1. What’s the export processing zone?

Before learning in detail about operational documents on foreign investment projects inside and outside export processing zones, we hope that readers will clearly understand the concept of “Export Processing Zones”.

According to the provisions of Clause 2, Article 2 of Decree No. 35/2022/ND-CP, an export processing zone is a special industrial park dedicated to the production of goods for export, providing support services for produce export goods and carry out export activities. This export processing zone must be divided and isolated from the outside area according to regulations applicable to non-tariff zones, as stipulated in the law on export tax and import tax.

2. Special conditions for foreign investment projects inside and outside export processing zones

To meet the legal documents certifying foreign investment projects inside and outside export processing zones, enterprises must properly and fully meet the following requirements:

2.1. About profession

Export processing enterprises operate in the manufacturing sector of industrial goods for export.

As specified in Annex I, Section A of Decree No. 31/2021/ND-CP, foreign investors shall not invest in industries and occupations that do not have access to the market. These sectors and occupations that do not have access to the market are specifically regulated.

In order to invest in industries accessing the market, foreign investors must comply with the regulations applicable to such industries for foreign investors. Regulations on conditional market access (including charter capital share of foreign investors in economic institutions, forms of investment, scope of investment activities, capabilities of investors, partners in investment activities) are detailed in Annex I, Item B of Decree 31/2021/ND-CP.

2.2. About equipment & infrastructure

For foreign investment projects within and outside the export processing zone, the requirements for infrastructure and equipment are also clearly specified:

Within the industrial zone, there may be industrial subdivisions reserved for export processing enterprises. Export processing zones, export processing enterprises and industrial subdivisions for export processing enterprises are isolated from external territory by a barrier system with gates and entrances. This ensures the conditions for inspection, supervision and control of customs authorities and related authorities in accordance with regulations applicable to non-tariff zones, as stipulated in the law on export duties and import duties.

2.3. Incentives for export processing enterprises

Enterprises carrying out foreign investment projects within and outside the export processing zone will enjoy the following benefits: :

First, on corporate income tax incentives:

As stipulated in clause 4 of Article 19 of Circular 78/2014/TT-BTC, export processing enterprises shall enjoy a tax rate of 17% as of 01 January 2016, when implementing new investment projects in disadvantaged socio-economic areas detailed in Annex to Decree 218/2013/ND-CP, amended and supplemented by Annex III to Decree 31/2021/ND-CP, specifically section 55.

At the same time, export processing enterprises are exempt from taxation within two years and reduce the amount of taxes payable over the next four years for income from the implementation of new investment projects as stipulated in clause 4 of Article 19 in Circular 78/2014/TT-BTC as stated (Article 6 Circular 151/2014/TT-BTC).

Secondly, regarding land use preferences:

Export processing enterprises are exempt from land rent for 7 years as stipulated in point B, Clause 3 of Decree 46/2014/ND-CP.

Third, on export – import tax incentives:

According to paragraph c of clause 4 of Article 2 of the Export Tariff Law, import duties in 2016, export goods from non-tariff-bearing region to foreign countries, import goods from foreign countries to non-tariff-bearing region only, nor will goods transferred from one tariff-free zone to another tariff-free zone.

Export processing enterprises located in the region are not subject to tariffs, so they will not be subject to export or import duties in the above cases.

3. Foreign investment project activities inside and outside export processing zones

According to the provisions of Article 62 of Decree 31/2021/ND-CP, investors in foreign investment projects within and outside the export processing zone may carry out the following activities:

1. To rent or purchase factories, offices and warehouses that have been built for use in production and business activities.
2. Using infrastructure engineering works, service works have been built by paying infrastructure user fees. These include transportation, electricity, water, drainage, communication, wastewater treatment, waste and other public utilities.
3. To transfer or receive transfer of land use rights, lease or lease back land that already has technical infrastructure to build factories, offices and other works for production and business in accordance with the laws on land and real estate business.
4. To lease or sublease factories, offices, warehouses, and other structures that have been built for production and business in accordance with the laws on land and real estate business.
5. Carry out other activities in accordance with the provisions of the Investment Law 2020, Decree 31/2021/ND-CP, Government regulations on industrial parks, export processing zones, hi-tech parks, economic zones and related laws.

These activities allow investors in export processing zones to take advantage of and use land assets and rights for their production and business activities, and to comply with the laws on land and real estate business.

4. Procedures for adjusting foreign investment projects inside and outside export processing zones

The process of adjusting investment projects under the authority of policy approval at the Export Processing Zone Management Board, as stipulated in Article 32 of the Investment Law 2020, is conducted as follows:

1. Investors of foreign investment projects inside and outside export processing zones need to submit 04 sets of documents as prescribed in Article 44 of Decree 31/2021/ND-CP to the Export Processing Zone Management Board. Include:

• Document requesting adjustment of investment project;
• Report on project implementation progress up to the time of adjustment;
• Decision to adjust investment project (if applicable);
• Explanation or documents related to the adjustment of provisions specified in Article 33 of the Investment Law 2020.

2. Within 03 working days from the date of receipt of valid documents, the Export Processing Zone Management Board transfers the documents to the competent state agency as prescribed in Article 33 of Decree 31/2021/ND-CP for collection. comments on project adjustments.

3. Within 15 days from the date of receipt of the dossier, the relevant agencies shall provide comments on the project adjustment contents within their management scope.

4. Within 25 days of receiving the application, the Export Processing Zone Management Board decided to approve the adjustment of the investment policy. This decision will be sent to the investor and the agencies involved in the investment project.

5. Procedures for accepting certificates of foreign investment projects inside and outside export processing zones

Investment projects in export processing zones are projects with investment policies approved according to the provisions of Point h, Clause 1, Article 31 and Clause 2, Article 32 of the Investment Law 2020.

The deadline for issuance of Investment Registration Certificates for foreign investment projects inside and outside export processing zones subject to investment policy approval is prescribed as follows:

(i) Within 05 working days from the date of receiving the investment policy approval document, the investment registration agency must issue an Investment Registration Certificate to the investor and investment project.

(ii) Within 15 days from the date of receiving the request for an Investment Registration Certificate from the investor for investment projects that do not fall into the cases specified in point (ii).

Foreign investment projects inside and outside export processing zones are a special type of enterprise with a more complicated and strict establishment process, however, it brings many economic benefits to businesses. This article by Luat va Ke toan Viet My aims to help you better understand the characteristics and establishment process of export processing enterprises. If you have any questions, please contact us for direct consultation and answers.

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