Export processing zones: Their important contributions
Export processing zones are often formed with the support of the government, with the goal of attracting investment capital, creating a favorable business environment and contributing to the development of the local and national economy. In particular, it is a place that combines specialization and diversity, focuses on export production and is an important resource for global economic development. In this article, we will learn about export processing zones as well as their contributions to the economy.
1. What is an export processing zone?
Export processing zones are industrial zones specializing in producing export goods, providing services for export production and export activities; separated from the outside area according to regulations applicable to non-tariff areas specified in the law on export tax and import tax.
For example: Linh Trung I II III Export Processing Zone, Tan Thuan Export Processing Zone,...
2. Role of export processing zones:
Export processing zones have 5 major and prominent roles as follows:
- Attract investment: Export processing zones often create a favorable business environment, tax support and infrastructure to attract investment capital from domestic and foreign sources.
– Contribute to economic growth and economic restructuring: Export processing zones have helped our country's labor market to specialize, focusing on exploiting maximum advantages to create export fields to foreign countries, thereby improving competitiveness and at the same time strongly promoting the economic development.
– Create jobs for workers, improve the quality of labor resources, and help eliminate hunger and reduce poverty.
– When export processing zones have many foreign investors contributing capital and providing advanced scientific and technological equipment to apply in production, it will help improve national technological capacity.
– Export processing zones help promote the local economy and accelerate urbanization.
3. Tax incentives for export processing enterprises:
– Exemption from import and export tax:
+ Business goods are transferred from one non-tariff zone to another.
+ Enterprise goods are imported from foreign countries into the non-tariff area and are only used for production and service in the non-tariff area.
+ Types of goods that enterprises export from non-tariff areas to foreign countries
Because export processing enterprises are located in a non-tariff zone, they are not subject to taxes on export and import of goods in the above cases.
– Corporate income tax incentives:
+ According to the provisions of Clause 4, Article 19, Circular 78/2014/TT-BCT, income of enterprises from implementing new investment projects in areas with difficult socio-economic conditions is regulated. Apply preferential tax rate 20% for a period of 10 years
+ At the same time, export processing enterprises also receive a 2-year tax exemption and a 50% reduction in taxes payable in the next 4 years for income from implementing new investment projects.
– VAT exemption:
+ The exchange of goods between export processing enterprises and non-tariff zones is exempted from VAT. In addition, when export processing enterprises export goods, they must follow all procedures similar to normal enterprises. If you fully meet the regulations according to Circular 219/2013/TT-BTC of the Ministry of Finance, you will enjoy a VAT rate of 0%.
4. Distinguish between export processing zones and industrial zones:
About the concept:
– Export processing zone: is an industrial park specializing in producing export goods, providing services for export production and export activities.
– Industrial park: is an area with defined geographical boundaries, specializing in producing industrial goods and providing services for industrial production.
About goals:
– Export processing zones: goal of attracting foreign businesses.
– Industrial park: goal of popularizing production and business activities. That's why this type is open to attract domestic and foreign businesses
Regarding geographical boundaries:
– Export processing zone: is the customs and tariff border of a country. Export processing zones must have tariff barriers that are completely separate from outside businesses
– Industrial park: established by a fence system
Regarding preferential policies:
- Manufacturing area:
+ Enterprises in export processing zones are free to import unlimited quantities of raw materials. Not only that, these businesses do not have to pay sales tax or export tax for the products produced and exported
+ Get support for quick customs clearance
– Industrial parks: industrial parks are popular production models. Therefore, preferential policies for industrial parks are only at a certain basic level
Regarding business components:
- Manufacturing area:
+ Includes enterprises located in export processing zones, called export processing enterprises
+ Export processing enterprises are exempt from import and export tax when importing goods to create fixed assets, importing raw materials for production, or when exporting finished products abroad, exempt from Value Added Tax
– Industrial park: includes all domestic and foreign enterprises
About manufacturing industry:
– Export processing zone: industries and goods for export such as rice, textiles, leather shoes, etc.
– Industrial park: most industries and occupations with diverse types of goods and services.
Above are some shares about export processing zones. If you have questions that need answering or need to transport import and export goods, please contact Macsco Logistics immediately with a team of many years of experience for the fastest and most accurate support.
For further information and questions, please contact:
MACSCO LOGISTICS LIMITED
Address: 64 Nguyen Dinh Chieu, Da Kao Ward, District 1, Ho Chi Minh City, Vietnam
Phone: (84 28) 6270 6576
Email: anna@macsclogistics.com
Website: https://macscologistics.com
