Chapter 2Chapter 2

LAW ON IMPORT TAX LAW ON IMPORT TAX AND EXPORT TAXAND EXPORT TAX

CONTENT:CONTENT:* * General knowledgeGeneral knowledge** Provisions of E Provisions of E

xcise tax Lawxcise tax Law By: By: Nguyen Thi Thuy TrangNguyen Thi Thuy Trang

MaterialsMaterialsTextbooks:Textbooks: Hanoi Law University (2012), Hanoi Law University (2012), Vietnamese Vietnamese Tax LawTax Law, P. 57-P. 104, P. 57-P. 104

Legal document:Legal document: The National Assembly of Vietnam, The National Assembly of Vietnam,

No 45/2005/QH11, No 45/2005/QH11, Law on import tax Law on import tax and export taxand export tax The Government, The Government, Decree No Decree No 149/2005/ND-CP, 149/2005/ND-CP, Detailing and Detailing and guiding the implementaion of a number guiding the implementaion of a number of articles of the Law on import tax and of articles of the Law on import tax and export taxexport tax

A. GENERAL A. GENERAL KNOWLEDGEKNOWLEDGE

1. 1. Definition of Import tax and Definition of Import tax and export tax export tax

In the USA:In the USA:

A tariff or duty (the words are used A tariff or duty (the words are used interchangeably) is a tax levied by interchangeably) is a tax levied by governments on the value including governments on the value including freight and insurance of freight and insurance of imported/exported products. imported/exported products. http://export.gov/logistics/eg_main_018130.asphttp://export.gov/logistics/eg_main_018130.asp

A tax collected on imports and some A tax collected on imports and some exports by the customs authorities of a exports by the customs authorities of a country. This tax is used to raise state country. This tax is used to raise state revenue. It is based on the value of goods revenue. It is based on the value of goods called ad valorem duty or the weight, called ad valorem duty or the weight, dimensions, or other criteria of the item dimensions, or other criteria of the item such as its size. such as its size. http://www.investopedia.com/terms/i/import-dutyhttp://www.investopedia.com/terms/i/import-duty.asp.asp

A. GENERAL A. GENERAL KNOWLEDGEKNOWLEDGE In India: Customs Duties (Import In India: Customs Duties (Import

Duty and Export Tax)Duty and Export Tax)

Customs Duty is a type of indirect tax levied on Customs Duty is a type of indirect tax levied on goods imported into India as well as on goods goods imported into India as well as on goods exported from India. Taxable event is import exported from India. Taxable event is import into or export from India. Import of goods into or export from India. Import of goods means bringing into India of goods from a place means bringing into India of goods from a place outside India. India includes the territorial outside India. India includes the territorial waters of India which extend upto 12 nautical waters of India which extend upto 12 nautical miles into the sea to the coast of India. Export of miles into the sea to the coast of India. Export of goods means taking goods out of India to a place goods means taking goods out of India to a place outside India.A tax collected on imports and outside India.A tax collected on imports and some exports by the customs authorities of a some exports by the customs authorities of a country. This tax is used to raise state revenue. country. This tax is used to raise state revenue. It is based on the value of goods called ad It is based on the value of goods called ad valorem duty or the weight, dimensions, or valorem duty or the weight, dimensions, or other criteria of the item such as its size. other criteria of the item such as its size.

A. GENERAL A. GENERAL KNOWLEDGEKNOWLEDGE

In Vietnam:In Vietnam:

A tax imposed on the A tax imposed on the imported/exported imported/exported goods goods being tax-being tax-liable objects liable objects

Main Features of Excise TaxMain Features of Excise Tax♦ In Vietnam: Is indirect/direct tax. In other countries: Customs duty is a kind

of indirect tax which is levied on the import and export of goods of international trade. In economic sense, it is also a kind of consumption tax. 

♦ Tax objects: Goods which are :+ exported or imported through Vietnam's border-gates or borders + brought from the domestic market into non-tariff zones or from non-tariff zones into the domestic market.

♦ Special function: Protect domestic market and coordinate import/export activities.

A.A. GENERAL KNOWLEDGE GENERAL KNOWLEDGE 2. 2. Definition of Law on import Definition of Law on import tax and export taxtax and export tax

♦ Applied early (since 1954).

♦ Vietnam: Law on import tax and export tax 2005

♦ Law on import tax and export tax is a system of enforceable norms governing social relations which arise from levying and paying import tax and export tax process between customs agencies and taxpayers to mobilize revenue resources.

Tax law’s Roles To create the fundermental To create the fundermental

and stable legal frame for and stable legal frame for revenue resources revenue resources mobilization.mobilization.

An instrument to coordinate An instrument to coordinate export/import activities.export/import activities.

To protect domestic market.To protect domestic market.

B. PROVISIONS OF THE TAXB. PROVISIONS OF THE TAX

1. Taxpayers1. Taxpayers

2. Tax bases2. Tax bases

3. Import/export tax 3. Import/export tax administrationadministration

Organizations and individuals that Organizations and individuals that have import or export goods being tax-have import or export goods being tax-liable objects.liable objects.

In fact:In fact: An exporter/importer who directly carry An exporter/importer who directly carry

out the procedures of import/export out the procedures of import/export operations.operations.

Who is entrusted to import/export goods. Who is entrusted to import/export goods. Ex: customs agents; enterprises supplying Ex: customs agents; enterprises supplying tax administrative services/postal tax administrative services/postal services…etcservices…etc

1. Taxpayers1. Taxpayers

Importers/Exporters that: Importers/Exporters that: Import or export through Vietnam's border-gates Import or export through Vietnam's border-gates

or borders;or borders; Bring goods from the domestic market into non-Bring goods from the domestic market into non-

tariff zones or from non-tariff zones into the tariff zones or from non-tariff zones into the domestic market.domestic market.

