Vietnam

Understanding the Vietnam customs and trade environment

Import taxes (import duty, import VAT, and special sales tax) are still an important revenue source for the Vietnamese Government. As a result, Vietnam Customs has become more focused on ensuring that revenue targets are collected. A year-on-year increase in revenue targets has led to a recent surge in the number of clearance audits and investigations being undertaken by Customs. The focus of the audits and investigations is typically customs valuation, such as transfer pricing policies and the treatment of royalties, service fees etc. Consequently companies importing goods into Vietnam have been increasingly faced with additional Customs assessments for import taxes.

On the other hand, the Vietnam customs regulatory environment has undergone significant positive changes over the past years and current customs regulations offer a wide range of programmes to importers and exporters. The programmes are designed to allow them to either minimise the duty impact in Vietnam (e.g. bonded manufacturing or import for export processing, establishment of Export Processing Enterprises (EPE) etc) or to facilitate their import and export transactions or their general business in Vietnam.

Electronic customs programs have now been implemented in most local Customs Departments, helping companies to reduce the time spent for clearing goods and special programs such as the “Priority Enterprise” programme are introduced to allow companies with a good compliance record to receive additional benefits to facilitate their customs operations.

Therefore, understanding the Vietnam Customs environment as well as staying abreast with its laws and regulations, practical implications and interpretation of Vietnam Customs officers is key for every importer or exporter in Vietnam.
 

Our services

In Vietnam we advise clients on all aspects of customs and trade management. In particular we assist with the interpretation of Vietnamese regulations, putting them into a practical context for importers and exporters. Additionally we have significant experience of the following:

Competitiveness improvement through strategic customs and trade planning

  • Optimising use of customs incentives schemes (e.g. Free Zones, Bonded Warehouses, Duty exemption, Duty Drawback for Re-Exported Goods, Duty Deferral etc.)
  • Identifying duty savings opportunities arising from Vietnam’s network of Free Trade Agreements (FTA)
  • Identifying and implementing strategies to save duties by unbundling certain elements from the import price (e.g. non-dutiable royalties, license fees etc.)
  • Identifying the most appropriate customs and tax incentive schemes (e.g. Export Processing Enterprises, Import for export processing, import for export production, bonded warehouses etc.)
  • Reviewing tariff classification codes of imported products and identifying the most optimum way to import them into Vietnam (i.e. tariff engineering)
  • Customs supply-chain business modelling

Customs Compliance & Risk Management

  • Carrying out customs compliance health checks to identify historic and future customs risks, including handbook reconciliation
  • Preparing companies for a post clearance customs audit and providing assistance to companies throughout the post clearance audit process
  • Review of classification of traded goods and goods listed on investment certificates to ensure continued compliance with business licenses
  • Managing customs valuation support and documentation
  • Assisting in applying for Advance and Post-importation customs rulings
  • Provision of on-site customs and trade training and workshops

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Case studies

Advising a major automotive company on the dutiability of royalty and license fees

PwC was approached by a multinational automotive company to provide local expertise to assist with its expansion plans into the Vietnam market. WMS worked with a cross-service line team (including tax and supply chain advisory) to assess potential road blocks to a successful market entry.

How we helped

WMS analysed the relevant licensing and manufacturing agreements as well as the company’s planned import and export transactions in Vietnam. Based on this review, we assessed whether the royalties and license fees paid by the company would be considered dutiable from a Vietnam customs valuation perspective and provided suggested strategies to minimise the risks of being challenged. Our work included:

  • Clarification of whether the royalties and license fees were dutiable
  • Feedback on Vietnam Customs’ interpretation of the GATT Valuation Agreement and the practical implications for companies in Vietnam
  • Quantification of risk and possible strategies to minimise these risks

Benefit for the client

  • The client understood the risks of having a royalty and license fee in place when importing goods into Vietnam
  • Client was able put into place mitigation strategies before importation into Vietnam and thus reduced the risk of being challenged by Vietnam Customs.

Advising a multinational garment company on bonded manufacturing procedure

WMS was requested to analyse the bonded manufacturing operation of a multinational garment company to assess the consumption norms and customs handbook liquidation. Based on this review, WMS assessed the risk of being charged additional import duty as well as penalties and provided suggested strategies to minimise the risk of being challenged.

How we helped

WMS analysed the bonded manufacturing operation of a multinational garment company to assess the consumption norms and customs handbook liquidation. Based on this review, WMS assessed the risk of being charged additional import duty as well as penalties and provided suggested strategies to minimise the risk of being challenged. We:

  • Quantified the risk and possible strategies to minimise these risks.
  • Assessed the risk of being charged for a criminal offence

Benefit for the client

  • The client was able to fully understand the regulations related to bonded manufacturing, especially on customs handbook reconciliation and how it applied to its business
  • The client was able to put in place mitigation strategies to avoid being charged with criminal offences

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Contact us

Van Vinh Pham

Director

Tel: +84 (8) 3823 0796 Ext. 1503

Email

Nguyen Hong Son

Director, PwC Asia Pacific Customs and Trade

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