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

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

Understanding the calculation of customs duties and taxes is a key part of successfully importing items from Vietnam to the UK. It's rather like a formula, where you need specific ingredients: the Country of Origin, the Harmonized System (HS) Code, the Customs Value, the Applicable Tariff Rate, along with any other applicable taxes, levies, or fees that may apply to your products.

Now, let's put it into action. Your very first step would be to precisely identify where your goods were manufactured or produced. Simply put, discerning the ‘Country of Origin’ sets the stage for your entire import journey.

Step 1 - Identify the Country of Origin

Identifying the exact Country of Origin is your first step and it's crucial, with five key reasons anchoring its importance.

Firstly, the country of origin can directly influence import duties. Vietnam and the UK have unique trade agreements, including the UK-Vietnam Free Trade Agreement that reduces or eliminates certain tariffs.

Secondly, certain products may face additional duties or restrictions based on their origin. For instance, certain agriculture products from Vietnam have specific limits in the UK.

Thirdly, meticulously noting the origin prevents mix-ups, aiding accurate record-keeping.

Fourthly, knowing the origin country of your goods aids in calculating possible import taxes and in understanding if preferential duty rates apply.

Lastly, correct identification helps in avoiding fines or penalties for false declarations.

Remember, each trade agreement has different stipulations that can affect customs duties. Familiarize yourself with these to make the most out of your shipping budget. Also, make a note of the specific import restrictions the UK places on certain goods from Vietnam for a smoother transit. Identifying the country of origin may seem like an obvious step, but it holds significant impact on your shipping process. Ball's in your court: make sure to give it ample attention!

Step 2 - Find the HS Code of your product

In international trade, every item that is shipped is categorized under a specific code known as the Harmonized System (HS) Code. The code, composed of a series of numbers, is recognized globally and is used as a common language in trade to unmistakably identify goods. When you're shipping goods internationally, understanding your product's HS code is fundamental. It's used not just for determining customs duties and taxes, but also for statistical purposes and for complying with local and international trade laws.

Normally, to find the HS Code of a product, the easiest course of action is to ask your supplier. They typically know the codes and regulations related to what they're importing or exporting. However, if that's not an option, we've got you covered with the following easy-to-follow steps.

1. Visit the “Harmonized Tariff Schedule” here. This looks up the HS code for you.
2. When you're there, utilize their search function by entering the name of your product.
3. After completing your search, check the Heading/Subheading column where you will find your needed HS Code.

Please be warned, it's essential to be accurate when identifying your goods' HS Code. Incorrect codes can lead to hold-ups, misunderstandings, and could result in additional costs or fines due to non-compliance with trade regulations.

Finally, to help you understand better, here's an infographic showing you how to read an HS code.

Step 3 - Calculate the Customs Value

Knowing the customs value of your Vietnam-origin goods can be a bit like learning a new language. It's more than just the product's price tag; rather, it wraps in several costs you might not have considered. Customs value really is the total of the goods' actual price, the cost of international transport, and insurance costs - we call this the CIF (Cost, Insurance & Freight) value.

For example, if you bought goods worth $5,000, with shipping fees of $500, and insurance of $100, your customs value isn't $5,000 but $5,600. It's an essential part of the puzzle when paying duties in the UK and can directly impact your business's bottom line. So, keeping abreast with this calculation can keep you ahead in your import game.

Step 4 - Figure out the applicable Import Tariff

Import tariffs, commonly known as customs duties, represent the taxes you'll need to pay when importing goods into a country. For the UK, they're determined based on the product's Harmonized System (HS) code, which classifies traded products on an international scale.

To figure out what tariff applies to your goods, the UK provides its own Trade Tariff ,Here's how you can use it:

1. Enter the HS code of your product and the country of origin (Vietnam).
2. View the duties and taxes that apply to your product.

Let's illustrate this with an example. Suppose you're importing faux leather jackets from Vietnam under HS code 4203. The UK tool reveals a duty rate of 12%. If your Cost, Insurance and Freight (CIF) value is $5,000, then your import duties would be 12% of that, equalling $600. Thus, understanding import tariffs helps in budgeting and offers cost certainty, reducing shocks in your financial planning.

Step 5 - Consider other Import Duties and Taxes

When importing goods from Vietnam to the UK, you'll find that it's not just a matter of standard tariffs. Other import duties may come into play depending on your product and its country of origin. Let's dissect this further with some hypothetical examples:

Excise duty applies to certain goods like tobacco and alcohol. Suppose you're importing wine, UK's excise duty might add an extra $100 per 100 liters.

Anti-dumping taxes are imposed when cheap imports might harm local industry. For instance, if you're bringing in significantly underpriced steel, you might be hit with an extra duty, say around 25%.

Finally, most significant could be Value Added Tax (VAT). In UK, the standard VAT rate is 20%. So, a consignment worth $10000 could attract a VAT of $2000.

