Import Duty Exemption for Export Processing Goods: Does "Organization" Cover Joint Ventures Engaged as Sub-processors?
RegHub explainer by New MarketerLast updated:
Based on:Nghị định số 134/2016/NĐ-CP; Nghị định số 18/2021/NĐ-CP - Ministry of Finance
This explanation was generated by AI and checked by an automated AI review, not by a human expert. It is not legal, tax or accounting advice and may contain errors. Check the official document before you rely on it.
The Ministry of Finance clarifies the conditions for import duty exemption on goods imported for export processing when the taxpayer subcontracts processing to another entity. Under Article 10 of Decree 134/2016/ND-CP (as amended by Decree 18/2021/ND-CP), a company holding an export processing contract with a foreign party may pass materials to a Vietnamese sub-processor duty-free, provided the sub-processor owns or has the right to use a qualifying processing facility and equipment in Vietnam, and duly notifies customs of the sub-processing arrangement and contract. The Ministry does not explicitly confirm or deny whether a joint venture (lien danh) qualifies as an "organization" for this purpose. It directs the questioner to study applicable customs and import-export tax law independently. The key principle is that whichever entity receives the sub-processing work must meet all conditions of the Decree before the exemption applies.
Import Duty Exemption for Export Processing - Sub-processing Conditions
Question raised: Does the term "organization" in Article 10(2)(b) of Decree 134/2016/ND-CP include a joint venture (lien danh) formed by two companies? If so, can the taxpayer use a joint venture as a sub-processor and still claim the import duty exemption?
Legal basis: Article 10 of Decree No. 134/2016/ND-CP dated 1 September 2016 (as amended by Decree No. 18/2021/ND-CP dated 11 March 2021).
Conditions for Import Duty Exemption on Sub-processed Goods
Article 10(2)(b): The entity or individual receiving sub-processing work must:
- Own or hold the right to use a processing facility in Vietnam
- Own or hold the right to use machinery and equipment at that facility
- Notify customs of the sub-processing arrangement and submit the sub-processing contract within the statutory timeframe (late notification results in administrative fine only, not loss of exemption)
Article 10(2)(c): Where the taxpayer (holding the main processing contract) transfers imported goods or semi-finished products to a qualifying sub-processor and receives back semi-finished or finished goods for further processing or export, the taxpayer qualifies for import duty exemption on those transferred goods.
Ministry of Finance Position
The Ministry confirms the legal framework for sub-processing exemptions but does not directly rule on whether a joint venture constitutes an "organization" under the Decree. It instructs the questioner to independently review customs and import-export tax law to determine eligibility.