Instructions on how to calculate import tax, accounting for import tax

What is import tax? Who is subject to import tax and who is subject to import tax? How to calculate import tax and account for import tax?… Through this article, fdiinvietnam.com will help you understand the regulations on import tax.

I. What is import tax?

Import tax is a tax imposed by a country on goods imported into that country that originate from foreign countries during the import stage to protect the consumer market for domestically produced products and supplement revenue for the state budget.

II. Subjects subject to import tax and not subject to import tax

1. Subjects subject to import tax

• Goods imported through Vietnam’s border gates;
• Goods imported from export processing enterprises, export processing zones, bonded warehouses, customs warehouses and other non-tariff zones into the domestic market;
• Goods imported on the spot, imported goods of enterprises exercising import rights and distribution rights.

2. Objects not subject to import tax

• Transit goods, transshipment goods or transshipment goods;
• Humanitarian aid goods;
• Non-refundable aid goods;
• Goods imported from foreign countries into duty-free zones and used only in duty-free zones;
• Goods transferred from one duty-free zone to another.

III. Time for calculating and paying import tax

1. Time to calculate import tax

• The time for calculating import tax is the time of registering the customs declaration;
• Customs declarations must be registered before the date of arrival of goods at the border gate or within 30 days from the date of arrival of goods at the border gate.

2. Time to pay import tax

• The time for paying import tax is the time before customs clearance or release of goods;
• In case you are entitled to priority regime according to the provisions of the Customs Law and are allowed to pay tax after customs clearance or release of goods, the tax payment deadline is the 10th day of the following month;
• In case the enterprise is guaranteed by a credit institution for the tax payable, it can pay the tax after the customs clearance or release of goods but must pay late payment fees according to regulations. Late payment fees are calculated from the date of customs clearance or release of goods. The maximum guarantee period is 30 days from the date you register the customs declaration.

➤ Some special cases

For goods that must be analyzed and appraised to accurately calculate the amount of tax payable, goods that do not have an official price at the time of customs declaration or goods with actual payment, goods with adjustments added to the customs value that have not been determined at the time of customs declaration registration:

• You will temporarily pay tax on the declared price;
• In case of goods appraisal, analysis, official price of goods or actual payment, adjustment added to customs value results in goods value higher than the value of goods used for previous tax calculation. The amount of tax payable will increase. In this case, the deadline for paying additional tax is 5 working days from the date you receive the request for additional declaration from the customs authority;
• In case of goods appraisal, analysis, official price of goods or actual payment, adjustment added to customs value results in goods value lower than the value of goods used to calculate tax payment before… In this case, you are overpaying tax. The customs authority will notify you to declare additional accurate data. With the overpaid tax, you can apply for a refund or offset it against the tax payable for subsequent imports.

IV. Regulations on import tax rates

Import tax rates are very diverse, depending on the nature of the goods, the use of the goods and the origin of the goods, there will be different applicable tax rates. The same goods, the same use, but if imported from two different countries, the applicable tax rates will also be different. 

Import tax rates have three main tax rate groups depending on the economic agreements that Vietnam has signed with the countries, which will be applied as follows:

• Normal import tax: Applicable to imported goods not subject to preferential tax rates;
• Preferential import tax: Applicable to imported goods originating from countries that provide most-favored-nation (MFN) treatment in trade relations with Vietnam;
• Special preferential import tax: Applied to imported goods originating from countries that have special preferential import tax agreements in trade relations with Vietnam.

FREE DOWNLOAD: Import tariff schedule.

Note : In case a business imports goods from a country that has signed an economic agreement with tax incentives with Vietnam, it is necessary to prepare a Certificate of Origin (CO) to submit to the customs authority and enjoy incentives according to regulations.

V. Instructions on accounting, calculation and exchange rate for import tax calculation

1. Instructions on how to account for import tax

Import tax incurred will be recorded in the cost of goods. When import tax arises, it is accounted for as follows: 

Debit account 156 – Goods;

Credit account 3333 – Import tax.

2. Instructions on how to calculate import tax

There are 3 methods of calculating import tax, including:

➤ Method 1: Percentage tax calculation method

 

➤ Method 2: Absolute tax calculation method 

According to this method, the customs authority will determine the amount of tax payable on a unit of imported goods, the import tax payable is calculated as follows:

 

➤ Method 3: Mixed tax calculation method

If this method of tax calculation is applied, the amount of import tax payable is calculated as follows:

 

3. Import tax calculation exchange rate

The exchange rate for calculating import tax is the foreign currency buying and transfer exchange rate of the Joint Stock Commercial Bank for Foreign Trade (Vietcombank) Head Office at the end of the previous Thursday.

