Export Processing Enterprises in Vietnam: Rules on Invoices & Customs

When an export processing enterprise chooses the change-of-use-purpose form when selling goods domestically without completing customs procedures, does it issue an invoice? When choosing on-spot import/export, when selling goods domestically, the export processing enterprise carries out on-spot export procedures — does it issue a value added tax invoice?

1. What is an export processing enterprise?

Under Clause 21 of Article 2 of Decree 35/2022/ND-CP (effective from July 15, 2022), an export processing enterprise is an enterprise carrying out export processing activities in export processing zones, industrial parks and economic zones.

2. Must an export processing enterprise choosing the change-of-use-purpose form when selling goods domestically issue an invoice?

Under Decree 123/2020/ND-CP and Circular 78/2021/TT-BTC on e-invoices, when selling goods or providing services, the seller must issue an e-invoice to the buyer, including for goods used for promotion, advertising, giving or gifting (except goods in internal circulation or for internal consumption to continue the production process).

Thus, an export processing enterprise may sell to the domestic market its liquidated assets and goods as prescribed by law, but must still issue invoices as prescribed. In this case, the value added tax invoice is used and the value added tax rate remains as for ordinary goods (not subject to the 0% rate under the 0% tax rate provisions of the Law on Value Added Tax 2024 (No. 48/2024/QH15)).

Pursuant to Article 74 of Circular 38/2015/TT-BTC, as amended and supplemented by Clause 50 of Article 1 of Circular 39/2018/TT-BTC, cases where export processing enterprises and their partners may choose to complete or not complete customs procedures include:

– Imported goods serving the production of export products of an EPE must complete customs procedures as prescribed and be used for the correct production purpose, except for the following cases where the EPE and its partners may choose to complete or not complete customs procedures:

+ Goods bought, sold, leased or lent between EPEs. Where goods are raw materials, supplies, machinery or equipment of a processing contract between EPEs, they shall follow Clause 3 of Article 76 of this Circular;

+ Goods being construction materials, stationery, food, foodstuffs and consumer goods purchased from the domestic market for construction works, office administration and the daily life of officers and workers working at the EPE;

+ Goods circulated internally within an EPE or between EPEs in the same export processing zone;

+ Goods of EPEs belonging to a group or system of companies in Vietnam with dependent accounting;

+ Goods brought into or out of the EPE for warranty, repair or to perform certain stages in production such as: inspection, classification, packaging and repackaging. Where customs procedures are not completed, the EPE prepares and archives documents and detailed books tracking goods brought in and out in accordance with the regulations of the Ministry of Finance on goods trading, accounting and auditing regimes, clearly stating the purpose and source of the goods.

– Goods imported by the EPE from abroad for which all taxes have been fully paid and all import management policies have been fully implemented as for imported goods not enjoying the regimes and policies applicable to export processing enterprises, when exchanged or traded with domestic enterprises, do not require customs procedures. Goods purchased by the EPE from the domestic market for which all taxes have been fully paid as for enterprises not enjoying the regimes and policies applicable to export processing enterprises do not require customs procedures for such trading. Where the EPE purchases from the domestic market goods subject to export tax rates, customs procedures must be completed, except where such goods are used as raw materials and consumable supplies in the EPE’s production process (Example: coal used in the kiln burning process serving the EPE’s production)

3. Must an export processing enterprise choosing on-spot import/export when selling goods domestically issue an invoice?

Pursuant to Clause 3 of Article 53 of Circular 38/2015/TT-BTC (as amended and supplemented by Clause 33 of Article 1 of Circular 39/2018/TT-BTC), which specifically provides as follows:

For on-spot export goods, goods temporarily exported and re-imported with a change of use purpose, goods from the domestic market sold into a non-tariff zone in a border-gate economic zone or export processing zone, an export processing enterprise, or goods of a domestic enterprise exported for processing for an export processing enterprise, the customs documents are the export customs declaration and the import customs declaration confirmed as cleared.

Customs procedures for on-spot export and import goods specified in Clause 5 of Article 86 of Circular 38/2015/TT-BTC (as amended by Clause 58 of Article 1 of Circular 39/2018/TT-BTC) are specifically as follows:

– Responsibilities of the exporter:

+ Declare information on the export customs declaration and declare combined transport, clearly stating in the “Bonded transport destination” box the code of the location of the Customs Sub-department handling import customs procedures, and in the “Enterprise internal management number” criterion on the export declaration, declare as follows: in the “Other notes” box on the paper customs declaration;

+ Complete goods export procedures as prescribed;

+ Notify the completion of export customs procedures so that the importer completes import procedures and deliver the goods to the importer;

+ Receive information on the on-spot import declaration having completed customs procedures from the on-spot importer to carry out subsequent procedures.

– Responsibilities of the importer:

+ Declare information on the import customs declaration within the prescribed time limit, clearly stating the corresponding on-spot export customs declaration number in the “Enterprise internal management number” box as follows: the corresponding on-spot export customs declaration number, or in the “Other notes” box on the paper customs declaration;

+ Complete goods import procedures as prescribed;

+ Immediately after completing on-spot import procedures, notify the completion of procedures to the on-spot exporter for subsequent procedures;

+ Only put goods into production and consumption after the imported goods have been cleared.

– Responsibilities of the customs authority handling export procedures:

+ Complete customs procedures for export goods as prescribed in Chapter II of this Circular;

+ Monitor on-spot export customs declarations that have completed customs procedures but have not yet undergone on-spot import procedures, and notify the Customs Sub-department expected to handle import procedures for management, monitoring and urging the on-spot importer to complete customs procedures.

– Responsibilities of the customs authority handling import procedures:

+ Receive and inspect according to the channeling results of the System. Where physical inspection of goods is required, if the goods have been physically inspected at the export Customs Sub-department, the Customs Sub-department handling import procedures is not required to physically inspect the goods;

+ For on-spot export and import goods as designated by foreign traders, monthly summarize and list the cleared on-spot import customs declarations in Form No. 01/TB-XNKTC/GSQL of Appendix V issued together with this Circular and send them to the tax authority directly managing the on-spot importing organization or individual;

+ Coordinate with the Customs Sub-department handling export procedures to urge the on-spot importer to complete customs procedures.

In this case, you will use a commercial invoice instead of a value added tax invoice.