If borrowed machinery is imported into an export processing enterprise, what should be done if it breaks during the loan period?

If borrowed machinery is imported into an export processing enterprise, what should you do if it breaks during the loan period?

Borrowed machinery imported into an export processing enterprise, if it is damaged during the loan period, how to handle it, based on Point a, Clause 9, Article 16 of the Law on Export Tax and Import Tax 2016, stipulates:

Tax Free

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9. Goods temporarily imported for re-export or temporarily exported for re-import within a certain period of time, including:

a) Goods temporarily imported for re-export, temporarily exported, re-imported to organize or attend fairs, exhibitions, product introductions, sports, cultural, artistic events or other events; machinery and equipment temporarily imported for re-export for testing, research and product development; machinery, equipment, professional tools temporarily imported for re-export, temporarily exported, re-imported to serve work within a certain period of time or to serve processing for foreign traders, except in the case of machinery, equipment, tools, and means of transport of organizations and individuals that are allowed to temporarily import and re-export to carry out investment projects, construction, installation of works, and serve production;

And based on Clause 1 of Article 21 Circular 38/2015/TT-BTC, amended by Clause 10, Article 1, Circular 39/2018/TT-BTC as follows:

Declaration of change in use purpose, transfer to domestic consumption

1. Principles of implementation

a) Exported and imported goods for domestic consumption or change of use purpose shall comply with the provisions of Clause 5, Article 25 of Decree No. 08/2015/ND-CP amended and supplemented in Clause 12, Article 1 of Decree No. 59/2018/ND-CP;

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d) Goods with change of purpose used or transferred for domestic consumption, taxpayers must declare and pay full taxes and fines (if any) according to regulations.

Accordingly, this case also depends on the business’s handling method.

If machinery is temporarily imported to serve work for a certain period of time or to serve processing for foreign traders, tax exemption will only be granted when the enterprise re-exports the machinery. Here, if the machinery is damaged and still re-exported (it may or may not be repaired), it will still be exempt from tax.

If the machinery is damaged, processed in Vietnam and cannot be re-exported, you must change the type of import and pay full tax (if any).

Can export processing enterprises establish branches?

Whether an export processing enterprise can be established quickly, based on Clause 7, Article 26 of Decree 35/2022/ND-CP as follows:

Special regulations applicable to export processing zones and export processing enterprises

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7. Export processing enterprises are allowed to establish branches according to the provisions of investment law and enterprise law to carry out export processing activities. Branches of export processing enterprises may apply the mechanism for export processing enterprises specified in this Article if they carry out export processing activities in export processing zones, industrial parks, and economic zones and meet the conditions in Clause 2 of this Article.

8. In industrial parks and economic zones, there are export processing enterprises and the mechanism for export processing enterprises is applied if they meet the conditions specified in Clause 2 of this Article.

9. In the export processing zone, there are enterprises specializing in manufacturing and providing services for industrial production.

Accordingly, export processing enterprises are allowed to establish branches according to the provisions of investment law and enterprise law to carry out export processing activities.

There is not enough space to arrange a warehouse to store goods to serve export processing activities of export processing enterprises in export processing zones, can this enterprise be hired from outside?

Then according to Clause 10, Article 26 of Decree 35/2022/ND-CP, then:

In case there is not enough space to arrange a warehouse to store goods to serve export processing activities of export processing enterprises in export processing zones, industrial parks, economic zones, export processing enterprises that rent premises outside industrial parks or economic zones to store goods must be separated from the outside territory by a fence system, with gates and doors, ensuring conditions for inspection, supervision, and control by customs authorities and relevant functional agencies according to applicable regulations. applicable to non-tariff zones specified in the law on export tax and import tax.

Goods storage warehouses outside industrial parks and economic zones are put into use from the date they are confirmed by the competent customs authority to meet the conditions for customs inspection and supervision according to the provisions of tax law and customs law.

After 05 working days from the date the competent customs authority allows it to be put into use, the export processing enterprise must notify the investment registration agency of arranging a warehouse outside the export processing zone, industrial park, or economic zone to store goods and make adjustments to the investment project (if any) according to the provisions of law on investment.