Can an investment incentive project importing machinery and equipment to form fixed assets be exempt from import duty? Yes — under Article 16(11) of the Law on Export and Import Duties 107/2016/QH13, applying to both new and expansion projects that qualify as investment incentive projects. This article takes the procedural angle: conditions, dossier, the duty-exempt list and finalisation — distinct from articles on incentives for the specific category of high-tech projects.
Exemption basis: Article 16(11) of Law 107/2016
Article 16(11) of the Law on Export and Import Duties 107/2016/QH13 exempts from import duty goods imported to form fixed assets of investment incentive projects. The exempt scope covers:
- Machinery and equipment; components, parts and spares imported for synchronous assembly or use with the machinery and equipment; raw materials and supplies imported to manufacture machinery, equipment or their components, parts and spares;
- Specialised means of transport within technological lines directly serving the project’s production;
- Construction materials not yet domestically producible.
The policy applies to new investment projects and expansion investment projects qualifying as investment incentive projects.
Which law defines “investment incentive”?
Investment incentive status is currently determined under the Investment Law 143/2025/QH15 (effective 1 March 2026, replacing Law 61/2020/QH14) — covering projects in incentivised business lines, projects in incentivised locations, and large-scale projects. Details for investment clusters are in Decree 96/2026/ND-CP (used here only within its investment-cluster scope, matching this article’s scope).
Important: do not apply the new incentivised business-line list of Law 24/2026/QH16 — that law takes effect on 1 March 2027 and does not yet apply.
The key point: machinery is NOT subject to the “not domestically producible” test
Many businesses wrongly assume all exempt goods must satisfy the “not yet domestically producible” condition. In fact, that condition applies only to construction materials (point c of Article 16(11)). For machinery and equipment forming fixed assets, the law imposes no “not domestically producible” condition — even if a similar machine is made domestically, an investment incentive project remains exempt from import duty when importing machinery and equipment.
Exemption procedure: 4 steps
Under Article 17 of Law 107/2016 and Articles 14, 30 and 31 of Decree 134/2016/ND-CP (as amended by Decree 18/2021/ND-CP):
- Step 1 — Prepare the duty-exempt goods list: the taxpayer prepares the list of duty-exempt imports before importation, matching the Article 16(11) scope;
- Step 2 — Register the list with customs: submit and register the exempt list; customs verifies and confirms;
- Step 3 — Import and complete exemption procedures: at customs clearance, declare the goods as falling under the registered list to obtain the exemption; the exemption dossier follows tax-administration law;
- Step 4 — Manage, use and finalise: exempt goods must be used for the proper purpose; any domestic transfer or change of use must be declared and taxed as required.
Distinguish: fixed-asset machinery exemption vs. 5-year raw-material exemption
Article 16(13) of Law 107/2016 provides a different policy: import-duty exemption for 5 years on imported raw materials, supplies and components for production of especially incentivised investment projects. The two policies are entirely different:
- Article 16(11): exempts machinery and equipment forming fixed assets — for investment incentive projects (broader scope);
- Article 16(13): exempts raw materials, supplies and components for production for 5 years — only for especially incentivised projects (narrower scope).
The dossiers and exempt lists of the two policies must not be mixed.
Warning: misuse triggers back-tax and penalties
Exempt goods that are transferred or repurposed domestically without declaring to customs may face tax reassessment and penalties under tax-administration and customs-penalty rules. “Exemption” is a conditional incentive attached to the project, not a permanent privilege attached to the shipment.
FAQs
1. Does an expansion project (not a new project) qualify for the machinery exemption?
Yes. Article 16(11) applies to both new and expansion investment projects that qualify as investment incentive projects.
2. Is used machinery imported for an incentive project exempt?
In principle the exemption does not distinguish new from used machinery; but used machinery must meet the import conditions for used goods (equipment age, technical standards) to be importable at all.
3. What if the exempt list was not registered before importation?
The duty-exempt list must be registered before importation. Importing first and registering later may disqualify the shipment from the exemption — contact the registering customs office immediately for guidance.
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Transparency note: This article was researched and reviewed by FLAT Law Firm’s AI Legal Council under its internal process; it has not been reviewed by a human lawyer. The content is for reference only, not legal advice.