Correctly identify the product code and comply with the rules of origin.
To implement the tariff commitments under the Vietnam-Israel Free Trade Agreement (VIFTA), the Government issued Decree No. 131/2024/ND-CP dated October 15, 2024, stipulating the Special Preferential Import Tariff Schedule of Vietnam for the implementation of VIFTA in the period 2024-2027. This serves as the basis for determining the special preferential import tariff rates for goods originating from Israel when imported into Vietnam, under the conditions stipulated in the Decree.
Tariff schedules are compiled for each product code and each year; therefore, businesses need to accurately identify the HS code of the goods before looking up the tariff rate. For some product groups subject to tariff quotas, the applicable tariff rate also depends on the corresponding quota regulations. Carefully checking the product code, tariff rate, and application conditions is a necessary step for businesses to calculate import costs and develop appropriate business plans.
For goods exported from Vietnam to Israel, rules of origin are one of the important conditions for enjoying preferential tariffs under the VIFTA. According to Circular No. 11/2024/TT-BCT, goods must meet corresponding origin criteria, such as being entirely produced in a member country, being produced from originating materials, or meeting specific regulations for non-originating materials. The application of which criteria depends on the specific goods and relevant regulations.
This requires businesses to pay attention to origin from the very beginning of raw material selection and production organization, rather than just focusing on completing documentation when preparing for export. Raw materials, production processes, and related documentation need to be consistently managed to demonstrate that goods meet origin criteria when applying for preferential treatment.
Rules of origin are one of the important conditions for enjoying preferential tariffs under VIFTA.
Discussing this issue, Associate Professor Dr. Nguyen Thuong Lang, an international trade expert and senior lecturer at the National Economics University, stated that the rules of origin in free trade agreements (FTAs) are fundamentally similar. However, to take advantage of tariff preferences, businesses need to clearly understand the specific requirements of each agreement and proactively adjust their production and raw material supply activities accordingly.
“Vietnamese businesses first need to utilize domestic raw materials and fuel sources to meet origin standards, thereby taking advantage of preferential treatment,” Associate Professor Dr. Nguyen Thuong Lang analyzed.
Following this approach, proactively sourcing raw materials domestically can help businesses more easily meet certain rules of origin. However, using domestic materials does not automatically mean that goods fully comply with rules of origin. Businesses still need to compare specific regulations for each product and retain documentation to prove the origin of materials and the production process.
Furthermore, businesses need to differentiate between preferential tariff conditions and other requirements when importing goods into the Israeli market. According to Associate Professor Dr. Nguyen Thuong Lang, businesses need to understand the cultural, religious, and consumer habits of the target market, including standards such as Kosher and Halal for relevant product groups.
Kosher and Halal are associated with specific product requirements and methods for meeting those standards. These are not automatically criteria for determining origin to qualify for preferential tariffs under VIFTA. Therefore, businesses need to clearly identify the type of goods, the requirements of the importing partner, and the regulations applicable in the Israeli market to prepare accordingly and avoid confusion between the origin conditions under the agreement and the product requirements.
Build a database of origin and proactively monitor policies.
Another important point emphasized by Associate Professor Dr. Nguyen Thuong Lang is the development of a database for traceability. For goods exported under FTAs, the ability to prove origin depends on the completeness, accuracy, and consistency of information about raw materials and the production process.
Businesses need to manage information about suppliers, raw material sources, purchase documents, and related production processes. Depending on the origin criteria applied to each product, businesses need to determine the types of records to be kept and how to cross-reference data to prove that the goods meet the regulations. Systematically organizing data also makes it easier for businesses to review records, provide explanations, or carry out procedures related to origin.
According to experts, businesses need to consider data management as a regular task in their production and business operations. If they only gather documents when an export order is placed, businesses may encounter difficulties due to a lack of information from suppliers or the inability to fully verify all production stages. Conversely, updating data from the outset will help businesses be more proactive in preparing documentation and proving the origin of goods.
Associate Professor Dr. Nguyen Thuong Lang, international trade expert, Senior Lecturer at the National Economics University.
To implement this effectively, businesses can review their raw material management processes, assign responsibilities for document archiving, and standardize information recording methods among the purchasing, production, accounting, and import/export departments. The data should accurately reflect the company’s operations, be verifiable with relevant documents, and be updated when there are changes in suppliers or raw material sources. This forms the basis for meeting rules of origin requirements while enhancing transparency in supply chain management.
Preparing data and documentation on origin should also go hand in hand with updating policies. Businesses should not only focus on preferential tax rates but also monitor regulations on origin, documentation, and applicable conditions for exported goods. Based on this, businesses can assess their ability to meet rules of origin, calculate costs, and proactively communicate with importing partners about related requirements.
One point to note is that Decree No. 131/2024/ND-CP stipulates the special preferential import tariff schedule for the implementation of VIFTA during the period 2024-2027. The year 2027 marks the end of the tariff schedule period as stipulated in this Decree, but it does not mean that VIFTA expires after 2027. Businesses need to continue monitoring implementing documents and tariff schedules issued for subsequent periods to determine the applicable preferential rates.
For businesses exporting to Israel, leveraging VIFTA requires comprehensive preparation, from identifying product codes and meeting rules of origin to managing data and understanding market requirements. Proactively undertaking these tasks will provide businesses with a stronger foundation when applying for tariff preferences, while minimizing potential obstacles during transactions and exports.