An export processing enterprise in Vietnam (EPE) is a company that specialises in producing goods for export, providing services for export production and carrying out export activities, located in an export processing zone, an industrial park or an economic zone (Article 2(20) and (21) of Decree 35/2022/ND-CP). Legally, an EPE is treated as a non-tariff zone. Goods moving between the EPE and abroad are outside import duty, export duty and VAT; goods moving between the EPE and the rest of Vietnam are imports and exports. In return, the site must have a solid fence, cameras linked to customs and inventory software, and the tax treatment only holds once customs has confirmed that these supervision conditions are met.
Group tax and supply chain teams often work from older summaries that cite Decree 82/2018/ND-CP, Circular 219/2013/TT-BTC and Decree 09/2018/ND-CP. All three have been replaced: Decree 35/2022 took over from Decree 82/2018 on 15 July 2022, the VAT Law 48/2024 and Decree 181/2025 apply from 1 July 2025, and Decree 342/2026/ND-CP replaced Decree 09/2018 on 18 October 2026. Corporate income tax (CIT) has moved too: projects in industrial parks and export processing zones licensed from 1 October 2025 no longer get location-based CIT incentives (Law 67/2025 and Decree 320/2025).
What is an export processing enterprise in Vietnam?#
Decree 35/2022 defines the EPE by activity. "Export processing activity" means specialised production of export goods, services for export production and export activity; an EPE is a company carrying out that activity inside an export processing zone, an industrial park or an economic zone (Article 2(20) and (21)). The Investment Law 143/2025 defines an export processing zone on the same basis (Article 3(15)).
That leaves three possible sites:
- Inside an export processing zone, where the whole zone is already fenced off as a non-tariff zone.
- Inside an industrial park or economic zone, either with its own fence and gates or in a sub-zone reserved for EPEs (Article 26(2) and (8)).
- Not outside a zone. A plant in an industrial cluster or on stand-alone land cannot hold EPE status. The only off-zone element allowed is a rented warehouse when the EPE lacks storage space, and only once customs has approved it (Article 26(10)).
Two consequences follow. Trade between an EPE and other parts of Vietnam (other than non-tariff zones) is an import-export relationship (Article 26(4)), matching the definition of a non-tariff zone in Article 4(1) of the Law on Export and Import Duties. Only investors, employees and people with business dealings may enter the site (Article 26(12)).
There is no minimum export ratio in the current text, and an EPE may sell into the domestic market (Article 26(11)). The common line that "an EPE must export 100%" is therefore out of date. Our reading is that an EPE selling most of its output locally would struggle to show it "specialises" in export production, and would also lose most of the cost advantage shown in the comparison below.
Which rules govern an export processing enterprise in Vietnam in 2026?#
There is no single EPE law. The rules sit in seven layers, most of them replaced in 2025–2026:
| Topic | Current text | Older text still quoted |
|---|---|---|
| Definition, procedure, rights and duties | Article 26 of Decree 35/2022/ND-CP | Decree 82/2018/ND-CP |
| Investment registration, IRC authority | Investment Law 143/2025/QH15 (from 1 March 2026), Decree 96/2026/ND-CP | Investment Law 61/2020, Decree 31/2021 |
| Customs supervision conditions | Article 28a of Decree 134/2016 (added by Decree 18/2021) | Article 30(1) of Decree 82/2018 |
| Customs procedures | Articles 56, 58 and 74–80 of Circular 38/2015/TT-BTC as amended by Circulars 39/2018 and 121/2025 (from 1 February 2026) | Original Circular 38/2015 |
| VAT | Law 48/2024/QH15, Decree 181/2025/ND-CP (from 1 July 2025) | Law 13/2008, Circular 219/2013/TT-BTC |
| CIT | Law 67/2025/QH15 (from 1 October 2025), Decree 320/2025/ND-CP | Law 14/2008, Decree 218/2013 |
| Trading and distribution rights | Decree 342/2026/ND-CP (from 18 October 2026) | Decree 09/2018/ND-CP |
Three status points:
- Decree 35/2022 is still the base text. Resolution 66.25/2026/NQ-CP lists its amendments (Decrees 70/2023, 129/2025 and 178/2025); none touches Article 26. Since 15 September 2026 the Ministry of Industry and Trade has taken over the Ministry of Finance's tasks under Articles 7, 13, 40, 53, 57 and 68 of Decree 35 (Article 2(1)(b) of the Resolution). EPE status is still recorded by the zone management board when it issues the IRC.
