The difference between an export processing enterprise and a manufacturing enterprise

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(a)     Export processing enterprise means an enterprise that is established and operates in an export processing zone or exports all its products and operates in an industrial zone or economic zone.

(b)     Sojourn or temporary residence in export processing enterprises

-        Only investors and persons working in export processing enterprises and persons having working relationships with agencies, organizations and enterprises in export processing enterprises may enter and leave these enterprises. These entities may not stay in export processing zones and enterprises, unless they are permitted by the Management Board.

In case of necessity, foreign experts may temporarily reside at enterprises in industrial zones or export processing zones under regulations of provincial-level Peoples Committees.

-        Manufacturing enterprise is not limited in sojourn or temporary residence.

(c)      Export processing enterprises may apply legal provisions applicable to non-tariff area. The law-specified status of export processing enterprises is stated in their investment certificates.

Therefore, import tax and domestic tax isn’t applicable to goods export processing enterprise produced. However, these taxes is applicable mormally to manufacturing enterprise.

(d)     Export processing enterprises are separated from inland Vietnam with fence and wall systems which have entry and exit gates and doors to ensure conditions for the control by customs and relevant functional agencies.

(e)      Export processing enterprises may purchase office equipment and stationery, food, foodstuffs and consumer goods from inland Vietnam to serve the administration of their office apparatus and daily-life activities of their staff members and workers. Export processing enterprises may choose to or not to carry out import, export and customs procedures for these goods.

(g)     Customs procedures for inspection and supervision of exported and imported goods of export processing enterprises comply with the customs law.

(f)      Relations of goods exchange between export processing enterprises and other areas in the Vietnamese territory, except for non-tariff areas, are regarded as import and export relations.

(h)     When carrying foreign currencies from inland Vietnam into export processing enterprises and vice versa, staffs and workers working in these export processing enterprises are exempt from customs declaration.

(i)      Taxes:

Value-Added Tax:       

VAT rate for providing services to the export processing with the goods and export services is 0%.

Nevertheless, Ministry of Finance enacted a Dispatch No 1505/BTC-TCT dated on 27/10/2009 detailing that: "services provided by domestic enterprises to organizations, individual of non tariff zone shall be not allowed to apply the 0% tax rate  including: rental, meeting halls, offices, hotels, warehouses, service of transporting the labors, foodservices (excluding the provision of industrial foods, foodservices in non tariff zone). This regulation shall be also applied for the export processing enterprises.

Import and Export Tax

-        Under the Clause 2 Artcille 21 of Decree No 29/2008/NĐ-CP dated on 14/3/2008 of Government regulating about the industrial zone, export processing zone, and economic zone.

Under the regulation, the enterprises exporting 100% of products which are producted from exported raw materials shall be duty free to manufacture the export goods and shall pay the tax when providing the goods to domestically consume.

-        Manufacturing enterprises mustn’t pay tax for domestic consumption of goods/services.

-        In addition, export processing enterprises uses domestic materials to produce goods need to monitor the supervision of customs.

Enterprise Income Tax

Export processing enterprise pays enterprise income tax and  as manufacturing enterprise and has incentives as stipulated under Decree No. 122/2011/ND-CP dated December 27, 2011 of the Government and Decree No.124/2008/ND-CP dated December 11, 2008 of the Government.

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