Vietnam Lowers Requirements for Preferential Customs Treatment
Jul. 10 – According to Circular 86/2013/TT-BTC released this week by Vietnam’s Ministry of Finance, the financial hurdle for receiving preferential treatment from customs authorities will be lowered for companies in Vietnam that are engaged in the import and export of goods.
Specifically, the circular, which will take effect on August 11, 2013, allows for all companies with US$200 million or greater in annual trade revenues to receive fast-tracked approval from customs agents for the goods they wish to import or export. The previous policy for such preferential treatment required each enterprise to accrue trade revenues in excess of US$350 million.
Circular 86 also incentivizes several industries by providing even lower revenue hurdles for preferential treatment, which include:
- Agricultural and aquatic products;
- Textile and garment products;
- Leather footwear; and
- Raw materials imported for production.
These goods will now be eligible for preferential treatment if their respective enterprise earns over US$50 million in import-export revenue.
The circular also simplifies the application process for companies that wish to receive such preferential treatment: enterprises that wish to claim “preferred status” now only need to receive the relevant approval from the General Department of Customs and the local tax authority in the region where the enterprise is located. Previously, businesses had to seek additional approval from various other local departments and market authorities to obtain “preferential status.”
Enterprises seeking preferential treatment from customs must also comply with certain legal, accounting and payment conditions as outlined in Circular 86.
Vietnam has seen several decades of strong export growth, averaging 17 percent per year over the last two decades. However, there is always room for improvement.
“If Vietnam could reduce logistics expenses by 1-2 percent of GDP, its import-export competitiveness would have been much stronger,” noted Paul Vallery of the World Bank.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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