December 17, 2018 12:29

Advertisement Contact us RSS Vietnamese

72% of import taxes from Hong Kong will be 0%

14:36 | 06/12/2018

VCN - The Ministry of Finance is consulting about the draft Decree on Vietnam's Special Preferential Import Tariff to implement the ASEAN-Hong Kong Free Trade Agreement (China) in 2019 - 2022 (AHKFTA). With this tariff, it is expected that in the period 2019 - 2022, the average tax rate will show a biggest change for the AHKFTA in 2021 (with a decrease from 6.52% in 2020 to 4.98% in 2021), corresponding to a reduction of VND 63,8 billion in import tax revenue of Vietnam, according to the calculation of the Ministry of Finance.

72 of import taxes from hong kong will be 0 Tax and Customs policy dialogue with the business: Practice and efficiency
72 of import taxes from hong kong will be 0 Minister Dinh Tien Dung: Strictly handle violations of tax and invoices
72 of import taxes from hong kong will be 0 Inform tax debt to each enterprise owing the amount of debt over 5 million VND
72 of import taxes from hong kong will be 0
According to the Ministry of Finance, the average tax rate for the AHKFTA is expected to fall from 6.97% in 2019 to 4.98% in 2022. Photo: Huy Kham.

7199 tariff lines will be 0%

The AHKFTA draft Decree stipulates the special preferential import tax rates for the volume of imported goods in the tariff quotas, which is detailed in the Special Preferential Import Tariff attached to the Decree. The tax rate outside the quotas shall comply with the Government's regulations at the time of import. The annual import quotas shall comply with the current law provisions.

The AHKFTA was officially negotiated in 2014. Throughout the 10 sessions, the AHKFTA ended its negotiations in late July 2017. At the ASEAN Economic Ministers and Hong Kong Consultations in September 2017, the involved parties formally announced the conclusion of negotiations on the Agreement. The AHKFTA was signed by the parties in November 2017 on the sidelines of the 31st ASEAN Summit in the Philippines. The AHKFTA tax rate is developed on the basis of the principle of complying with commitments under Vietnam’s tariff reduction roadmap described in the ASEAN-Hong Kong Free Trade Agreement.

The AHKFTA tax rate is based on the principle of complying with commitments under the tariff reduction roadmap of Vietnam as stipulated in the AHKFTA Agreement. In general, the AHKFTA Tariff complies with the ASEAN Harmonized Tariff Nomenclature (AHTN 2017) for 2018-2015 including 10,856 tariff lines, of which 10,775 tariff lines are at 8-digit level and 81 tariff lines detailed in 10 digit level (from 38 lines at 8-digit level). The roadmap for tariff reduction is enacted in four phases from 2019 to 2022.

Under the new structure of the AHKFTA Tariff, the number of tariff lines in the lists under AHTN 2017 is higher than that of AHTN 2012. However, in terms of the percentage of each list of the total tariff has hardly changed. The tariff elimination rate in the AHKFTA for the 2019-2022 period is about 72% of the AHKFTA tariff lines (corresponding to 7,819 tariff lines). Regarding the lists under AHKFTA Tariff for the period 2019-2022, in addition to 7,819 eliminated tariff lines, there are 457 sensitive tariff lines (accounting for 4.2% of tariff lines); 536 high sensitive tariff lines (accounting for 4.94%); and 1,814 tariff lines which are not committed (accounting for 6.71%) ...

The revenue will reduce by VND 63.8 billion

According to the Ministry of Finance, the tax commitments to Hong Kong at AHKFTA are similar to those signed with China under the ASEAN-China Free Trade Area (ACFTA), which helps to reduce cases applicable with the former ACFTA when goods from Hong Kong did not meet the import tax requirements. The signing and implementation of the AHKFTA facilitate the management of imported goods by origin.

Overall, Vietnam gives Hong Kong a market share of 72% of its tariff lines, equivalent to US$ 658.7 million. The statistics show that imports from Hong Kong market have shown a relatively high growth in value over the past two years (2016 and 2017). In 2017, import value increased 11% over the same period in 2016, from about US$ 1.495 billion to US$ 1.660 billion. The major imports from Hong Kong (worth US$ 30 million or more) focus on textile, garment and footwear (about US$ 400 million); machinery, equipment, tools and spare parts; scrap steels; phones of all kinds and components; computers, electronic products and components and other goods.

In terms of revenue, revenue from VAT from Hong Kong market increased from VND493 billion in 2016 to about VND740 billion in 2017 (an increase of about 50%). Revenue from special consumption tax in the same period also increased from VND 2 million to VND 112 million. Import tax revenue was determined on the basis of the import tax rate and corresponding import turnover from markets. Goods imported from the Hong Kong market were subject to the MFN tax rate. Vietnam revenue from this source in 2017 reached VND 75 billion, down 78% over the same period in 2016 (342.6 billion VND).

72 of import taxes from hong kong will be 0 ASEAN-Hong Kong FTA brings about numerous benefits

The ASEAN-Hong Kong free trade agreement, once taking effect, will help tighten relations between Hong Kong and ...

The drafting agency expects that the average AHKFTA tax rate will fall from 6.97% in 2019 to 4.98% in 2022. In which, the biggest change in the average tax rate will fall in 2021 (with a reduction from 6.52% in 2020 to 4.98% in 2021), corresponding to a reduction of VND 63.8 billion of import tax revenue.

By Hong Van/ Huyen Trang