German Market

Procedures for importing goods into Vietnam?

Question: Procedures for importing goods into Vietnam?

Answer: 

Procedures for importing goods into Vietnam include the following steps:

Step 1: Preparation for import

 Determining the import category of goods

Prior to importation, the importers must determine which category their goods fall into, as not all types of goods can be imported into Vietnam, and not all goods follow the same import mechanism. Therefore, importers need to check whether their goods fall into one of the following categories:

  1. Goods banned from import

Some goods are not allowed to be imported into Vietnam, for example: weapons, drugs, hazardous chemicals, some used goods... The list of goods banned from import into Vietnam is detailed in Appendix I - Decree 69/2018/NĐ-CP dated May 15, 2018 of the Government detailing a number of articles of the Law on Foreign Trade Management.

  1. Goods subject to specialized inspection permits

Before importing goods into Vietnam, traders need to determine whether their goods are subject to a permit for specialized inspection.

Example 1 - Goods subject to sanitary and phytosanitary inspection: Goods such as vegetables and fruits, meat, aquacultural products, etc. need to be inspected for food hygiene and safety before being circulated in the Vietnamese market. The Ministry of Agriculture and Rural Development, the Ministry of Health, the Ministry of Industry and Trade, and a number of other relevant ministries are the state management agencies for these requirements (issuing standards, regulations as well as a list of products subject to inspection).

Example 2 - Goods subject to technical standard inspection: Some goods such as electronics, machinery and equipment, automobiles and vehicles... must meet Vietnam's technical standards and regulations such as standards on labels, functions, operation, safety, environmental protection... The Ministry of Science and Technology, the Ministry of Transport, the Ministry of Industry and Trade, and a number of other relevant ministries are the state management agencies for these requirements (issuing standards, regulations as well as a list of products subject to inspection).

Goods subject to specialized inspection as above will have to register in advance with the relevant authorities to be inspected upon arrival and granted a certificate before being allowed to circulate in the Vietnamese market.

  1. Goods requiring an Import License, or meeting conditions.

For some types of products, importers must apply for an import license or meet the conditions set by the relevant ministries.

For import licenses, depending on the category, products may be automatically or non-automatically granted import licenses.

For products imported under conditions, the imported products must fully satisfy the conditions for such products, but the importing enterprises do not need to apply for an import license.

The list of products imported under licenses and conditions set by management ministries is detailed in Appendix III - Decree 69/2018/ND-CP dated May 15, 2018 of the Government detailing a number of articles of the Law on Foreign Trade Management.

Registering/Applying for import licenses

  • Individuals cannot directly import goods, but must be a legal entity with a registered business establishment to be able to import. Business registration can be done online at the National Business Registration Portal (dangkykinhdoanh.gov.vn).

  • Registering for the usage of digital signature at the website of the General Department of Vietnam Customs at: https://www.customs.gov.vn/SitePages/DangKyDoanhNghiepSuDungChuKySo.aspx. It should be noted that the digital signature must be registered in advance at a digital signature service provider licensed by the Ministry of Information and Communications. After acquiring a digital signature, enterprises register that digital signature for electronic customs declaration on the website of the General Department of Vietnam Customs.

  • Registering for the usage of the Vietnam Automated Cargo Clearance System (VNACCS): The customs declaration is made through the VNACCS System. To be able to use this system, customs declarants must register to use it at the website of the General Department of Vietnam Customs by following the link: https://dknsd.customs.gov.vn/Pages/dn.aspx.

  • Registering for inspection of goods subject to specialized inspection at the relevant agencies, for example:

  • Ministry of Health: inspection of food hygiene, safety, and quality for a number of food products, pharmaceuticals, cosmetics...;

  • Ministry of Transport: inspection and registration of special-use vehicles and motorcycles;

  • Ministry of Agriculture and Rural Development: SPS inspection of animals, plants, aquacultural products.

  • Applying for import licenses at the ministries or ministerial-level agencies competent to grant licenses for products subject to import licenses.

 

Step 2: Determining the classification of goods

Determining the classification of goods (HS) is a very important step in determining the tariff to be applied to those goods. It should be noted that according to the World Customs Organization (WCO), countries will uniformly apply up to the first 6 digits of an HS code. However, the imposition of latter numbers in the HS code sequence is at the discretion of individual countries, so these numbers may vary from country to country. In practice, countries tend to add 2 or 4 numbers to the uniform  6-digit HS code (forming an 8-digit, 10-digit HS code) to serve their own management needs.

Vietnam currently adopts a 8-digit HS code.

