Modification of the import and export tax schedule, prompt removal of difficulties for businesses

26/11/2021

Decree No. 101/2021/ND-CP amending and supplementing a number of articles of Decree No. 122/2016/ND-CP and Decree No. 57/2020/ND-CP promulgated in order to contribute to stabilizing the macro-economy and controlling inflation; promptly support and remove difficulties for domestic production and business enterprises in the face of the impact of the COVID-19 epidemic.

The Government issued Decree No. 101/2021/ND-CP dated November 15, 2021, amending and supplementing a number of articles of Decree No. 122/2016/ND-CP dated September 1, 2016 of the Government and Decree No. 57/2020/ND-CP dated May 25, 2020 of the Government on Export Tariffs, Preferential Import Tariffs, List of goods and absolute tax rates, mixed taxes, and foreign import taxes tariff quota.

The promulgation of Decree No. 101/2021/ND-CP aims to contribute to stabilizing the macro-economy and controlling inflation; promptly support and remove difficulties for domestic production and business enterprises in the face of the impact of the COVID-19 epidemic. At the same time, it would help protect, exploit and effectively use domestic natural resources, encourage the export of products with high added value; encourage enterprises to continue to invest, innovate technology, reduce production costs to increase competition with imported products; and ensure that it is simple, easy to understand, easy to implement, and convenient for taxpayers.

Amended and supplemented contents in Decree No. 101/2021/ND-CP focus on the following four groups:

Firstly, adjusting and reducing the most favored nation (MFN) import tax rates of a number of commodity groups contributes to stabilizing the macro-economy and controlling inflation as required by the Government in Resolution No. 63/NQ- CP and Resolution No. 58/NQ-CP. Specifically, in Decree No. 101/2021/ND-CP, MFN import tax rates have been reduced for a number of products such as steel, wheat, and corn, etc. These are commodity groups with high prices in the past period, affecting input costs of many domestic manufacturing industries. To clarify, in order to contribute to lowering domestic steel prices, promoting businesses to reduce costs, through reviewing the MFN import Tariffs and the current development status of the steel industry, in Decree No. 101/2021/ND -CP, the Government has adjusted and reduced the MFN import tax rate of some construction steel products, steel plate with the tax rate reduction from 5% to 10%; reducing the MFN import tax rate of wheat from 3% to 0% and corn from 5% to 2% to support the domestic livestock industry under the pressure of rising raw material prices.

Secondly, export tax rates and MFN import tax rates for several commodities are amended to protect and promote the exploitation and efficient use of domestic natural resources, and to limit the export of raw, unprocessed materials, contributing to the simplification of the tax schedule, limiting commercial fraud.

In Decree No. 101/2021/ND-CP, based on the tax rate frame prescribed by the National Assembly in the Law on Import Tax and Export Tax, the Government has adjusted the export tax rates and preferential import tax rates for some items of mineral resources such as stone and clinker. However, to limit the impact on businesses, create conditions for businesses to have a reasonable time to adjust production, business and inventory plans, the adjustment is made according to the road map, in which, the amendment of tax rate for stone products and products made from stone, would be implemented according to the 3-year road map (2022-2024) and the tax rate increase of each adjustment does not exceed 5%.

Thirdly, a few contents of the tax incentive program for the domestic production and assembly of automobiles would be amended and adjusted as specified in Decree No. 125/2017/ND-CP and Decree No. 57/2020/ND-CP. According to current regulations, the tax incentive program for manufacturing and assembling cars is applied from November 16, 2017, to December 31, 2022. This is the first program applied in Vietnam, in line with international commitments. The implementation of the Program has made an important contribution to the implementation of the Strategy for the development of the domestic automobile industry to 2020, with a vision to 2025; promoting automobile manufacturing and assembling enterprises to invest in expanding production, increasing the localization rate and developing supporting industries in the country. However, domestic automobile manufacturers and assemblers are facing increasingly fierce competition from imported cars in the context of reducing tariff barriers under FTAs. In addition, due to the impact of the COVID-19 epidemic, many fields had to stop working for a long time, in which the transport and public passenger transport sectors were almost stagnant along with people's incomes decreasing. The decline has led to a sharp decline in sales of domestic automobile manufacturers and assemblers, especially buses, minibuses, and passenger cars.

Accordingly, in order to continue to encourage enterprises to invest, expand production scale, and promote the development of the domestic auto supporting industry, Decree No. 101/2021/ND-CP has adjusted a number of contents of Tax incentive program for automobile production and assembly, which has amended and supplemented regulations on tax incentive consideration period (Enterprises can choose 6-month or 12-month tax incentive consideration period); adjusting the conditions on output to participate in the Tax Incentive Program to suit the new context. In particular, on the basis of the results achieved from the implementation of the Program in the past period, in Decree No. 101/2021/ND-CP, the Government decided to extend the implementation period of this Program to December 31, 2027, for automobile manufacturing and assembling enterprises to actively develop production and business plans in the following years. From that point, the domestic automobile industry would be promoted to develop according to the orientation of the Party and the State.

Finally, export tax rates and MFN import tax rates are amended for a number of items in order to meet management requirements and overcome inadequacies arising in practice. Specifically, to overcome the inadequacies arising in practice, create favorable conditions for production and business activities of enterprises; promote export development, especially in the context of the COVID-19 epidemic and to ensure simplicity, easy understanding, ease of implementation, and convenience for taxpayers, in Decree No. 101/2021/ND-CP, some contents of Decree No. 57/ND-CP have been revised and amended, for example adjusting MFN import tax rates for a number of seeds used for planting, specialized tires for underground coal mining, adjusting conditions for applying the 10% MFN import tax rate for gel products scar reduction.... Along with that, a review was carried out to stipulate the same tax rate for goods with different tax rates but lacking specific criteria for classification and code application, thereby contributing to simplifying tax rates, reducing inspection costs for businesses and aiming to limit commercial fraud.

Source: Chinhphu.vn

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