The Ministry of Finance proposes reducing import tax on some foods

The Ministry of Finance proposes reducing import tax on some foods

The ministry proposed cutting import tax on some agricultural products such as chicken, pork, fresh apples, fresh grapes and raisins.

Some chicken products and by-products would see their import tariffs cut from 20 per cent to 18 per cent, corresponding to the first-year cut in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The ministry said consumers will benefit from tax reductions due to decreasing product prices.

The cut from 20 per cent to 18 per cent, based on import turnover in accordance with MFN (most-favoured nation) tax rates last year, would hit State budget collection by US$3 million per year, said the ministry.

Compared with last year, chicken meat imports increased from April to June this year but have decreased gradually since June.

The Ministry of Agriculture and Rural Development said the increase in imports was mainly caused by African swine fever, which made many consumers turn to chicken.

For pork, the Ministry of Finance proposed cutting the tax rate of fresh or chilled pork except for carcasses and half-carcasses, hams, shoulders and cuts thereof from 25 per cent to 22 per cent.

As almost no import turnover applies the MFN tax rate, such an adjustment would not affect State budget revenue.

However, the reduction of MFN tariffs would lead to an increase in import volume, which could increase State budget collection, said the ministry.

In addition, the ministry also proposed reducing taxes on fresh apples and fresh grapes from 10 per cent to 8 per cent.

Assessing the impact of the plan, the Ministry of Finance stated it was expected to cut State budget collection by $3.7 million per year.

The fruit harvest nationwide has reached more than 7 million tonnes and increased rapidly compared to seven and eight years ago, according to the Ministry of Agriculture and Rural Development.

However, up to 90 per cent of fruit production still relies on domestic consumption, so the price was low, the proportion of exported fruits accounts for only 10 per cent with about 5 to 6 per cent of fresh fruits.

Conversely, fruit imports are increasing due to demand.

Statistics of the General Department of Customs showed fruits from the main Thai market had tended to decrease in recent months, while those from markets such as Chile increased by 98 per cent, the US increased by 90 per cent and South Korea increased by 83 per cent.

This showed the increase in fruit imports from countries outside free trade agreement areas did not depend on import taxes but the tastes of consumers.

With the prices of apples and grapes ranging from VND50,000 to VND200,000 ($2-9) per kilogramme, this is relatively suitable for many Vietnamese consumers.

Regarding the commitments of the CPTPP, the special preferential tax rate for fresh apples and grapes is 5 per cent and is only applied to countries that have ratified the agreement.

The four countries which have not ratified the agreement (Brunei, Chile, Malaysia, and Peru) still have to use the MFN tax rate. 

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