On October 11, 2024, the General Department of Customs (GDC) issued Official Letter No. 4920/TCHQ-GSQL to guide customs procedures and tax policies in case export processing enterprises (EPEs) lease factories to other EPEs.
The GDC has the following opinions:
According to Clause 6, Article 26 of Decree No. 35/2022/ND-CP:
c) Assets, machinery, and equipment that benefit from tax incentives granted to export processing enterprises must not be used for any other production or business activities. In case of using assets, machinery and equipment eligible for tax incentives applicable to export processing enterprises to carry out other business activities, they must refund the tax incentives that have been exempted or reduced in accordance with tax regulations.”
According to the above provisions, assets, machinery and equipment eligible for tax incentives of EPEs are only used for production activities of EPEs. If used for other business activities, EPEs must refund the exempted or reduced taxes.
The GDC requests bussiness to contact the authorities on land, real estate business, and IRC authorities to determine whether bussiness is allowed to sublease offices and factories or not.
In case it is allowed to sublease offices and factories, bussiness must refund tax incentives that have been exempted or reduced when leasing these preferential assets for other purposes.
(According to Official Letter No. 4920/TCHQ-GSQL dated October 11, 2024)
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