Trade pacts cost Vietnam $558 million in import duties

By Nguyen Ha   December 15, 2019 | 09:00 am GMT+7
Trade pacts cost Vietnam $558 million in import duties
Containers are loaded at a port in Ho Chi Minh City. Photo by Reuters/Kham.

Vietnam has foregone VND13 trillion ($558 million) in import duties in the first 11 months of this year as per signed trade pacts.

The country is currently implementing 12 trade agreements, which have so far cost it VND29 trillion ($1.25 billion) in reduced or abolished import duties, according to Ha Duy Tung, Deputy Director of the Ministry of Finance’s department of international cooperation.

Vietnam is currently part of or negotiating a total of 20 such agreements, he said.

The customs sector is still getting its revenue from a wide range of taxes, including environmental protection, anti-dumping, and special consumption taxes. Vietnam is only required to cut import duties under trade agreements, and can still levy other types of taxes, Tung noted.

Customs revenue has continued to increase, but the proportion of import taxes to total revenue has been declining. In 2017, import duties accounted for 21.85 percent of customs revenue, then fell to 17.4 percent in 2018 and 16.7 percent in the first 11 months of 2019, he cited.

In the first 11 months of 2019, the customs sector collected VND320 trillion ($13.74 billion). Customs revenue in 2018 was VND315 trillion ($13.53 billion), and in 2017 was VND297 trillion ($12.76 billion), Vietnam Customs statistics show.

Tung said the rise in customs revenue was also caused by a sharp increase of import turnover, such as goods related to automobiles, especially cars with less than 9 seats. Some imported items also generated three or four types of tax revenues, such as gasoline, which is subject to a high import tax rate, environmental protection tax, a 10 percent value added tax, and a 10 percent special consumption tax.

Meanwhile, the EU-Vietnam Free Trade Agreement (EVFTA), which Vietnam signed in June this year, has also been submitted to the National Assembly and European Parliament for ratification. It is expected to come into effect in the first half of 2020, he added.

Under the EFVTA, Vietnam has pledged to eliminate tariffs for 48.5 percent of its import tax lines as soon as it takes effect, which would apply to 64.5 percent of the country’s import turnover from the EU. Ten years later, 99 percent of tariff lines, which would apply to 99.8 percent of import revenue, will be removed.

For the remaining tariff lines, Vietnam will follow a roadmap of erasing the relevant import taxes over more than 10 years, or use tariff quotas pursuant to WTO commitments.

In 2019, Vietnam signed four trade agreements, including the EVFTA, the ASEAN – Hong Kong, China Free Trade Agreement (AHKFTA), the Vietnam - Cuba Trade Agreement, and the Agreement promoting bilateral trade between Vietnam and Cambodia.

 
 
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