Assessing the tax accounting situation for export processing enterprises in Vietnam

Assessing the tax accounting situation for export processing enterprises in Vietnam

Nowadays, multinational trade business in Vietnam has become much easier, increasingly developing in the direction of importing and exporting goods to the world. Much of that in Vietnam is goods trade with China and countries in the ASEAN free trade zone, thanks to manufactured goods exports that brought in a total turnover of more than 170 billion US dollars in 2017. The government expects export industry revenue to be one of the main drivers for economic growth in 2017 and is targeting a 6.7 percent increase in export value this year.
 
The birth of export processing zones (EPZs), with tax-free trade policies and low labor costs, makes Vietnam an ideal "paradise" for export processing enterprises (EPE). Based on government policy, these businesses enjoy special tax policies, so let's find out with Dương Minh Logistics the following:
 

Tax for export processing enterprises (EPE)

Export processing enterprises (EPEs) are subject to standard corporate income tax (20 percent, effective January 1, 2016). This tax also applies to foreign income. However, the same tax paid abroad is deductible from Vietnam Corporate Income Tax.
 
As mentioned, export processing enterprises (EPEs) have their own unique characteristics regarding import and export taxes. A simpler understanding is that, in transactions with foreign entities or other EPEs, they do not have to pay any import or export taxes (export tax, import tax). However, in cases where EPE purchases goods from domestic companies in the country, those goods are subject to export tax. But according to Vietnamese law, the exporting parties in Vietnam are responsibleexport tax. Additionally, if an EPE purchases goods and services to be used outside the EPZ, they will still have to pay VAT of 10%.
 
From there, export processing enterprises (EPEs) are subject to strict customs inspections to ensure that all imported materials are used legally in the production and processing of goods for export. Any material discrepancies, surpluses or shortages between the accounting books and customs declarations will be subject to tax and at the same time be liable for disclosure or penalty; This is what tax accounting is forexport processing enterprisesin Vietnam, especially in recent Circular 39.
 
The raw material surplus difference occurs when the raw material balance in the accounting books is higher than the data in the customs settlement report (ie the quantity of imported raw materials exceeds the quantity of raw materials used to produce goods for export). If the excess materials remaining are not equal to the amount of materials used and at the time of import and the cause cannot be explained, fines and taxes are unavoidable.
 
The negative difference can be understood as the book balance being higher than the customs reports in the accounting books. This leads to the familiar case: “it may be because the raw materials are sold to the Vietnamese market”; If that is true, customs will calculate the correct tax amount for such difference.