The Ministry of Finance plans to increase import taxes imposed on a number of steel products after local steel producers complained that they are in difficulties due to the overwhelming presence of imported steel.
The ministry announced on its website the draft version to amend and supplement Circular 157/2011/TT-BTC issued on November 14, 2011 setting preferential import and export tariffs.
As planned, the ministry will pull the import tax rate of stainless cold-rolled steel up to 7% from the current 5%.
The ministry came up with the uptrend tax adjustment after Posco VST Co., the country’s largest stainless cold-rolled steel plant with total output meeting over 70% of local demand, said its business is facing difficulties due to poor demand and tough competition from cheap imports.
Moreover, the firm also said it is encountering problems in maintaining steel prices at the most competitive level compared to prices fixed by steel import enterprises charged with an import tax rate of 5%.
Even though the tax rate of stainless cold-rolled steel was revised up to 5% in January from the initial 0%, the volume of this product imported into the nation amounted to 45,773 tons from January to May, a contraction of a mere 11.62% year-on-year.
Therefore, Posco petitioned the finance ministry to consider doubling the tax rate from 5% to 10% in order to help the firm secure its market share in the current tough conditions. Despite a tax rate of 5%, stainless cold-rolled steel is still being imported into Vietnam at low prices and the product has dominated the local market, the company said.
According to the Vietnam Steel Association, total output of the domestic stainless cold-rolled steel segment exceeds 300,000 tons while the annual demand for this kind of product of the whole country only stays at below 250,000 tons.
Responding to the proposal from Posco, the ministry is weighing the possibility of adjusting up the tax rate to 7%.
Now Posco is selling stainless cold-rolled steel at US$1,504 a ton for the 430 type, and US$2,770 a ton for the 304 type at home while the import prices of the products are US$1,400 and US$2,650 a ton respectively. With a 7% tax rate, the import prices of these steel products will be increased to US$1,428 and US$2,703 per ton and the prices will jump to US$1,470 and US$2,783 a ton with a tax rate of 10%.
Apart from the planned stainless steel tax rate, the ministry also plans to increase import taxes of a number of other steel products to support local steel makers in the current fierce competition with imported products given low import tariffs.
The Saigon Times Daily