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| Vietnamese enterprises are benefiting from FTA tariff incentives. (Source: Vietnamnet) |
Benefit from tax incentives
Figures from the Ministry of Industry and Trade show that nearly 80 billion USD worth of goods exported to markets with Free Trade Agreements (FTAs) enjoyed tariff incentives in 2022, a figure 13% higher than the previous year.
More than 60 markets have signed FTAs with Vietnam and these are major export "addresses", accounting for nearly two-thirds of the country's export turnover. In 2022, Vietnam exported over 371.5 billion USD of goods, of which exports to FTA markets alone reached 233 billion USD.
Not only does it create a large export market area with favorable trade conditions, the great significance of participating in FTAs is that Vietnamese industries also benefit from tariff incentives.
Total export turnover using preferential Certificates of Origin (C/O) under FTAs reached 78.3 billion USD, accounting for 33.61% of Vietnam's total export turnover of nearly 233 billion USD to FTA markets.
Vietnam is implementing 15 FTAs, opening up many opportunities for export enterprises to enjoy tariff incentives.
Among these, China, Korea, and ASEAN markets are continuously the leading markets in importing goods from Vietnam with the rate of using FTA incentives.
Preferential C/Os issued to Vietnamese goods exported to China ranked first, with a value of more than 17 billion USD. Next was 13.34 billion USD of Form D C/Os issued to goods exported to ASEAN countries.
Ranked third and fourth are South Korea with 12.4 billion USD and the European Union (EU) with 12.1 billion USD, respectively.
The export commodity groups to Korea with the best FTA preferential usage rate are seafood (93.99%), agricultural products (vegetables, coffee and pepper) all have very high preferential C/O usage rates, reaching 92.26%, 97.98% and nearly 100% respectively; wood and wood products (76.15%); footwear (100%); textiles (97.99%)
Business still has obstacles
At the workshop "Effective implementation of preferential export tax and special preferential import tax commitments of Vietnam in implementing FTAs" held recently, Ms. Nguyen Thi Thu Trang, Director of the WTO and Integration Center, Vietnam Federation of Commerce and Industry (VCCI) said that the rate of preferential tariff utilization of imported goods is much lower than that of exported goods, which is quite regrettable.
From a practical perspective, in 2022, the WTO and Integration Center conducted a survey on taking advantage of the incentives of the Vietnam-EU FTA (EVFTA).
Ms. Trang shared: "When asked about the biggest benefit that businesses have received after 2 years of implementing EVFTA, businesses said that tariff incentives are the biggest benefit, in which businesses benefit from greater export incentives than import incentives. Most businesses assess that FTAs will have a positive impact on production and business activities, thereby reducing difficulties and creating advantages for Vietnam in negotiations."
Regarding some businesses that have not taken advantage of tariff incentives, the Director of the WTO and Integration Center said that some businesses do not know about the tariff incentives stipulated in the EVFTA.
According to Ms. Trang, taking advantage of tariff incentives in FTAs has many obstacles such as: market fluctuations, unfavorable business environment; difficulty in meeting rules of origin to enjoy benefits; lack of specific information about commitments; some FTA commitments are disadvantageous to businesses; and limited competitiveness of businesses.
Ms. Nguyen Thi Thu Trang emphasized: "With internal resistance, businesses must change themselves, and with resistance coming from the process of implementing and executing commitments, businesses need to speak up so that the implementing agencies can make adjustments."
In the coming time, to be able to take advantage of the preferential tariff commitments of FTAs, Ms. Trang said that businesses need to carefully study the commitments of FTAs. When businesses export goods to any market, they must study the agreements that Vietnam has signed with that market to learn about the preferential tariff commitments of these agreements.
For example, with the Japanese market, Vietnam currently has 4 FTAs with this country, so businesses need to learn about 4 different tax schedules as well as the general tariff schedule (MFN) to see which tariff schedule is more favorable.
In parallel, each incentive of the agreements is associated with rules of origin, so businesses need to consider which agreement's rules of origin can be met to take advantage of the incentives of that agreement by meeting the rules of origin. Businesses also need to learn to comply with other conditions to enjoy other incentives according to the provisions of the FTAs.
According to Ms. Nguyen Phuong Linh, Head of Multilateral Financial Integration Department, Department of International Cooperation (Ministry of Finance), businesses need to proactively learn about commitments, their impacts and prepare appropriate actions in the context of tax decrees being issued on a rather long schedule.
In addition, it is necessary to improve competitiveness, create a foundation for businesses to take advantage of FTA integration opportunities, and at the same time, strengthen cooperation and linkages between businesses.
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