Export processing enterprises (EPEs) in export processing and industrial zones enjoy some of the highest CIT incentives. Many assume “EPE income” gets special treatment under the global minimum tax — a misconception worth correcting.
This article answers squarely: are EPEs subject to top-up tax, and is EPE income excluded?
EPE income is not excluded from GloBE
The short answer: no. Neither the GloBE standard nor Resolution 107/2023/QH15 provides a special exclusion for EPE income. All of an EPE’s income — from exports or domestic sales — enters the entity’s GloBE income, and the ETR is computed normally like any other business.
Because EPEs typically enjoy high CIT incentives (10% rates, multi-year holidays), their ETR very easily falls below 15% — making EPEs the highest top-up-risk group, not a “protected” one. The bigger the incentive, the bigger the gap to fill.
The one bright spot: EPEs are usually manufacturers with large workforces and assets — i.e., high SBIE. This substance shield substantially cuts the top-up base and may even help “pass” the routine-profits test in the transitional safe harbour.
EPE domestic sales
When an EPE sells into the domestic market, procedures follow on-the-spot import/export rules: customs declarations, import duty (if any) and VAT under customs and tax law. This is a separate duty, independent of the global minimum tax.
For GloBE, domestic-sales income still joins the EPE’s GloBE income — there is no “export vs domestic” split in ETR computation. Tax authorities likewise look at the entity’s overall ETR.
EPE practice: model ETR year by year over the remaining incentive period (note: holiday years can push ETR near 0%, with very large top-up gaps); maximize SBIE through full payroll/asset recording; and test the transitional safe harbour from 2024.
Frequently asked questions
Are export processing enterprises subject to top-up tax?
Yes — among the highest-risk. EPEs typically enjoy large CIT incentives (10%, multi-year holidays), so ETR very easily falls below 15% → top-up under the QDMTT (Resolution 107/2023/QH15). There is no special EPE carve-out under the global minimum tax.
Is income from export processing zones excluded?
No. Neither GloBE nor Resolution 107/2023/QH15 excludes EPE income — all EPE income (exports or domestic) enters GloBE income with a normally computed ETR. The only support is the high SBIE from a manufacturing EPE’s workforce/asset scale.
What if an EPE sells domestically?
Procedurally it follows on-the-spot import/export (customs, import duty if any, VAT) — a separate duty. For GloBE, domestic-sales income still joins GloBE income; no export/domestic split in ETR computation.
EPEs under QDMTT: no exclusion, no exemption — and precisely because incentives are generous, top-up risk is highest. The SBIE from manufacturing scale is the “life vest” every EPE should model now.
This article has been quality-reviewed by the FLAW AI Legal Council