FTA & Tax Incentives: Unlocking Vietnam’s Breakthrough Competitiveness In Logistics

Vietnam is emerging as a strategic center for manufacturing and cargo transshipment in Asia. One of the key factors behind this attractiveness is its extensive network of Free Trade Agreements (FTAs), which makes Vietnam’s logistics industry an indispensable link in the global supply chain.

VIETNAM – ASIA’S WIDEST FTA GATEWAY

Vietnam is currently one of the countries with the most extensive and comprehensive FTA networks in the region. Vietnam has signed and implemented more than 15 Free Trade Agreements, including important new-generation FTAs such as:

•               CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership)
•               EVFTA (EU-Vietnam Free Trade Agreement)
•               RCEP (Regional Comprehensive Economic Partnership)
•               VKFTA (Vietnam-Korea Free Trade Agreement)
•               AJCEP (ASEAN-Japan Comprehensive Economic Partnership Agreement)
•               UKVFTA (Vietnam-UK Free Trade Agreement)

The presence in these major trade blocs opens up vast market access opportunities for Vietnamese goods and, more importantly, brings unprecedented benefits to logistics activities in the country.

TARIFF INCENTIVES: A DRIVER FOR LOWERING THE COST OF GOODS

1. The most evident and direct benefit from FTAs is the substantial reduction of tariffs

Thanks to the commitments under FTAs, a large proportion of import tariff lines have been, and continue to be, eliminated. Currently, more than 70% of import tariff lines have been reduced to 0% for goods originating from key markets such as ASEAN, the European Union (EU), China, and South Korea.

2. How does this strongly impact logistics?

The reduction or 0% of import tariffs significantly lowers the total cost of goods in the supply chain. As input costs decrease, the competitiveness of goods manufactured in Vietnam or goods transiting through Vietnam increases substantially.

VIETNAM’S LOGISTICS: LEVERAGING THE ADVANTAGE OF “BOTH SAVINGS AND INCENTIVES”

Vietnam’s logistics industry not only involves transportation and warehousing, but also serves as a strategic link for international enterprises seeking to optimize costs and take advantage of tax incentives.

1. Zero-Tariff Hub

With a dense FTA network, international enterprises can choose Vietnam as a transshipment point, processing base, or final packaging location to take advantage of flexible rules of origin and enjoy 0% import tariffs when exporting to FTA partner markets.

2. Optimizing Transit Costs

When goods are transported through Vietnam, logistics enterprises can advise their clients on leveraging agreements such as the RCEP to ensure the most optimized tariff costs, particularly for goods moving between member countries within the bloc (e.g., China – ASEAN).

3. Enhancing Service Demands

To meet the complex requirements of Certificates of Origin (C/O), which are the key to benefiting from FTA tax incentives, Vietnamese logistics enterprises are compelled to upgrade their services:

•               Consulting and assisting clients in completing origin documentation
•       Managing warehouses and supply chains to higher standards, ensuring compliance with inspection requirements from customs authorities and business partners.

In summary, FTAs are not only a matter of import and export, but also a core competitive advantage of Vietnam’s logistics industry.

To maintain and further strengthen this advantage, logistics enterprises need to continuously update their knowledge of existing FTAs, invest in technology and expertise to provide comprehensive tariff and logistics consulting services, becoming strategic partners helping clients “decode” and fully capitalize on tariff incentives.

If your Enterprise requires in-depth consultation on tax and customs policies to optimize supply chain, please contact TPM Tax Agency for detailed support.

Quyen Nguyen