Export Processing Enterprises in Vietnam: Eligibility and Alternatives in 2025

Export processing enterprises are a popular way to reduce tax liabilities in Vietnam. However, they can be somewhat challenging to establish. This brief overview outlines the requirements and the alternatives.

Many investors eye Vietnam as a new manufacturing hub and aim to set up an ‘export processing enterprise’ (EPE), which allows them to export 100 percent of their products and be exempt from value-added tax (VAT).

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With the enactment of Decree No. 10/2024/ND-CP on high-tech zones, dated February 1, 2024, Vietnam has expanded the policy framework for EPEs that support Vietnam’s efforts to foster globally competitive high-tech industries.

However, Dezan Shira & Associates notes that the process to set up an EPE has become more complex, as provinces impose more conditions and grant licenses in their own jurisdiction.  For example, it is common for a company to find a ready-built factory in the perfect location for its business activities, but it cannot apply for an EPE because the factory for lease is not qualified.

In this article, we will explain what exactly an EPE is, the eligibility criteria, and alternative options so that the company can still benefit from the tax incentives associated.

What is an EPE?

EPEs are companies that are established and operate within an export processing zone (EPZ) or those in industrial parks (IP) or economic zones that specialize in manufacturing products for export.

Vietnamese law has certain requirements in terms of facilities for EPEs. They are required to be separated by fence systems, have ports, entrance and exit doors, and fulfill requirements by customs authorities related to non-tariff areas and rules on import and export duty, such as camera installation. EPEs are therefore often strangled by red tape and subject to stringent tax and customs controls.

Prior to the issuance of Decree 10/2024, EPEs could only be located in EPZs or certain IPs meeting specific requirements. Currently, there are five EPZs in Vietnam, out of which two are fully occupied.

Investors are advised to investigate other options at normal IPs. They should also check whether the locations they are considering meet the above-mentioned requirements. This is not an issue for companies leasing land and then building the factories themselves, but may be a concern for companies that are planning to lease a ready-built factory.

Decree 10/2024: EPEs in high-tech zones

Article 32 of Decree 10/2024 allows establishments of EPEs in high-tech zones to execute eligible investment projects. They must specialize in manufacturing products for export, and be separated from outside areas according to regulations applicable to duty-free zones in the law on export tax and import tax.

Eligible investment projects for EPEs in high-tech zones

According to Decree 10/2024, eligible investment projects in high-tech zones must meet the following conditions:

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• Project objectives and activities must align with the missions of high-tech zones (Article 31.2, Law on High Technology);
• Apply environment-friendly and energy-saving measures;
• Must fit with zoning, infrastructure, and social facilities of the high-tech zone and comply with relevant laws; and
• Investors must demonstrate financial capacity or legitimate resources to ensure capital, project construction, and operation.

Beyond these broad principles, projects must follow certain technical and operational conditions, including:

• Applied technology must belong to the List of prioritized high technologies issued by the Prime Minister;
• Use energy efficiently;
• Implement a quality management system that meets international industry standards;
• Comply with environmental technical regulations, encouraged to meet international standards such as ISO 14000; and
• Meet criteria on revenue from high-tech products, research and development (R&D) workforce, R&D spending, and technology lines, as guided by Articles 4–5 of Circular No. 08/2024/TT-BKHCN.

Together, these requirements define a tightly regulated but opportunity-rich framework for investors. Projects that can demonstrate technological strength, environmental responsibility, and sustainable financing are well-positioned to benefit from Vietnam’s strategy of fostering globally competitive high-tech industries.

Policies for EPEs in high-tech zones

In addition to the investment incentives and support measures for businesses in high-tech zones provided under Decree 10/2024, EPEs are entitled to special regulations if they meet customs inspection and supervision requirements. Specifically, they may apply the same preferential rules that govern EPEs operating in industrial parks and economic zones, as stipulated under Vietnamese laws on industrial and economic zones.

Enterprises within high-tech zones that had already met these requirements, as well as the non-tariff zone conditions under Vietnam’s import and export tax laws, before Decree 10/2024 took effect, will also be granted the same treatment. In these cases, the applicable regulations for EPEs in industrial parks and economic zones apply from the date the enterprise fulfills those conditions.