Non-tariff zones:Non-tariff zones:

Economic areas lying within the Vietnamese Economic areas lying within the Vietnamese territory which are determined by geographical territory which are determined by geographical boundaries and set up under decisions of the Prime boundaries and set up under decisions of the Prime Minister; the goods sale, purchase and exchange Minister; the goods sale, purchase and exchange between these zones and outside areas constitute between these zones and outside areas constitute

import and export relations.import and export relations.

1. Taxpayers1. Taxpayers

Taxable objectsTaxable objects

Taxable objectsTaxable objects 1. Goods imported or exported 1. Goods imported or exported

through Vietnam's border-gates or through Vietnam's border-gates or borders;borders;

2. Goods brought from the domestic 2. Goods brought from the domestic market into non-tariff zones or from market into non-tariff zones or from non-tariff zones into the domestic non-tariff zones into the domestic market.market.

Excluding non-taxable objects.Excluding non-taxable objects.

Non-taxable objectsNon-taxable objects 1. Goods in transit or being transported 1. Goods in transit or being transported

across Vietnam's border-gates or across Vietnam's border-gates or borders; goods transferred through borders; goods transferred through border-gates as provided for by the border-gates as provided for by the Government;Government;

2. Humanitarian aid, non-refundable aid;2. Humanitarian aid, non-refundable aid; 3. Goods exported from non-tariff zones 3. Goods exported from non-tariff zones

to foreign countries, goods imported to foreign countries, goods imported from foreign countries into non-tariff from foreign countries into non-tariff zones for use in non-tariff zones only, zones for use in non-tariff zones only, and goods transported from one non-and goods transported from one non-tariff zone to another;tariff zone to another;

4. Goods being petroleum portions paid 4. Goods being petroleum portions paid to the State in value as natural resource to the State in value as natural resource tax when exported.tax when exported.

2. Import and Export Tax 2. Import and Export Tax bases and Tax bases and Tax

calculation methodscalculation methods2.1. For goods items subject to 2.1. For goods items subject to

percentage tax percentage tax Tax bases Tax bases the unit volume of each the unit volume of each

actually actually imported or imported or exported goods item(1)exported goods item(1)inscribed in the customs declarationsinscribed in the customs declarations

tax calculation prices tax calculation prices (2) (2)

tax rates in percentage (%) tax rates in percentage (%) (3) (3)

The payable import tax or export tax amountThe payable import tax or export tax amount = = (1) X (2) X (3)(1) X (2) X (3)

2.2.2.2. FFor goods items subject to absolute tax the unit volume of each the unit volume of each

actually actually imported or imported or exported goods item exported goods item inscribed inscribed in the customs declarationsin the customs declarations

Tax bases Tax bases

the absolute tax rate the absolute tax rate provided for provided for a goods unit a goods unit atat the time of tax calculation.the time of tax calculation.

The payable import tax or export tax amountThe payable import tax or export tax amount = = (1) X (2)(1) X (2)

The tax payment currency:The tax payment currency:

- Is the Vietnamese dong- Is the Vietnamese dong

- In cases where it is permitted to - In cases where it is permitted to pay tax in foreign currencies, tax pay tax in foreign currencies, tax must be paid in freely convertible must be paid in freely convertible currencies. currencies.

Tax calculation prices:Tax calculation prices: 1. 1. For export goodsFor export goods: the tax : the tax

calculation prices are the calculation prices are the contractual sale prices at the contractual sale prices at the exporting border-gates.exporting border-gates.

2. 2. For import goodsFor import goods: the tax : the tax calculation prices are the actually calculation prices are the actually paid prices at the first importing paid prices at the first importing border-gate under contracts, in border-gate under contracts, in conformity with international conformity with international commitments.commitments.

2.2. Import & Export 2.2. Import & Export Tax RateTax Rate1. Tax rates applicable to export goods shall be 1. Tax rates applicable to export goods shall be

specified for each goods item in the Export specified for each goods item in the Export Tariff.Tariff.

2. 2. Tax rates applicable to import goods include Tax rates applicable to import goods include preferential tax rates, special preferential tax preferential tax rates, special preferential tax rates and ordinary tax rates:rates and ordinary tax rates:

a/ The preferential tax rates shall apply to import goods a/ The preferential tax rates shall apply to import goods originating from countries, groups of countries or territories, originating from countries, groups of countries or territories, which apply the most favored nation treatment in their trade which apply the most favored nation treatment in their trade relations with Vietnam;relations with Vietnam;

b/ The special preferential tax rates shall apply to import b/ The special preferential tax rates shall apply to import goods originating from countries, groups of countries or goods originating from countries, groups of countries or territories, which apply special preferences on import tax to territories, which apply special preferences on import tax to Vietnam;Vietnam;

c/ The ordinary tax rates shall apply to import goods c/ The ordinary tax rates shall apply to import goods originating from countries, groups of countries or territories, originating from countries, groups of countries or territories, which do not apply the most favored nation treatment or which do not apply the most favored nation treatment or special preferences on import tax to Vietnam. The ordinary special preferences on import tax to Vietnam. The ordinary tax rates shall not be 70% higher than the preferential tax tax rates shall not be 70% higher than the preferential tax rates of the same goods items specified by the Government.rates of the same goods items specified by the Government.

T H E E N DT H E E N D