28 July 2023

Vietnam's draft Decree on Special Preferential Import Tariff aims to implement the Vietnam-Cambodia Bilateral Trade Promotion Agreement 2023-2024.

Inheriting the contents specified in Decree No. 83/2021/ND-CP dated 13/9/2021.

Vietnam and Cambodia have signed and implemented the Agreements in the periods: 2006-2007, 2010-2011, 2012-2013, 2014-2015, 2016-2017, 2019-2020, 2021-2022. On April 19, 2023, the Government issued Resolution No. 10/NQ-CP on the signing of the Agreement to promote bilateral trade between Vietnam and Cambodia for the period of 2023 – 2024.

On June 2, 2023, the Ministry of Industry and Trade signed with the Cambodian side an Agreement to promote bilateral trade between the Government of the Socialist Republic of Vietnam and the Government of the Kingdom of Cambodia for the period of 2023 – 2024. According to the provisions of Articles 12 and 14 of the Agreement, the Agreement takes effect from June 2, 2023 and expires on December 31, 2024.

In the period of 2021-2022, in order to implement Vietnam's commitments on import duties in the Agreement, the Government has issued Decree No. 83/2021/ND-CP dated September 13, 2021 on Vietnam's Special Preferential Import Tariff to implement the Agreement on Promoting Bilateral Trade between the Government of the Socialist Republic of Vietnam and the Government of the Kingdom of Cambodia paragraph 2021 – 2022. As a rule, the Decree is valid until the end of December 31, 2022.

In order to comply with Vietnam's commitments in signed international treaties, Vietnam should issue a Decree stipulating Vietnam's Special Preferential Import Tariff to implement the Agreement on Promoting Bilateral Trade between the Government of the Socialist Republic of Vietnam and the Government of the Kingdom of Cambodia for the period 2023-2024.

The draft Decree is built on the basis of inheriting the contents specified in Decree No. 83/2021/ND-CP dated September 13, 2021, including regulations that are applied stably and do not arise problems in the implementation process over the past time.

According to the draft, promulgated together with this Decree 01 Tariff and 02 corresponding lists in 03 annexes:

Annex I, stipulating the list of goods to which the special preferential import tax rate of 0% of Vietnam applies to goods originating from the Kingdom of Cambodia corresponding to items in Annex I of the Vietnam Agreement - Cambodia (including unprocessed rice and tobacco leaves within the quota quantity specified in Articles 3 and 4 of the Agreement).

Annex II, stipulating the list of goods imported under Vietnam's tariff quota: in accordance with the provisions of Articles 3 and 4 of the Agreement on commodities (rice, dried tobacco leaves) and quantity and conversion rate.

Annex III, list of pairs of border gates permitted for customs clearance of items enjoying special preferences: this provision in the Decree is in accordance with the provisions of Annex III of the Agreement.

The tariff of 29 items entitled to special preferential tax rates in this Decree is narrowed to 02 lines compared to 31 items in Decree 83/2021/ND-CP dated September 13, 2021 (bringing 02 items of other flavored crispy foods with HS code of 1905.90.80 and others with HS code of 1905.90.90 out of the Preferential Tariff of Cambodian import tax rates in the Agreement for the period 2023 - 2024 because the tax rate of this item has reached 0% under the ATIGA Agreement).

Tax rates and tariff quotas for unprocessed rice and tobacco leaves originating from the Kingdom of Cambodia

Stipulate the application of special preferential import tax rates to imported goods subject to the tariff quota regime in Appendix II promulgated together with the Decree, including rice and unprocessed tobacco leaves.

For rice: In case of import within the quota specified in Appendix II, the tax rate of 0% shall be applied; in case of import exceeding the quota, special preferential import tax rates of free trade agreements to which Vietnam and Cambodia are jointly contracting parties, or preferential import tax rates (MFN rates) may be applied as prescribed in the MFN Tariff Decree and amended documents,  additional (if any).

For tobacco leaves: In case of import within the quota specified in Appendix II, the tax rate of 0% shall be applied; in case imports exceed the quota specified in Appendix II, but are still included in the total quota according to the WTO, this amount shall be subject to preferential import tax rates; in case the import exceeds the quota specified in Annex II and falls outside the total quota according to the WTO, the import tax rate outside the quota for unprocessed tobacco leaves, according to the provisions of the MFN Tariff Decree and amended documents,  additional (if any).

Rice products supported by Vietnamese enterprises, households, business households and individuals for investment and cultivation in Cambodian provinces adjacent to the border of Vietnam imported to Vietnam are not included in the quota quantity of rice products specified in Appendix II promulgated together with this Decree.

Unprocessed rice and tobacco leaves originating from Cambodia imported by Vietnamese enterprises to Vietnam for re-export to other markets shall comply with the mechanism of temporary import for re-export not included in the quota quantity of corresponding items specified in Appendix II promulgated together with this Decree.

Source: congthuong.vn