In the case of a domestic enterprise importing goods for export but selling them to an export-processing enterprise, the customs procedures and tax policies for the goods are implemented as follows:
1. Regarding Customs Procedures:
Regulations on Export Processing Enterprises (EPE) are as follows:
EPE activities include specialized production of goods for export, providing services for the production of export goods, and engaging in export activities. EPE conducts export activities in export processing zones, industrial zones, and economic zones. Furthermore, EPE can engage in other business activities as per legal regulations and must meet the following conditions:
- The storage area for goods used in export activities must be separated from goods used in other production and business activities.
- Revenues and expenses of export activities and other business activities must be accounted for separately.
- Assets and machinery enjoying tax incentives must not be used for other business activities. In cases of use, tax incentives must be reimbursed as per legal regulations.
(Article 2, 6, Decree No. 35/2022/ND-CP)
Customs procedures for cases involving a change in the intended use of goods:
For imported goods initially intended for:
- Processing,
- Manufacturing of export goods,
- Temporary import for re-export, already cleared or customs-approved.
But if the intended use changes to domestic consumption, a new customs declaration must be submitted.
For policies such as:
- Goods export and import management policies;
- Tax policies for exported and imported goods.
These policies are implemented at the time of filing the new customs declaration. Unless the EPE has fully complied with the policies at the time of the initial customs declaration.
(Article 5, Decree No. 08/2015/ND-CP)
Changing domestic consumption or the intended use of goods that have undergone export and import procedures is carried out after the customs procedure with the completion of a new customs declaration. Taxpayers must declare and pay the applicable taxes and fines (if any)
When EPE purchases goods from domestic enterprises for export but does not export them, they are not required to undergo customs procedures. However, when exporting these goods, they must follow the customs procedures applicable to goods for export.
(Article 21, 77, Circular No. 38/2015/ND-CP)
Therefore, in the case of a domestic enterprise importing goods for export (import declaration code E31) but subsequently not exporting them abroad and selling them to an export-processing enterprise, they must change the intended use of the imported goods. The enterprise should not use export product declaration code E62 (exporting products produced for export).
2. Regarding Value-Added Tax (VAT) when Issuing Invoices to EPE
- EPE registers for VAT with the local tax authority to declare and pay VAT.
- When EPE purchases goods from domestic enterprises, the domestic enterprise issues VAT invoices to EPE. The invoices should clearly indicate the VAT amount as per legal regulations.
- When exporting, EPE issues VAT invoices like other domestic enterprises.
- EPE applies a 0% VAT rate and is eligible for input VAT refund if they meet the conditions for VAT refund.
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