Artemia eggs import tax arrears collecting is regulated and fair

Detailing Artemia eggs HS code is entirely consistent with international practice.

Not to reduce revenue

As Customs newspaper has previously reported, Ministry of Finance (MOF) issued Circular No. 98/2016/TT-BTC adding the category of commodity group and tax rate of preferential import tariff to Artemia egg products in Chapter 98 of the Preferential import tariff schedule issued with MOF Circular No. 182/2015/TT-BTC.

In this Circular, the MOF reduced the preferential import tax to Artemia egg products from 5% to 3% and detailed this tariff line in Chapter 98 of Preferential import tariff schedule with HS code is 9843.00.00. Currently, this item is under heading 05.11, item code 0511.91.00.

This adjustment of the MOF comes from the Ministry of Agriculture and Rural Development (MARD)’s proposal. Accordingly, Artemia eggs are products that are imported into Vietnam to serve mainly the production of shrimp seed. The use of Artemia eggs will contribute to improve the quality of shrimp seed to create a better input for the shrimp farming industry in Vietnam.

The adopted tax rate of 5% for this item may cause adverse impact on the quality of seed since businesses could use artificial feed to save costs and thereby affect the shrimp aquaculture development, and there are recommendations to reduce the tax to 0%.

Agreeing with the view of encouraging the development of shrimp farming, the MOF has also pointed out: The Artemia eggs item in 2015 made $30 million USD and import tax revenue was about 27 billion vnd. Thus, if the preferential import tax of Artemia eggs item ir reduced to 0%, it reduces State budget revenues by the same amount.

Therefore, in order not to affect the current import tax policies of other items in code 0511.91.00 as well as to reduce impact on the State budget, MOF has decided to reduce the tax on this item to 3% and put it into Chapter 98.

The new tax will be applied from 13/8/2016.

Consistent with international standard

After the circular was issued by the MOF, a number of Press agencies have reflected businesses’ opinions that the new tax and code of this product is not reasonable, leading the business community to a situation where shrimp farming could collapse and they must pay a large amount of taxes.

In a statement broadcast on 10 August, the MOF has given an official explanation. Accordingly, commodity codes specified in Vietnam List of goods for import-export, Vietnam Preferential import, export tariff schedule, the goods classification of Vietnam Customs are fully compliant under the International convention on the commodity description and coding system (referred to as the HS Convention) and the list of ASEAN harmonized tariff nomenclature (AHTN).

Being in the process of international integration, Vietnam is now a member of the World Customs Organization and the ASEAN Customs Organization, and has signed the HS Convention. Thus, the classification of the goods is not only consistent with all Customs units throughout the country, but also is consistent with other nations in the world, ensuring each item has only one code.

Pursuant to provisions of the current law, the Artemia eggs item is listed as a live item, used as feed for shrimp classified in Heading 05.11, Code 0511.99.90, with the preferential import tax rate of 5%. This item is classified in Heading 05.11 in other countries as well. In fact, the majority of enterprises that import this item correctly classified under code 0511.99.90.

According to Customs City Departments’ reports, from 2009 to 2015, there are over 30 enterprises which have imported Artemia eggs products, with more than 20 import enterprises with import turnover accounted for 84% of total import of this commodity, which have declared this item under code 0511.91.00 (tax rate of 5%); less than 10 importers accounted for 15% of total import of this commodity, which have declared this item under the heading 23.09 (tax rate of 0%).

Thus, the Customs authorities are seeking tax arrears from businesses that declared incorrect code. This is regulated and ensures fairness for enterprises which imported this item.

Reasonable protection

On tariffs, according to the MOF, under the provisions of the Export tariff schedule promulgated by the National Assembly Standing Committee promulgated, the highest tax of Artemia eggs item is 5%, similar to the commitment to the WTO.

After receiving the recommendations on adjustment of the tax rate for this item from the MARD, the MOF has sent a draft text and consulted with MARD, the Ministry of Industry and Trade (MIT), the Ministry of Planning and Investment (MPI), the People's Committees of provinces and cities, the Chamber of Commerce and Industry of Vietnam (VCCI), and the Vietnam Association of Seafood Exporters and Producers (VASEP).

According to MPI, this adjustment must ensure viability and consistency with Resolution No. 99/2015 / QH13 of the National Assembly on the State budget forecast in 2016 in not issuing policies that reduce State budget revenues, and this item has been produced by the country.

Based on the General Department of Fisheries’ statistics, the domestic demand for this commodity is over 200 tons, domestic production meets 20% of demand, the rest must be imported.

Therefore, based on the opinions of the Ministries and Associations, the MOF has issued Circular No. 98 adjusting import tariff on Artemia eggs item from 5% to 3% to encourage domestic production protection, and also encourage the development of the shrimp farming industry.