VCN- In order to implement the import tax commitments under the Vietnam – Cambodia Agreement, according to the provisions of the Law on Import Tax and Export Tax No. 107/2016/QH13, the Ministry of Finance drafted a Decree promulgating the Special Preferential Import Tariff to implement the Agreement on Promoting Bilateral Trade between Vietnam and Cambodia from January 1, 2021 to December 31, 2022.
|Moc Bai international border gate (Tay Ninh) is one of 24 border gates that are eligible for the special preferential tariff.|
31 items enjoy special preferential import tax
The Ministry of Finance said that the maintenance and expansion of the number of items eligible for export tax incentives from 2006 until now has contributed to promoting bilateral trade between the two sides from about US$700 million in 2005 to US$5.28 billion in 2019 and US$5.32 billion in 2020.
According to the commitment in the 2021-2022 Agreement, the tariff schedule of the 2021-2022 Agreement has been shortened to 31 product codes entitled to special preferential import tax rates, reducing by one item compared to 32 items as in the 2019 Agreement, it is cake with HS code 1905.90.30 that is off the list of preferential tax rates for the period of 2021-2022 because the tax rate on this item has been reduced to 0% for the 2018-2022 period according to the ASEAN Trade in Goods Agreement (ATIGA).
The draft Decree includes seven articles and three appendices. The tax schedule states in Appendix I that the Vietnamese side will apply the tax rate of 0% to the Cambodian side on 31 items including: live poultry, chickens of the species Gallus domesticus, ducks, geese, turkeys and pheasants (with two codes); meat and edible offal of poultry of heading 01.05, fresh, chilled or frozen (with eight codes); fresh or dried citrus fruits (with three codes); rice (with four codes); meat, meat offal or other processed or preserved blood (one code); bread, pastries, cakes, cookies and other cakes, whether or not containing cocoa; holy cakes, capsule shells for pharmaceutical use, sealing wafers, rice paper and similar products (two codes); unprocessed tobacco leaves; tobacco waste (11 codes). In which, live poultry products, poultry meat and by-products, lemons, and rice have a quota of 300,000 tons/year; preparations containing pork (in airtight packaging for retail sale), and unprocessed tobacco leaves with a quota of 3,000 tons/year.
According to the draft Decree, the condition for applying the special preferential import tax rate is that the imported goods must be on the special preferential import tax schedule to implement the Vietnam – Cambodia Agreement from January 1, 2021 to December 31, 2022; have a Certificate of Origin form S (C/O form S) issued by a competent authority of the Kingdom of Cambodia.
The above goods must be cleared through 24 pairs of border gates in eight localities, including: Gia Lai (one pair of border gates), Dak Nong (two); Binh Phuoc (three), Tay Ninh (six), Long An (three), Dong Thap (three), An Giang (four) and Kien Giang (two).
Imposing special preferential import tax of other Agreements on rice in excess of quota
The draft Decree also stipulates that, for rice products, in case rice products are imported in excess of the quota, the quantity imported in excess of the quota may be eligible for tax special preferential import tax of the Free Trade Agreements to which Vietnam and Cambodia are members (if the conditions specified in the respective Decrees on the Special Preferential Import Tariff are satisfied); or may be subject to a preferential import tax rate as prescribed in Decree No. 57/2020/ND-CP, list of goods and absolute tax rate, mixed tax, and out-of-date import tax tariff rates and Decree No. 125/2017/ND-CP and amendments and supplements (if any).
For unprocessed tobacco products, in case the quantity of imported unprocessed tobacco leaves exceeds the prescribed quota but is still within the total quota according to the WTO and meets the conditions specified in Vietnam’s legal documents on tariff quotas, this quantity is eligible for the preferential import tax rates specified in Decree No. 57/2020/ND-CP and amendments and supplements (if any).
In case the quantity of imported unprocessed tobacco leaves exceeds the prescribed quota and is outside the total quota according to the WTO of the whole country, the extra-quota import tax rate shall be applied to unprocessed tobacco products according to the provisions of Decree No. 57/2020/ND-CP and amendments and supplements.
Notably, this draft Decree stipulates that the quantity of unprocessed rice and tobacco products that can be imported falls into the following two cases. Firstly, rice products sold by enterprises and households, Vietnamese business households and individuals supporting investment and planting in Cambodia’s provinces on the border with Vietnam, and import to Vietnam in accordance with the current law on export and import tax. Secondly, unprocessed rice and tobacco products originating from Cambodia that Vietnamese enterprises import to Vietnam for re-export to other markets will comply with Vietnam’s mechanism of temporary import for re-export and regional and international agreements signed by both parties are not included in the quota of the respective goods specified in this Decree.
By Uyen Nhu/Kieu Oanh