On September 4, 2024, the General Department of Customs issued Official Letter No. 4218/TCHQ-CCHĐH in response to inquiries from the Korean Business Association in Vietnam.
Accordingly, in cases where goods such as components, accessories, and materials are brought into the domestic market for the purpose of replacing, repairing, or upgrading machinery, equipment, and molds of EPEs that have been leased or borrowed by domestic enterprises to support manufacturing activities aligned with the objectives stated in the Investment Registration Certificate or the confirmation document issued by the competent investment registration authority, the EPE must file a temporary export declaration, and the domestic enterprise must complete the temporary import procedures. Upon the conclusion of the lease or loan agreement, the domestic enterprise must perform re-export procedures, and the EPE must complete re-import procedures for the goods that were leased or borrowed. As such, the machinery, equipment, and molds upon re-import must be identical to the goods that were temporarily exported.
Therefore, if the machinery, equipment, or molds have been altered after the aforementioned activities, and are no longer identical to the goods initially temporarily exported, they do not meet the required conditions. Thus, companies involved in such activities to re-import the goods for repair, replacement, or upgrade, and then continue to complete the necessary procedures for leasing or borrowing.
In cases where machinery and equipment that are non-taxable are dismantled or destroyed, and certain parts are recovered for reuse in the maintenance and repair of EPE machinery, and if the EPE wishes to retain certain parts of the machinery and equipment for the purpose of replacement or upgrading other machinery and equipment, the enterprise must clearly specify the intended use of the other machinery and equipment.
Regarding customs procedures and tax policies for indirect materials and consumable goods used for the operation and management activities that are transferred by EPEs to domestic partners under a processing contract: If the processing party imports indirect materials and consumable goods for operation and management purposes, and these goods do not directly constitute part of the exported processed products or participate directly in the processing process, they are not eligible for tax exemption as per regulations.
