Tax policy guidance for export processing enterprises in Nghe An

- Clause 2, Article 17 of the Law on Tax Administration No. 38/2019/National Assembly 14, stipulates:

“Article 17. Responsibilities of taxpayers

...2. Declare taxes accurately, honestly, completely and submit tax records on time; be responsible before the law for the accuracy, honesty, and completeness of tax records".

- Point c, Clause 3, Article 7 of Decree 126/2020/ND-CP dated October 19, 2020 of the Government detailing a number of articles of the Law on Tax Administration, stipulates:

“Article 7. Tax declaration dossier

3. Taxpayers are not required to submit tax returns in the following cases:

c) Export processing enterprises with only export activities are not required to submit value added tax declarations.

- Article 8 of Decree No. 123/2020/ND-CP dated October 19, 2020 of the Government regulating invoices and documents stipulates:

“Article 8. Types of invoices

Invoices prescribed in this Decree include the following types:

1. Value added tax invoice is an invoice for organizations that declare value added tax according to the deduction method and use it for the following activities:

a) Selling goods and providing services domestically;

b) International transport activities;

c) Export to duty-free zones and cases considered as export;

d) Exporting goods and providing services abroad.

2. Sales invoice is an invoice for organizations and individuals as follows:

a) Organizations and individuals declare and calculate value added tax using the direct method for the following activities:

- Selling goods and providing services domestically;

- International transport activities;

- Export to duty-free zones and cases considered as export;

- Exporting goods and providing services abroad.

b) Organizations and individuals in the duty-free zone when selling goods and providing services domestically and when selling goods and providing services between organizations and individuals in the duty-free zone, exporting goods and providing services abroad, the invoice must clearly state "For organizations and individuals in the duty-free zone".

- Clause 20, Article 4 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the implementation of the Law on Value Added Tax and Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government detailing and guiding the implementation of a number of articles of the Law on Value Added Tax, stipulates:

“Article 4. Subjects not subject to VAT

Section 20:

Non-tariff zones include: export processing zones, export processing enterprises, bonded warehouses, tax-free zones, bonded warehouses, special economic and commercial zones, commercial-industrial zones and other economic zones established and enjoying tax incentives as non-tariff zones according to the Prime Minister's Decision. The relationship of buying and selling goods between these zones and the outside is an export-import relationship.

Clause 20, Clause 21, Article 2, Article 26 of Decree No. 35/2022/ND-CP dated May 28, 2022 of the Government regulating the management of industrial parks and economic zones, stipulates:

“Article 2. Interpretation of terms

20. Export processing activities are activities specializing in producing export goods, providing services for the production of export goods and export activities.

21. An export processing enterprise is an enterprise that carries out export processing activities in export processing zones, industrial parks and economic zones.

DArticle 26. Separate regulations applicable to export processing zones and export processing enterprises.

1. Documents, order and procedures for establishing an export processing enterprise:

a) In case of establishing an export processing enterprise at the same time as carrying out the procedures for granting an Investment Registration Certificate, the investor shall submit a commitment on the ability to meet the conditions for customs inspection and supervision according to the provisions of the law on export tax and import tax together with the application for an Investment Registration Certificate according to the provisions of the law on investment. The investment registration agency that grants the Investment Registration Certificate shall record the objective of establishing an export processing enterprise in the Investment Registration Certificate when granting the Investment Registration Certificate;

6. Export processing enterprises are allowed to carry out other business activities in accordance with the provisions of the law on investment, the law on enterprises and other relevant legal provisions and must ensure that the following conditions are met:

a) The arrangement of the storage area for goods serving export processing activities must ensure separation from the storage area for goods serving other production and business activities;

b) Separately account for revenue and expenses related to processing activities and other business activities;

c) Assets, machinery and equipment enjoying tax incentives applicable to export processing enterprises must not be used for other production and business activities. In case of using assets, machinery and equipment enjoying tax incentives applicable to export processing enterprises to carry out other business activities, the tax incentives that have been exempted or reduced must be returned according to the provisions of the law on tax.

11. Export processing enterprises are allowed to sell goods to the domestic market. Goods imported from export processing enterprises and export processing zones to the domestic market are subject to tax according to the provisions of the law on export tax and import tax.

...”

Based on the above regulations, Nghe An Provincial Tax Department responds according to the following principles:

- In case Ju Teng Electronic Technology Co., Ltd. (Vietnam) is an export processing enterprise in accordance with the provisions of law and only has export activities, it is not required to submit VAT declaration documents according to the provisions of Point c, Clause 3, Article 7 of Decree No. 126/2020/ND-CP. In case the Company has submitted incorrect VAT declaration documents, the Company shall directly contact the Nghe An Provincial Tax Department, address No. 366, Le Nin Street, Vinh City, Nghe An Province for instructions on handling.

- In case the Company is an export processing enterprise with business activities other than export processing activities, if it meets the conditions specified in Clause 6, Article 26 of Decree No. 35/2022/ND-CP; regulations on investment law and other relevant legal regulations, the Company shall use invoices according to the provisions in Clause 1 or Point a, Clause 2, Article 8 of Decree No. 123/2020/ND-CP depending on the tax calculation method that the enterprise registers with the tax authority.

The Company shall, based on the actual situation, compare with the above legal documents and relevant legal documents to comply with the regulations.

Nghe An Provincial Tax Department replies so that Ju Teng Electronic Technology Co., Ltd. (Vietnam) can know and implement./.