An export processing zone is an industrial park specializing in the production of export goods, provision of services for export production and export activities, and is established according to the conditions, order and procedures applicable to industrial parks. EPE (Export Processing Enterprise) is an enterprise located in an export processing zone (both established and operating) or not located in an export processing zone but exports all manufactured products. The State has policies to support and encourage EPE development through tax incentives.

Therefore, Hong Bang Law would like to send to customers the following advice about the Tax policy for enterprises located in an export processing zone.

Legal grounds

• Decree 82/2018/ND-CP on the management of industrial parks and economic zones
• Circular 219/2013/TT-BTC on value-added tax (Article 2)
• Circular 78/2014/TT-BTC (regarding corporate income tax, Article 19, Clause 4)
• Circular 151/2014/TT-BTC (regarding corporate income tax Article 6)
• Decree 46/2014/ND-CP (regarding land use levy incentives, point b, Clause 3, Article 19)
• Law on export tax and import tax 2016

Tax incentives

Export processing enterprises may apply regulations for separate customs areas and non-tariff zones, except for separate regulations applicable to non-tariff zones in border-gate economic zones.

Corporate income tax

Pursuant to: Clause 4, Article 19 of Circular 78/2014/TT-BTC guiding Decree 218/2013/ND-CP stipulating and guiding the implementation of the Law on Corporate Income Tax.

• Export processing enterprises are also entitled to 2 years of tax exemption and a 50% reduction of payable tax amounts for the next 4 years for incomes from the implementation of new investment projects.
• Export processing enterprises are entitled to the tax rate of 17% from January 1, 2016, when the export processing enterprises carry out new investment projects in difficult socio-economic areas.
• And the export processing enterprise itself is also an enterprise in the difficult socio-economic area as prescribed in Section 55, Appendix II issued together with Decree 118/2015/ND-CP.

(See the Appendix issued together with Decree 218/2013/ND-CP, now Appendix II to Decree 118/2015/ND-CP (Article 66 Decree 118/2015/ND-CP).

Value Added Tax 

Pursuant to: Clause 20, Article 4 of Circular 219/2013/TT-BTC on value-added tax

“Article 4. Entities not required to pay VAT: Goods transshipped or transited through the Vietnamese territory; goods temporarily imported for re-export; goods temporarily exported or re-imported; raw materials and supplies imported for the production or processing of goods for export according to the export production and processing contracts signed with foreign parties.

• Goods and services are traded between foreign countries and non-tariff zones and between non-tariff zones.
• Non-tariff zones include: export processing zones, export processing enterprises, tax-suspension warehouses, tax-suspension zones, bonded warehouses, special economic and commercial zones, commercial-industrial zones and other economic areas approved established and enjoy tax incentives like non-tariff zones under the Prime Minister’s Decision. The relationship of buying, selling and exchanging goods between these zones and the outside world is an import and export relationship.
• Export processing enterprises are not subject to VAT for goods sold and services provided directly to organizations and individuals in non-tariff zones.
• For export processing enterprises, when selling goods to domestic enterprises, the export processing enterprises must declare and pay Value Added Tax with the local tax authorities.

Import and export tax

Pursuant to: Point c, Clause 4, Article 2 of the Law on Import Tax and Export Tax 2016

• Goods exported from non-tariff zones to foreign countries; goods imported from abroad into non-tariff zones and used only in non-tariff zones; Goods moved from one non-tariff area to another are not subject to tax.
• Export processing enterprises are located in non-tariff zones, so they will not be subject to import and export tax in the above cases.
• Export processing enterprises and sellers to export processing enterprises may choose to carry out or not carry out export and import procedures for building materials, stationery, food, foodstuffs and consumer goods from inland Vietnam.
• Customs procedures, customs inspection and supervision for exported and imported goods of export processing zones and export processing enterprises shall comply with the law on customs.
• The goods exchange relationship between export processing zones, export processing enterprises and other areas in the territory of Vietnam, other than non-tariff zones, is an import and export relationship, except for the cases specified in Clause 1 of this Article. 3 This Article and cases of non-customs procedures shall be prescribed by the Ministry of Finance.
• Export processing enterprises may sell into the domestic market their liquidated assets and goods according to the provisions of the law on investment and trade. At the time of sale or liquidation to the domestic market, no policy on management of exported or imported goods shall apply, unless the goods are subject to management according to conditions, standards, and specialized inspection has not yet been carried out. import; goods under the management of a license must be approved in writing by the import licensing agency.
• Officials and employees working in export processing zones, export processing enterprises, when bringing foreign exchange from inland Vietnam into export processing zones, export processing enterprises and vice versa are not required to declare customs.
• When an export processing enterprise is permitted to do business in goods trading and activities directly related to the purchase and sale of goods in Vietnam, it must open separate accounting books for revenue and expenses related to the purchase and sale of goods. sell goods in Vietnam and arrange a goods storage area separate from the goods storage area in service of production activities of export processing enterprises or establish a separate branch outside the export processing enterprise or processing zone. output to perform the operation this one.

Land use fees

Pursuant to: Point b, Clause 3, Article 19 of Decree 46/2014/ND-CP: “Exemption from land rent and water surface rent after the period of land rent or water surface rent exemption for the period of capital construction as prescribed in Clause 2 of this Article, specifically as follows: b) Seven (7) years for investment projects in areas with difficult socio-economic conditions”

• Export processing enterprises are exempt from land rent for 07 years

Services provided by Hong Bang Law

Hong Bang Law is a company with 10 years of experience in consulting in the fields of foreign investment, tax, and finance. We have supported many foreign investors, accompanying them throughout the implementation of investment projects and activities in Vietnam, especially in the field of taxation.

Hong Bang Law will accompany customers, providing tax consulting and support services for export processing enterprises including:

• Comprehensive consultation on the investment process in export processing zones, tax issues for export processing enterprises;
• Registration service for business tax identification number;
• Service of declaring contractor tax on each arising, monthly basis;
• Service of corporate tax finalization;
• Service of confirming corporate tax obligations;
• Service of performing other tax procedures.Processing establishment and execution of authorized transactions, regularly informing about developments and proposing new ideas (note: if there are adjustments or supplements to the content of the authorization, rights must be made in a new document);
• Handing over the work results after successfully performing the authorized work.

If you need more detailed advice and answers as well as how to access this service, please contact directly our Lawyer Nhat Nam via hotline: 0912.35.65.75, 0912.35.53.53 or call the toll free legal consultation hotline 1900.6575 or send a service request via email: lienheluathongbang@gmail.com

Wishing you and your family good health, peace and success!

Best regards!