On March 27, 2024, the Minister of Industry and Trade issued Circular 04/2024/TT-BCT amending and supplementing some provisions of Circular 20/2014/TT-BCT on the implementation of Rules of Origin in the ASEAN - Korea Free Trade Area Agreement.
Accordingly, Article 1 of Circular 04/2024/TT-BCT amends the Rules of Origin of Goods in the AKFTA Agreement in Appendix I of Circular 20/2014/TT-BCT. For example, the amendment of the regulation on non-purely originated goods is as follows:
- To apply point b, Clause 1, Article 2, goods, if not subject to Article 5 stipulated in this Appendix, are considered to have originated if they reach a Regional Value Content (hereinafter abbreviated as RVC) of at least 40% calculated according to FOB value, or undergo a process of changing the 4-digit Harmonized System code (hereinafter abbreviated as CTH).
- The RVC calculation formula is based on one of the following two methods:
+Direct formula: RVC = VOM/FOB x 100% Where “VOM” is the value of originated materials, including the value of originated materials, direct labor costs, direct allocation costs, transportation costs, and profit. or
+Indirect formula: RVC = [(FOB – VNM) / FOB] x 100%
Where “VNM” is the value of non-originating or undetermined originating input materials, which can be:
+CIF price at the time of import of materials, parts, or goods; or
+The first purchase price of materials, parts, or goods with undetermined origin in the territory of the member country where the processing and manufacturing stages take place.
- Exporters or manufacturers of the exporting member country flexibly apply the direct RVC calculation formula or the indirect RVC calculation formula. The chosen RVC calculation formula must continue to be applied throughout a fiscal year of that exporter or manufacturer. In case the importing member country conducts inspection and verification of the origin of goods, any inspection and verification for the RVC criterion must be carried out based on the RVC calculation formula that the exporter or manufacturer of the exporting member country has used. This circular takes effect from May 11, 2024.