- Circular 121/2025 still refers to Decree 09/2018. Article 77 of Circular 38 (as amended) has not caught up with Decree 342; from 18 October 2026 the reference should be read as Decree 342/2026 (Article 45(3) of Decree 342).
- Article 28a of Decree 134/2016 is unchanged. Decree 182/2025 amended Decree 134 (duty exemptions for science and technology) but did not touch Article 28a.
EPE customs supervision conditions: fence, cameras, software#
What qualifies a project is not its capital or sector but whether customs can supervise it. Article 28a of Decree 134/2016 requires all three of:
- A solid fence separating the site from the outside, with gates or doors so that goods can only enter and leave through them (Article 28a(1)(a)).
- Cameras covering the gates and every storage location 24 hours a day, including weekends and holidays, with the feed connected online to the supervising customs office and footage kept on site for at least 12 months (Article 28a(1)(b)).
- Inventory software for duty-free imports, able to produce the import-export-inventory reconciliation report required by customs (Article 28a(1)(c)).
Where the EPE also runs other business lines, Article 26(6) of Decree 35 adds three operating rules: keep goods for the export processing activity physically separate from goods for other activities; account separately for revenue and costs; and do not use tax-exempt assets and machinery for the other activities, or repay the tax benefit if you do.
Without customs confirmation, the company does not get the non-tariff zone tax treatment (Article 26(3) of Decree 35). The texts do not deal expressly with a site that falls out of compliance after confirmation (a broken camera link, footage not kept for 12 months). Our reading is that the conditions must be met continuously, so EPE customs supervision is a running cost for the life of the project, not a one-off construction cost.
How to obtain EPE status#
EPE status has two layers: the investment layer (status recorded on the investment registration certificate, or IRC) and the customs layer (confirmation that the supervision conditions are met). The non-tariff zone tax treatment applies from the date EPE status is recorded on the IRC or on a separate EPE registration confirmation (Article 26(3) of Decree 35; Article 28a(3) of Decree 134), but it can be clawed back if the later on-site check fails.
Step 1: record EPE status at investment registration#
Projects of foreign investors, and of Vietnamese companies more than 50% foreign-owned, need an IRC (Article 26(1) of the Investment Law), issued by the industrial park or economic zone management board for projects inside a zone (Article 27(1)). Under the 2025 Law a foreign investor may set up the company first and obtain the IRC afterwards (Article 19(2)); see our guides to setting up a foreign-owned company and to the IRC.
| Situation (Article 26(1) of Decree 35) | What to file | Outcome |
|---|---|---|
| EPE set up together with the IRC | IRC dossier plus a commitment to meet customs supervision conditions | The IRC records the objective of establishing an EPE |
| Project that needs no IRC (usually a domestic investor) | Project documents plus the commitment | EPE registration confirmation within 3 working days |
| Project needing investment policy approval | Commitment filed with the approval dossier | Confirmation within 3 working days of approval, or EPE status recorded on the IRC |
The commitment uses Form 24 of Appendix VII to Decree 134. The investment authority asks customs for its view, and customs confirms on the same form within 3 working days (Article 28a(2)(a)). An expansion project follows the same route for the expansion (Article 28a(2)(b)).
Step 2: notify the production site before the first machinery import#
Before the first shipment of machinery for the project, the EPE notifies its production site through the customs system on Form 20 of Appendix II to Circular 38, leaving out machinery, workforce and capacity for the time being (Article 56(1)(a.2.1) of Circular 38 as amended by Circular 121). EPE imports, including machinery temporarily imported to build the factory, are cleared at the customs office for the area where the plant sits (Article 58(1)(b)).
Step 3: on-site customs check before operations start#
This is the step projects most often leave too late.
- At least 30 days before the operating start date on the IRC, the EPE notifies customs on Form 25 that the conditions are met (Article 28a(4)(a) of Decree 134; Article 56(1)(a.2.2) of Circular 38).
- Customs inspects and replies on Form 26 within 10 working days (Article 28a(4)(b)).
- If the site fails, the EPE may fix and resubmit as often as needed, but only within 1 year of the first customs response (Article 28a(4)(b) and (c)).
- If it still fails after that year, or never notifies, it loses the non-tariff zone treatment and must pay the duties, late-payment interest and penalties on all imports that benefited from it, counted from the IRC date. If it later passes, the treatment restarts only from the date of the customs confirmation (Article 28a(4)(d)).
