Vietnam: Export manufacturers entitled to import duty exemption for imported materials subcontracted to third parties in outsourcing activities

In brief

Government Resolution No. 178/NQ-CP dated 12 December 2020, approves the Ministry of Finance’s proposal to grant import duty exemptions for materials imported by export manufacturers for outsourcing activities. Specifically, if export manufacturers subcontract specific processing steps to third parties, any materials imported by the export manufacturers for the implementation of such processing steps will also be exempted from import duties.

On 23 February 2021, the General Department of Customs issued Official Letter No. 879/TCHQ-TXNK (OL 879) to provide guidelines on the implementation of the Resolution.


In more detail

During the government's meeting in November 2020, Prime Minister Nguyen Xuan Phuc approved the proposal of the Ministry of Finance regarding the import duty exemption for goods imported for manufacturing products for export, where export manufacturing enterprises outsource certain manufacturing activities. OL 879 was issued to implement the government's approval and cover the following notable points:

  • Export manufacturing enterprises can enjoy import duty exemption if the following conditions are met:
    • Customs declarations for raw material/parts/components, etc., imported for export manufacturing are made from 1 September 2016 onwards.
    • Export manufacturing enterprises have outsourced a part of their manufacturing activities for finished products or have outsourced one/several steps of the manufacturing process.
    • Export manufacturing enterprises receive either semi-finished products (then continue the manufacturing process) or finished products ready for export.
  • The customs duty treatment for import duty and Value Added Tax (VAT) at the imported stage are set out in the following scenarios:
    • Customs authorities will not issue a tax and duty imposition decision if similar decisions have not been issued.
    • Customs authorities will amend, supplement or revoke tax and duty imposition decisions if such decisions have been issued, but related taxes and duties have not been paid.
    • Customs authorities will amend, supplement or revoke tax and duty imposition decisions if such decisions have been issued, and related tax and duties have been paid. Any paid tax and duty, late payment interest and administrative penalties, if any, will be refunded according to the regulations.
    • Any pending VAT credit will be refunded.
Contact Information
Thanh Vinh Nguyen
Partner at BakerMcKenzie
Ho Chi Minh City

© 2021 Baker & McKenzie. Ownership: This site (Site) is a proprietary resource owned exclusively by Baker McKenzie (meaning Baker & McKenzie International and its member firms, including Baker & McKenzie LLP). Use of this site does not of itself create a contractual relationship, nor any attorney/client relationship, between Baker McKenzie and any person. Non-reliance and exclusion: All information on this Site is of general comment and for informational purposes only and may not reflect the most current legal and regulatory developments. All summaries of the laws, regulation and practice are subject to change. The information on this Site is not offered as legal or any other advice on any particular matter, whether it be legal, procedural or otherwise. It is not intended to be a substitute for reference to (and compliance with) the detailed provisions of applicable laws, rules, regulations or forms. Legal advice should always be sought before taking any action or refraining from taking any action based on any information provided in this Site. Baker McKenzie, the editors and the contributing authors do not guarantee the accuracy of the contents and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents of this Site. Attorney Advertising: This Site may qualify as “Attorney Advertising” requiring notice in some jurisdictions. To the extent that this Site may qualify as Attorney Advertising, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. All rights reserved. The content of the this Site is protected under international copyright conventions. Reproduction of the content of this Site without express written authorization is strictly prohibited.