HANOI: Vietnam’s customs department is reviewing imports of oil products originating from fellow members of ASEAN this year to make sure they are legitimate and qualify for an import tax reduction, sources close to the matter said.
Under the Association of Southeast Asian Nations free trade agreement, taxes on imports of oil products such as diesel, jet fuel and kerosene from ASEAN members are lower than on shipments from other countries. This has made the shipments cheaper and the volumes of oil products coming into Vietnam from ASEAN have increased.
To qualify for the lower taxes, an oil product cargo must have a content of at least 40% that has come from refineries in ASEAN, which counts as its members 10 countries in Southeast Asia, including Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
Vietnam’s customs department is now investigating if this year’s ASEAN oil product imports were indeed produced in the region and declared correctly, the sources said. “There have been lots of imports from ASEAN and the gap (in taxes) between imports from ASEAN and non-ASEAN is quite big,” a Vietnam-based industry source said.
The department began tightening checks on the origin of oil products from ASEAN from September this year, according to the official Hai Quan (Customs) newspaper, which is published by the General Department of Vietnam Customs.
Customs had also asked importers in Vietnam to return tax savings on cargoes imported from ASEAN earlier this year while the cargoes were reviewed, two of the industry sources said. But Vietnam’s Finance Ministry said this month that importers will not have to return the tax refunds from earlier cargoes ruled eligible for preferential duties, according to a circular seen by Reuters.
Importers will only have to submit to the customs department for verification all documents related to any cargo for which there are doubts about the legitimacy of its certificate of origin, the circular said. Imports might be slowed by the additional checks but volumes should remain about the same, the sources said.
Under the ASEAN free trade pact, the import taxes on diesel, jet fuel and kerosene imports into Vietnam will be cut to 0% on Jan 1, 2016, from the current 5% and will remain at 0% until 2018.
The import taxes for ASEAN diesel were first reduced to 5% at the beginning of 2015, while the tax on non-ASEAN diesel is held at 10%, gasoline at 20%, kerosene at 13% and fuel oil at 10%. Vietnam’s Finance Ministry did not respond to queries on the matter. Officials from the customs department were not immediately available for comment.