Illustration: a project imports VND 50 billion of machinery during construction. If the camera feed never connects to customs and the one-year window lapses, import VAT (10% on a base that includes import duty, so at least VND 5 billion), import duty (unless the machinery qualifies for an exemption), late-payment interest and penalties from the IRC date all become payable at once. The import VAT may later be credited; the interest and penalties are a pure loss.
Converting an existing company, and leaving EPE status#
Becoming an EPE. The investment authority consults customs, which inspects the site and replies within 10 working days (Article 28a(2)(c) of Decree 134). Beforehand, the company reconciles its processing and export-production inventory, proposes how to deal with remaining stock and settles all tax and penalty debts with customs; EPE treatment starts only after that and once the IRC records EPE status (Article 78(2) of Circular 38 as amended). The IRC amendment itself is covered in our IRC amendment guide.
Leaving EPE status. Before conversion is approved, the company reconciles goods that benefited from non-tariff treatment and deals with each group: change of use (paying tax), sale, destruction, re-export, or continued use for export production (Article 78(1)). According to Customs Department guidance reported on 8 September 2026, the company may record a change of use to itself so that it can keep using the assets after conversion.
Tax treatment of an export processing enterprise in Vietnam#
"EPE tax incentives" are really the non-tariff zone tax rules applied to goods moving in and out. There is no special CIT incentive for being an EPE.
Import and export duty#
- Outside the scope of duty: goods imported from abroad into a non-tariff zone and used only there; goods exported from the zone abroad; goods moving between non-tariff zones (Article 2(4)(c) of the Law on Export and Import Duties). This covers an EPE's imported machinery, materials and consumables.
- Dutiable: goods sold from the domestic market into an EPE (export duty, if the item carries one) and goods sold from an EPE into the domestic market (import duty, paid by the local buyer) (Article 2(2) of the Law; Article 2(2) of Decree 134). Goods an EPE imports under trading or distribution rights are dutiable like any other import (Article 2(3) of the Law; Article 2(4) of Decree 134).
- Goods made in a non-tariff zone without imported inputs are exempt from import duty when sold into Vietnam (Article 16(8)). Goods made with imported inputs can use preferential or FTA rates if they meet the origin rules (Article 5(3)(a) and (b)).
VAT#
- Goods and services traded between a foreign country and a non-tariff zone, or between non-tariff zones, are outside VAT (Article 5(20) of the VAT Law; Article 4(12) of Decree 181).
- Goods sold from Vietnam to an organisation in a non-tariff zone and consumed there directly for export production are zero-rated, as are services supplied directly to and consumed in the zone for export production, expressly including container handling, loading and documentation services for an EPE (Article 9(1)(a) and (b) of the VAT Law; Article 17(1) and (2)(b) of Decree 181).
- Not zero-rated: fuel and cars sold into the zone (Article 9(1)(d) of the Law); rental of premises, halls, offices, hotels and warehouses; staff transport; and catering, except industrial catering and catering inside the zone (Article 17(4)(l) of Decree 181). The supplier charges normal VAT on these.
- Conditions for 0% on goods: a contract, non-cash payment and a customs declaration (Article 18(1) of Decree 181). For office supplies, food and building materials that the parties choose not to clear through customs (Article 26(4)(b) of Decree 35), the seller has no declaration; our reading is that it cannot safely apply 0% and should invoice at the normal rate.
- An EPE with only export processing activity does not file VAT returns (Article 11(3) of Decree 252/2026/ND-CP). An EPE with other business lines is a VAT payer for those lines (Article 3(1)(d) of Decree 181).
CIT: no incentive just for being in an export processing zone#
The CIT Law 67/2025/QH15 (in force 1 October 2025, applying from the 2025 tax year) recognises only three groups of incentive locations: especially disadvantaged areas; disadvantaged areas; and economic zones, high-tech parks, hi-tech agricultural zones and digital technology parks (Article 12(3)). Industrial parks and export processing zones are not listed. The Investment Law still treats them as investment incentive locations, but Decree 320/2025 carves out of the disadvantaged and especially disadvantaged areas row 55 of Appendix III to Decree 31/2021 (as amended by Decree 239/2025), which is the row that classified these zones (Article 18(3)(a) and (b)). Our investment incentives guide explains the change in detail. For an EPE:
- In an export processing zone or industrial park, project licensed from 1 October 2025: CIT incentives are available only if the commune is a disadvantaged or especially disadvantaged area, or the product is in an incentivised sector (Articles 18 and 19 of Decree 320/2025).
