Vietnam strives to enact FTA with Israel from Oct
The Ministry of Finance is drafting a government decree on tax for the implementation of the Vietnam-Israel Free Trade Agreement (VIFTA) in 2024-2027, aiming to start the decree from October 15.
In a preview of the draft document, the Ministry of Finance asked the Ministry of Justice to recommend the effective date of the decree whether on or after October 15, as the VIFTA will become effective on that date. The expiry date of the draft decree is December 31, 2027.
From left: Vietnam’s Trade Minister Nguyen Hong Dien, then Deputy PM Tran Luu Quang; Israel’s PM Benjamin Netanyahu and Trade Minister Nir Barkat at the VIFTA signing ceremony in Jerusalem on July 25, 2023. Photo courtesy of the government's news portal.
In line with Vietnam’s commitment per the ASEAN Harmonized Tariff Nomenclature 2022 (AHTN 2022), the decree will provide preferential tax rates for 11,446 tax lines. The average tax rates will be reduced gradually from 10.3% in 2024 to 9.3% in 2025, 8.4% in 2026, and 7.5% in 2027.
In July 2023, Vietnam’s Ministry of Industry and Trade and Israel’s Ministry of Economy and Industry signed the VIFTA after seven years of negotiations. It was the 16th FTA of Vietnam and the first FTA between Israel and a Southeast Asian nation.
Per the VIFTA, Israel is committed to cutting 92.7% of tax lines and Vietnam will remove 85.8% of the tax lines, towards bilateral trade of over $3 billion soon. Vietnam-Israel trade reached $2.68 billion in 2023, up 20% year-on-year.
According to Vietnam Customs data, in the first seven months of 2024, Vietnam spent $1.22 billion on importing goods from Israel, with computers, electronics, and components accounting for the biggest portion of $1.13 billion. Meanwhile, Vietnam earned $500.5 million from exporting products to Israel.
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