“An FDI project automatically gets import duty exemption for machinery and equipment, right?” — This is the most common question from foreign investors, and the answer is no. The exemption is not tied to the nationality of the investor but to the project: only projects qualifying as investment-incentive beneficiaries under the Investment Law 143/2025/QH15 (effective 1 March 2026, replacing Law 61/2020/QH14) enjoy import duty exemption for machinery and equipment forming fixed assets. A foreign-invested project outside the incentive scope gets no exemption; conversely, a domestic project within the scope is exempt on the same terms.
Legal basis: Article 16(11) of the Law on Export and Import Duties
Goods imported to form fixed assets of investment-incentive beneficiaries are exempt from import duty (Article 16(11) of the Law on Export and Import Duties — consolidated document 96/VBHN-VPQH). Eligible goods include:
- Machinery and equipment; components, parts and spares for synchronous assembly or use with the machinery and equipment; raw materials and supplies for manufacturing the machinery and equipment or their components, parts and spares;
- Specialised means of transport within the technological line directly serving the project’s production;
- Construction materials not yet domestically producible.
The policy applies to both new investment projects and expansion projects.
Condition: the project must be an “investment-incentive beneficiary”
Under Article 14(1) of the Investment Law 143/2025/QH15, incentive beneficiaries comprise three project groups:
- Projects in incentivised business lines (per Article 15);
- Projects in incentivised locations (per Article 15);
- Large-capital, labour-intensive projects and key national projects.
The import-duty incentive form is set out in Article 14(2)(b): exemption from import duty for goods imported to form fixed assets, and for imported raw materials, supplies and components for production (per the law on export and import duties).
Two notable extensions (Article 14 of Decree 134/2016/ND-CP, as amended by Decrees 18/2021/ND-CP and 182/2025/ND-CP): a project located in an incentivised area but not in an incentivised business line is still exempt for goods forming fixed assets serving the incentivised project’s production; and a project partially within the incentive scope (separately allocated, accounted and directly used for the incentivised part) is exempt for goods imported for that part.
Three exclusion groups: not every project qualifies
Article 14(7) of the Investment Law 143/2025 excludes the import-duty incentive for:
- Mineral extraction investment projects;
- Projects producing or trading goods and services subject to special consumption tax (except automobile, aircraft and yacht manufacturing projects);
- Commercial housing construction projects.
Investors should check their project against all three exclusion groups before building an exemption plan — one wrong step, and the “exempted” import duty bill comes back as a payable obligation.
Procedure: notify the duty-free list before importation
Procedurally, the taxpayer must notify the list of duty-exempt imported goods to the customs authority before importation; dossiers and procedures follow Articles 30–31 of Decree 134/2016/ND-CP, and exemption procedures follow tax-administration law (Article 17 of the Law on Export and Import Duties). In practice, the list must match the Article 16(11) scope exactly (machinery, equipment, synchronous components…). Note: duty exemption (Article 16) differs from non-taxable goods and from duty refund (Article 19) — three distinct mechanisms, not interchangeable in dossiers.
Warning: misuse triggers back-tax and penalties
Exempted goods that are transferred, sold domestically or misused without declaring the change of use to customs constitute tax evasion (Article 15(1)(g) of Decree 169/2026/ND-CP): a fine of 1–3 times the evaded tax plus an order to pay the full evaded tax (Article 15(2)–(3)). When the incentive period ends or the use changes, the business must declare and pay the duty. “Exemption” is a conditional incentive, not a permanent privilege attached to the shipment.
Checklist for FDI investors
- Step 1: confirm the project falls in one of the 3 beneficiary groups (business line / location / scale) and outside the 3 exclusion groups;
- Step 2: prepare the duty-exempt import list matching the Article 16(11) scope (machinery, equipment, synchronous components, specialised transport means, domestically-unavailable construction materials);
- Step 3: notify the list to customs before importation and complete the dossier under Decree 134/2016;
- Step 4: strictly manage exempted goods afterwards — every transfer or change of use must be declared, or it will be treated as tax evasion.
Need help reviewing customs and import-export tax risks for your business? Reach us via the Contact page of FLAT Law Firm.
The information above is for reference only and does not constitute legal advice. Each business situation should be assessed separately by a lawyer.
For reference only, not legal advice. Content quality-checked by the AI Legal Council; not yet reviewed by a human lawyer.
