Need to supplement legal regulations to ensure the customs management for the export processing enterprises

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The establishment of EPEs is the same as other normal enterprises but they are entitled to non-tariff policies. Photo: Illustration

Not specific conditions to ensure customs supervision

Under the current legal regulations the EPEs, including those in export processing zones (EPZs) and outside the EPZs, are entitled to apply the policy of non-tariff zones. When the EPEs import raw materials and supplies to produce goods for use in the EPEs, they are entitled to policies that are not subject to tax. When selling products which they produce in the domestic market, local purchasers must carry out the import procedures and pay taxes according to tax regulations the same as for goods imported from foreign countries.

Analysis of legal regulations related to EPEs, the Ministry of Finance (General Department of Customs) said that according to the system of legal documents of the Investment Law, there are no specific conditions on granting investment certificates for the EPEs. However, it is stipulated that EPEs be separated from the outside territory by a fence system, with gates and entrances, ensuring conditions for inspection, supervision and control by the Customs and other relevant agencies, but there are no specific stipulations to ensure conditions for inspection, supervision and control of the Customs and other relevant agencies. Therefore, in fact, when issuing Investment Certificates for the EPEs, there are cases in which the enterprises do not have fences, or have not certified that they have enough conditions for inspection, supervision and control of the Customs and other related agencies

In particular, currently, the EPEs are being affected by the policy of non-tariff areas under the provisions of Clause 1, Article 30 of Decree 82/2018/ND-CP (previously defined in Clause 1, Article 21 of Decree 29/2008/ND-CP). However, in the Law on Export Tax and Import Tax; Decree 82/2018/ND-CP does not specify the assurance of inspection, supervision and control conditions by the Customs and other relevant authorities. Even before the Decree 82/2018/ND-CP took effect, the licensing of EPEs under the provisions of Decree 29/2008/ND-CP also did not have specific criteria when issuing licenses for the EPEs. Currently, the Customs are based on the granted Investment License to manage the EPEs and carry out the customs procedures, customs inspection and supervision according to regulations. Thus, it can be seen that the establishment of EPEs is similar to other normal enterprises, but they are entitled to non-tariff policies.

While the law allows the EPEs to sell the products they produce to the domestic market, they must carry out the import and export procedures on the spot when selling. Therefore, the management of sales, domestic consumption of EPEs without regulations on inspection and supervision at EPEs is completely dependent on the legal compliance of EPEs, while it is determined that the EPEs must ensure the conditions of inspection, supervision and control of the Customs and other related management agencies.

At the EPEs, currently, the Customs does not arrange the officials to supervise directly. Particularly for 3 EPZs, Linh Trung, Tan Thuan and Long Binh, the Customs arranged to supervise the gates of Linh Trung and Tan Thuan. However, because there are the normal businesses in these areas, the inspection and supervision at the gate of these zones are not effective.

Recommendations for additional regulations

Facing the situation of managing EPEs’ arising inadequacies, the Ministry of Finance (the General Department of Customs) has proposed the Ministry of Planning and Investment to supplement the provisions on conditions of inspection, supervision and control of the Customs for the EPEs in Decree 82/2018/ND-CP.

Specifically, they must be surrounded with a hard fence, separated from the outside area and provide: Surveillance cameras that show clearly images of incoming and outgoing goods; production process images at the enterprises. Images are to be observed at all times of the day (24/24); Data on camera images are to be kept at the enterprise for at least 12 months, and the camera system is to be directly connected to the Customs office. Also, having a management system for imported raw materials and supplies to produce the exported goods, for providing the export - import-stock data of raw materials, supplies and products to give balanced reports on the situation of use for the Customs.

In the immediate future, for the problems in Clause 1, Article 30 of Decree No. 82/2018/ND-CP, stipulating that "investment registration agencies have the responsibility to consult the competent Customs authorities about their ability to meet conditions on the customs supervision before issuing the Investment Registration Certificate or confirming in writing to investors", while there are no specific regulations on the customs inspection and supervision conditions, no regulation on procedures (documents, processing time ...), the Ministry of Finance requested the Ministry of Planning and Investment to report to the Prime Minister that the licensing investment authorities can only license EPEs when the enterprise commits to meeting the conditions on hard fencing, separated from the outside area; surveillance cameras management system of raw materials and supplies for production of exported goods; can provide export-import-stock data of raw materials, supplies and products to report on the situation of use with the Customs authorities. When meeting all conditions, they are recognized as EPEs, and the Customs agency is assigned to check before the EPEs begin to produce, imported raw materials and supplies to produce exported goods.

Regarding the leasing of external warehouses to store raw materials, supplies and products of EPEs, the Ministry of Finance said that the legal documents had not specified for the case that the EPEs hire external warehouses to keep their materials, supplies and products at the locations outside the industrial parks, export processing zones, high-tech zones and economic zones, and had not prohibited the EPEs from conducting this activity.

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Thus, in order to solve problems arising for the EPEs in localities with high occupancy rates in industrial zones, which want to hire warehouses outside the EPEs to store materials, supplies and products (not produced at rented warehouses) at locations near industrial parks, export processing zones, hi-tech parks and economic zones, it is necessary to supplement specific provisions in Decree No. 118/2015/ D-CP. In the immediate future, for the EPEs that need to rent external warehouses at locations outside industrial zones, export processing zones, high-tech zones and economic zones, the Ministry of Planning and Investment is requested to provide guidance to create favorable conditions for businesses, at the same time, the businesses must meet the supervision requirements of the Customs authorities.