In case the exchange rate of that foreign currency is not announced by Vietcombank, it will be determined according to the cross rate between Vietnamese Dong and a number of foreign currencies announced by the State Bank of Vietnam. 

VI. Cases of import tax exemption 

Some cases of import tax exemption are specified in detail in Article 16, Law on Import and Export Tax No. 107/2016/QH13, specifically as follows:

• Import tax is exempted under International Treaties of which Vietnam is a member;
• Household items and supplies for daily life and work that individuals, families and organizations bring with them when they end their residence abroad and return to Vietnam, gifts and presents for organizations and individuals in Vietnam (within the limit);
• Goods bought, sold and exchanged across the border by border residents to serve the production and consumption of border residents (within the prescribed quota and on the list of goods);
• Import duty exemption for items with customs value or tax payable below the minimum level, specifically:

➧ Imported goods sent by express delivery service with a value of VND 1,000,000 or less or with a tax payable amount of less than VND 100,000;

➧ Goods with a total value of less than 500,000 VND or total import tax payable of less than 50,000 VND.

• Imported raw materials, supplies and components to serve processing and manufacturing of export products;
• Goods produced, processed, recycled, or assembled in duty-free zones that do not use imported raw materials or components from abroad during production or processing;
• Temporarily imported, re-exported goods or temporarily exported, re-imported goods;
• Goods not intended for commercial purposes such as samples, photos, films, models instead of samples, small quantity advertising publications;
• Imported goods to create fixed assets of organizations enjoying investment incentives (including new investment projects and expanded investment projects) according to the provisions of law on investment;
• Some goods such as plant varieties, animal breeds, pesticides, raw materials, supplies and components for the production and assembly of medical equipment, for oil and gas activities, shipbuilding. Machinery and equipment for printing, minting money, information technology, environmental protection software, education, scientific and technological research, etc. that cannot be produced in our country;
• Imported goods directly serving national security and defense activities;
• Export and import goods to serve the general needs of society such as social security, overcoming the consequences of natural disasters, catastrophes, epidemics and special cases.

VII. Instructions on how to account for imported goods

1. Instructions on how to account for imported goods

When importing goods, materials, equipment, and fixed assets, the accounting is as follows:

• Value of materials, goods, equipment, taxes (import tax, environmental protection tax, special consumption tax… if any):

Debit account 152, 153, 156, 211…;

Credit account 33381 – Environmental protection tax;

Credit account 3332 – Special consumption tax;

Credit account 3333 – Export and import tax;

There are accounts 111, 112, 331…

• Input VAT of imported goods:

Debit account 1331 – Deductible VAT;

Credit account 33312 – VAT on imported goods.

• When paying taxes to the State Budget:

Debit account 33312 – VAT on imported goods;

Debit account 3332 – Special consumption tax;

Debit account 3333 – Import and export tax;

Debit account 33381 – Environmental protection tax;

There are accounts 111, 112…

• During the import process, if there are any purchasing costs such as shipping costs to the warehouse, storage costs, etc., those costs will be recorded in the value of the goods and accounted for:

Debit account 152, 153, 156, 211…;

Debit account 1331 – Deductible input VAT;

There are accounts 111, 112, 331…

2. How to determine the exchange rate for accounting for the value of imported goods

➤ Case 1: Pay the entire value of the goods in advance

The exchange rate used to account for the value of imported goods and payables is the foreign currency selling rate of the commercial bank where the payment transaction is made.

The exchange rate for accounting for arising taxes (import tax, import VAT, environmental protection tax…) is the exchange rate on the customs declaration.

• When paying in advance:

Debit account 331 – Apply foreign currency selling rate of the commercial bank where the payment transaction is made;

Credit account 112 – Apply foreign currency selling rate of the commercial bank where the payment transaction is made.

• Upon receipt:

Debit account 152, 153, 156, 211 – Apply foreign currency selling rate of the commercial bank where the payment transaction is made on the previous payment date;

There are tax accounts 3332, 3333, 33381 – Apply exchange rate on customs declaration;

Credit account 331 – Apply foreign currency selling rate of the commercial bank where the payment transaction is made on the previous payment date.

