Tax Cut on Commodities from China and South Korea from January 1, 2007

According to the International Relation Department under the Ministry of Finance, the import tariff on many commodities from China and South Korea will be reduced from January 1, 2007 following the implementation of the ASEAN-China and ASEAN-South Korea free trade agreement frameworks in which Vietnam is a signatory.

 

Under the tax cut catalogue, the tax rate will be reduced from 60 per cent or higher to 40 per cent (the most favoured nation - MFN - rate) in 2007 if the commodities are inclusive in the ASEAN-China Free Trade Area (ACFTA) framework. The commodities consist of beer, wine, second-hand clothes, heavy motorcycles and dump trucks with loads less than 10 tonnes.

 

If the commodities are currently levied a 50 per cent import tax, the new rate will be 35 per cent. Such commodities include several tea products, coffee and soda water. Nearly 300 ACFTA commodities will enjoy a tax rate of over 10 per cent lower than the current MFN rate, including rice, cereal products, plastic products for office and construction purposes, leather, household electrical appliances, lorries, light trucks, pickups and accessorises and scooters.

 

Under the ASEAN-South Korea Free Trade Area (AKFTA) agreement, the tax cut will be subjected to nearly 9,000 commodities in 2007. The cut will not be so deep in 2007 but deeper in the following years. In 2007, the tax reduction mainly falls on floor tiles, vegetable oils, cookies, spices, sauces and steamers. South Korea will scrap import tax on over 70 per cent of imported commodities from 2007 and on 100 per cent of commodities in 2010.