An export-processing enterprise (EPE) operates inside a non-tariff zone and enjoys a separate tax regime for its processing activities. But when an EPE sells goods into the domestic market — are those goods still “duty-free” as many assume? The law is clear: EPEs may sell domestically, but goods entering the domestic market are dutiable, and on-the-spot import/export customs procedures apply.
What an EPE is — and why domestic sales count as imports
An EPE is an enterprise operating in a non-tariff zone (a concept under Article 4 of the Law on Export and Import Duties). Under Article 26(4) of Decree 35/2022/ND-CP, exchanges of goods between an EPE and other areas of Vietnam’s territory (outside non-tariff zones) constitute export/import relations (except the case in Article 26(4)(c) and cases not requiring customs procedures). Goods an EPE sells into the domestic market are therefore treated as imports into Vietnam.
A technical note: the Investment Law 143/2025 (Article 3(15)–(16)) defines only export-processing zones and industrial parks — it does not define “export-processing enterprise”; the EPE/non-tariff-zone concepts come from the Law on Export and Import Duties and Decree 35/2022.
Can EPEs sell domestically? — Yes, but dutiable
Article 26(11) of Decree 35/2022 states that goods imported from EPEs and export-processing zones into the domestic market are subject to tax under the law on export and import duties (see also Article 2(2) of the Law on Export and Import Duties and Article 2(2) of Decree 134/2016/ND-CP).
This is the key point: the common trap is assuming “EPE goods are duty-free”. Wrong for domestic sales — duty-free treatment applies only to processing activities inside the non-tariff zone; once goods enter the domestic market, full tax obligations arise.
Customs procedures: on-the-spot import/export
Goods bought and sold between an export-processing enterprise and a domestic enterprise go through on-the-spot import/export procedures:
- The EPE (seller) completes on-the-spot export — declaration-type code E42 (export of DNCX products, covering both exports abroad and domestic sales per the code table issued with Decision 1357/QD-TCHQ);
- The domestic enterprise (buyer) opens the corresponding on-the-spot import declaration (Article 75(3) and Article 86 of Circular 38/2015/TT-BTC);
- Deadline: within 15 working days from the clearance date of the export goods, the on-the-spot importer must complete customs procedures (Article 86(4) of Circular 38/2015/TT-BTC, as amended).
Legal basis for the on-the-spot regime: Article 3(3) of Law 90/2025/QH15 (effective 1 July 2025); Article 35 of Decree 08/2015/ND-CP as amended by Decree 167/2025/ND-CP (Article 1(19), effective 1 July 2025).
Tax obligations: who pays, on what value?
- The taxpayer is the domestic enterprise (the on-the-spot importer) — not the EPE;
- It pays import duty based on the duty rate and the taxable value of the product imported into the domestic market;
- It pays value-added tax on imported goods under the Law on Value-Added Tax 48/2024/QH15 (26 November 2024, effective 1 July 2025, replacing Law 13/2008/QH12).
Special cases
- Scrap and waste of the export-processing enterprise may be sold into the domestic market: the EPE completes export procedures and the domestic enterprise opens an import declaration of the corresponding type (Article 75(5) of Circular 38/2015);
- Sale/liquidation of used assets into the domestic market: EPEs may sell or liquidate used assets and goods domestically under investment law; at the time of sale, import/export goods management policies do not apply, except for goods subject to conditional/standard/specialized-inspection management not yet fulfilled at import, and licence-managed goods requiring written consent from the import-licensing authority (Article 26(4)(c) of Decree 35/2022);
- An EPE conducting business activities beyond processing must meet conditions including segregated goods storage and separate accounting of revenue and expenses for processing versus other business activities (Article 26(6) of Decree 35/2022).
Conditions for EPE non-tariff-zone tax treatment
An EPE enjoys investment incentives and non-tariff-zone tax policies from the time the EPE-establishment investment objective is recorded in its Investment Registration Certificate, but it must be certified by customs as meeting customs inspection and supervision conditions before officially operating — otherwise it does not enjoy non-tariff-zone tax policies (Article 26(3) of Decree 35/2022).
Quick checklist
- Treat the transaction as on-the-spot import/export (EPE declares E42; the domestic buyer declares on-the-spot import within 15 working days);
- The domestic enterprise pays import duty + VAT, computed on the value of the product imported domestically;
- Scrap/waste and liquidated assets follow their own procedures (Article 75 of Circular 38/2015; Article 26(4)(c) of Decree 35/2022);
- Never apply “EPE goods are duty-free” thinking to domestic sales.
Need help reviewing import/export tax incentives for your investment project? Reach us via the Contact page of FLAT Law Firm.
The information above is for reference only and does not constitute legal advice.
For reference only, not legal advice. Content quality-checked by the AI Legal Council; not yet reviewed by a human lawyer.