10:14 | 01/08/2015 Finance - Banking
(VEN) - In the context of increasing economic integration and the tax liberalization rate exceeding 90 percent, the existing regulations on ceiling and floor import tax rates in the Export and Import Tax Tables are no longer appropriate.
Contributing to stabilizing the market
According to the current Import and Export Tax Law, the Import Tax Table is currently applied to 1,224 categories of goods, with the ceiling tax rate of 150 percent. 314 categories of goods currently apply minimum tax rates from over zero to 50 percent including several kinds of tariff-quota goods such as sugar, tobacco leaves and eggs.
The existing Import Tax Table with both ceiling and floor rates has provided an important basis for the government and the Ministry of Finance to impose specific Most Favored Nation (MFN) preferential import tax rates on each category of goods to timely adapt to changes in price in the global market, thus contributing to stabilizing domestic prices (for example, adjusting the import tax on gasoline and oil), while ensuring the appropriateness of the Import Tax Table with more than 10,000 items which must be changed every five years in accordance with the regulations of the World Customs Organization and the ASEAN Secretariat.
No more significance
Vietnam has basically completed its commitment to cut and reduce 100 percent of the tariff lines under the World Trade Organization’s itinerary, while concluding 10 bilateral and multilateral free trade agreements (FTAs). It is about to sign a Trans Pacific Partnership (TPP) and an FTA with the European Union in order to liberalize 90 percent of the tariff lines from 2018-2020 and 97 percent by 2028.
According to the statistics, goods subject to preferential import tariffs were valued at US$147.85 billion in 2014, including US$107.07 billion worth of imports from countries and groups of countries which have concluded FTAs with Vietnam accounting for 72.4 percent of total import revenues. It is scheduled that more than 80 percent of imports to Vietnam will enjoy the zero percent special preferential import tax rate in the next 10 years. With this in mind, maintaining the current floor import tax rates will not be significant in the upcoming time.
Vietnam is also negotiating with TPP and EU partners to terminate export tariffs on most goods. However, the country is determined to maintain the current export tariff rates for several kinds of mineral which have greatly contributed to state budget revenues such as oil, gas, gold, coal and titanium ore. The Ministry of Finance said that it is necessary to retain the current floor export tax rates on several categories of goods during the amendment of the Import and Export Tax Law in order to protect natural resources and properly change sources of state budget revenue to meet the need of integration negotiations in the short run and economic exchange with FTA partners.
According to the Ministry of Finance, the Export and Import Tax Tables under the current Import and Export Tax Law must be modified since it currently is inappropriate, inflexible and unstable, thus not helping businesses actively calculate efficiency.