The EU also applies an 8-digit HS code across the EU. This system will be used for the imposition of tariffs on all goods imported into the region. However, some member countries, including Germany, stipulate in more detail up to an 11-digit HS code, to be used for the imposition of VAT and for a number of other purposes.

When German goods are imported into Vietnam, it is necessary to determine its appropriate HS code according to Vietnam's HS  to get the right tariff rate, since Vietnam Customs will classify goods according to Vietnam's HS, not of the exporting country. Businesses can refer to Vietnam's HS at the website of the General Department of Vietnam Customs by following the link: https://www.customs.gov.vn/SitePages/Tariff.aspx

Under the EVFTA and Vietnamese law, a Vietnamese importer or a German exporter/manufacturer has the right to submit a request to Vietnam’s Customs for pre-determination of the HS code of their goods (Advanced Rulings procedure) before importing goods into Vietnam. Thus, to ensure the accuracy of the HS code of the goods and avoid disagreements between businesses and the Vietnamese customs when the goods arrive at the port, businesses can send a request for the pre-determining of HS code of goods to the General Department of Vietnam Customs.

 

Step 3: Determining tariffs, taxes and fees

Import Tariff

After determining the classification of goods according to Vietnam's HS, the importer can estimate the import tariff rate applicable to such goods.

For German goods imported into Vietnam, there are 2 applicable tariff mechanisms, each corresponds to a certain tariff rate and conditions. The importer will base on the specific conditions of the goods to choose the most suitable and beneficial tariff for them. Specifically:

  1. MFN tariff: This is the tariff rate Vietnam applies to goods coming from WTO member countries. German goods imported into Vietnam are subject to MFN tariff without any attached conditions.

  2. EVFTA tariff: This is Vietnam's preferential tariff rate for goods coming from EU member countries (including Germany), the preferential tariff rate will be decided by Vietnam but must not be lower than the level committed in the EVFTA. However, to enjoy the EVFTA tariff, German goods exported to Vietnam must meet the rules of origin of the Agreement.

To determine the exact EVFTA tariff rate that Vietnam applies to German products, importers need to keep update on Vietnam's current regulations on the implementation of tariff commitments under this Agreement. The EVFTA tariff rates for the period of 2020-2022 is provided in the Decree 111/2020/NĐ-CP dated September 18, 2020 of the Government on the Special Preferential Import-Export Tariff to implement the EVFTA Agreement for the period of 2020 - 2022.

Value-Added Tax (VAT)

Most  goods imported into Vietnam are subject to value-added tax (except for some special goods). The value-added tax rate is usually 10%, but some are only subject to 5%.

However, if the imported product is used as an input for the production of another good, then the amount of value-added tax will later be deducted and refunded.

Excise Tax

Some imported goods are subject to excise tax, such as alcohol, tobacco, automobiles, etc. The excise tax rates vary depending on the type of goods.

Environmental Protection Tax

This is the tax applied to goods that, when being used, will have an adverse impact on the environment such as petroleum, coal, pesticides, etc.

Anti-dumping, Anti-subsidy and Safeguards duties

Some imported goods are investigated by Vietnam and imposed anti-dumping, anti-subsidy or safeguard duties, so they will be subject to these additional duties when imported into Vietnam. However, currently, no German products are subject to these duties by Vietnam.

 

Step 4. Customs declaration, payment of tariffs and taxes, and customs clearance

Customs declaration

The customs declaration can be prepared in advance by pre-filling the information on an electronic customs declaration software. The customs declaration can be submitted before the date of arrival at the border gate or within 30 days from the date of arrival to the VNACCS system. After the customs declaration is transmitted, the system will automatically classify:

  • Green Line: If the classification is Green Line, the importer is exempt from checking documents and inspecting goods.

  • Yellow Line: If the classification is Yellow Line, the importer must submit the following additional documents for Customs to check:

  • Bill of lading;

  • Packing List;

  • Value declaration;

  • Commercial Invoice;

  • Import License (for goods subject to import license);

  • Notice of exemption from inspection or Notice of inspection results from a specialized inspection agency (for goods subject to specialized inspection);

  • Certificate of Origin (to enjoy EVFTA tariff preferences).

  • Red Line: If the classification is Red Line, the importer must submit the same documents as in the case of the Yellow Line and the Customs will conduct physical inspection for the goods.

Payment of tariffs, taxes and fees

Importers must pay all relevant tariffs, taxes and fees for customs clearance and release of goods.

Source: The Center for WTO and International Trade

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