Now, these are just examples to illustrate potential costs you could incur. Real rates will fluctuate and require you to consult the latest regulations. Understanding these charges can help strategize your import process, planning for costs, and avoiding legal repercussions. Evaluate your products and import conditions carefully, because even a small oversight can lead to significant costs.

Step 6 - Calculate the Customs Duties

Calculating customs duties can be intricate. Let’s break it down into a step-by-step formula.

For goods imported from Vietnam into the UK, first add the customs value (price paid for the goods) to the cost of transport and insurance, obtaining the CIF value. Then, apply the applicable duty rate to this CIF value, getting the customs duty.

In situations where Value Added Tax (VAT) is charged, calculate it by adding up the CIF value, customs duty, and, if applicable, the anti-dumping tax. Multiply the outcome by the VAT rate.

Let’s illustrate with three examples, all in USD:

1. Goods costing $1000, shipped for $200. The duty rate is 5%. The CIF value is $1200, and customs duties are $60.
2. Add a VAT rate of 20% to the above. Your total duties and taxes become $60 in duties and $252 in VAT.
3. Now, let’s introduce a 10% anti-dumping tax. The duties and taxes calculation becomes $60 (duty), $252 (VAT), and $120 (anti-dumping tax). If there's an additional Excise Duty, it would be applied to the sum of all the above values.

Remember, FNM Vietnam navigates these intricacies effortlessly. We offer customs clearance services worldwide, ensuring you don't overpay. For a no-obligation, free quote within 24 hours, simply reach out to us. We're here to take the load off your shoulders.

Bill of Lading

Understanding the Bill of Lading (BoL) is crucial when shipping goods from Vietnam to the UK. Acting as your official proof of ownership, this document is a handshake in paper form, seamlessly transitioning your products from one entity to another. One considerable advantage of today's tech-driven world is the electronic or 'telex' release of the BoL. Gone are the days of misplaced papers or waiting in line; now, a few clicks provide quicker and easier access to your documents.

Similar to the BoL, but for air cargo, is the Air Waybill (AWB). These tools are your golden tickets in the world of international shipping.

Here's a tip: Leverage the convenience of 'telex' released BoLs to accelerate your shipping process, save time, and budget effectively. Empower your business with these game-changers to master your Vietnam-UK shipping ventures.

Packing List

Wrapping your head around the Packing List might seem challenging, but it's actually an essential cog in your shipping journey from Vietnam to the UK. Think of it as the blueprint of your cargo - it lists details about your shipment like weight, dimensions, and contents. Just picture the customs agent checking your shipment against the Packing List. If there's a mismatch - say you've listed 100 home decor vases but there are 110 in the crate - complications can arise, causing delays in clearance. That's frustrating, isn't it? Accurately preparing your Packing List, whether you're shipping by sea or air, helps avoid such hiccups. Remember, the key here is precision. So, get those weight scales and measuring tapes ready, and let's get your goods smoothly transported.

Commercial Invoice

Managing shipments from Vietnam to the UK requires a Commercial Invoice, the cornerstone document for customs clearance. It must detail specific elements like your goods' value, a detailed description, HS codes, and country of manufacture. But remember, this isn't just a list. Any discrepancy between your Commercial Invoice and your shipping documents can cause costly delays or fines. So, assess your goods meticulously. For instance, if you are exporting handcrafted pottery, ensure it's described accurately - 'Handcrafted Vietnamese Blue Ceramic Pots' rather than just 'Pottery'. Capture every detail, align it with your other documents, and let your shipment voyage smoothly through customs from the bustling ports of Ho Chi Minh City to the thriving markets of London.

Certificate of Origin

Shipping between Vietnam and the UK involves comprehensive documentation, one of them being the Certificate of Origin. This document is vital in affirming where your goods were produced. It can unlock preferential duty rates, potentially driving down your shipping costs and boosting your bottom line. Don't neglect to accurately indicate the manufacturing country on your certificate; it's the crux of the document. Imagine you're shipping handicrafts produced in Hanoi to London. With a correctly filled out Certificate of Origin, you could take advantage of the Generalised Scheme of Preferences (GSP) duty rate instead of the World Trade Organization (WTO) rate, thereby saving a significant chunk of your budget. A small detail, yet significant enough to impact your profitability!

Certificate of Conformity (CE standard)

When shipping from Vietnam to the UK, documents are your lifeline and a Certificate of Conformity (CoC) is essential. Unlike quality assurance, which often deals with internal processes, the CoC validates that your goods comply with UK standards. In the case of the UK, the CE standard isn't applicable anymore since the UK now uses its own marking, the UKCA. A real-world example would be a Vietnamese manufacturer exporting toys to the UK. These toys must meet British safety standards, verified with a CoC. Without this, the consignment could be held up at customs, costing you time and money. Therefore, before shipping, ensure your goods possess the necessary certifications to avoid any hold-ups.