Issue April 2021
Nguyen Thi Ngan
The new Decree No. 18/2021/ND-CP (Decree 18) amending Decree 134/2016/ND-CP on import and export tax will come into effect on 25th April. The prominent point of the Decree is specific regulations on conditions, registration procedure, supervision and management of export processing enterprises (“EPEs”). Procedures for registration to applying EPEs will be simplified and streamlined between investment licensing authorities (DPI or DIZA) and customs agency. Approval of EPEs registration is only based on the commitment for conditions satisfaction of the applicant. The applicant shall have 1 year span from the date of commencement of operation to complete all construction infrastructure to satisfy EPEs conditions.
1. The conditions for customs inspection and supervision for export processing enterprises
According to the Decree 18, the conditions on customs inspection and supervision applicable for EPEs include:
a) Having a hard fence separating from the outside area; having gates/ doors to ensure the delivery of goods in and out of the export processing enterprise through the gate/door.
b) Having a camera system that observes the gate/exit, entry and storage locations anytime, all day (24/24 hours, including day off, holidays); camera data is linked online to the customs office that manages the business and is archived at the export processing enterprise for a minimum of 12 months.
c) Having software to manage imports not subject to tax of the export processing enterprise to report on the import-export-inventory settlement of the use of imports in accordance with the law on customs.
2. Inspection for EPE eligibility
All existing EPEs shall have a span of maximum of 1 year from the effective date of Decree 18 to complete the conditions for customs inspection and supervision and apply for assessment of satisfaction with the Sub-Department of Customs where those EPEs are administered. Accordingly, the Sub-Department of Custom undertakes at-site evaluation of satisfaction of customs supervision and inspection conditions and issues a written confirmation of eligibility for the export processing enterprise.Evaluation of satisfaction with customs inspection and supervision conditions in accordance with Decree 18 shall be applicable to both EPEs registered under the new regulations and EPEs that have been issued with Investment Registration Certificates prior to the effective date of Decree 18 and in normal operation, including EPEs that have been certified by the customs office for their conditions for customs inspection and supervision before the effective date of Decree 18.
At the expiry of 01 year deadline, if the export processing enterprise (i) fails to give notice; or (ii) fails to meet the conditions of customs inspection and supervision, the tax policy for the non-tariff area shall not be applied from the date above the 1-year time limit. Consequently, the EPE is obliged to return to the State all unpaid taxes due to preferential treatment of EPEs.