“Hand-carried”, “Carry-on” or “Hand luggage” Goods

The client run a business on cosmetics and perfumes in Vietnam. Some of their goods were hand-carried goods. They were most concerned about how to sell these goods without breaking applicable laws. That was an interesting problem to deal with!

In Vietnam, “hand-carried” goods, also known as “carry-on” goods or “hand luggage” goods, are understood to be goods purchased directly from abroad and brought to Vietnam by air, often purchased by tourists, flight attendants, or a person’s relatives living abroad, or purchased and shipped to Vietnam by some service-rendering individuals or companies, etc. However, since they are not officially imported, hand-carried goods are often difficult to check the origin and quality, there may be risks such as buying fake or poor quality goods. Currently, there is no document specifically providing for hand-carried goods; however, some regulations are designed to control the quantity and value of goods that individuals can bring into the country without paying customs duties. The regulations are primarily intended to prevent smuggling and ensure proper taxation of imported goods.

• Duty-Free Allowances:

1. • Passengers entering Vietnam are allowed to bring a certain quantity of goods duty-free. This typically includes items like personal effects, a limited quantity of alcohol, tobacco, and some other goods.
   • The duty-free allowances for alcohol and tobacco are usually capped, e.g., 1.5 liters of alcohol, 400 cigarettes, etc.

• Value Limits:

1. • There is a limit on the total value of goods that can be brought into Vietnam without incurring customs duties. If the value exceeds this limit, the excess is subject to import duties.
   • As of recent regulations, goods with a total value of over VND 10 million (approximately USD 430) may be subject to duties.

• Declaration Requirement:

1. • Passengers are required to declare goods that exceed the duty-free allowances or value limits. Failing to declare such goods can result in fines, confiscation of goods, or other penalties.

• Prohibited and Restricted Items:

1. • Certain goods are prohibited or restricted from being imported, including weapons, drugs, and some agricultural products. Importing such items can lead to severe legal consequences.

• Commercial Quantities:

1. • If the quantity of hand-carried goods suggests a commercial purpose rather than personal use, the goods may be subject to stricter scrutiny, higher duties, and additional regulations.

• Luxury Goods:

1. • Luxury items such as high-end electronics, jewelry, and branded fashion goods are often closely monitored. Importing these items may attract higher duties.

Furthermore, due attention should also be paid to the following provisions:

Article 3.6 of Decree 98/2020/ND-CP (dated 26 August 2020, prescribing penalties for administrative violations against regulations on commerce, production and trade in counterfeit and prohibited goods, and protection of consumer rights), which stipulates as follows:

“6. “Contraband goods” include:

a) Imported goods included in the list of goods banned from import or the list of goods temporarily suspended from import as prescribed by law, unless they are imported with the Prime Minister’s permission;

b) Goods imported without the required import license or without meeting given import conditions as prescribed by law;

c) Goods imported without going through a prescribed border checkpoint or without following customs procedures as prescribed by law, or the information on quantities or types of which is falsified when following customs procedures;

d) Imported goods sold on the market without accompanied invoices and documents as prescribed by law, or with unlawful invoices and documents;

dd) Goods, which are subject to import labeling, imported without bearing stamps as prescribed or with bearing false or used stamps.”.

In light of the above provisions, hand-carried goods are not contraband goods if they meet the following conditions:

• Not on the list of goods prohibited from import or temporarily suspended from import, except in cases where the Prime Minister decides to allow import;
• Having invoices or documents proving the origin of the goods;
• Hand-carried goods go through the border gate and go through customs procedures in accordance with regulations;
• Having an import license (for goods imported under a license);
• Goods have import stamps and pay full taxes according to regulations of law.

Selling hand-carried goods is a legal style of business when the goods sold meet all the conditions prescribed by law. However, in cases where the conditions are not met, this style of business will violate the law and can be considered smuggled goods.

Article 16 of the Law on Export and Import Duties (Law No. 107/2016/QH13 dated 6 April 2016), which stipulates as follows:

“Article 16. Tax exemption

1. Exported or imported goods of foreign entities granted diplomatic immunity and privileges in Vietnam within the allowance under an international treaty to which Socialist Republic of Vietnam is a signatory; luggage within the tax-free allowance of inbound and outbound passengers; imports to be sold at duty-free shops.
2. Personal belongings, gifts from foreign entities to Vietnamese entities and vice versa within the tax-free allowance.