How to set up an EPE

To establish an EPE, firms must:

• Apply for an Investment Registration Certificate (“IRC”);
• Apply for an Enterprise Registration Certificate (“ERC”);
• Apply for Certification of Eligibility for Export Processing Enterprises from the customs authority;
• Apply for an Environment License if the factory produces emissions or other waste that needs to be treated before being released into the environment; and
• Apply for any product-specific permits.

After receiving their IRC and ERC, companies wishing to establish an EPE shall apply for Certification of Eligibility for Export Processing Enterprises from the customs authority. The customs office will conduct a field inspection. It may be inspected multiple times until all the requirements are met.

It is also important to note that a company must be qualified as an EPE within 12 months from the date the IRC is issued. After 12 months, if the company has not yet been qualified, it will be changed to non-EPE.

Investment procedures for EPEs in high-tech zones

As per Article 16 of Decree 10/2024, the establishment and operation of EPEs within high-tech zones must follow specific investment procedures set out under Vietnam’s investment law and the provisions of this Decree:

• Investment registration: Projects for establishing EPEs must be registered in accordance with the general investment regulations and this Decree;
• Application dossier: Required documents include those applicable to high-tech projects producing high-tech products, along with a written commitment to meeting customs inspection and supervision requirements applicable to non-tariff zones under Vietnam’s import and export tax laws; and
• Investment objectives: The investment objectives of an EPE must be clearly stated in the Decision on Investment Policy Approval, the IRC, or an official confirmation that the project satisfies the principles of high-tech operations as prescribed in this Decree.

Updated invoicing practice for EPEs having other business activitites

With Decree No. 70/2025/NC-CP now in effect, which amends Decree No. 123/2020/NC-CP, EPEs that engage in additional business activities outside their main operations must issue invoices accordingly:

• Those who declare VAT using the direct method shall use VAT invoices; and
• Those that declare VAT using the deduction method shall use sales invoices.

For detailed guidance on the updated invoice compliance in Vietnam, please read: E-Invoice Compliance in Vietnam: Key Requirements & Best Practices

EPE or non-EPE: tax incentives

The alternative to an EPE is a normal manufacturing company (or non-EPE). These firms can produce goods for the domestic market or for export. Non-EPEs can be more flexible in selecting their manufacturing location (any IP will do) and don’t have to set up a fence or install cameras for the customs authority to inspect their operation.

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Regarding investment incentives, both EPEs and non-EPEs are entitled to corporate income tax incentives and land rental incentives based on their location and business lines. The key difference lies in the incentives in terms of customs duties and VAT.

An EPE is exempt from paying duties on imports and exports, as well as VAT. On the other hand, for manufacturing companies, customs duties for raw materials are not exempt but may be refunded if certain conditions are met. The ordinary VAT is also applied to manufacturing companies, and they have to conduct monthly or quarterly declarations. It’s important to note here that where a normal manufacturing company has export activities, the equivalent creditable input VAT shall be refundable if the amount equals or exceeds VND 300 million (US$12,222). Note that VAT refunds are capped at 10 percent of export revenue.

Key takeaways

VAT plays a crucial role in cash flow and the taxation aspect of corporate budgets. It frequently serves as a primary motivator for businesses to dedicate resources towards establishing an EPE.

Nevertheless, it is imperative for companies to be aware of the challenges that can emerge during the EPE certification process. Collaborating closely with local consultants and IP developers is essential to ensure that all necessary prerequisites are satisfied.

In cases where a company does not qualify as an EPE but intends to export all its products, Dezan Shira & Associates recommends setting up a manufacturing enterprise specifically for the purpose of exporting manufactured goods. Subsequently, the company can request the local supervising tax department to refund the creditable input VAT that is directly associated with the export processing activities.

Lastly, companies should be aware that the assessment process can be time-consuming, and they may encounter challenges when striving to secure a tax refund and optimize the refund amount successfully. Planning for these delays is key to effectively managing cash flow and company budgets.

(With inputs from Vu Nguyen Hanh)

This article was originally published on October 18, 2023. It was last updated on August 22, 2025.

This article first appeared on Vietnam Briefing, our sister platform.