Vietnam cuts tariffs as committed to multilateral trade pacts
Vietnam on January 1 slashed tariffs on thousands of items imported from Southeast Asian countries in accordance with commitments to the ASEAN Trade in Goods Agreement (ATIGA) in 2015-2018.
Under the Ministry of Finance’s Circular 165/2014/TT-BTC, with effect from January 1, import duties are down from 5% to zero for 1,715 more tariff lines, including those for farm produce and fuel products.
Together with 6,859 tariff lines removed between early 2012 and late last year, 90% of the tariff lines in ATIGA are now brought down to zero.
Vietnam will cut 7% of tariff lines, or 669 items, including steel, paper, cloth, autos, auto components, machines, equipment, building materials and furniture in 2018.
Of these products, two groups of sensitive commodities Vietnam has separate tax reduction road maps are auto-motorcycle and cigarette.
The import tax of 50% on autos and motorcycles is maintained this year but will fall to 40% next year, 30% in 2017 and 0% in 2018. Meanwhile, the import tariff for cigarettes still enjoys the most favored nation status.
Tax cuts for imports from many other markets
Also from on January 1, many items imported from China, India, South Korea and New Zealand had their import tax rates reduced in line with the ASEAN-China Free Trade Area (ACFTA), the ASEAN-India Free Trade Area (AIFTA), the ASEAN-Korea Free Trade Area (AKFTA) and the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA).
With ACFTA, Vietnam pledged to cut 9,491 tariff lines and the average tax rate in 2015-2017 and in 2018 is 2.26% and 1.67% per year respectively. Under Circular 166/2014/TT-BTC, there are 3,691 tariff lines lowered to 0% from this year, bringing the percentage of tariff lines with a zero rate to 84.11%.
Under AKFTA, import tariffs on common products are removed in accordance with Circular 167/2014/TT-BTC. There will be an additional 340 lines slashed to 0% in 2016 and 478 more in 2018.
Similarly, import tax reductions and breaks are also applied to many products imported from Australia and New Zealand from this year in accordance with AANZFTA and Circular 168/2014/TT-BTC.
With AIFTA, Vietnam has to lower and eliminate tax rates of 6,722 out of 9,558 tariff lines, with the average rate of 7.38% per year between 2015 and 2018 (down 2.15% from last year). Specific tariff lines are clarified in Circular 169/2014/TT-BTC.SGT/VNN