Foreign investors considering Vietnam as a regional manufacturing or export hub must see customs not as a routine hurdle but as a strategic factor that can make or break margins and market access. In 2025, Vietnam’s trade turnover is estimated at US$637 billion, with exports contributing US$325 billion and rising at nearly sixteen percent annually. In the first quarter alone, exports to the United States reached US$31.4 billion, a 22 percent increase over the same period last year. These figures underscore how deeply Vietnam is tied to global trade dynamics.
When a firm loses tariff preference, is forced to repay duties after audit, or fails to meet origin thresholds, the financial damage can slice deeply into investor returns.
Vietnam’s customs architecture and enforcement trends
In 2025, the government expanded the on-spot export-import model to allow subsidiaries or branches of foreign investors to engage in it, thereby easing some cross-border flows.
Customs now operates via an integrated electronic system (VNACCS/VCIS), enabling risk scoring and pre-declaration, while physical inspections still apply for goods that trigger red or yellow channel flags. In recent years, the authorities have uniformly signaled an intention to strengthen enforcement against origin fraud, transshipment, and misdeclaration. For example, the customs agency has documented dozens of cases where goods shipped from China were falsely labeled “Made in Vietnam” to evade U.S. tariffs.
On the enforcement statistics side, published figures are limited, but several data points are available. Under Decree 128, fines for customs supervision violations were raised 33 percent, placing the typical range between US$216 and US$345 for misdeclaration or tampering with customs seals. More serious violations involving illicit or restricted goods attract fines in the thousands of US dollars. Beyond monetary fines, customs can rescind duty exemptions and suspend operators. In one case, a Vietnamese exporter lost preferential access to EU markets after a post-audit found missing supplier declarations. The trend is clear: audit volumes are rising, enforcement is becoming stricter, and customs agencies are actively targeting high-risk origin claims.
Free trade agreement leverages and sector impacts
Vietnam boasts participation in eighteen active FTAs, including the CPTPP, RCEP, EVFTA, and bilateral pacts with the UK and Korea. Its applied most-favored-nation (MFN) tariff averages around 9.5 percent, but many FTA lines have zero or reduced tariffs for qualifying origin goods.
To leverage these benefits, exporters must satisfy the rules of origin. This requirement forces firms to track their bill of materials, maintain supplier records, and apply regional content rules. A loss of conformity means goods revert to MFN rates.
In textiles, for example, Vietnam remains a major player: the sector accounted for over 22 percent of its exports recently, and pressures from U.S. tariffs have pushed firms to double down on origin compliance. Meanwhile, the electronics sector has seen export order growth of 15–25 percent post-RCEP, especially for smartphone and component manufacturing.
Consider a foreign investor planning to assemble automotive components in Vietnam for export to ASEAN. Under RCEP, reduced tariffs could make the margins viable, but only if critical parts comply with origin thresholds. If a component sourced from outside the RCEP region exceeds a threshold, that entire unit may lose the preferential rate, undercutting cost assumptions. A rival investor in a similar sector failed to document a non-RCEP part’s origin and ended up paying full duties on a large shipment, erasing projected gains.
Thus, for each product line, investors must run origin simulations under target FTAs and build safeguards in the procurement strategy.
Processing trade: Duty exemptions with compliance rigor
Vietnam’s processing trade regime allows the importation of inputs duty-free, on condition that the finished product is exported. This regime serves as the backbone of many export-oriented industries — textiles, electronics, automotive parts — especially when scale is large and BOM stability is high.
A firm must declare consumptio
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n norms (ratios of input to output), reconcile actual imports with exports, and file reports periodically. Deviation triggers repayment of duties plus fines.
Investors should view duty exemptions as levers demanding high internal rigor. If the BOM is volatile or internal traceability is immature, the compliance cost may outweigh the exemption benefit.
Audits, inspections, and the consequences of non-compliance
Vietnam’s customs audit regime includes desk reviews, post-clearance audits, and on-site inspections. The authorities select targets using risk profiles: high trade volume, repeated exemption use, or anomalies in documentation.
Upon audit initiation, the firm receives formal notice and must deliver evidence such as contracts, invoices, origin certificates, production logs, and accounting records. In severe cases, customs may inspect factory premises and inventory.
The penalties under Decree 128 are substantial. Minor misdeclarations or seal tampering typically fall between US$216 and US$345. More serious violations, such as mislabeling origin or circumventing controlled goods, can attract fines in the thousands of dollars and withdrawal of incentives. Underlying violations, such as failure to retain records or deliberately underreporting relationships between buyers and sellers, incur VND fines ranging from VND 1 million to VND 10 million in local cases. Criminal liability looms if intentional fraud is proven.
Strategic decision tool and scenario
To assist investors, here is a worked scenario that demonstrates how to use a decision tool in practice.
Investor A plans to set up an electronics subassembly business in Vietnam. With 70 percent of inputs from RCEP countries, the duty saving would be 7 percent of the landed value, which means the total cost of imported goods, including duties, freight, and insurance. Compliance costs for origin tracking, supplier audits, and documentation are estimated at 1.5 percent of turnover, which refers to the company’s total sales revenue, reducing the net gain to 5.5 percent.
Audit risk must also be considered. If audited, the company could face repayment of the 7 percent duty plus a 1 percent penalty, creating an 8 percent downside. With a 10 percent chance of this outcome, the expected loss is 0.8 percent. Subtracting this from the earlier gain leaves a net expected benefit of 4.7 percent.
Because this is above the company’s 4 percent hurdle rate, the RCEP origin strategy is justified. This example illustrates how clear numbers on savings, compliance costs, and risks support stronger decisions than those based on intuition alone.
Looking ahead and risk considerations
Vietnam’s customs enforcement is becoming increasingly data-driven. Decree 167/2025 now allows foreign subsidiaries to participate in on-spot export schemes, while new provisions give science and technology firms preferential treatment.
Global trade pressures add to this shifting landscape. The United States has already imposed a dual tariff framework on Vietnamese goods: a 20 percent duty applies broadly, while a 40 percent rate targets exports viewed as higher risk for transshipment. Together, these measures could reduce bilateral trade by as much as US$25 billion and hit major sectors such as electronics, textiles, and furniture.
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Currency dynamics further complicate matters. Because duties are calculated in Vietnamese dong, any depreciation increases the cost of imported inputs and magnifies tariff liabilities.
Future trade agreements are another variable. Talks with Mercosur and the GCC promise new market access but will also introduce fresh rules of origin that businesses must track and comply with.
For investors, the message is clear. Customs strategy in Vietnam must be flexible, striking a balance between compliance readiness and the agility to adjust to changing tariffs, currency fluctuations, and evolving trade frameworks.
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ASEAN Briefing is one of five regional publications under the Asia Briefing brand. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Jakarta, Indonesia; Singapore; Hanoi, Ho Chi Minh City, and Da Nang in Vietnam; besides our practices in China, Hong Kong SAR, India, Italy, Germany, and USA. We also have partner firms in Malaysia, Bangladesh, the Philippines, Thailand, and Australia.
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