Import tariffs cut ties to fixed prices

The decision, Circular 87 signed on August 31, removes the minimum price table in a bid to satisfy the country’s integration ambitions and comply with market economy standards.
Quach Duc Phap, head of the ministry’s Tax Policy Department, said several countries had been increasing pressure on Vietnam to remove the price table.
The minimum price table, in which a fixed import price for each kind of commodity is outlined, was created in the 1990s to prevent fraudulent price declarations by importers.
Phap said that under the decision, only a small number of commodities, such as electronic products, wine and other beverages, would still have their import tariffs calculated according to the minimum price table. The majority of commodities imported into Vietnam, however, will have their import tariffs calculated according to contract agreements signed between exporters and importers.
“With the removal of the minimum price table, customs staff will have to bear the full responsibility for possible trade fraud,” he said, adding that customs authorities would have to regularly update information on world commodity prices in order to effectively prevent price fraud.
Nguyen Thi Cuc, deputy head of the General Department of Taxation (GDT), said that the past had seen some enterprises commit such acts.
She said that there were cases reported in which enterprises claimed a low price for import products to avoid high import tax payments, while secretly arranging to pay the remaining amount to exporters.
“The ministry and GDT are drafting a guideline circular on anti-price transferal,” she said, adding that the circular would detail methods that enterprises had used to commit fraud in the past.
“Updating customs and other concerned agencies like taxation departments and investment
and planning departments

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with modern technology is the most effective way to ensure change,” he said.

The deputy general director of a foreign-invested enterprise who preferred to remain anonymous said that consumers would be the ones to reap the benefits of the government’s decision to remove the minimum price table.
He said that despite the 20 per cent reduction of import taxes on electronic products required by the ASEAN Free Trade Area Agreement, domestic prices had remained relatively high.
“Because the minimum price table set prices higher than actual import prices, enterprises have had to pay higher tariffs than necessary. As a result, domestic consumer prices have been driven up,” he said.
Phap agreed, saying that the minimum price table had hindered many enterprises from importing commodities that were cheap on the world market.
Under the government’s decision, import activities would be stimulated while locally-produced commodities would face increasingly stiff competition, he said.