General

Guide to import in Vietnam in 2020

Linh Pham

August 12, 2020

It can be said that the Vietnamese economy witnessed positive signals despite the unstable context of the global economy and regional economy. Vietnamese export and import in the past 2019 had a lot of improvements and brought considerable achievements to our economy. Currently, although the coronavirus pandemic has posed difficulties, Vietnam is trying the best to gradually recover economic activities to boost bilateral trade. This article focuses on import in Vietnam presenting statistics in 2019 and provides you legal policies of conducting import. 


Overview of export and import in Vietnam in 2019

In 2019, export and import in Vietnam gained achievements which marked a highlight in the commercial trade yet still had challenges to identify Vietnamese products in the international market. 

Achievements

– The high growth of the export scale reached targets of the National Assembly.

– Export from domestic enterprises experienced a sharp increase.

– The export structure shifted and export goods were more diversified.

– The export market was extended and focused on markets of FTAs’ partners.

– Import ensured production and manufacturing.

– Trade surplus was maintained.

Challenges

– Agricultural and aquatic products for export still faced difficulties in accessing markets with high requirements on quality and food safety.

– Agricultural products relied heavily on Asian market.

– The technology was still behind to support the quality and production scale.

– The competitiveness and instability of the global and regional economies have been such a challenge.


Key import goods in Vietnam in 2019

According to the World’s Top Export, top import goods in Vietnam in 2019 were:

– Electrical machinery and equipment

– Machinery including computers

– Plastics, plastic articles

– Mineral fuels including oil

– Iron and steel

– Optical, technical, medical apparatus

– Vehicles

– Knit or crochet fabric

– Cotton

– Man-made filaments

According to a report by Vietnam’s Ministry of Industry and Trade, imported goods are divided into product groups including agricultural and aquatic products, industrial products, fuels and minerals.

Key import goods in Vietnam in 2019

Regarding agricultural and aquatic products, soy, wheat, corn, feeding products, and vegetables were the top imported goods. The import turnover of soy was 1.71 million tons, equal to USD 681 million despite there was a 12% decrease in 2018. The US, Brazil, and Canada were major import markets of soy. Meanwhile, the import of wheat dropped in either weight or total import value. The total import value reached 2.79 million tons of wheat. On the contrary, there was an increase of corn in importing in 2019 with regard to both weight and value. 

In terms of industrial products, the import turnover of textile material in 2019 increased by 0.4% compared to 2018, reaching USD 21.8 billion. Despite the slight rise in textile material, the import of cotton witnessed a considerable decline in terms of weight and import turnover, 7.4% and 17.4% respectively.

With regard to plastic and plastic products, the import of plastic was 6.34 million tons (USD 899 billion). The pattern of plastic product imports experienced an upward trend in 2019 with USD 6.54 billion, increasing 11% from 2018. China, Korea and Japan were the three biggest importers of plastic products in Vietnam. 

The import of coal rocketed sharply, recording 43.9 million tons and USD 3.79 billion of import value in 2019. Besides, the import of petrol also decreased considerably in 2019 because the amount of petrol produced by Vietnam increased. 


Regulations of import in Vietnam

This part will provide you useful information about import policies in Vietnam consisting of licensing procedures, banned import goods, duties applied to import, and tax on import. 

Licensing procedures

Vietnam does not require a company to have an import license to set up a trading company. However, to be able to conduct import business, a foreign investor must register with the Department of Planning and Investment (DPI). In addition, foreign investors who wish to engage in import activities in Vietnam are required to obtain an Investment Certificate. Companies that wish to expand their current business operations to engage in import activities must follow the procedures for adjusting their Investment Certificates. 

All imports must comply with the relevant government regulations on quarantine, food safety, and quality standards, and must be inspected by the relevant government agencies before clearing customs.

Importers are also required to submit a customs dossier which includes a customs declaration as per Appendix II of Circular no 38/2015/TT-BTC. The customs declaration can be filed electronically here.

Certain goods require the trading company to obtain import permits from the government, as per Appendix II of Decree 187/2013/ND-CP. These include:

  • Goods subject to import control in accordance with international treaties to which Vietnam is a contracting party; and
  • Chemicals, explosive pre-substances and industrial explosives.

