Ambiguous instructions have led to a disagreement between steel importers and the General Department of Customs about the application of the import code for steel billets.

Last week, 11 steel importers had criticised the Government's decision to change the harmonised system (HS) code for steel billets, which resulted in taxes increasing from 5 to 9 per cent,

VnEconomy.vn reported.

On November 15, 2014, local customs departments had asked steel importers to adopt the HS code 7207.11.00 for non-alley steel billets, with the percentage of carbon being less than 0.25, instead of the HS code 7207.19.00.

This meant that an import tax rate of 9 per cent would be levied, instead of 5 per cent, which was applicable earlier.

Kim Seong Gyun, general director of VSC-Posco Steel Corporation, was quoted by the website as saying that the adoption of the new HS code with a higher tax rate was "unreasonable", and that the description of the shape of steel billet for the application of the import code was unclear.

Steel importers also pointed out that the cost of steel billets accounted for 90 per cent of the total production cost. As a result, the change in tax rate would hit these firms hard.

Meanwhile, the General Department of Customs said steel importers had misunderstood the change, adding that the steel import tariff would also be applied to ASEAN countries.

Deputy President of the Steel Association, Nguyen Van Sua, said that due to its lack of knowledge about steel, the Customs Department's explanations had been unconvincing, and had resulted in many queries from companies.

Customs data show that in 2014, the import of steel billets in Viet Nam reached 324,000 tonnes, 87.1 per cent of which came from China. Nearly 90 per cent of the steel billets were imported from China and a 5 per cent tax rate was imposed on them in line with the ASEAN-China Free Trade Agreement.

It is estimated that if a tax rate of 9 per cent is applied, tax collection will surge by more than VND100 billion (US$4.7 million).