Preferential export tax to implement CPTPP Agreement from 8.3%-3.6%

Preferential export tax to implement CPTPP Agreement from 8.3%-3.6%

Together with MVA Vietnam, analyze the Decree on Preferential Export Tariffs of the CPTPP Agreement applied to 603 tariff lines, which is being drafted and consulted by the Government.

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The Decree on Preferential Export Tariffs of the CPTPP Agreement applied to 603 tax lines is being drafted by the Government and collected for comments.

The Ministry of Finance is collecting comments from the people with the draft Decree on Preferential Export Tariffs and Special Preferential Import Tariffs of Vietnam to implement the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Ocean for the period 2022-2027 (CPTPP Agreement).

Preferential export tax to implement the CPTPP Agreement is from 8.3%-3.6% - Photo 1.

The draft clearly stipulates the Preferential Export Tariff for the implementation of the CPTPP. Accordingly, the Preferential Export Tariff includes product codes, descriptions, and tax rates for the period 2022-2027, applicable to 603 tariff lines.

The average preferential export tax rate in 2022 is 8.3%; in 2023 is 7.9%; in 2024 is 7.4%; in 2025 is 7%; in 2026 is 6.6%; in 2027 is 3.6%.

The tax rates promulgated in the Decree are built on the principle of complying with commitments under Vietnam’s tariff reduction roadmap in the CPTPP Agreement. The tariff reduction roadmap in the promulgated Tariff is applicable for each year, from December 1, 2022 to the end of December 31, 2027.

Goods that are not included in the Preferential Export Tariff specified in Appendix 1 issued with the Decree will apply a preferential export tax of 0% when exported to the territories of countries that are members of the CPTPP Agreement.

The CPTPP Agreement is valid for 8 countries including Mexico, Australia, Canada, Japan, New Zealand, Singapore, Peru and Vietnam. According to the provisions of Article 3 and Appendix 2D of the CPTPP, Mexico applies the tax rate according to the reduction schedule starting from the first year; Australia, Canada, Japan, New Zealand, Singapore and Peru apply tax rates according to the cut schedule starting from the second year. The application of two separate roadmaps for the two groups of countries as above ensures compliance with commitments and benefits for Vietnam on the basis of implementing the principle of reciprocity.

Conditions for application of preferential export tax rates under the CPTPP Agreement: The CPTPP does not have specific provisions on conditions for enjoying preferential export tax rates. However, in order to control the actual goods imported into the territories of the countries according to the right subjects and avoid trade fraud, the draft Decree stipulates the conditions for applying preferential export tax rates as follows: have transport documents and import declarations showing that the destination is in the territories of the above countries.

Special preferential import tariffs for the implementation of the CPTPP Agreement

According to the draft, the Special Preferential Import Tariff includes item codes, description of goods, special preferential import tax rates, items subject to tariff quotas, applicable to 11,525 tariff lines, in which 205 tax lines are detailed in 10-digit level.

Regarding the special preferential import tax rate: The average tax rate in 2022 is 2.18%, in 2023 is 1.77%; in 2024 is 1.36%; by 2025 is 1.06%; 2026 is 0.74%; in 2027 is 0.4%.

Special preferential import tax on used cars of headings 87.02, 87.03 and 87.04 applies tariff quotas.

Special preferential import tax on goods in headings 04.07 (poultry eggs), 17.01 (sugar), 24.01 (tobacco leaves) and 25.01 (salt) subject to tariff quotas.

Tax rates applicable for the period 2022-2027: Apply the same principle as for preferential export tax, whereby: (i) Mexico applies the tax rate according to the reduction schedule starting from year 1; (ii) Australia, Canada, Japan, New Zealand, Singapore and Peru apply tax rates according to the reduction schedule starting from the second year. For goods imported from Vietnam’s non-tariff zone into the domestic market, in order to ensure the benefits for businesses in Vietnam’s non-tariff zone, the Ministry of Finance proposes to apply a roadmap starting from second year (as applicable to Australia, Canada, Japan, New Zealand, Singapore and Peru).

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