Adjusting MFN import tax rates – towards harmonizing interests with international partners

The decree amending preferential import tax rates (MFN) will affect many important items, from cars, food to energy.

Adjusting MFN tax rates is an urgent requirement in the new context.

The world economic and political situation is evolving complicatedly, with rapid changes in trade and tariff policies. This poses a great challenge to the Vietnamese economy, forcing the Government to make flexible adjustments.

On March 10, 2025, the Prime Minister issued Directive 06/CT-TTg dated March 10, 2025 of the Prime Minister on key tasks and solutions to proactively, flexibly, promptly, appropriately and effectively adapt to the world and regional situation in order to achieve growth targets, maintain macroeconomic stability, curb inflation, and ensure major balances of the economy in 2025 and the following years. In particular, the Government assigned the Ministry of Finance to urgently amend Decree 26/2023/ND-CP on MFN import tax rates, ensuring harmony and rationality. The goal is to complete in March 2025 according to simplified procedures.

Speaking to the press, Mr. Nguyen Quoc Hung, Director of the Department of Tax, Fee and Charge Policy Management and Supervision (Ministry of Finance), said that this adjustment of the MFN tax rate has important significance in the trade relationship between Vietnam and comprehensive strategic partners, especially the United States.

Since September 11, 2023, Vietnam and the United States have established a comprehensive strategic partnership. However, due to the lack of a bilateral Free Trade Agreement (FTA), imported goods from the United States are still subject to the MFN tax rate applied to all WTO member countries. This creates a significant gap compared to partners that have FTAs ​​with Vietnam.

In addition to the United States, Vietnam has comprehensive strategic partnerships with 11 other countries, including China, Japan, South Korea, Australia, Russia, India, France, Singapore, Malaysia, Indonesia and New Zealand. Therefore, adjustments are needed to ensure fairness in tax policies among important trading partners.

Although Vietnam and the United States have established a bilateral trade agreement since 2001, Vietnam and the United States do not have a free trade agreement on tariff reduction, so the United States is still a partner subject to the preferential import tax rate (MFN) commonly applied to WTO member countries.

Comprehensive strategic partnership is the highest level in the system of diplomatic relations between countries or between countries and international organizations. This is a strategic and long-term relationship, determined by the connection of long-term interests, mutual support and promotion of cooperation in many fields. Therefore, following the direction of the Government, the Ministry of Finance affirms the necessity of adjusting the MFN import tax rates for a number of goods to ensure fair treatment among Vietnam's Comprehensive Strategic Partners.

Mr. Nguyen Quoc Hung, Director of the Department of Tax, Fee and Charge Policy Management and Supervision (Ministry of Finance) - Photo: VGP/HT

Lower MFN import tax rates on many products

Mr. Nguyen Quoc Hung said: The Ministry of Finance has reviewed all tax rates (MFN preferential import tax (tax rate applied to countries in the WTO), special preferential import tax (tax rate applied to countries with Free Trade Agreements (FTA) with Vietnam), special consumption tax, environmental protection tax, value added tax) for goods that countries are interested in as well as the tax rates that these countries are applying to imported goods to build and orient Vietnam's tax policy to improve the trade balance.

At the same time, the Ministry of Finance also compared the overall tax rates with countries that are Comprehensive Strategic Partners of Vietnam to develop a draft Decree amending and supplementing preferential import tax rates of a number of items in the Preferential Import Tariff according to the List of taxable items issued together with Decree No. 26/2023/ND-CP dated May 31, 2023 of the Government on Export Tariff, Preferential Import Tariff, List of goods and absolute tax rates, mixed tax, import tax outside the tariff quota.

Director Nguyen Quoc Hung said: The principles for developing the Decree are also clearly stated: Ensuring the implementation of the principles for issuing tax rates stipulated in the Law on Export Tax and Import Tax; adjusting import tax on domestically produced goods that have not been produced or have been produced but have not yet met demand; focusing on adjusting import tax on goods with high import turnover of countries of interest; the basic adjusted tax rate is not lower than the tax rates of the Free Trade Agreements of which Vietnam is a member.

The Decree also ensures that no new tax rates arise in the Tariff; unifies tax rates for goods of the same nature and type to limit trade fraud, causing difficulties in classifying and calculating goods taxes.

"The Decree contributes to improving the trade balance with trading partners; encourages businesses to diversify imported goods, creating purchasing power for consumers; ensures simplicity, ease of understanding, ease of implementation, and convenience for taxpayers," Director Nguyen Quoc Hung analyzed the purpose of policy adjustment.

According to the draft, MFN import tax rates will be reduced for many items.

Notably, cars under 3 HS codes 8703.23.63, 8703.23.57, 8703.24.51 from 64% and 45% to the same tax rate of 32%; Ethanol from 10% to 5%; Frozen chicken thighs from 20% to 15%; Pistachios from 15% to 5%; Almonds from 10% to 5%; Fresh apples from 8% to 5%; Sweet cherries from 10% to 5%; Raisins from 12% to 5%; Wood and wood products under Group 44.21, Group 94.01 and 94.03 from tax rates of 20% and 25% to the same tax rate of 5%; Liquefied natural gas (LNG) from 5% to 2%; Ethane item: Add Ethane item to Chapter 98 with 0% tax rate. The Decree will take effect from the date of signing and promulgation.

Huy Thang

Source: https://baochinhphu.vn/dieu-chinh-thue-suat-nhap-khau-mfn-huong-toi-hai-hoa-loi-ich-voi-doi-tac-quoc-te-102250325184031914.htm