EXPORT PROCESSING ENTERPRISE AND CONSIDERATIONS FOR OPERATIONS

An export processing enterprise is specialized enterprise focused on the production and export of goods, playing a crucial role in attracting investment and promoting international trade in Vietnam. Beside variety of preferential policies and strict regulations, export processing enterprise must adhere to legal requirements to ensure effective operations. The following outlines the legal regulations and key considerations for export processing enterprise regarding reporting, taxation, and business activities.

What is an export processing enterprise?

According to the provisions of Decree No. 35/2022/ND-CP on the management of industrial zones and economic zones, export processing enterprises are those that specialize in manufacturing goods for export and providing services to support export production activities. Export processing enterprises are established and operate in export processing zones or industrial zones designated for export processing functions.

Additionally, export processing enterprises must register business lines focused on export and commit to serving foreign markets.

How is the scope of investment and business activities?

Export processing enterprise primarily operates in the fields of manufacturing and exporting goods. They can also sell goods in the domestic market; however, it is important to note that goods imported from export processing enterprises or export processing zones into the domestic market are subject to taxes in accordance with the laws on export and import duties.

Under Decree No. 31/2021/ND-CP and the 2020 Investment Law, export processing enterprise seeking to expand or modify their business lines must apply for an amendment to their Investment registration certificate. These amendments must follow the required procedures and meet relevant legal conditions, ensuring the export processing enterprises operations remain aligned with the policies of the industrial or export processing zone.

How is the reporting regime for export processing enterprise regulated?

Under current legal regulations, export processing enterprise must submit quarterly and annual reports on production and business activities, labor, and finances.

In addition to regular reports, export processing enterprise must comply with periodic and ad-hoc inspections regarding environmental protection, labor safety, taxation, and customs. If violations occur, the enterprises may face administrative fines or temporary suspension of operations in accordance with the provisions of Decree No. 128/2020/ND-CP, as amended by Decree No. 102/2021/ND-CP.

Are export processing enterprise entitled to tax and customs incentives?

Export processing enterprise is exempt from import taxes on raw materials and components used for the production of export goods and may claim tax refunds upon exporting their products abroad. These provisions significantly reduce production costs and enhance competitiveness.

What are the requirements on environmental protection and social responsibility?

Export processing enterprises must establish waste treatment systems that meet standards and periodically submit environmental impact assessment reports to the appropriate authorities.

Moreover, export processing enterprise is required to comply with regulations regarding employee benefits and working conditions, including insurance, wages, and labor safety. Enterprises that violate employee rights may face administrative penalties or difficulties in maintaining operational permits.

Violations are strictly penalized, including fines, suspension of operations, or even revocation of licenses in cases of severe non-compliance.

>> PROCEDURE FOR ESTABLISHING EXPORT PROCESSING ENTERPRISES https://linconlaw.vn/procedure-for-establishing-export-processing-enterprises/

>> AREAS ELIGIBLE FOR INVESTMENT INCENTIVES – HOW TO DETERMINE https://linconlaw.vn/areas-eligible-for-investment-incentives-how-to-determine/

>> PENALIZING PROJECT OWNER FOR LACK OF FOREIGN CONTRACTOR LICENSE https://linconlaw.vn/penalizing-project-owner-for-lack-of-foreign-contractor-license/