Notes on customs inspection and supervision conditions for EPEs

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EPEs are required to meet conditions for customs inspection and supervision. Illustrative photo

Conditions on specifications of hard fences

Regarding the specifications of hard fences, based on the provisions of Clause 10, Article 1 of the Decree 18/2021/ND-CP, the hard fence must separate the EPE from the outside.

Therefore, the customs departments of the provinces and cities shall base on each specific case on the form, materials, and specifications for the construction of hard fences when carrying out customs inspection and supervision for EPEs to assess conditions on the separation between EPEs and the external area.

Besides, some enterprises are accepted on meeting the condition of hard fences, such as EPEs established in export processing zones, export processing divisions in industrial parks and economic zones, if the export processing zones and export processing divisions do not include ordinary enterprises, conditions on hard fences shall be applied to the whole zone; conditions on the camera system and management software shall apply to each EPE.

In case export processing zones and export processing divisions have ordinary enterprises or EPEs are located in industrial parks or economic zones, each EPE must meet the conditions of its own hard fence and must ensure that goods only go through a separate gate/door of the EPE as prescribed in Clause 1, Article 28a of Decree 18/2021/ND-CP.

In addition, if the EPEs leases factories, production facilities that have shared gates/doors and internal roads with other EPEs, the condition of a hard fence is applied to the leased entire area and the hard fences must separate goods of this EPE from goods of other EPEs and satisfy the requirements of customs supervision; and conditions on the camera system and management software shall apply to each EPE.

In case an EPE leases factories and production facilities and shares the premises of the factories or production facilities with an enterprise other than an EPE, each EPE must meet the conditions on its own hard fence and must ensure that goods can only go through a separate gate/door of the EPE as prescribed in Clause 1, Article 28a of the Decree 18/2021/ND-CP.

How to manage branches of EPEs?

Regarding the management of dependent branches of EPEs established in customs management areas different from the place where the EPEs have their headquarters, the General Department of Customs said that the branch of an EPEs is allowed to apply the mechanism like an EPE, if it meets the conditions in Clause 10, Article 1 of Decree 18/2021/ND-CP, and is established in an export processing zone, industrial park or economic zone and its accounting depends on the EPE.

The dependent branch of the EPE must be shown on the Investment Registration Certificate of the EPE issued by a competent authority.

The Customs Department where the EPE's head office is located shall send a written request to the Customs Department where its dependent branch is located for inspection and certification of the branch's conditions as prescribed. The Customs branch managing the EPE where the head office is located is responsible for managing and monitoring the incoming and outgoing goods of the EPE and its dependent branches; monitoring the operation of the EPE and its dependent branches through camera data from the head office and the dependent branches; inspecting the EPE and coordinate with the customs department where the dependent branch of the EPE is located to inspect production facility when detecting signs of violations of the law on customs.

The time limit for achieving camera image data at the EPE is at least 12 months, stipulated by the General Department of Customs.

How is tax policy for EPEs that fail to meet conditions on customs inspection and supervision?

Regarding tax policy for the EPEs failing to meet conditions for inspection and supervision, the General Department of Customs requests local Customs Departments to comply with the provisions of Clause 5, Article 28a of Decree 18/2021/ND-CP.

Accordingly, within a maximum period of no more than one year from the effective date of Decree 18/2021, the EPEs, which have a Certificate of Investment Registration or a Written confirmation issued by a competent investment authority before the effective date of Decree 18/2021 (April 25, 2021) and have been operating, must complete conditions on customs inspection and supervision.

If the EPEs fail to meet conditions on customs inspection and supervision, they shall be allowed to complete the conditions multiple times within one year since Decree 128 is effective.

If an EPE neither completes the conditions on customs inspection and supervision for more than a year since the effective date of Decree 18/2021 nor reports to the customs branch, it will enjoy tax policy for the non-tariff area since the date is beyond the time limit of one year.

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If this EPE then meets the conditions on customs inspection and supervision and reports to the customs branch and is certified by the customs branch for eligibility in accordance with regulations in Clause 10, Article 1 of Decree 18/2021, the EPE shall apply tax policy for the non-tariff area since the date the customs branch issues the certification.