry and Trade.

- For transit agreements for goods through the territory of Vietnam signed between Vietnam and neighboring countries, follow the guidance of the Ministry of Industry and Trade.

- The transportation of goods falling into the category of highly dangerous goods transiting through Vietnamese territory must comply with Vietnam's laws on the transportation of dangerous goods and relevant international treaties to which the Socialist Republic of Vietnam is a contracting party.

- Transit shippers must pay customs fees and other applicable fees for transiting goods under the current regulations of Vietnam.

What is transit of goods? Is it subject to import duty in Vietnam? (Image from the Internet)

Are transiting goods subject to import duty in Vietnam?

Currently, transiting goods are not subject to import duty or VAT. (clause 4 Article 2 of the Law on export and import duties 2016 and Article 4 of the Circular 219/2013/TT-BTC) Except for cases where customs duty is imposed on transiting goods via the ACTS system under Article 30 of the Decree 46/2020/ND-CP as follows:

- Goods illegally moving outside the transit procedure through the ACTS system as prescribed in clause 15 Article 3 Decree 46/2020/ND-CP or after 30 days if the customs authorities at the point of departure have not received documents or receipts from the customs declarant or from the customs authorities in the transit route proving that the transit activities have completed the customs procedures through the ACTS system as prescribed in clause 2 Article 14 of the Decree 46/2020/ND-CP;

- Transiting goods consumed domestically or changes in quantity, value, origin, or commodity code compared to the declaration and other cases arising where tax is required to be paid.

Thus, transiting goods are not subject to tax.

What are principles of transit of goods in Vietnam?

The principles of managing the transit of goods are regulated in Article 45 of the Law on Foreign Trade Management 2017 as follows:

- Goods in transit when exported must be the entire imported goods.

- The organization or individual performing the service of transiting goods or self-executing the transit of goods through the territory of Vietnam, hiring foreign merchants to perform the transit of goods through the territory of Vietnam must:

+ Comply with the provisions of commercial law, international treaties to which the Socialist Republic of Vietnam is a contracting party;

+ Comply with Vietnam's laws on exit, entry, traffic, and transportation.

- Transit of goods by air shall comply with the provisions of international treaties on aviation to which the Socialist Republic of Vietnam is a contracting party.

- Goods transiting through Vietnamese territory must be supervised by the customs authorities during the entire transit period, in and out through specified border gates.

- Goods in transit when consumed domestically must comply with the regulations on export and import management of goods from the Law on Foreign Trade Management 2017 and other relevant legal provisions.