Import Tax Reductions Proposed to Delay

Import Tax Reductions Proposed to Delay

The government has ratified the Ministry of Finance’s proposal to delay import tax reductions for 14 products until January 1, 2006, the ministry announced. Vietnam had pledged to cut these tariffs by January 1, 2005.

Under the Protocol of Common Effective Preferential Tariff (CEPT), ASEAN member states that are not ready to include the products in the CEPT plan may exclude them on a temporary basis, though they must transfer the products to an inclusion list.

Motorbike engines and parts, and vans and pick-up trucks with a capacity of under 5 tonnes are amongst the 14 products that will receive the delay in tax reduction.

The MoF first planned to include more than 40 products in the temporary exclusion list. However, it eventually selected 14 products considered extremely necessary for protection, said the ministry.

The industry ministry said Vietnam’s domestic production abilities for the 14 products remain less competitive compare to ASEAN imports.

For example, Vietnam imports roughly US$50 million worth of motorbike engine parts yearly, with half of the parts coming from ASEAN countries, the trade ministry reported.

Local industry authorities worry that the domestic market would be dominated by ASEAN imports if the products received the scheduled tax cuts.

The Vietnam CEPT plan for the 14 products designates a tax cut programme of 20 per cent in 2006, 10 per cent in 2007, and 5 per cent in 2008.

• B.T