Machinery imported duty-free for incentivized projects keeps its exemption only while used for the registered purpose. Change the use without declaring, and the company faces recovery of the entire exempted duty. This article maps the scenarios and the correct handling.
Which changes of use trigger recovery, and must they be declared in advance
The rule: duty-exempted imports stay exempt only while used for the registered purpose (serving an incentivized investment project, an EPE’s production…). Acts treated as change of use include: selling, leasing or transferring the machinery to another party; moving it out of the export processing zone / project area; redeploying it to non-incentivized activity.
Declaration to customs is mandatory BEFORE the change of use, with re-payment of import duty (plus import-stage VAT if applicable) computed on the value at the time of the change. This order cannot be reversed: sell first, declare later is still a violation and still penalized.
How much is recovered, and how to sell exempted machinery to another party
Undeclared change of use triggers customs recovery of the entire exempted duty on that machinery lot — not “how many years” of tax periods but the full duty attached to the violating asset — plus administrative fines and late interest. For high-value production lines, recovery can reach billions of VND.
Selling exempted machinery onward: the buyer does NOT “inherit” the exemption. The correct sequence is for the seller to declare the change of use and pay all duty first, then transfer the machinery as tax-cleared goods. A buyer accepting “duty-free” machinery without checking its tax status may face disputes when customs recovers later.
Frequently asked questions
1. Which changes of use trigger recovery of exempted import duty?
Selling, leasing or transferring the machinery; moving it out of the EPZ/project area; redeploying to non-incentivized activity — all count as change of use.
2. Must the change be declared in advance?
Yes — declare to customs BEFORE the change and re-pay import duty (+ import VAT if applicable) on the value at change time. Sell-first-declare-later is still penalized.
3. How much is recovered?
The entire exempted duty on the violating lot (not by tax period), plus administrative fines and late interest.
4. How to sell duty-exempted machinery to another party?
The buyer inherits no exemption. The seller must declare and pay duty before transfer; the buyer should verify the tax status before accepting the machinery.
This article has been quality-reviewed by the FLAW AI Legal Council
