VietNamNet Bridge – Government agencies and professional associations have proposed to restrict cross-border trade by reducing the ceiling value of tax-free goods brought across border gates.

The Vietnam Chamber of Commerce and Industry (VCCI) has proposed a new cross-border import/export policy that would step-by-step restrict trade across the border.

The Ministry of Finance (MOF) has completed the draft of the Prime Minister’s Decision on the management of cross-border trade activities.

Under the draft, the value of tax-free goods that each household can trade across the border must not be higher than VND8 million. At present, the level is VND60 million per individual per month.

The current tax-exemption policy on goods traded across the border gates aims to help residents in border areas exchange goods they produce and buy essential goods for daily use and production.

However, MOF has found that the VND2 million “quota” is not used up by local residents.

Meanwhile, the policy has been exploited by non-resident traders to evade tax by hiring local residents to carry goods across the border instead of importing goods through official channels.

MOF believes that it is the right time to restrict goods exchange activities of local residents in the border areas.

If the Prime Minister’s approves the draft, cross-border trade with Laos, Cambodia and China will be affected.

There are no official statistics about cross-border trade turnover. According to Chinese customs agencies, China’s export turnover to Vietnam was $56.2 billion in the first 11 months of 2014. Meanwhile, according to Vietnamese customs agencies, the figure was $39.5 billion.

A source said experts and other government agencies have raised their voice opposing the Ministry of Finance’s proposal.

The cross-border trade restriction policy, once applied, would place difficulties on border area residents. The tax exemptions for cross-border trade is the only preferential policy offered to local residents.

A senior executive of the Vietnam Rubber Group noted that the policy suggested by MOF, if applied, will not affect rubber companies, because the companies tend to export products through official channels instead of across border gates.

“In the past, they (rubber companies) preferred exporting rubber across the border gates to avoid the export tariff of 5 percent. However, as the tariff has been cut to zero percent, they would rather export through official channels to minimize risks,” he explained.

Hoang Lam, director of Hung Giang Company, a rice exporter, also said the restriction would only affect the trade of consumer goods, not products with high value like rice.

TBKTSG