Banned import goods

According to Circular 34/2013/TT-BCT, goods banned from import into the country include cigars, tobacco, petroleum oils and oils obtained from bituminous minerals, newspapers, journals, and periodicals; discs, tapes, and other recorded media; second-hand items (including electronics and automotive); aircraft, helicopters, satellites, spaceships and their parts.

Duties applied to import

Most goods imported across the borders of Vietnam, or which pass between the domestic market and a non-tariff zone, are subject to import duties. Exceptions to this include goods in transit, goods imported from foreign countries into non-tariff areas for use in non-tariff areas only, and goods passing from one non-tariff zone to another.

Consumer goods, especially luxury goods, are subject to high import duties, while machinery, equipment, materials and supplies needed for production, especially those items which are not produced domestically, enjoy lower rates of import duties, or even a zero percent tax rate.

Depending on the trade conditions, Vietnam imposes several different types of duties on the import of goods. Companies wishing to find in-depth information on a range of goods would be well advised to visit the website of Vietnam Customs.

Import duties declarations are required upon registration of customs declarations with the customs offices. For imported goods, import duties must be paid before receipt of consumer goods.

Taxes applicable on imports

Vietnam imposes a tax on almost every type of product that is imported into the country. The import tax rates range depending on the type of product, for example, consumer products and luxury goods are highly taxed while machinery, equipment, and raw materials, tend to receive lower taxes and even tax exemptions.

Imports are subject to import tax, Value-added tax (VAT) and, for certain goods, Special Consumption Tax (SCT) and Environmental Protection Tax (EPT). In the aspect of SCT, some consumer goods are classified as luxury items and an additional tax will be imposed on those products. The special consumption tax or also known as the luxury tax applies to certain imported goods, e.g alcoholic beverages, tobacco products, and petroleum products. SCT rates start at 7% and can be more than 100% for some products such as cars with a higher engine capacity. Besides, EPT is a tax imposed on products that have a harmful effect on the environment. According to Law No. 57/2010/QH12, goods such as plastic bags, gasoline, coal, etc. are subject to the environmental protection tax. Tax rates are calculated based on the amount of money paid on one unit. For example, plastic bags are subject to 30,000-50,000 VND (~1,32-2,2 US dollars) of EPT per kilogram.

Tax rates applicable to imported goods include preferential tax rates, special preferential tax rates, and ordinary tax rates:

– Preferential tax rates apply to goods originating from countries, groups of countries, or territories, which apply the most favored nation treatment in their trade relations with Vietnam.

– Special preferential tax rates apply to goods originating from countries, groups of countries, or territories, which apply special preferences on import tax to Vietnam. Currently, it is mainly applicable to ASEAN nations under common preferential tariffs (CEPT).

– Ordinary tax rates apply to goods originating from countries, groups of countries, or territories, which do not apply the most favored nation treatment of special preferences on import tax to Vietnam. Ordinary tax rates will be no more than 70% higher than the preferential tax rates specified by the government.

VAT rates range from zero to 10 percent, with 10 percent being the most common rate. Detailed information can be found in Circular No 83/2014/TT-BTC.

In addition, in certain situations, imported goods are exempt from tax, these include the following:

– Goods temporarily imported for re-export.

– Goods imported for processing for foreign partners then exported

– Goods imported to create fixed assets for projects entitled to investment incentives or investment projects funded with official development assistance (ODA) capital sources;

– Goods imported in service of petroleum activities; and

– Goods imported for direct use in activities of scientific research and technological development.

READ FURTHER: How To Set Up A Mergers And Acquisitions In Vietnam (Part 1).

In conclusion, the article focuses on import in Vietnam. The first part is to focus on the achievements and challenges of export and import in Vietnam in 2019. The second part listed top import goods into Vietnam with three main groups containing agricultural and aquatic products, industrial goods and fuels and minerals. The article concludes with import policies in Vietnam so that enterprises are able to follow the rules in case they would like to import products from overseas companies. If you want to be consulted about the legal framework when investing in Vietnam, Viettonkin is always ready to support you at any time.

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