Issue of September 2024 – Guidance on obtaining a Certificate of Origin in Vietnam for enterprises

Dear Valued Clients,

The Certificate of Origin (C/O) functions as an official “passport” for exported goods, serving to verify the nationality of investors’ products and declare their country of origin. This document plays a crucial role in international trade by facilitating customs clearance and potentially unlocking preferential trade benefits. In Vietnam, C/O matters are generally regulated by the Ministry of Industry and Trade (the “MOIT”), while the authority responsible for issuing the C/O is the Vietnam Chamber of Commerce and Industry (“VCCI”).

Therefore, in this Legal Update, we would like to summarize and clarify the initial guidance on obtaining a C/O in Vietnam. It should be noted that this article is a general overview; and specific procedures may vary based on individual circumstances and the type of goods and products. Investors should consult with legal professionals of ENT Law LLC for further guidance and precise advice.

1. Criteria for a Vietnamese C/O

1.1. General eligibility criteria

Before applying for a C/O, investors should ensure that their goods meet the following criteria:

(i) The goods are wholly produced or sufficiently processed in Vietnam.

(ii) The goods comply with the rules of origin specified in bilateral or international treaties that Vietnam is a signatory member.

1.2. Primary criteria for a C/O

When applying for a Vietnamese C/O for exported goods, one of the following four criteria is usually applied, (a) pure origin (also known as “Wholly Obtained” or WO), (b) value percentage (which includes “Regional Value Content” or RVC and Local Value Content” or LVC and “Value Added Content” or VAC), (c) commodity code conversion (also known as “change in tariff classification” or CTC), and (d) product criteria (also known as “Specific Process”).

a. Wholly obtained (WO)

This criterion applies when a product is entirely produced within Vietnam’s territory or when its input materials are 100% of Vietnamese origin. Some examples are (i) agricultural products grown and harvested within Vietnam; (ii) live animals (including mammals, birds, fish, etc.) born and raised in Vietnam; (iii) processed goods derived from live animals within Vietnam; (iv) goods obtained from hunting, trapping, aquaculture, or fishing within Vietnam; (v) natural minerals and substances and so on.

b. Percentage value (RVC, LVC, VAC)

This criterion assesses the percentage of value added within Vietnam. It varies based on the specific C/O form:

(i) Regional Value Content (RVC): RVC refers to the proportion of a product’s final value that originates from within a specific region or country. It plays a crucial role in determining the degree of local sourcing and production in traded goods. Under free trade agreements (FTAs), RVC rules require that a product include a certain percentage of content from the FTA partner country (or countries) to qualify for preferential treatment. For example, if an investor is exporting a product under the Europe-Vietnam Free Trade Agreement (EVFTA), it needs to ensure that a significant portion of its value comes from either the European Union (EU) or Vietnam.

(ii) Local Value Content (LVC): LVC specifically focuses on the value added within a single country (usually the exporting country and in this case, Vietnam). It measures the percentage of a product’s value that results from local production, processing, or other activities. LVC is essential for assessing whether a product meets the origin criteria under an FTA. For example, if an investor is applying for a Vietnamese C/O, understanding LVC helps determine whether its product qualifies as originating from Vietnam.

(iii) Value Added Content (VAC): VAC encompasses the additional value created during the production process. It considers the difference between the final selling price of a product and the cost of its inputs (materials, labor, etc.). VAC reflects the economic contribution made by the producer or manufacturer. In the context of FTAs, VAC contributes to meeting origin requirements and accessing preferential tariff treatment.

c. Change in tariff classification (CTC)

Under this criterion, a product is considered of Vietnamese origin if its non-originating input materials undergo a change in the Harmonized System (HS) code. There are three levels of HS code conversion:

(i) CC (Change in tariff of Chapter): Changing the first two digits of the HS code (chapter level);

(ii) CTH (Change in tariff of Heading): Changing the first four digits of the HS code (heading level)

(iii) CTSH (Change in tariff of sub-heading): Changing the first six digits of the HS code (sub-heading level).

