Toll manufacturing for foreign traders is one of the most common business models for FDI enterprises in Vietnam: receiving raw materials and inputs from an overseas partner, processing them in Vietnam, and exporting the finished goods back. The model’s biggest advantage is the exemption from import and export duties on toll-manufactured goods — but the relief only applies when the enterprise fully meets customs conditions and procedures.
This guide systematizes the current legal framework for toll manufacturing for foreign traders: the processing contract, notification of the manufacturing facility, the tax policy, and what to watch for when the amended Customs Law takes effect on 1 March 2027.
1. The processing contract must contain 10 mandatory items
Under Article 39 of Decree 69/2018/ND-CP, a toll-manufacturing contract between a Vietnamese enterprise (the processor) and a foreign trader (the ordering party) must include 10 minimum items: names and addresses of the parties; names, quantities, and values of materials, inputs, and processed products; the processing term; the processing price; payment terms; each party’s responsibilities; handling of scrap and waste; warranty; dispute resolution; and other agreements.
This is not a formality: the processing contract is the sole legal basis for customs to determine that imported goods qualify for duty exemption under the toll-manufacturing regime. A contract missing mandatory items can be rejected by customs for exemption purposes.
2. Notify the manufacturing facility before the first shipment
Under Article 37(1) of Decree 08/2015/ND-CP, before clearing the first consignment of raw materials and inputs under a processing contract, the enterprise must notify the supervising customs authority of its manufacturing facility. The notification covers the facility location, machinery and equipment, production capacity, and the list of processing contracts.
The practical point: many newly established FDI enterprises import materials before completing this notification — that first consignment will not enjoy duty exemption under the processing regime and will be dutiable as ordinary commercial imports, with refunds very difficult to obtain afterwards. Complete the facility notification before filing the first declaration.
3. Import/export duty exemption for toll-manufactured goods
Under point (d), Clause 4, Article 1 of Decree 18/2021/ND-CP (amending Article 10 of Decree 134/2016/ND-CP), goods imported for processing for foreign traders and exported processed products are exempt from import and export duties.
The exemption covers: imported raw materials, supplies, and components for processing (including inputs imported to manufacture goods for export); machinery and equipment temporarily imported to perform the processing contract; and finished processed products exported back to the ordering party. The precondition: goods must be used for the declared processing purpose and managed with settlement reports as required by customs regulations.
4. Settlement reporting and contract liquidation
Duty exemption comes with strict management obligations. Under Circular 38/2015/TT-BTC (amended by Circular 39/2018/TT-BTC), the processor must file periodic settlement reports on the use of duty-exempt imported materials, reconciling import, export, and inventory quantities against registered consumption norms.
When a processing contract ends, the enterprise must liquidate it: dispose of surplus materials (re-export, declare for domestic consumption and pay duties, or transfer to another processing contract) and handle scrap and waste per the contract terms. Duty-exempt materials diverted to domestic consumption without declaration constitute tax evasion, subject to back-tax collection and heavy penalties.
5. Watch out: the amended Customs Law takes effect 1 March 2027
Law No. 11/2026/QH16 amending the Customs Law was passed by the National Assembly on 23 August 2026 and takes effect on 1 March 2027. The new law cuts and simplifies many customs administrative procedures and advances digital customs. Processing enterprises should follow the implementing decrees and circulars to update internal procedures — particularly the rules on reporting and post-clearance audit (maximum 40 days under the new law).
During the transition, the current framework (Decrees 08/2015, 134/2016, 18/2021, 69/2018 and Circulars 38/2015, 39/2018) continues to apply in full.
Checklist for FDI toll manufacturers
- Sign a processing contract with all 10 mandatory items under Article 39 of Decree 69/2018.
- Notify customs of the manufacturing facility before importing the first material consignment.
- Register material consumption norms with the customs authority.
- Track and separately manage duty-exempt materials; file periodic settlement reports.
- Liquidate the contract at completion: dispose of surplus materials and scrap properly.
- Update procedures when Law 11/2026/QH16 takes effect on 1 March 2027.
Legal references
- Decree 69/2018/ND-CP — Article 39 (processing contract contents).
- Decree 08/2015/ND-CP — Article 37(1) (manufacturing facility notification).
- Decree 134/2016/ND-CP, amended by Clause 4, Article 1 of Decree 18/2021/ND-CP (duty exemption for processing goods).
- Circular 38/2015/TT-BTC, amended by Circular 39/2018/TT-BTC (customs procedures, settlement reports).
- Law 11/2026/QH16 amending the Customs Law (effective 1 March 2027) — follow implementing guidance.
This article is for general information only and does not replace legal advice for specific cases. Tax and customs policies for processing goods may be further detailed in guidance documents; enterprises should check the latest instruments and consult professionals before acting.
Contact FLAT Law Firm: if your company needs a review of processing contracts, preparation of facility-notification dossiers, or help with duty-exemption and settlement-report issues, our team is ready to assist. See more articles on foreign investment on flaw.vn.
This article was prepared by the FLAW AI Legal Council, has passed internal QA review, and is pending owner approval. It is not the opinion of a licensed human lawyer and does not replace direct legal advice.