2) Customs clearance in UK for goods imported from Vietnam
The customs procedure for import and export in the UK is, like any other advanced country, very precise and automatized. Because Vietnam and the United Kingdom doesn’t have any FTA (Free Trade Agreement) linking them together, the clearance will be operated the standard way. This will result on average and not reduced paperwork to do, and normal import taxes to pay for your goods to enter the UK territory. You may be worried about how the Brexit will impact the customs operations in the UK, but as far as it comes, the same process will certainly still be remained for goods traded between the two countries. It will also the same process if you’re importing British products in Vietnam.
2.1) How much will I pay?
Before beginning all procedures, it is necessary to have a precise estimation of how much will cost the customs clearance and the transfer of your goods in the UK. Like any other countries that are part of the WTO (World Trade Organization), Vietnam and the UK are using the Harmonized Commodity Description and Coding System, to designated traded goods the same way. This means that all the articles traded in the world are referenced with the same ID code, no matter the country. This code, the “HS code”, is composed of 6 figures.
2.1.1) Calculate applicable tariff with the HS code
The HS code of a pineapple is 08043010. You’re wanting to learn what is the meaning beside this code? The following picture will precisely describe it to you :
First, you may not know what is the HS code designating your goods. The Canadian post implemented a great web tool that helps you to sort it out. Let’s stay in the pineapple example. If you’re typing pineapple in the search bar, you will first be been asked to choose the country of destination. After choosing UK, it will provide you the following HS code:
The official website of the UK government has also a page made to determine HS code for products. It is called the look up commodity code. If you’re trying to find what the HS code of pineapples is, just type pineapple in the search bar, and it will show you the result which is:
As you can see the applicable rates to pineapples are showing 5.80% import duties and no VAT inherent on this product.
2.1.2) Different taxes existing for your goods
126.96.36.199) GST/VAT in the UK
In the United Kingdom, there are three different VAT rates, the zero rate of VAT, the reduced rate of VAT and the standard rate of VAT:
- The standard rate of VAT is of 20%
- The reduced rate of VAT is of 5%
- And the zero rate of VAT is of 0%
All these rates are applicable to a scope of goods and services, which you can precisely determine in the UK’s government guidance for VAT rates page.
2.2) How to get a taxes exemption?
Because the Kingdom is still in negotiations for its retirement from the European Union, the UK government absolutely needs to counterbalance the trade advantages he will lose over the Brexit. As the EU and Vietnam should have put in application the EVFTA, a potential exit of the UK may it also exit it of the FTA. The UK is still working on its side with Vietnam, either to keep the agreement valid between the two countries, or to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is involving Vietnam and many other countries. So, there will be no solution of exemption by searching this way. The only way to have an exoneration of import taxes will be to be benefiting of the GSP.
2.2.1) The Generalized Scheme of Preferences (GSP)
Vietnam takes part in the list of countries included in the general arrangement of the GSP of the European Union. Considered as a developing country, imports of products made in Vietnam is subject to reduced or zero import rates.
To benefit of this measure, you must provide to UK customs, the certificate of origin of your products, proving that they’ve been made in Vietnam. Of course, this very advantageous policy isn’t applicable for imports of competitive categories of goods, like clothing, textile and footwear.
2.2.2) The general arrangement
All the products benefiting of the general arrangement are listed in the Annex V of the REGULATION (EU) No 978/2012 of 25 October 2012. You can consult it to know if the goods you’re aiming to import can benefit of it.
Depending on the Sensitive (S) or non-sensitive (NS) character of your goods, the import taxes will be respectively reduced or zero. Still in the Annex V, you can determine the sensitiveness of a product. Non-sensitive products are totally exonerated of import taxes, except on agricultural goods.
2.2.3) Sensitive products
There are two type of sensitive products, the products subject to ad valorem taxes and other subject to specific taxes.
Ad valorem taxes are applied on products of the chapter 1 to 49 and 64 to 97. On these products, import taxes are reduced of 3.5%. It is also applied on textile products mentioned in the chapters 50 to 63. Here, import taxes are reduced by 20%.
If a sensitive product is applied both by ad valorem and specific right, ad valorem is always the chosen right.
To know the applicable import taxes to your products made in Vietnam, you must:
1 – Verify if the goods are mentioned in the Annex V of the general arrangement.
2 – determine if the goods are sensitive or non-sensitive in the Annex II of the same document.
2.3) Does FNM Vietnam charge duty?
FNM Vietnam is charging the handling and preparation of the documents. But we’re not taking any advantage of the import taxes applicable on your goods, and we’ll provide you all documents written by the UK customs to guarantee you a complete transparency of the handling of your goods in the UK.
2.4) Customs contacts
Contact at the Vietnamese customs
Official name: General Department of Vietnam Customs
Website: Vietnamese Customs
Contact at the British customs
Official name: HM Revenue and Customs
Website: British Customs
2.5) Customs process
If you haven’t done it yet, register an EORI number to be able to import Vietnamese goods in UK. You will be granted it after 3 working days.
The first step you’ll have to accomplish with customs is to declare your import. The duties and VAT are coming after.
2.5.1) Import declarations to customs
The import declaration in UK can be done electronically or with paper files. If you’re importing your goods in the UK via rail freight (which is almost impossible departing from Vietnam), you have to send to British customs an Entry Summary Declaration. This is necessary because before entering in the Kingdom, your goods will travel through the EU. If you’re not skilled, here is a guideline to achieve the import declaration by yourself.
