Maximizing Import Duty Exemptions in Vietnam
By Joyce Roque
Mar. 17 – Foreign investors in Vietnam may need to import components of their business not readily available in the local market.
Import duty rates regularly change so it is best to always keep abreast with the latest rates. Authorities however prefer businesses that do not import majority of their manufacturing needs from overseas. Enterprises and business cooperation contract parties doing business in the country are allowed the following import tax exemptions:
- Temporary imports for re-export or temporary exports for re-import
- Movable assets of organizations and individuals brought into or from Vietnam within the permitted limits
- Exports or imports of foreign organizations and individuals enjoying diplomatic privileges and immunities in Vietnam
- Goods imported for processing for a foreign party which are exported or goods exported overseas for processing for a Vietnamese party which are re-imported pursuant to a processing contract. These imported articles shall be subject to a temporary import duty but a tax refund may be claimed when the goods are exported
- Goods which are imported in order to form fixed assets of a project which is an encouraged investment or of a project which is funded by Official Development Aid, comprising equipment and machinery, specialized means of transportation of a technological line and means of transportation used for transporting employees (including accessories), as well as components, details, separate sections, spare parts, fittings and moulds, and raw materials and materials used to manufacture the above stated goods; also construction materials which are not yet domestically produced
- First-time tax exemption is granted to equipment imported for the formation of fixed assets of projects eligible for investment incentives and official development assistance -funded investment projects in hotels, office buildings, apartments for lease, houses, trade centers, technical service centers, golf courses, tourist resorts, sport complexes, entertainment and amusement centers, medical examination and treatment centers, training, and cultural, financial, banking, insurance, audit and consultancy service establishment
- Goods which are imported for direct use in scientific research and development of technology which cannot yet be created domestically
- Raw materials, supplies and components imported for production under projects in the domains eligible for special investment incentives or in geographical areas with especially difficult socio-economic conditions or in the domain of manufacturing mechanical, electric and electronic components and accessories, are exempt from import tax for five years from the start of production
- Goods which are manufactured, processed, recycled or assembled in non-tariff zones without using raw materials or component parts which are imported from abroad, upon import thereof into the domestic market; in cases where raw materials and component parts imported from abroad are used, upon import of goods into the domestic market, import duty must be paid on that part of the goods which is imported raw materials or component parts which form a constituent part of such goods
- Plant varieties and livestock breeds permitted to be imported for implementation of investment projects in agriculture, forestry and fisheries.
- Goods imported for petroleum activities
- Shipbuilders are exempt from export duty with regard to exported seagoing ships and from import duty with regard to machine and equipments to form fixed assets, means of transport in technological lines and materials not yet domestically produced
- Import duty exemption for materials used in software production which are not yet domestically produced
- Import duty exemption for goods imported for direct use in scientific research and technological development
- Import duty and export duty exemption for machinery, equipment and means of transport temporarily imported into Vietnam for re-export by foreign contractors for construction works or official development assistance-funded projects
- Other goods and materials required for projects encouraged by the Prime Minister
As part of its World Trade Organization membership Vietnam has agreed to cut high import duty on traded goods. Imported goods to Vietnam consist mainly of machinery and equipment, petroleum products, fertilizer, steel products, raw cotton, grain, cement and motorcycles.
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