A company’s goods do not meet the “wholly obtained” standard — for example, products assembled from imported components. How can they still qualify for a preferential C/O? The answer lies in the two most common origin criteria across free trade agreements: change in tariff classification (CTC) and regional value content (RVC). Understanding these two criteria correctly is the prerequisite for a C/O application that will not be sent back.
The general principle of origin determination
Under Article 4 of Circular 05/2018/TT-BCT (issued 3 April 2018, effective from the signing date), goods are determined to originate in the country, group of countries or territory where the last production process fundamentally transforming the goods was performed. CTC and RVC are two ways of giving this principle concrete form.
CTC — change in tariff classification
CTC is the change in the HS code of the goods compared with the HS code of the non-originating input materials (including imported materials and materials of undetermined origin) used to produce them. (Point a, Clause 2, Article 6, Circular 05/2018/TT-BCT.)
CTC has three levels, from broad to narrow:
- CC (Change of Chapter): change at Chapter — 2-digit level;
- CTH (Change of Tariff Heading): change at Heading — 4-digit level;
- CTSH (Change of Tariff Sub-heading): change at Sub-heading — 6-digit level.
The key point: the applicable CTC level for each product is set out in the Product-Specific Rules (PSR) list of each agreement — for ATIGA, the appendix issued with Circular 03/2023/TT-BCT. Do not state generally that “CTC means a 4-digit change”; some products require CC, others only CTSH.
Also note: CTC is assessed on non-originating materials. Materials already originating in a member state need no tariff-classification analysis — that situation is governed by the cumulation rule.
RVC — regional value content (ATIGA as the standard example)
RVC measures the share of value created within the agreement’s region. Using ATIGA as the standard example: goods that are not wholly obtained qualify as originating if they achieve an RVC of not less than 40% (RVC40) calculated on the FOB value, or undergo a tariff-classification change at the 4-digit level (CTH); certain products use RVC35 (not less than 35%). (Articles 2 and 4, Clause 1 of Article 5, Appendix I, Circular 22/2016/TT-BCT — cited via 29/VBHN-BCT 2024; Product-Specific Rules appendix, Circular 03/2023/TT-BCT.)
Important warning: there is no universal 40% RVC threshold across all FTAs. Each agreement takes its own approach: RCEP lets businesses choose the direct or indirect formula (Article 8, Circular 05/2022/TT-BCT); EVFTA uses the “maximum non-originating materials” (MaxNOM) approach in Appendix II. When citing 40%/35%, always say “for example, ATIGA”.
As with every ATIGA criterion, the last production process must be performed in a member state — an independent condition alongside the RVC figure.
The two RVC formulas (ATIGA)
Businesses may choose one formula and must apply it consistently throughout the fiscal year (Article 5, Appendix I, Circular 22/2016/TT-BCT):
- Direct formula: RVC = (value of originating materials + direct labour cost + direct overhead + transport costs + profit) / FOB value × 100%;
- Indirect formula: RVC = (FOB value − value of non-originating / undetermined-origin input materials) / FOB value × 100%.
RVC vs LVC
LVC (local value content percentage) is the criterion for non-preferential origin under Circular 05/2018/TT-BCT, calculated by the direct formula (value of originating input materials / FOB value × 100%) or the indirect formula ((FOB − value of non-originating materials) / FOB × 100%); the producer or trader chooses one formula and applies it consistently throughout the fiscal year. (Clause 3, Article 6, Circular 05/2018/TT-BCT.)
| Criterion | RVC | LVC |
|---|---|---|
| Scope | Preferential — per FTA | Non-preferential — under Circular 05/2018/TT-BCT |
| Calculation | Per each agreement’s formula (e.g. ATIGA: direct/indirect) | Direct or indirect, chosen once and applied all fiscal year |
The formulas may look similar but their scope differs — do not mix RVC and LVC in a dossier.
Combination criteria and SP
Some products must satisfy two criteria at once, e.g. “CTSH + 35%” (both a 6-digit HS change and RVC of not less than 35%). SP (Specific Process) denotes a particular manufacturing or processing operation listed in the Product-Specific Rules.
Entering the origin criterion on Form D (Box 8)
Correspondingly, Box 8 of the Form D C/O shows: “WO” (wholly obtained) | actual RVC content (e.g. “40%”) | “CC” / “CTH” / “CTSH” | “SP” | combination criterion (e.g. “CTSH + 35%”) | “PC x%” (partial cumulation: 20% ≤ RVC < 40%). (Circular 10/2022/TT-BCT amending Circular 22/2016/TT-BCT.)
Declarations when applying for a C/O
Traders applying for a C/O declare and commit that origin meets the RVC/CTC criterion using the forms in Appendices VII, VIII and IX of Circular 05/2018/TT-BCT.
Common risks and recommendations
- Applying the 40% threshold to every FTA: each agreement has its own threshold and calculation.
- Stating “CTC means a 4-digit change”: the applicable level depends on each product under each FTA’s PSR.
- Mixing RVC and LVC in a preferential C/O dossier.
- Switching formulas mid-fiscal-year: the chosen formula must be applied consistently all year.
- Citing the wrong instrument number: the circular amending AKFTA origin rules is 04/2024/TT-BCT (effective 11 May 2024; RVC ≥ 40% or CTH) — some secondary sources wrongly write “04/2022”.
Frequently asked questions
Goods reach 40% RVC but undergo only simple processing in Vietnam — do they get an ATIGA C/O?
Not necessarily. The last production process must be performed in a member state, and simple processing or working does not confer origin — an independent condition alongside the RVC figure.
May a business use both the direct and indirect formulas?
No. A business chooses one formula and must apply it consistently throughout the fiscal year.
Do materials imported from another ASEAN state need a CTC analysis?
Materials already originating in a member state need no tariff-classification change analysis — that case falls under the cumulation rule.
Legal bases
Circular 05/2018/TT-BCT (Article 4; Point a of Clause 2 and Clause 3, Article 6; Appendices VII, VIII, IX); Circular 22/2016/TT-BCT (Articles 2, 4, 5 and 10 of Appendix I) — cited via Consolidated Document 29/VBHN-BCT 2024; Circular 10/2022/TT-BCT; Circular 03/2023/TT-BCT; Circular 05/2022/TT-BCT (Article 8); Circular 04/2024/TT-BCT; Decree 31/2018/ND-CP (Articles 7, 8). Checked 14 October 2026.
The information in this article is for reference only and does not constitute legal advice. Rules of origin under each trade agreement may change; businesses should check the current legal instruments or consult a lawyer before applying them.
See also: Contact FLAT Law Firm
For reference only, not legal advice. Content quality-checked by the AI Legal Council; not yet reviewed by a human lawyer.