- In an economic zone: a new project gets 10% for 15 years, with a 4-year exemption and 50% reduction for the next 9 years, if the project site is in a disadvantaged or especially disadvantaged area; otherwise 17% for 10 years, with a 2-year exemption and 50% reduction for the next 4 years (Article 19(1)(d) and (4)(c), and Article 20 of Decree 320).
- Projects with an IRC or investment policy approval issued before 1 October 2025 that are still within their incentive period, including industrial park incentives, keep them for the remaining period under the rules in force when licensed (Article 20(1) of Law 67; Article 25(1) of Decree 320).
In practice, then, the EPE tax incentives that matter are on customs duty and VAT, not on CIT.
On foreign contractor tax: a foreign supplier that directs one EPE to deliver materials, supplies or components to another EPE for export production or processing pays no CIT in Vietnam on that sale (Article 12(3)(b) of Decree 320). See our foreign contractor tax guide for the wider rules.
Selling into the domestic market, liquidation and scrap#
Selling finished goods to local customers#
For an export processing enterprise in Vietnam, every sale to a local customer is an import by that customer: the EPE may sell into the domestic market, and those goods are dutiable (Article 26(11) of Decree 35). Under Article 75(3) of Circular 38 (as amended by Circular 121):
- The EPE files an export declaration marked "#&XKPTQ"; the buyer files a matching import declaration marked "#&NKPTQ" with the export declaration number. One export declaration pairs with one import declaration.
- The buyer must complete import formalities within 15 days of export clearance.
- The EPE delivers only after the buyer has registered its import declaration, and the buyer may use the goods only after clearance. Sales between two EPEs follow the same steps (Article 75(4)).
Contracts with local buyers should say who bears the import duty, who files, and the delivery term; see our guide to international sale of goods contracts.
Liquidating machinery, materials and other imports#
An EPE may sell or liquidate used assets and other goods into the domestic market. Import management rules do not apply at that point, except for goods that still need specialised inspection not carried out at import and licensed goods, which need written consent from the licensing body (Article 26(4)(c) of Decree 35). Article 79 of Circular 38 (as amended) allows export, sale, donation or destruction. For a local sale or donation, including to another EPE, the EPE chooses between:
| Route | Who files | Tax base | Afterwards |
|---|---|---|---|
| Change of use | The EPE files a new declaration | Value, duty rate and exchange rate on the date of the change-of-use declaration (Article 21 of Circular 38) | The sale needs no further customs formality |
| Export-import pair | EPE files the export, buyer files the import and pays tax | The buyer's import declaration | Treated as an ordinary sale |
Scrap and local purchases#
Scrap and rejects that may be sold locally go through the same export-import pair; scrap that may be exported is cleared as an export; waste is handled under environmental law and tracked in the books (Article 75(5) and (8) of Circular 38).
Building materials, office supplies, food and consumer goods bought locally for construction, the office and staff may be cleared or not, at the parties' choice (Article 26(4)(b) of Decree 35). If not, the EPE must record the purpose and source in its accounting records (Article 74(2) of Circular 38). Locally bought goods on which all taxes have been paid need no customs formality, except export-dutiable goods used as materials forming part of export products (Article 74(4)).
Trading rights under Decree 342/2026#
An EPE may run other business lines subject to the three conditions in Article 26(6) of Decree 35. Older advice says an EPE needs a separate branch outside the zone to trade. Neither Decree 35 nor Article 77 of Circular 38 (as amended by Circular 121) requires this: separate accounting and a separate storage area for goods imported or exported under trading rights are enough. An EPE may still open branches for its export processing activity; a branch gets EPE treatment if it is inside a zone and fenced as required (Article 26(7)).
From 18 October 2026, a foreign-invested EPE's trading rights follow Decree 342/2026:
- Export, import and wholesale of most goods: registering the activity on the IRC or enterprise registration certificate is enough; no Business Licence is needed (Article 6(1)). The import right is the right to import goods for sale to traders holding distribution rights, not to distribute them yourself (Article 3(5)).
- A Business Licence is needed for retail (with extra conditions for rice, sugar, recorded media, books, newspapers and magazines); for importing or wholesaling petroleum-based lubricants (Article 9(4)(c)); and for activities such as logistics (except opened sub-sectors), goods rental, trade promotion and commercial intermediary services (Article 5(1)). See our business licence service.
