WHAT IS SAFEGUARD DUTY IN IMPORT EXPORT?

Safeguard duty is a term many of us may have heard in the context of import and export but might not fully understand. So, what is safeguard duty? Which goods are subject to this tax, how is it calculated, and what are the relevant legal regulations in Vietnam? Let Smart Link take a closer look through the article below.

What is Safeguard Duty?

Safeguard duty is one of the measures that countries apply to protect their domestic economy and locally produced goods from unfair competition posed by imported products.

According to Clause 7, Article 4 of the Law on Export and Import Duties No. 107/2016/QH13 issued on April 6, 2016:

Safeguard duty is an additional tax imposed on imported goods when their volume entering Vietnam increases excessively, causing or threatening to cause serious harm to domestic industries or hindering their development.

Tax is a familiar concept to most businesses and individuals, especially those with taxable income. However, it is a less common term as it is only applied in specific circumstances and is not broadly implemented. This article will explain the concept of safeguard duty in detail, along with related information to give you a more comprehensive understanding of this tax.

Conditions and Principles for Applying Safeguard Duty

(Outlined in Article 14 of the Law on Export and Import Duties No. 107/2016/QH13)

Conditions for applying safeguard duty:

Sudden increase in import volume: Safeguard duty is only applied when imported goods significantly and abruptly increase in volume or value, negatively affecting similar or directly competitive goods produced domestically.
Causing serious harm to domestic production: The increase in imported goods causes or threatens to cause serious harm to domestic producers of similar products, leading to reduced production, profits, or increased unemployment in the industry.

Principles for applying safeguard duty:

Scope and necessary extent: It is applied to the extent and duration necessary to prevent harm, while allowing the domestic industry to improve its competitiveness.
Temporary measure: It is only a temporary measure to protect domestic production. The period of application is typically limited, giving local businesses time to adjust and enhance their competitiveness.
Non-discriminatory: It is applied equally to all countries exporting goods to Vietnam, regardless of origin, except in cases of special agreements.
Compliance with international regulations: The application of safeguard duty must comply with WTO regulations and trade agreements that Vietnam has signed.
Based on investigation results: It is only applied after an official investigation, except in cases of temporary application.

Duration of Safeguard Duty Application

According to the 2016 Law on Export and Import Duties, the duration of safeguard duty application does not exceed four years, including the time of temporary duty. However, it can be extended by a maximum of six additional years if imports continue to cause serious harm. This extension requires evidence that the domestic industry is in the process of adjusting and improving its competitiveness.

We hope the information above helps you better understand safeguard duty, the goods subject to it, and how this tax is calculated. With over 13 years of experience in the logistics industry, we are proud to be your trusted partner throughout your journey.

Hotline: + 84 935 766 039 to know more about our services

If you require assistance with international import and export of goods, please contact our team at Smartlink Logistics. We are available to provide you with professional guidance on our services and the necessary customs procedures.

SMART LINK: BEST SERVICE BEST YOU