Particular regulations applied to export processing zones, export processing enterprises in Vietnam

Particular regulations applied to export processing zones, export processing enterprises in Vietnam (Internet image) 

Regarding this issue, LawNet would like to answer as follows:

1. What is export processing zone?

According to Clause 2, Article 2 of Decree 35/2022/ND-CP, export processing zone refers to an industrial park specially intended for manufacturing of exported goods, rendering of services meeting the needs of production of exported goods and exporting purposes; which is fenced in under the regulatory provisions applied to the free zones stipulated in law on customs duties.

2. Particular regulations applied to export processing zones, export processing enterprises in Vietnam

Particular regulations applied to export processing zones, export processing enterprises in Vietnam according to Article 26 of Decree 35/2022/ND-CP as follows:

- Documentation requirements, application processes and procedures for establishment of export processing enterprises:

+ Where the process for establishment of an export processing enterprise coincides with the process for grant of the investment registration certificate, the investor shall be required to submit the full text of commitment regarding its competence in conformance to customs inspection and supervision conditions under law on customs duties, together with application documents for grant of the investment registration certificate under law on investment. Investment registration agencies issuing investment registration certificates shall inscribe the objectives of establishment of an export processing enterprise on the investment registration certificate when issuing that investment registration certificate;

+ Where the process for establishment of the export processing enterprise does not coincide with the process for grant of the investment registration certificate, the investor must submit a set of application documents to the investment registration agency where the export processing enterprise is located.

The set of application documents shall include the followings: documents on the investment project required by law on investment; the full text of the commitment regarding its competence in conformance to customs inspection and supervision conditions under law on customs duties.

The investment registration agency shall grant the certificate of registration of the export processing enterprise to the investor within 03 working days of receipt of all required documents prescribed herein with respect to the investment projects that are not classified into the group of investment projects not subject to the requirements for grant of the investment registration certificate under law on investment;

+ With respect to the investment project of the investor of which the consent to the investment policy is required under law on investment, that investor must submit the commitment regarding its competence in conformance to customs inspection and supervision conditions under law on customs duties, together with the request documentation for consent to the investment policy for the investment project under law on investment.

The investment registration agency shall grant the certificate of registration of the export processing enterprise to the investor within 03 working days of receipt of the written consent to the investment policy if the investment project is not classified into the group of investment projects subject to the requirement concerning application for the investment registration certificate, or entry of objectives of establishment of the export processing enterprise in the investment registration certificate when granting the investment registration certificate under law on investment.

- In an industrial park, there may be industrial sections intended for export processing enterprises. Export processing zones, export processing enterprises or industrial sections reserved for export processing enterprises shall be separated from the outside by fences, have welcome, entrance and exit gates, satisfying the requirements concerning supervision and control by customs authorities and relevant functional agencies according to the regulations applicable to free trade zones specified in law on customs duties.

- Export processing enterprises shall be entitled to investment incentives and tax policies applied to free trade zones from the date of entry of the objectives of establishment of export processing enterprises in the investment registration certificate, the revised or updated investment registration certificate or the export processing enterprise certificate of the competent investment registration agencies

. After construction of an export processing enterprise is completed, its conformance to the customs inspection and supervision conditions prescribed in law on customs duties must be certified before its official entry into operation.

Where an export processing enterprise does not obtain certification of conformance to the customs inspection and supervision conditions, it shall not be entitled to tax policies applied to free trade zones. The process for inspecting, certifying an export processing enterprise’s conformance and improvements in conformance to the customs inspection and supervision conditions shall be subject to law on customs duties.

- Any trade in goods between export processing enterprises and other areas within the territory of Vietnam, except free trade zones, shall be defined as an export and import relation, unless otherwise stipulated in point c of clause 4 of Article 26 of Decree 35/2022/ND-CP, and except in the cases where completion of customs procedures prescribed in law on customs is not required, as follows:

+ Customs procedures; customs inspection and supervision; customs duties for exported and imported goods of export processing enterprises shall be subject to regulations as applicable to special customs areas and free trade zones, except special regulations applied to free trade zones inside the perimeter of economic zones;

+ Building materials, stationery, food, foodstuffs, consumer goods from inland Vietnam to build facilities, serving the paperwork, office or administrative purposes and daily needs of employees and staff members of export processing enterprises, shall not be subject to regulations on customs procedures, customs inspection and supervision and customs duties applicable to exported and imported goods in accordance with law. Export processing enterprises and vendors can decide whether they implement procedures for export or import of building materials, stationery, food, foodstuffs and consumer goods from inland areas of Vietnam;

+ Export processing enterprises may sell or liquidate used property and goods into the domestic market under the provisions of law on investment and other regulations of relevant legislation.

At the time of selling or liquidating them into the domestic market, if export or import management policies do not apply, except to the extent that they are put under the control under regulatory requirements or standards, and the specialized inspection that have not yet been carried out upon arrival; the goods are subject to the permit-based management requirements, import thereof must depend on the written consent from the licensing agency.

- Workers and employees of export processing enterprises shall not be obliged to make customs declaration when bringing foreign currency from inland areas of Vietnam to these enterprises and vice versa.

- Export processing enterprises may perform other business transactions under law on investment, law on businesses and relevant regulatory provisions, and ensure conformance to the following requirements:

+ Areas intended for storage of goods needed for export processing activities must be separated from the others;

+ Revenues and expenses related to export processing and other business activities must be recorded separately;

+ Using property, equipment and machinery obtaining tax incentives applied to export processing enterprises for other production and business activities must be prohibited. In case of using property, equipment and machinery obtaining tax incentives applied to export processing enterprises for other production and business activities, tax incentives granted in the form of tax reduction or exemption according to law on taxes must be reimbursed.

- Export processing enterprises may set up branches in accordance with law on investment and law on businesses so that these branches can perform export processing activities.

Branches of export processing enterprises may be entitled to incentive policies the same as those applied to export processing enterprises specified in Article 26 of Decree 35/2022/ND-CP if they carry out export processing activities inside the perimeter of export processing zones, industrial parks, economic zones, and meet the conditions set out in clause 2 of Article 26 of Decree 35/2022/ND-CP.

- Industrial parks or economic zones with export processing enterprises entitled to incentive policies intended for export processing enterprises may apply these particular regulations if they meet the conditions set out in clause 2 of Article 26 of Decree 35/2022/ND-CP.

- These particular regulations shall apply to the export processing zones with enterprises specialized in producing and supplying services for industrial production.

- Through lack of spaces reserved for warehouses or facilities used for storing goods for export processing activities of export processing enterprises inside the perimeter of export processing zones, industrial parks or economic zones, export processing enterprises can outsource spaces outside the perimeter of industrial parks or economic zones to store goods if the conditions specified in clause 2 of Article 26 of Decree 35/2022/ND-CP are satisfied.

Warehouses and facilities for storage of goods that are located outside the perimeter of industrial parks or economic zones may be put to use from the date of the competent customs authority’s certification of the customs inspection and supervision conditions under law on taxes and law on customs.

05 working days after obtaining permission to bring these warehouses and storage facilities into operation from the competent customs authorities, export processing enterprises must notify investment registration agencies of such permission and make any adjustment to the investment project (if any) under law on investment.

-. Export processing enterprises may sell goods into the domestic market. Goods imported from export processing enterprises or export processing zones into the domestic market shall be subject to taxes in accordance with law on customs duties.

- Only investors, workers and employees working for export processing enterprises and persons who do business with export processing enterprises may enter or exit export processing enterprises.

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