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Industrial Factories for Export Processing Enterprise (EPE) in Vietnam

RSL Group – Export Processing Enterprises (EPE) is a popular investment vehicle for foreign investors in Vietnam and plays an important role in our country’s economy. The article below will provide basic information about export processing enterprises (EPEs) and some remarks on the construction of industrial factories for export processing enterprises.

I. Export processing enterprise (EPE)

1. What is an export processing enterprise?

According to Clauses 20 and 21, Article 2 of Decree 35/2022/ND-CP, an export processing enterprise (EPE) means an enterprise conducting export processing activities in export processing zones, industrial zones and economy zones. In particular, export processing refers to a specialized act of manufacturing of exported commodities and provision of services for the production of exported products and exportation.

2. Preferential policies for export processing enterprise

Value Added Tax incentives (VAT)

According to the provisions of Clause 20, Article 4 of Circular 219/2013/TT-BTC, export processing enterprises will not be subject to value added tax (VAT).

Corporate Income Tax incentives (CIT)

According to the provisions of Clause 4, Article 19 of Circular 78/2014/TT-BTC, export processing enterprises are entitled to a tax rate of 17% from January 1, 2016, when export processing enterprises carry out investment projects. in difficult socio-economic areas in the Appendix issued with Decree 218/2013/ND-CP, now Appendix II of Decree 118/2014/ND-CP (Article 66 of Decree 118/2014 /ND-CP).

At the same time, tax exemption for the first two years, 50% decrease in the 17% tax rate due over the next 4 years for income from implementing new investment projects specified in Clause 4, Article 19 of Circular No. 78/ 2014/TT-BTC as above (Article 6 of Circular 151/2014/TT-BTC). For businesses that have not yet made a profit, there is a maximum of 3 additional years of tax exemption in the first period.

Export and import tax incentives

Exporting enterprises exempt import taxes on imported goods to create fixed assets; Raw materials, supplies, and components imported for production according to the provisions of law on export tax and import tax.

Industrial Factories for Export Processing Enterprise (EPE) in Vietnam - RSL Group-1

3. Conditions for establishing an export processing enterprise

According to the provisions of Clause 2, Article 26 of Decree 35/2022/ND-CP, when investors want to establish an export processing enterprise, it is necessary to meet the following conditions:

  • Export processing zones, export processing enterprises and industrial zones for export processing enterprises are separated from the outside territory by a fence system, with gates and doors;
  • Must ensure conditions for inspection, supervision and control by customs authorities and relevant functional agencies according to regulations applicable to non-tariff zones in accordance with the tax law. export, import tax;
  • Export processing enterprises that want to enjoy investment incentives and tax policies for non-tariff zones must be certified by a competent customs authority that they meet the conditions for customs inspection and supervision according to the regulations on export tax and import tax before officially going into operation.

II. Industrial factories for export processing enterprise

Industrial Factories for Export Processing Enterprise (EPE) in Vietnam - RSL Group

Conditions for building EPE factories are specified in Article 28A of Decree 18/2021/ND-CP stipulating conditions for customs supervision and inspection and application for tax policies on exporting processing enterprises (EPE) that are free trade zones (FTZ):

  • There are hard fences that separate the EPE from the outside; there are gates/doors that are the only ways for goods to enter and leave the EPE;
  • There are surveillance cameras at the entrances and exits where goods are stored throughout the day (24/24 hours, including days off and holidays); images recorded by these cameras shall be transmitted to the supervisory customs authority of the EPE and retained at the EPE for at least 12 months.

The Director of the General Department of Customs shall prescribe the format of surveillance camera data to be exchanged between customs authorities and EPEs mentioned in Point B of this Clause.

  • There is software for management of duty-free goods of the EPE serving preparation of reports on receipt, discharge, inventory and use of imports required by customs laws.

Above we have provided information including concepts, preferential policies and conditions for establishing export processing enterprises, as well as conditions of industrial factories for export processing enterprises. Read more articles here.