Investors can determine which criterion (CC, CTH, or CTSH) applies by referring to Appendix I of Circular 05/2018/TT-BCT.

d. Specific process (SP)

Some FTAs specify that certain products are of Vietnamese origin only if they undergo a specific production, processing, or manufacturing process. Even if costs, value percentages, or material HS codes change, these products qualify for a C/O if the specified process is consistently applied. This criterion is not as popular as other 03 first criteria and it may involve an inspection of production processes to determine the C/O.

2. Licensing process for issuance of a Vietnamese C/O

Investors should follow following steps to obtain a Vietnamese C/O. But, at first, they should be able to distinguish between C/O forms to apply the licensing process accordingly.

2.1. Types of C/Os:

Vietnam issues various types of C/Os, some of which are as follows:

(i) C/O Form A: For goods exported to developed countries under the Generalized System of Preferences (GSP) program.

(ii) C/O Form B: Used for goods exported under Free Trade Agreements (FTAs).

(iii) C/O Form D: Issued for goods exported under ASEAN FTAs.

(iv) C/O Form E: Issued for goods exported to ASEAN countries under the ASEAN – China FTA.

(v) C/O Form AK: For goods exported to South Korea under the Vietnam – South Korea FTA.

(vi) C/O Form JPT: Issued for goods exported to Japan under the Vietnam – Japan FTA.

(vii) C/O Form AANZ: Issued for goods exported from Vietnam to Australia and New Zealand under the ASEAN – Australia – New Zealand FTA.

(viii) C/O Form EUR.1: For goods exported from Vietnam to EU countries under EVFTA.

(ix) C/O Form CPTPP: Issued for goods exported under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

2.2. Required documents for application

Once criteria are met, investors should prepare the necessary documents for the application and submission for the C/O, including some key documents as follows:

(i) Export documents: commercial invoice, bill of lading or airway bill; packing list; application form/declaration of origin form (provided by the MOIT), detailed declaration of exported goods meeting preferential origin criteria or non-preferential origin criteria.

(ii) Documents proving origin: Declaration of origin of the manufacturer or supplier of raw materials with origin or goods with origin produced domestically in case the raw materials are used for a subsequent stage to produce another good; certified copy of the goods production process; etc.

We note that some other documents such as export customs declaration, good production process, etc. may be required by authority during the licensing process.

2.3. Application process

Investors may register first-time trader via the electronic C/O issuance system at www.ecosys.gov.vn or another designated website. Alternatively, application for issuance of the C/O can be physically submitted to VCCI or sent by post to its head office.

2.4. Verification and timeline

The authority will verify the information provided and issue the C/O if all requirements are met. When it comes to obtaining a C/O in Vietnam, timing matters. Basically, the time schedule for C/O issuance is as follows:

(a) Standard timeline

Generally, a C/O shall be issued within three working days after investors submit a complete and valid dossier. If everything is in order, investors can expect the C/O within this timeframe.

(b) Inspections and exceptions

In some cases, the C/O issuer may need to conduct inspections at production facilities. This could happen if: (i) the documentation examination is insufficient for C/O issuance; or (ii) there are suspicions of violations of the law related to origin criteria.

In conclusion, investors, particularly foreign invested companies operating in Vietnam, should always verify Vietnamese C/O issues before making investments in the country. When preparing C/O applications, it’s crucial to be aware of the specific rules of origin outlined in relevant FTAs (such as ASEAN or EVFTA). Navigating intricacies of C/O requirements can indeed be complex; and seeking professional guidance helps ensure compliance and maximizes the benefits of trade agreements. We recommend that investors collaborate closely with a professional C/O consultant to achieve effective results.

As usual, we hope you find this Legal Update helpful and look forward to working with you in the upcoming time.

Kind regards,

ENT Law LLC

The full version of this Legal Update can be found here.