Regulations on export processing enterprises according to Vietnamese law

When an export processing enterprise chooses to change the purpose of use when selling goods domestically without going through customs procedures, will they issue an invoice? When choosing the form of on-site import and export, when selling goods domestically, the export processing enterprise must carry out on-site export procedures and issue value-added invoices?

1. What is an export processing enterprise?

According to the provisions of Clause 21, Article 2 of Decree 35/2022/ND-CP (Effective from July 15, 2022) Export processing enterprises are enterprises that carry out export processing activities in export processing zones, industrial parks and economic zones.

2. Does an export processing enterprise that chooses to change the purpose of use when selling goods domestically need to issue an invoice?

Pursuant to the provisions in Point b, Clause 1, Article 16 of Circular 39/2014/TT-BTC, amended by Point a, Clause 7, Article 3, Circular 26/2015/TT-BTC) on invoices for specific goods and services as follows: The seller must issue an invoice orders when selling goods and services, including cases where goods and services are used for promotion, advertising, or sample products; goods and services used to give, donate, donate, exchange, and pay instead of wages to employees (except for goods circulated internally, consumed internally to continue the production process.)

Thus, export processing enterprises can sell into the domestic market the liquidated assets of the enterprise and goods according to the provisions of law, but must still issue invoices according to regulations. In this case, a value-added invoice will be used and the value-added tax rate in this case remains the same as for normal goods (not subject to the 0% tax rate according to Article 9 of Circular 219/2013/TT-BTC).

Pursuant to Article 74 of Circular 38/2015/TT-BTC, amended and supplemented by Clause 50 of Article 1 Circular 39/2018/TT-BTC on cases where export processing enterprises and partners of export processing enterprises can choose to carry out or not carry out customs procedures, including:

– Goods imported to serve the production of export products of an EPE must carry out customs procedures according to regulations and be used for the correct production purpose, except for the following cases where the EPE and its partners can choose to carry out or not to carry out customs procedures:

+ Goods bought, sold, rented, borrowed between EPEs. In case the goods are raw materials, supplies, machinery and equipment of processing contracts between EPEs, the provisions in Clause 3, Article 76 of this Circular shall comply;

+ Goods are construction materials, stationery, food, foodstuffs, and consumer goods purchased from the domestic market for construction projects, serving the operation of the office apparatus and daily activities of officials and workers working at the EPE;

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

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

+ Goods brought into or out of the EPE for warranty, repair or some stages in production activities such as: inspection, classification, packaging, repackaging. In case of not carrying out customs procedures, the export processing company prepares and stores documents and detailed books to monitor incoming and outgoing goods according to the regulations of the Ministry of Finance on buying and selling goods, accounting and auditing regimes, clearly identifying the purpose and source of goods.

– For goods imported by EPEs from foreign countries that have fully paid all taxes and have fully implemented import goods management policies according to regulations such as imported goods without benefits and policies applicable to export processing enterprises, when exchanging and buying and selling these goods with domestic enterprises, customs procedures are not required. For goods that EPEs purchase from the domestic market and have fully paid all taxes according to regulations, such as enterprises that do not enjoy the benefits and policies applicable to export processing enterprises, this purchase and sale activity does not have to go through customs procedures. In case an EPE purchases from the domestic market goods with export tax rates, customs procedures must be completed, except in cases where these goods are used as raw materials and consumables in the production process of the EPE (For example: coal used in the process of burning furnaces for the EPE’s production).

3. Do export processing enterprises that choose on-site import and export need to issue invoices when selling goods domestically?

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

For on-site exported goods, temporarily exported – re-imported goods to change the purpose of use, Goods from the inland sold into non-tariff zones in border gate economic zones or export processing zones, export processing enterprises, goods of domestic enterprises exported and processed for export processing enterprises are export customs declarations and import customs declarations that have been confirmed for customs clearance.

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

– Responsibilities of the exporter:

+ Declare information on the export customs declaration and combined transportation declaration, clearly stating in the box “Destination for tax-protected transportation” as the code The location of the Customs Branch carrying out import customs procedures and the criteria box “Internal management number of the enterprise” on the export declaration must be declared as follows: in the “Other records” box on the paper customs declaration;

+ Carry out export procedures for goods according to regulations;

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

+ Receive information on on-site import declarations that have completed customs procedures from on-site importers to carry out the next procedures.

– Responsibilities of importers:

+ Declare information on import customs declarations within the prescribed time limit, clearly stating the corresponding on-site export customs declaration number in the box “Management number”. internal enterprise management” as follows: corresponding on-site export customs declaration number or in the “Other records” box on the paper customs declaration;

+ Carry out import procedures for goods according to regulations;

+ Immediately after completing on-site import procedures, notify the on-site exporter of the completion of procedures to carry out further procedures. according to;

+ Goods can only be put into production and consumption after imported goods have been cleared through customs.

– Responsibilities of the customs authority where export procedures are carried out:

+ Carry out customs procedures for exported goods according to the provisions of Chapter II of this Circular;

+ Monitor on-site export customs declarations that have completed customs procedures but have not yet carried out on-site import procedures and notify the Customs Branch where import procedures are expected to be carried out to manage, monitor and urge on-site importers to carry out customs procedures. customs.

– Responsibilities of the customs authority where import procedures are carried out:

+ Receive and check according to the system’s classification results. In case of physical inspection of goods, if the goods have been physically inspected at the Export Customs Sub-Department, the Customs Sub-Department where import procedures are carried out does not have to physically inspect the goods;

+ For on-spot export and import goods as designated by foreign traders, monthly synthesize and make a list of on-spot import customs declarations that have been cleared according to form No. 01/TB-XNKTC/GSQL Appendix V issued together with this Circular sends it to tax authorities directly managing organizations and individuals importing on the spot;

+ Coordinate with the Customs Branch where export procedures are carried out to urge importers on the spot to complete customs procedures.

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