- Customs declarations: the EPE enters the number of the permit for trading activities in the "licence number" field (Article 77(2)(a) of Circular 38). The circular does not say what to enter now that Decree 342 no longer requires a licence for import rights; our reading is that the IRC or registration document recording the right should be used, after checking with the supervising customs office. Goods imported under the import right and sold to a local company need no further customs formality; sold to another EPE, they go through export-import formalities (Article 77(2)(b)).
Is an export processing enterprise in Vietnam the right model?#
The table compares an EPE with an ordinary foreign-invested exporter (export production regime) in an industrial park, same sector and location.
| Item | EPE | Ordinary exporter in an industrial park |
|---|---|---|
| Import duty on machinery for fixed assets | Outside the scope of duty (Article 2(4)(c), Law on Export and Import Duties) | Exempt if the project qualifies for investment incentives (Article 16(11)); industrial parks are incentive locations under Article 15(2)(b) of the Investment Law |
| Import VAT on machinery | None | Paid, then credited or refunded as investment-stage VAT above VND 300 million after offsetting (Article 30, Decree 181) |
| Import duty on materials | None | Exempt if used for export production (Article 16(7)), with reconciliation; materials diverted to local sales need a change-of-use declaration and tax |
| Import VAT on materials | None | Outside VAT if imported under a processing or export production contract with a foreign party (Article 5(20), VAT Law); otherwise payable |
| Local purchases of materials and services | Supplier zero-rates if it has the contract, non-cash payment and (for goods) a customs declaration | Pays 10% (or a reduced rate where applicable), then claims an export refund above VND 300 million, capped at 10% of export revenue (Article 29, Decree 181) |
| VAT returns | None if export processing only | Monthly or quarterly |
| Selling locally | Buyer imports and pays import duty (unless Article 16(8) applies) and import VAT | Ordinary domestic sale |
| CIT | By incentivised sector or disadvantaged area only; for projects licensed from 1 October 2025, industrial parks and export processing zones are not CIT incentive locations | Same |
| Supervision cost | Solid fence, 24/7 cameras linked to customs, 12-month footage, inventory software | Production site notice and reconciliation reports; no fence or camera link required |
| Liquidation | Export-import pair or change of use, tax at liquidation | Exempt goods diverted to other uses must be declared and taxed (Article 21, Circular 38) |
| Access | Only people with business dealings; all goods through the gates | No non-tariff zone restrictions |
Illustration (10% VAT, ignoring temporary reductions): a garment plant exporting all its output buys VND 30 billion of fabric and trims locally each year and exports VND 60 billion.
- As an EPE: suppliers zero-rate, so no VND 3 billion of input VAT arises on these purchases.
- As an ordinary exporter: it pays VND 3 billion to suppliers and claims it back. The refund cap is VND 6 billion (10% of export revenue), so the claim usually fits, but the cash is tied up until the refund and the claim may be audited.
In our experience an export processing enterprise in Vietnam makes sense for projects that export almost everything, import heavy machinery, buy many inputs locally and have a warehouse team disciplined enough to run the cameras and software. Projects with material local sales, or machinery shared across product lines, usually find the ordinary regime more flexible.
Common EPE compliance mistakes#
Most problems we see at an export processing enterprise in Vietnam come from day-to-day operations rather than from the licence itself.
- Missing the one-year window for the customs check, triggering duty and interest on every import since the IRC date (Article 28a(4)(d) of Decree 134). Form 25 is due at least 30 days before the IRC start date; file earlier to leave time for fixes.
- Using tax-exempt machinery for another business line without first declaring a change of use and paying tax (Article 79(3) of Circular 38).
- Selling scrap or liquidated goods locally on an invoice alone, without the paired declarations, or delivering before the buyer files its import declaration.
- Moving goods into a rented off-zone warehouse before customs approval. The warehouse needs a fence or partition, linked cameras and software; storage is capped at 2 years, an extension must be requested at least 30 days before expiry, and no production may take place there (Article 80 of Circular 38). Five working days after customs approval, the EPE must also notify the investment authority (Article 26(10) of Decree 35).
- Mixing trading and production in the accounts or in the warehouse (Article 77(1) of Circular 38).
- Suppliers zero-rating services that do not qualify, such as office rental or staff buses. When the tax office disallows it, the supplier is assessed and usually passes the cost back under the contract.
LexData handles IRC applications that record EPE status and the IRC amendments needed to convert: see our company formation and IRC amendment services. For the definition of a foreign-invested company under the 2025 Investment Law, see what is an FDI company in Vietnam.
