Profile
Vietnamese
THE TAX INCENTIVES FOR EXPORT PROCESSING ENTERPRISES
Currently, there are many foreign investors who have established and are in the process of establishing businesses in export processing zones in Vietnam due to the tax incentives they receive. So, what are the tax incentives for export processing enterprises in Vietnam? Join Siglaw to learn more in the article below:
What is an export processing enterprise??
An export processing enterprise is a business established and operating in an export processing zone, industrial zone, or economic zone.
In this context, export processing activities involve the production of export goods, providing services for the production of export goods, and export activities.
Areas of operation for export processing enterprises:
- Within industrial zones, there may be industrial subdivisions designated for export processing enterprises.
- Export processing zones, export processing enterprises, and industrial subdivisions for export processing enterprises are separated from the outside territory by:
- A system of walls, with gates for entry and exit;
- Ensuring conditions for inspection, supervision, and control by customs authorities and relevant functional agencies according to regulations applicable to free trade zones as stipulated in export and import tax laws.
Tax incentives for export processing enterprises
Export processing enterprises enjoy investment incentives and tax policies in Vietnam, including:
Exemptions from export and import taxes
According to Point c, Clause 4, Article 2 of the 2016 Law on Export Tax and Import Tax, the following types of goods are exempt from taxation:
- Goods transferred by enterprises from one free trade zone to another.
- Goods imported by enterprises from abroad into the free trade zone and used solely for production or services within the free trade zone.
- Goods exported by enterprises from the free trade zone to foreign countries.
Since export processing enterprises operate within the free trade zone, they are exempt from export and import taxes on goods in the cases mentioned above.
Corporate income tax reduction
According to Clause 4, Article 19 of Circular 78/2014/TT-BTC, export processing enterprises benefit from a tax rate of 17% starting from January 1, 2016, if they carry out new investment projects in economically and socially disadvantaged areas as listed in Appendix II of Decree 118/2014/ND-CP (Article 66 of Decree 118/2014/ND-CP).
Additionally, export processing enterprises are exempt from corporate income tax for the first two years and receive a 50% reduction on the tax payable for the following four years on income generated from new investment projects.
Value added tax exemption and reduction
The exchange of goods between export processing enterprises and the free trade zone is exempt from value-added tax (VAT). Furthermore, when export processing enterprises export goods outside, they must complete all procedures similar to regular enterprises. If they meet the requirements specified in Circular 219/2013/TT-BTC from the Ministry of Finance, they will benefit from a VAT rate of 0%.
Phone: (+84) 961 366 238
Email:
Headquarters: No.44/A32-NV13, Gleximco A, Le Trong Tan street, An Khanh, Hoai Duc, Ha Noi, Vietnam.
Southern branch: A9.05 BLOCK A, SkyCenter Building, 5B Pho Quang Street, Ward 2, Tan Binh District, Ho Chi Minh City, Vietnam.
Central branch: 177 Trung Nu Vuong, Hai Chau District, Da Nang City
Facebook: https://www.facebook.com/hangluatSiglaw
