Enterprises applying the Rules of Origin in ATIGA will help them enjoy preferential tax rates and better manage compliance costs that enterprises incur in the form of paperwork and accounting costs.
1. Plan to meet requirements on origin
The enterprise should consider having a plan to meet the requirements to minimize problems of non-compliance with the Agreement as well as avoid necessary trouble with customs authorities to take advantage of preferential tariff rate of ATIGA.
Accordingly, the enterprise must:
- Find out information about export markets and how to take advantage of preferential tariff rate in ATIGA;
- Gradually change the traditional management model according to international standards such as ISO;
- Gradually change the traditional management model according to international standards such as ISO;
- Implement management and use of labor according to international standards such as SA8000;
- Environmental protection during production.
2. Identify the benefits upon application of ATIGA
From a commercial perspective, the application of ATIGA is always beneficial for enterprises, especially in cases where the standard tax rate on goods is significantly higher than the preferential tariff rate from ATIGA.
However, the cost savings resulting from not having to pay (or paying little) import taxes and the hassle or burden of having to comply with ATIGA regulations are issues to be considered by the enterprises.
In case of anti-dumping, anti-subsidy and safeguard duties, if an enterprise understands the principles of origin in ATIGA, its interests shall be protected in case of the importing country committing violation by direct complaint or through notification to the Government for appropriate protection.
Only qualified products that meet the rules of origin can enjoy ATIGA’s tax rate incentives. Therefore, exporters should keep in mind the nationality of the importer and must understand and comply with the rules of origin of that country to take advantage of the preferences in ATIGA.
3. Determination of goods which are wholly originated
Provision on wholly obtained goods notes that goods are wholly produced in an exporting member state (wholly domestic origin) is determined to be originating. Goods shall be deemed to be wholly originated or produced in the exporting member state in the cases set out in Article 3 of Appendix 1.
Applicable Appendix: Rules of Origin (Appendix I).
4. Determination of goods which are not wholly originated
Goods which are not wholly originated shall be deemed to be originated when they meet the general origin criteria or product-specific rules set out in Article 4 of Appendix I.
- Criteria that have an important influence on the determination of origin and the general criteria of origin, including conversion of commodity codes at level 4 (CTH) or 40% regional value content (RVC (40)).
- Item Specific Rules provide for specific rules of origin for certain goods, allowing selection or a combination of criteria if the corresponding criteria specified for that good are met.
To calculate the RCV regional value content ratio, each country will apply a direct or indirect formula. In which, Vietnam applies the indirect calculation formula to determine the origin for exports under ATIGA.
Direct calculation formula
| RVC = | Cost of ASEAN raw materials | + | Costs of direct labour | + | Direct allocation cost | + | Other expenses | + | Profit | X 100% |
| FOB price | ||||||||||
Indirect calculation formula
| RVC = | FOB price | – | Value of non-originating materials, parts or products | X 100% |
| FOB price | ||||
To determine the origin of goods, there are other rules such as: the rule of accumulation; simple processing and processing stages; direct shipping; negligible percentage of materials not meeting CTC criteria; packaging and packaging materials; accessories, spare parts, and tools; mediating factors; The ingredients are the same and can be substituted for each other.
Applicable appendices
- Rules of Origin (Appendix I).
- Product Specific Rules (Appendix II).
- Substantial transformation for textiles and textile products (Appendix III)
- ITA products in AHTN (Appendix IV).
- Principles and guidelines for calculating regional value content on the ATIGA (Appendix V).
- Guidelines for partial cumulation (Appendix VI).
5. Register for issuance and check Certificate of Origin
The customs authority in the importing country only applies the preferential tariff rate if the goods are accompanied by a Certificate of Origin (C/O) indicating the country of origin of the goods. To obtain this C/O, the exporter must ensure that the goods meet the rules of origin, prepare and keep relevant documents, and present them with the application for issuance of the certificate of origin with the C/O issuing authority in the exporting country.
Applicable appendices
- C/O Issuance and check (Appendix VII).
- C/O Form D (Appendix VIII).
- Guidelines on C/O declaration (Appendix IX).
- List of C/O granting agencies (Appendix X).
