Freight Shipping between US and Vietnam | Rates – Transit times – Duties and Taxes

How to calculate duties & taxes when importing from US to Vietnam?

Understanding how to accurately estimate duties and taxes when transporting goods from the US to Vietnam can significantly impact your shipping costs. It's critical to have a grasp of a few essential details to correctly calculate these charges. Firstly, you must pinpoint the country of origin because it's not enough to just know where your goods have been shipped from; you need to identify where they were manufactured or produced.

This seemingly straightforward detail has the potential to influence the tariffs a business might face and is the first crucial step in your estimation process. It's essential to remember that various other factors come into play such as the goods' HS Code, the Customs Value, the Applicable Tariff Rate, and other taxes and fees that may apply to your products being shipped. Being cognizant of these elements, and how they interplay, will empower you to establish an accurate estimate, helping to avoid unexpected costs and ensuring smooth transits.

Step 1 - Identify the Country of Origin

Identifying your product's country of origin, in this case the US, is your first port of call. This crucial step, seemingly obvious, is the bedrock of successful importation for five primary reasons.

Firstly, it dictates the customs tariffs applied to your goods. Thanks to the 2001 US-Vietnam Bilateral Trade Agreement, US-origin goods receive lowered tariffs. Secondly, it affects your eligibility for special trade programs like the Generalized System of Preference, further cutting costs.

Thirdly, the country origin plays a role in defining whether those goods are even permissible to import, with Vietnam imposing strict regulations on certain items. Fourthly, it establishes anti-dumping measures–an extra tax imposed on cheap imports that harm local industries. Last but not least, this step paves the way to identifying the HS code of your goods, leading to an accurate estimate of duties.

From small appliances to high-end electronics, every product category has its own array of restrictions and tariff reductions. For instance, certain agricultural products from the US have reduced rates. Your freight forwarder's expertise can help you navigate this complex path, ensuring smooth and hassle-free importing from the US to Vietnam.

Step 2 - Find the HS Code of your product

The Harmonized System (HS) Code is a universal economic language and code for goods. It's an internationally standardized system of names and numbers divided into 21 sections, each section having 99 chapters. This classification is designed to facilitate the collection, comparison, and analysis of statistics related to international trade.

Your product's HS Code is essentially its identity in the world of imports and exports. Proper identification helps streamline customs clearance and determines the amount of duties and taxes to be paid. Finding your product's HS Code might seem daunting at first, but there are ways to make the process easier.

Generally, the most convenient method is to ask your supplier. Suppliers have a good grasp of their products and are aware of the applicable rules and regulations. Therefore, they could provide the necessary information promptly.

However, if this option is not viable, you can always find the HS Code yourself by following these steps. First, visit the Harmonized Tariff Schedule using this link, which leads to a common HS lookup tool. Then, simply input your product's name in the search bar. After executing the search, check the Heading/Subheading column where you'll find the HS Code for your product.

Here's a word of caution: accuracy is paramount when it comes to HS Codes. A minor inaccuracy might not only delay your shipment but also expose you to potential fines. So, always ensure to verify the HS Code of your product.

Last but not least, here's an infographic showing you how to read an HS code. It demystifies the sequence and helps you understand what each number signifies.

Step 3 - Calculate the Customs Value

Sometimes, it's easy to think that the customs value of your goods is the same as their purchase price. However, that's not entirely accurate. When you're importing goods from the US to Vietnam, the customs value is based on the CIF (Cost, Insurance, and Freight) value. This value includes the price of the goods, plus the cost of international shipping and insurance.

So, for example, if you purchased goods worth $15,000, paid $2000 for shipping, and added insurance worth $200, your CIF value or customs value becomes $17,200. Always remember to calculate the CIF value in USD, as this will determine the import duties and taxes you'll need to pay in Vietnam. Understanding this formula can be the difference between a smooth customs clearance process and an unexpected hefty bill.

Step 4 - Figure out the applicable Import Tariff

Import tariffs are taxes imposed on imported goods, affecting the final cost of products in the receiving country. In Vietnam, these tariffs are largely determined by the World Trade Organization (WTO) agreements and can range from zero to hundreds of percent, depending on the product.

To identify the specific import tariff for your goods, you'll need to reference the Harmonized System (HS) Code associated with your product. This universal code helps standardize and categorize various goods. Here's how you can determine your rate:

1. Note down the HS code associated with your product. For example, let's say you are importing shoes, which fall under HS code 6403.
2. Visit the World Customs Organization website or  Vietnam Customs and enter your HS code in the search field provided.
3. Identify and record the specific tariff rate associated with your product. For our shoe example, it might indicate a tariff rate of 30%.

