A Guide To Import And Export Procedures In Vietnam
Importing and exporting products can be a challenge for businesses in Vietnam. Vietnam Briefing outlines a general step-by-step guide for import and export procedures in Vietnam. We also look at registration, license permit requirements, customs procedures, and duties applied.
Once among the smallest economies in Southeast Asia, Vietnam has now emerged as one of the world’s fastest-growing markets. Currently, the country is the EU’s 16th largest trade partner and the second-largest trade partner within ASEAN. Vietnam is also China’s sixth-largest trading partner and in the first half of 2020, was the second-largest exporter to the US.
With foreign investors showing significant interest in Vietnam, it is important for them to clearly understand the country’s import and export procedures.
Registration, Legal Entity, And License Permit Requirements
Vietnam does not require a company to have a separate import or export license to engage in import and export activities in the country.
The most common entity for investors looking to engage in import and export activities, as well as engage in domestic distribution of goods, is to establish a trading company. This is an inexpensive establishment option with no minimum capital contribution required.
However, in case an importer would like to sell imported products to Vietnamese consumers, they must obtain an additional trading license must be obtained to legalize the process. Establishing a trading company takes approximately three months while acquiring a trading license can take one to three months.
In practice, companies that want to import to Vietnam without setting up a local legal entity can utilize an importer of record to facilitate the process. This strategy allows foreign businesses that have time constraints, wish to test the market, or only import a few times to cope with logistical, regulatory, and language barriers.
Certain goods do require companies to obtain permits from the government. In addition, petroleum oil is banned from exports while goods banned from imports include cigars, tobacco, petroleum oils, newspapers and journals, and aircraft.
All goods imported or exported in Vietnam are subject to the Vietnam customs clearance standards, which effectively check the quality, specifications, quantity, and volume of the goods. Among these, certain imported goods are subject to inspection.
For example, imported pharmaceuticals must undergo testing and include documents detailing product use, dosage, and expiration dates (written in Vietnamese), which must also be included in or on the product packaging.
Currently, the Vietnam custom standards are set out under Law No. 54/2014/QH13.
Customs Documents Required In Vietnam
Companies that import or export goods must submit a dossier of documents, which includes at least the company’s business registration certificate and import/export business code registration certificate to the customs authorities. Depending on the imports or exports in question, authorities may request the following additional documents:
Documents required for importing goods include:
- Bill of lading;
- Import goods declaration form;
- Import permit (for restricted goods);
- Certificate of origin;
- Cargo release order;
- Commercial invoice;
- Customs import declaration form;
- Inspection report;
- Packing list;
- Delivery Order (for goods imported through seaports);
- Technical standard/health certificate; and
- Terminal handling receipts.
The documents required for exporting goods include:
- Electronic Export Customs Declaration (E-Form HQ/2015/XK);
- Bill of lading;
- Certificate of origin;
- Commercial invoice;
- Customs export declaration form;
- Export Permit;
- Packing list; and
- Technical standard/health certificate.
Export shipments can be completed on the same day while import shipments typically take around one to three days to complete for full container loads (FCL) and less than container loads (LCL), respectively.
According to Vietnamese Customs, companies that regularly export and import the same exact goods within a given period may use a single customs declaration form for carrying out the relevant customs procedures if the goods are listed under the same purchase and sales contract and are delivered within the delivery time listed on the purchase contract.
Priority Customs Treatment
For those seeking to reduce customs compliance costs in Vietnam, it is possible to apply for priority treatment. Under this scheme, qualifying companies will become eligible for a range of benefits including:
- Exemption from examination of supplementary customs documentation;
- Exemption from physical inspection of goods;
- Ability to submit incomplete customs declarations. It should be noted that within 30 days from the date of registration of incomplete customs declarations or submission of documentary evidence in substitution of customs declarations, customs declarants will be required to submit complete customs declarations; or
- Prioritized access when carrying out tax formalities for goods in accordance with the law on taxation.
There are several conditions companies must adhere to for preferential customs treatment. These are outlined under Decree No. 08/2015/ND-CP:
- Compliance with the law on customs and taxation from the date on which the enterprise files a priority application for a period of two years;
- Compliance with the law on accounting and auditing and subsequent compliance with Vietnamese Accounting Standards (VAS);
- Maintenance of a system and process for managing, monitoring, and controlling import and export supply chains; and
- Maintenance of specific export and import turnover requirements. For those importing and exporting, an annual turnover of US$100 million is required. For those exporting goods made in Vietnam, an annual turnover of just US$40 million has been set while Vietnamese exporters of agricultural goods are only required to show a turnover of US$30 million.
Duties Applied To Import And Exports
Tax Applicable On Imports
Vietnam imposes a tax on almost every type of product that is imported into the country, including import tax, value-added tax (VAT), and, for certain goods, special consumption tax (SCT). The import tax rates range depending on the type and origin of the goods. For example, consumer products and luxury goods are highly taxed while machinery, equipment, and raw materials tend to be subject to lower taxes and even tax exemptions.
In terms of the origin of the products, the duty rate for imported products can be divided into three types, namely preferential rates, special preferential rates, and standard rates:
- Preferential tax rates apply to goods originating from countries, groups of countries, or territories, which apply the most favored nation treatment in their trade relations with Vietnam.
- Special preferential tax rates apply to goods originating from countries, groups of countries, or territories, which apply special preferences on import tax to Vietnam. Currently, it is mainly applicable to ASEAN nations under common preferential tariffs (CEPT).
- Ordinary tax rates apply to goods originating from countries, groups of countries, or territories, which do not apply the most favored nation treatment of special preferences on import tax to Vietnam. Ordinary tax rates will be no more than 70 percent higher than the preferential tax rates specified by the government.
Import tariffs can be found on the official portal of Vietnam Customs. Import duties declarations are required upon registration of customs declarations with the customs offices and must be paid before receipt of consumer goods.
Tax Applicable On Exports
In contrast to imported goods to Vietnam, most goods and services being exported from Vietnam are exempt from tax. Export duties (ranging from zero percent to 45 percent and computed on free-on-board (FOB) price) are only charged on a few items, mainly natural resources, such as minerals, forest products, and scrap metal.
Many goods are subject to VAT. In addition, the Law on Special Consumption Tax (SCT) stipulates that those exporters who purchase SCT tax-liable goods for export but instead sell the products domestically are liable for SCT. Export duties declarations are also required upon registration of customs declarations with the customs offices but can be paid within 30 days of registration of customs declarations.
In certain situations, imported and exported goods are exempt from tax. These include the following:
- Goods temporarily imported for re-export or temporarily exported for re-import;
- Goods imported for processing for foreign partners then exported or goods exported to foreign; countries for processing for Vietnam then re-imported under processing contracts;
- Goods imported to create fixed assets for projects entitled to investment incentives or investment projects funded with official development assistance (ODA) capital sources;
- Goods imported in service of petroleum activities; and
- Goods imported for direct use in activities of scientific research and technological development.
Optimizing Your Customs Experience
Vietnam’s customs procedures are complex and subject to change with little to no warning. For up-to-date information on clearance regulations, processing times, or applying for the priority program, it is advised to consult with government officials or a professional service firm that can guide the business with any cumbersome procedures and legalities.