Vietnam is actively integrating in trade relationships with internationally through entering into many free trade agreements (“FTAs”) and open-tariff policies. On March 11, 2021, the Government issued Decree 18/2021/ND-CP (“Decree 18”) amending and supplementing Decree No. 134/2016/ND- CP (“Decree 134”) detailing a number of articles to implement the Law on Import and Export Tax. Below is a summary of some of the outstanding updates in Decree 18.
1. Supplementary regulations on tax rates for indirect exports and indirect imports
According to Article 86 of Circular 38/2015/TT-BTC, indirect exports/imports include:
(i) Processed products: hired/borrowed machinery and equipment; excess materials; waste, rejects under processing contracts prescribed in Article 32, Clause 3 of Decree No. 187/2013/ND-CP;
(ii) Goods traded between an inland enterprise and an export processing entity or an enterprise in a free trade zone;
(iii) Goods traded between a Vietnamese company and a foreign entity without a representative in Vietnam and are requested to be delivered to another enterprise in Vietnam by the foreign entity.
The new Decree 18 regulates tax policies for Indirect exports/imports:
– Tariff for indirect exports is applied following Decree No. 122/2016/ND-CP; and Decree No. 57/2020/ND-CP; and Decree No. 125/2017/ND-CP.
– Tariff for indirect imports is applied following Decree No. 125/2017/ND-CP; and Decree No. 57/2020/ND-CP
– Moreover, goods satisfying the conditions of origin from a country, group of countries or territories that have a special agreement on import tax incentives in commercial relations with Vietnam, imported on the spot from a non-tariff zone into the domestic market and meet other conditions to enjoy special preferential import tax rates shall have special preferential import tariffs applied.
2. Specify and simplify tax exemption procedures
Previously, according to Decree 134, tax exemption dossiers required many documents that must be certified as a true copy of the original document; now, these documents only require one original copy.
Previously, the focusfor carrying out tax exemption procedures was the customs office; now the participation of the Ministry of Foreign Affairs and the Ministry of Finance has been added. Thus, the result will be sent to the customs office for implementation or a direct reply is given to the foreign organizations or individuals in case of refusal.
Decree 18 has also removed the requirement to provide correspondence of diplomatic missions, consular offices, international organizations, non-governmental organizations that request issuing the duty-free allowance book. Therefore, organizations or individuals are now able to register for the duty-free allowance book by themselves, by providing documents proving the quantity and types of tax-exempt goods (i.e international agreements, tax exemption decisions of the Government); and proof of the fulfillment of requirements for the import and export of goods.
3. Amend and supplement tax policy for re-processed products
According to Decree 18 and Official Letter 2687/TCHQ-TXNK issued by the General Department of Customs, Department of Import and Export Tax in 2021,
– If taxpayers receive their re-processed products for further processing or export semi-finished products, they shall be exempt from import tax for imported goods and re-processed.
– If organizations that re-process located in non-tariff zones or abroad, imported goods and semi-finished products delivered for processing are exempt from export tax, but if they are then re-imported into Vietnam, they shall be subject to import tax.
4. Tariff policies related to Vietnam’s investment incentives as prescribed in the investment law
The following policies are applied to the following groups of subjects: Investment projects with business lines subject to investment incentives; investment projects in areas with difficult socio-economic conditions or extremely difficult socio-economic areas; investment projects with large-scale investment contribution or employing a large number of workers:
– Exemption from tax on goods imported to create fixed assets of the subjects entitled to investment incentives
– Exemption from import tax on raw materials, supplies and components for 5 years.
5. Amend and supplement tax exemption policies for exported and imported goods in service of ensuring social security, overcoming consequences of natural disasters, pandemics and other special cases
Article 5.1 of Decree 134 has been amended and supplemented to be consistent with Vietnam’s policy of calling for vaccine aid in the context of the COVID-19 pandemic, specifically:
– Goods that cannot be produced domestically and are imported for direct use for projects under the Government’s social security services program are exempt from import tax;
– Goods that cannot be domestically produced and imported to overcome consequences of natural disasters, pandemics are exempt from import tax;


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