If the quantity or value of personal belongings or gifts exceeds the tax-free allowance, the excess amount or value shall be taxed, unless the recipient is an entity funded by state budget and permitted by a competent authority to receive them or they are meant to serve humanitarian or charitable purposes.

3. Goods traded across the border of border residents on the List of goods and within the tax-free allowance serving the manufacturing or consumption by border residents.

Goods that are purchased or transported within the tax-free allowance but do not serve the manufacturing or consumption by border residents, exports and imports of foreign traders permitted to be sold at bordering markets shall be taxed.

…”

According to regulations, goods imported into Vietnam must pay taxes such as: Import duties, value added tax, special consumption tax, etc.

However, if hand-carried goods fall into one of the following cases, they are exempt from import tax:

• Goods enjoying preferential rights and exemptions;
• Goods within the tax-free luggage standards of people exiting or entering the country; imported goods for sale at duty-free shops;
• Goods traded and exchanged across the border by border residents on the List of Goods and within the quota to serve the production and consumption of border residents.
• Goods exempted from import tax under international treaties to which the Socialist Republic of Vietnam is a member;
• Goods with a value or tax amount below the minimum level;
• Raw materials, supplies and components imported for processing export products; finished products imported for attachment to processed products; processed products for export;
• Raw materials, supplies and components imported for the production of export goods;
• Goods produced, processed, recycled and assembled in duty-free zones without using raw materials and components imported from abroad when imported into the domestic market;
• Goods temporarily imported for re-export or temporarily exported for re-import within a certain period of time;
• Goods not for commercial purposes;
• Imported goods to create fixed assets of subjects entitled to investment incentives according to the provisions of the law on investment;
• Plant varieties; animal breeds; fertilizers, pesticides that cannot be produced domestically and need to be imported according to the regulations of competent state management agencies;
• Raw materials, supplies, and components that cannot be produced domestically and are imported for production of investment projects in the list of industries and professions with special investment incentives or in areas with particularly difficult socio-economic conditions according to the provisions of the law on investment, high-tech enterprises, science and technology enterprises, and science and technology organizations;
• Raw materials, supplies, and components imported domestically that cannot be produced domestically for investment projects to produce and assemble medical equipment that are given priority for research and manufacturing;
• Imported goods to serve oil and gas activities;
• Shipbuilding projects and facilities in the list of preferential industries and occupations according to the provisions of the law on investment are exempted from tax for:
• Imported goods to create fixed assets of shipbuilding facilities;
• Imported goods are machinery, equipment, raw materials, supplies, components, semi-finished products that cannot be produced domestically to serve shipbuilding;
• Imported machinery, equipment, raw materials, supplies, components, parts, and spare parts serving printing and minting activities;
• Imported goods are raw materials, supplies, components that cannot be produced domestically to directly serve the production of information technology products, digital content, and software;
• Exported and imported goods for environmental protection;
• Imported specialized goods that cannot be produced domestically to directly serve education;
• Imported goods are specialized machinery, equipment, spare parts, supplies that cannot be produced domestically, specialized scientific documents and books used directly for scientific research, technology development, development of technology incubation activities, incubation of science and technology enterprises, and technological innovation;
• Imported goods that directly serve security and national defense, in which specialized means of transport must be of a type that cannot be produced domestically;
• Exported and imported goods to serve social security, overcoming the consequences of natural disasters, catastrophes, epidemics, and other special cases.

We must say that Vietnam has been tightening regulations around hand-carried goods to prevent tax evasion and control the flow of luxury goods into the country. Customs authorities at airports and border checkpoints enforce these regulations. They have the authority to inspect luggage, assess duties, and enforce penalties for non-compliance. According to the said Decree 98/2020/ND-CP, individuals trading in smuggled goods will be fined from VND 500,000 to VND 50 million, depending on the value of the smuggled goods. Organizations violating the trade in smuggled goods will be fined from VND 1 to VND 100 million. The fine will be doubled, up to VND 100 million for individuals and VND 200 million for organizations if the violator directly smuggles food, food additives, food preservatives, medical equipment, disease prevention drugs and medicines, etc. with a value of less than VND 100 million or from VND 100 million without being prosecuted for criminal liability.

For further information, please do not hesitate to contact us at [email protected].