Imported cars increase dramatically, Customs requires 'tracing' origin

The General Department of Customs requires provincial and municipal Customs Departments to strengthen inspection of origin criteria (C/O) for imported complete automobiles when applying special preferential tax rates.

The General Department of Customs requires units to strictly review C/O to prevent false declaration.

Recently, the General Department of Customs (GDC) has sent a document to local Customs to properly implement regulations on customs procedures, customs inspection and supervision, export tax (XK), import tax (NK) and tax management for imported cars.

In particular, the General Department of Customs noted and checked the compliance with the criteria on origin (C/O) of ASEAN goods for imported cars during customs procedures to prevent fraud and benefit from importing cars into Vietnam as the time to apply tariff elimination on cars from ASEAN countries is getting closer.

From January 2017, import tax on complete cars from ASEAN countries to Vietnam will be only 30% instead of 40% as in 2016. In 2018, import tax on cars from ASEAN countries will be completely abolished.

Currently, in ASEAN, the three largest exporters of complete cars and auto parts to Vietnam are: Thailand, Indonesia (exporting complete cars), Malaysia (exporting auto parts). These three countries all have a localization rate that meets the standards for tax exemption when exporting cars to Vietnam, with the lowest localization rate being 40% (Malaysia) and the highest being 70-75% for many pickup truck models (pickup; sedan, 4-seat car, 7-seat car... of Thailand, Indonesia).

The remaining ASEAN countries do not have an automobile industry, or have a low localization rate (if components are imported from countries outside the bloc, special preferential taxes in ASEAN will not be applied).

The General Department of Customs requests local Customs to inspect the implementation of the Certificate of Origin (C/O) criteria for imported cars. In particular, apply the inspection procedures to determine the C/O of imported cars according to Decision 4286/QD-TCHQ of the General Department of Customs and the guiding documents of the Ministry of Finance.

If there is any suspicion of an invalid C/O such as: signs of forged signature, C/O seal, inconsistency between information about goods declared on the C/O and documents in the customs dossier, actual inspection of goods origin different from declaration... Local customs must report to the General Department of Customs to handle the case.

During the verification period, imported goods are not subject to special preferential tax rates, only the most-favored-nation (MFN) preferential tax rate, which is lower than the special preferential rate.

In addition to increasing inspections in the coming time, TCHQ requires reviewing all shipments that have enjoyed special preferential taxes from January 1, 2017 to present regarding C/O rules.

Many domestic car importers said that when the import tax on cars from ASEAN is eliminated, cars from countries in the region will certainly flood the market, causing difficulties for domestic production. TCHQ also previously issued a document requesting localities to investigate the customs declaration price for cars imported from India, especially Thailand and Indonesia, because the low price and large quantity will potentially pose risks of businesses falsely declaring and hiding under the guise of cars from countries with tax incentives to enjoy C/O incentives.

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According to VNN