Recent Customs¹ and Value Added Tax² (VAT) changes in Vietnam include:

Customs changes

New tariff classifications

For 2018, new preferential tariff classifications will apply for various dutiable commodities (including new entries/changes to the Harmonized System (HS) code, description and duty rates). This list replaces those promulgated in 2016 and is used as a basis for reference by the authorities for various customs purposes including but not limited to: build-up of yearly preferential import-export duty tariffs, import license determination, statistics, etc. Companies need to review their HS classification, because given this new one, their HS classification may be changed, and thus subject to new customs duty rates.

Tariffs on imported vehicles

The 0% rate of preferential tariff levied on imported vehicle components (subject to conditions) will now apply from 16 November 2017 to 31 December 2022.

With effect from 1 January 2018, there are significant increases in the import duty applicable to used automobiles (passenger vehicles with fewer than 16 seats).

For vehicles of 9 seats or less (including the driver), changes include:

• Absolute tariff on passenger cars with cylinder capacity of 1,000cc or lower is doubled at US$10,000 per unit.
• Mixed tariff on pickup trucks, SUVs and sports cars with cylinder capacity over 1,000cc is 200% or 150% plus US$10,000, the lowest rate is applied.
• Mixed tariff for other vehicles classified as passenger cars is the same as applied to new vehicles adding US$10,000 for those with cylinder capacity over 1,000cc to 2,500cc, and US$15,000 on vehicles of over 2,500cc.

For vehicles of 10 to 15 seats (including the driver), the tax rate is the same as applied to new vehicles adding US$10,000 (vehicles of less than 2,500cc) and US$15,000 (vehicles of over 2,500cc).

VAT changes

VAT refunds are now allowed for imported goods that are then exported (this was previously disallowed.) In addition, the scope of items not subject to VAT was amended to include exported products being primarily processed from natural resources and mined minerals. Both these changes are effective 1 February 2018.

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ENDNOTES

¹ Decree 125/2017/ND-CP dated 16 November 2017 of the Government amending and supplementing a number of articles of the Government's Decree 122/2016/ND-CP dated 1 September 2016 on preferential import and export tariff, Goods Classification Nomenclature and absolute tax rate, complex tax rate, and import tariff-free quota.

² Decree 146/2017/ND-CP dated 15 December 2017 of the Government amending and supplementing a number of articles of the Government's Decree 100/2016/ND-CP dated 1 July 2016 and the Decree 12/2015/ND-CP dated 12 February 2015 on value added tax and corporate income tax.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Shinnihon Tax, Ho Chi Minh City

• Robert King
  robert.m.king@vn.ey.com
• Anh Thach
  anh.tuan.thach@vn.ey.com

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ATTACHMENT

PDF version of this Tax Alert