Are foreign traders who sell goods to export processing enterprises subject to contractor tax?

Are foreign traders who sell goods to export processing enterprises subject to withholding tax?

Are foreign traders who sell goods to export processing enterprises subject to contractor tax or not, based on Clause 1, Article 1. Circular 103/2014/TT-BTC stipulates:

Applicable subjects

The instructions in this Circular apply to the following subjects (except for the cases stated in Article 2 Chapter I):

1. Foreign business organizations with permanent establishments in Vietnam or without permanent establishments in Vietnam; Foreign business individuals who are residents of Vietnam or not residents of Vietnam (hereinafter collectively referred to as Foreign Contractors, Foreign Subcontractors) doing business in Vietnam or having income arising in Vietnam on the basis of contracts, agreements, or commitments between Foreign Contractors and Vietnamese organizations and individuals or between Foreign Contractors and Foreign Subcontractors to perform part of the work of the Contract. bid.

2. Foreign organizations and individuals provide goods in Vietnam in the form of on-the-spot import and export and generate income in Vietnam on the basis of contracts signed between foreign organizations and individuals with businesses in Vietnam (except for processing and returning goods to foreign organizations and individuals) or distribute goods in Vietnam or provide goods according to the delivery conditions of international commercial terms – Incoterms in which the seller bears risks related to the goods. to Vietnamese territory.

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In case an export processing enterprise purchases goods from a foreign trader, resulting in the foreign trader generating income in Vietnam and not falling into the cases specified in Article 2 of Circular 103/2014/TT-BTC, the foreign trader is still subject to withholding tax.

Since when do export processing enterprises enjoy investment incentives and tax policies for non-tariff zones?

According to Clause 3, Article 26 of Decree 35/2022/ND-CP as follows:

Export processing enterprises are entitled to investment incentives and tax policies for non-tariff zones from the time the investment target for establishing an export processing enterprise is recorded in the Investment Registration Certificate, Adjusted Investment Registration Certificate or Export Processing Enterprise Registration Certificate of the competent investment registration agency.

After completing the construction process, the export processing enterprise must receive confirmation from the competent customs authority that it meets the conditions for customs inspection and supervision according to the provisions of law on export tax and import tax before officially going into operation. In case an export processing enterprise is not certified to meet customs inspection and supervision conditions, it will not be entitled to enjoy tax policies applicable to non-tariff zones.

The inspection, confirmation, and completion of customs inspection and supervision conditions of export processing enterprises shall comply with the provisions of law on export tax and import tax.

Are export processing enterprises allowed to sell goods into the domestic market?

Are export processing enterprises allowed to sell goods into the domestic market? According to Clause 11, 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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10. 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, or economic zones, export processing enterprises may rent space outside industrial zones or economic zones to store goods if they meet the conditions in Clause 2 of this Article. Warehouses storing goods 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 them to be put into use, the export processing enterprise must notify the investment registration agency of the arrangement of the warehouse outside the export processing zone. industrial parks and economic zones to store goods and make adjustments to investment projects (if any) according to the provisions of investment law.

11. Export processing enterprises are allowed to sell goods into the domestic market. Goods imported from export processing enterprises and export processing zones into the domestic market are subject to tax according to the provisions of law on export tax and import tax.

12. Only investors, workers working in export processing enterprises and people who have working relationships with export processing enterprises can enter and exit the export processing enterprise.

Accordingly, export processing enterprises are allowed to sell goods into the domestic market.

Goods imported from export processing enterprises and export processing zones into the domestic market are subject to tax according to the provisions of law on export tax and import tax.