With this information, you can now calculate your expected import duties. If your shoes have a Cost, Insurance, and Freight (CIF) value of $10,000, your import duty would be 30% of $10,000, resulting in a tariff of $3,000. By identifying import tariffs upfront, you can budget for these costs and avoid any surprises during the importing process.

Step 5 - Consider other Import Duties and Taxes

You must be aware that apart from the standard tariff rate, various other charges can affect the final cost of imports to Vietnam from the US. Here's what to look out for:

Excise duty is often levied on luxury or harmful products. For example, a premium watch worth $5000 might be subject to an excise duty of around 30%, costing you another $1500.

Anti-dumping tax protects domestic industries from cheap foreign imports. Suppose a US-made cooking oil is sold significantly cheaper than Vietnamese analogs, an anti-dumping duty may be applied.

Now, the biggest hit could be Value-Added Tax (VAT). In Vietnam, the standard VAT rate is 10%. This is calculated on the customs value of the goods plus any import duties paid. Using our earlier example, if you bought that $5000 watch, and after paying the excise duty its value became $6500, the VAT would be $650.

Remember, these rates are theoretical and may vary. Consult with a customs broker or freight forwarder for accurate figures. Anyway, this gives you a glimpse into the nuances you need to factor into your budgeting when importing goods. Don't underestimate these charges – they can significantly impact your total import costs.

Step 6 - Calculate the Customs Duties

Determining customs duties for any goods imported from the US to Vietnam can be a daunting task, but armed with the right formula, you can carry out this process efficiently. The formula is as follows: Duties = (Customs Value + Shipping Costs) Customs Duty Rate. Now, let's dive into three scenarios:

1. If you're importing ceramic vases valued at $5000 with a 10% duty rate, and no VAT, your customs liabilities amount to $500.

2. Imagine importing laptops worth $2000, a duty rate of 15%, and a VAT rate of 10%. The duties equate to $300 and the VAT amounts to $230 (2000+300)10%.

3. Finally, for a consignment of wine bottles valued at $1000, at a duty rate and VAT of 20% each, along with an anti-dumping tax of 5%, and Excise Duty at 30%, your total customs payment totals $925 ;

We understand this might seem complicated, this is where DocShipper steps in. We specialize in customs clearance worldwide, ensuring that you don’t pay a penny more than what’s required. Reach out for your free quote within 24hours, we are here to simplify the complex customs procedures for you!

Bill of Lading

Transporting goods from the US to Vietnam? Don't forget your Bill of Lading (BoL)! This official document holds significant weight by marking the shift of ownership, so your goods are safely recognized as yours at Vietnamese ports. Electronic or 'telex' release BoL is a blessing, saving time by eliminating the need for original paper documents—speed is the game when you're trading globally! Remember, if you're opting for air transport, the equivalent is the Air Waybill (AWB). Bottom line? Keep your BoL or AWB ready and embark on your shipping journey with an edge. It's just like keeping your passport handy while traveling abroad, only this time, it's for your goods!

Packing List

Navigating the customs between US and Vietnam may feel complex, but the Packing List is your ally here. Much like a grocery checklist, this document lists down every little item in your shipment, and accuracy is key. Suppose you're shipping machine components, your Packing List shouldn't just say 'components' - it needs to specify quantities, material composition, whether they are assemblies or spare parts, and more. Whether you're shipping a palette of sneakers via sea freight or a crate of microprocessors via air, correctly detailing each item ensures a smoother customs process. Remember, a Packing List omission could mean your shipment stalls at customs, resulting in delays and additional charges. So, getting this document right saves you time, money, and a major headache.

Commercial Invoice

When shipping from US to Vietnam, your Commercial Invoice is more than just a bill. It's a crucial document in getting your goods through customs. So, what's essential here? This should include the seller's detail, buyer's details, and a thorough description of the goods including their Harmonized System (HS) codes - a six-digit identification code for goods. Plus, the invoice should align perfectly with the details on your packing list and Bill of Lading. Remember, inconsistency between your shipping documents can hold up your shipment at customs. Harmonizing everything makes it smoother and hastens the clearance process. Realistically, think of it as providing full disclosure; the more transparent you are, the fewer problems you'll encounter. Balancing accuracy with completeness on your Commercial Invoice will go a long way in your US-Vietnam freight journey.

Certificate of Origin

Navigating customs between the US and Vietnam? The Certificate of Origin (CO) is your passport in the world of international trade. Acting as a declaration about where your goods are manufactured, it can unlock preferential customs duty rates. Say you're shipping furniture made in Houston to Hanoi. By detailing the US as the country of manufacture, your CO can unload those humongous duty costs. No fancy tricks, just straightforward proof of your product's birthplace. And remember, not having a CO or inaccurately filling it might lead to shipment delays or extra charges. So, start crossing your T's and dotting your I's, because this document is your key to smooth, cost-effective shipping.