Ministry of Finance proposes reduction in preferential import taxes

Ministry of Finance proposes reduction in preferential import taxes

The Ministry of Finance is proposing a reduction in preferential import taxes on several imported goods, including cars, timber, liquefied natural gas (LNG), and agricultural products, such as chicken thighs, cherries, and apples.

This information was shared by Nguyen Quoc Hung, director of the Tax, Fee, and Charge Policy Management and Supervision Department under the Ministry of Finance (MoF), on March 25. In the draft decree amending Decree No.26/2023/ND-CP on tax rate adjustments, the agency has suggested lowering the most-favoured nation (MFN) import tax for certain groups of goods.

MFN refers to the tax rate applied to countries within the World Trade Organisation (WTO). This tax adjustment is one of the measures aimed at addressing the context of global trade competition.

"As such, with the anticipated adjustment of MFN import tax rates, many goods from markets like the United States are expected to benefit. Currently, Vietnam has established comprehensive strategic partnerships at the highest level in its diplomatic hierarchy-with 12 countries, including the US, France, Russia, China, India, Japan, South Korea, and Australia," said Hung.

Except for the US, the other 11 countries are part of bilateral or multilateral trade agreements in which Vietnam is a member, allowing them to enjoy tariff preferences.

Vietnam and the US signed a Bilateral Trade Agreement in 2001, but they have not yet established a Free Trade Agreement (FTA) for tariff reductions. Therefore, the US remains subject to the MFN tax rates applied generally to WTO member countries.

"Reducing MFN import tax rates for certain goods is necessary to ensure fair treatment among Vietnam’s comprehensive strategic partners. Additionally, the tax reduction will help Vietnam adapt flexibly to global and regional developments, supporting goals such as economic growth, macroeconomic stability, and inflation control. It also contributes to improving the trade balance with trading partners, encouraging businesses to diversify imported goods and stimulating domestic consumption," Hung said.

"The adjustments adhere to the principle of reducing import taxes on goods that are either not produced domestically or fail to meet domestic demand," he added.

According to the MoF, local authorities are also adjusting import taxes on goods with high import turnover. However, the adjusted tax rates will not fall below the rates specified in the FTAs to which Vietnam is a party.

VIR