2.5.2) Paying duty on imports from Vietnam
As you probably imagine, your shipment will only be released from UK customs once that all duties and taxes have been paid. If you’re importing goods temporarily in the UK, with the purpose to move them to another country, you can claim to customs to be refunded the import taxes and VAT back. It is also possible to ask for a delay payment, for all shipments import with a non-EU country.
Once the payment is received by UK customs for your import, they will release the shipment, so it can reach its final destination.
2.5.3) Paying VAT on imports from Vietnam
If it is your first import in the UK, you’re liable to pay import taxes and VAT directly to the HM Revenue and Customs.
After the payment proceeded, the HMRC will provide you the import tax certificate, to officialise that you paid the VAT and duties. This document is called the form 79.
Below is detailed the import process of your goods, precisely with the UK customs:
2.6) What are the Licenses required (import & export)?
Before implementing any import or export process in the UK, you must verify if the goods you’re aiming to import are requiring a License. Of course, if it is applicable, you can’t import or export such shipments without the applicable licenses. Legal sanctions can be taken by customs against you. Such licenses are also required for temporary imports or exports.
2.6.1) Import license
You must have an import License in the UK to import shipments of:
- Plants and Animals
*If your products have a particular country of origin, Import License may not be required
2.6.2) Export license
Export license will be required to send shipments out of the UK territory, containing:
- Plants and animals
- Military or paramilitary items
The needing of an export license is determined by the type of products you’re sending, and also the country where you’re sending them. It is in order to prevent any misuse that may be done with your goods. e.g, weapons and ammunitions to East Africa.
You will find more information on the import and export guidance GOV page.
2.7) Necessary documents
2.7.1) The Bill of lading or Airway bill
The BL (Bill of Lading) has a double usage for your cargo. It is similar to a passport and a boarding pass for your shipment. Once the BL is released, your goods are able to travel through sea and ocean. Depending on the chosen freight solution, it can be a Bill of Lading for all ocean freight, and an Airway Bill for all Air freight. The BL is proving to customs authority that the shipping was legally established, because the carrier is releasing it once he received payment for the transfer. In international trade and logistics this document is one of the most important, with the certificate of origin.
The pictures below are example of Bill of Lading, with the details of each information written on:
2.7.2) The original invoice
The original invoice will be used by the HMRC to ensure that the products you’re importing in your shipment are corresponding to the one you declared through your import declaration.
2.7.3) The packing list
The packing list is a document describing all the products you’re importing. The HS code, weight and number of each items are described in that document. If you’re importing dangerous goods to the UK, the MSDS data sheet and the international code of the good must be precised.
2.7.4) Certificate of Origin
Like the Bill of Lading, the certificate of origin is one of the most important documents for import and export businesses. If you want to benefit from the GSP tariff treatment, you must show the CO to the UK customs in order to prove that your goods were “made in Vietnam”. This certificate must be issued by a Vietnamese government agency and be signed by your manufacturer. Of course, you must check that the manufacturer is able to provide such documents, before purchasing goods from him if you want to benefit of the GSP.
Below is an example of a certificate of origin (a Chinese one here):
2.8) Prohibited items in the UK
Some goods cannot be imported in the UK. Such products are:
- Offensive or defensive weapons like pepper sprays, CS gas, flick knives…
- endangered animal and plant species
- Illegal drugs
- rough diamonds
- obscene or amoral materials
- Imports for personal use of meats and dairies from countries outside the EU
2.9) Restricted items in the UK
The restricted goods in the UK are requiring a special import licence delivered by a precise authority in Great Britain. Firearms, ammunitions and explosives are requiring such authorisation.
Agricultural and food products are also restricted if they:
- May contain pests or other vegetal and animal diseases
- Are imported for commercial use
- Were not produced in a country of the EU
You will have more details about it on this page.
2.10) The Brexit impact on the European-Union Vietnam Free Trade Agreement (EVFTA) for UK
If the Brexit takes place, then the UK will exit from the customs union, which means that UK will have to leave all FTAs established by the European Union. It is mandatory because all members of a custom union should establish the same tariffs toward the other members and vice versa. As the automobile and pharmaceuticals sectors are accounting for most of the British exports, it will lose its competitivity compared to the European Union toward the Vietnamese market.
To avoid such losses, the UK government is willing to continue its existing investment and trade relations after the Brexit. This means that the Existing FTAs ratified with the EU will be reproduced at least in different forms for the UK, and the EVFTA is included.
This retention is aiming to protect British businesses from a drastic change that they may not be able to swallow.
So, the UK government is doing all its best, especially toward Vietnam, to keep its hardly negotiated privilege for trades in Vietnam.
2.11) Trade relationship between Vietnam and the UK
According to the last statistics established by the World Bank in terms of trades (2017), Vietnam is the 51st export partner and the 22nd import partner of the UK. On the opposite way, the UK is the 9th export partner and the 22nd import partner of Vietnam. Still in 2017 flows of goods departing from Vietnam and going to UK were valued at 5.4 billion USD, while flows from UK to Vietnam were valued at 745 million USD. As usual when it comes to Vietnam, the trade balance is largely benefiting to Vietnam with the UK.
The United Kingdom is largely importing broadcasting equipment, furniture, textile footwear, leather footwear, computers, coconuts, Brazil nuts and cashews, non-knit women and men’s suit from Vietnam.
In counterparts, the biggest exports of the UK to Vietnam are packaged medicaments, recovered paper, gas turbines, broadcasting equipment, antibiotics, electric generating sets, hard liquor, pesticides and cars.