➤ Case 2: Pay the entire value of the goods later

The exchange rate for accounting for the value of imported goods and payables is the foreign currency selling rate of the commercial bank your company regularly transacts with on the date the imported goods clear customs;

The exchange rate for accounting for arising taxes (import tax, import VAT, environmental protection tax…) is the exchange rate on the customs declaration.

• Upon receipt:

Debit account 152, 153, 156, 211 – Apply foreign currency selling rate of the commercial bank where the payment transaction is made on the date of customs clearance of imported goods;

There are tax accounts 3332, 3333, 33381 – Apply exchange rate on customs declaration;

Credit account 331 – Apply foreign currency selling rate of the commercial bank where the payment transaction is made on the date of customs clearance of imported goods.

• When paying off debt:

Debit account 331 – Apply foreign currency selling rate of the commercial bank where the payment transaction is made on the date of customs clearance of imported goods;

Debit account 635 – If there is an exchange rate loss difference (exchange rate on payment date is higher than exchange rate on customs clearance date);

Credit account 515 – If there is an exchange rate difference (exchange rate on payment date is lower than exchange rate on customs clearance date);

Credit account 112 – Apply foreign currency selling rate of the commercial bank where the payment transaction is made on the debt payment date.

➤ Case 3: Pay a part of the goods value in advance, the rest is paid after receiving the goods 

Exchange rate for accounting for import value and payables:

• Record at the exchange rate of the commercial bank where the payment transaction is made on the prepayment date the amount corresponding to the prepayment amount;
• Record at the exchange rate of the commercial bank where the payment transaction is made on the date the imported goods clear customs for the remaining amount not yet paid to the supplier.

The exchange rate for accounting for arising taxes (import tax, import VAT, environmental protection tax…) is the exchange rate on the customs declaration.

For example :

fdiinvietnam.com imports a shipment worth 20,000 USD. fdiinvietnam.com makes all payment transactions to the supplier via Vietinbank.

➜ Case 1: fdiinvietnam.com pays the entire amount of goods in advance to the supplier

• On December 1, 2021, fdiinvietnam.com paid the full amount of 20,000 USD. The selling rate of USD of Vietinbank on December 1, 2021 was 23,000 VND/USD;

Debit account 331: 20,000 x 23,000

There is account 112: 20,000 x 23,000

• On December 15, 2021, the goods arrived at Cat Lai port. The value of the goods will be recorded according to the exchange rate on the date of prepayment, not using the exchange rate on the customs declaration to record the value of the goods.

Debit account 156: 20,000 x 23,000

Credit account 331: 20,000 x 23,000

➜ Case 2: Pay the entire amount of goods to the supplier later

• On December 15, 2021, the goods arrived at Cat Lai port. The selling rate of USD of Vietinbank on December 15, 2021 was 23,500 VND/USD;

Debit account 156: 20,000 x 23,500

With account 331: 20,000 x 23,500

• On December 20, 2021, fdiinvietnam.com made full payment of the shipment value to the supplier. The selling rate of USD of Vietinbank on December 20, 2021 was 23,200 VND/USD.

Debit account 331: 20,000 x 23,500

Credit account 112: 20,000 x 23,200

Credit account 515: 20,000 x (23,500 – 23,200)

➜ Case 3: Pay a part of the value in advance, the rest is paid after receiving the goods

• On December 1, 2021, fdiinvietnam.com paid in advance 6,000 USD (30% of the order value) to the supplier. Vietinbank’s selling rate on December 15, 2021 was 23,000 VND/USD;

Debit account 331: 6,000 x 23,000

With account 112: 6,000 x 23,000

• On December 15, 2021, the goods arrived at Cat Lai port. The selling rate of USD of Vietinbank on December 15, 2021 was 23,500 VND/USD;

Nợ TK 156: (6,000 x 23,000) + (14,000 x 23,500)

Credit account 331: (6,000 x 23,000) + (14,000 x 23,500)

• On December 20, 2021, fdiinvietnam.com paid the remaining debt of 14,000 USD to the supplier. The selling rate of USD of Vietinbank on December 20, 2021 was 23,200 VND/USD.

Debit account 331: 14,000 x 23,500

With account 112: 14,000 x 23,200

Credit account 515: 14,000 x (23,500 – 23,200)

VIII. Some frequently asked questions about import tax