Decree No. 181/2025/ND-CP - VAT rate for services provided to Export Processing Enterprises

Specifically, a new condition has been added requiring that the services must be “provided directly to organizations located within non-tariff zones and consumed within those zones to directly serve export production activities”. This is further clarified in Clause 5, Article 17, as follows:
“Goods and services sold or provided to organizations within non-tariff zones and consumed within those zones to directly serve export production activities as stipulated in Clauses 1 and 2 of this Article are those consumed within the non-tariff zones to serve the export production activities of the organizations therein, and not for any other activities unrelated to export production, except for goods and services specified in Clause 4 of this Article.”

What to consider? 

Per our further discussions with the tax authorities there are currently two prevailing interpretations regarding the services provision: 

1. The distinction between “direct” and “indirect” services is typically assessed by the tax authorities based on the extent to which the related costs are connected to the export production process. Specifically, costs directly associated with production lines, machinery operation, materials, or actual manufacturing activities are generally considered as directly serving export production activities. Conversely, costs related to management, administration, or office support functions are usually classified as indirectly serving export production activities and, therefore, are not eligible for the 0% VAT rate. 
2. The assessment of whether a service “directly serves export production activities” should not be limited to the direct–indirect distinction mentioned above, but rather depends on the actual scope of operations of the export processing. Accordingly, if the EPE engages solely in export production activities, the services provided to such an enterprise may be regarded as directly serving export production and thus eligible for the 0% VAT rate. However, if the EPE also carries out other business activities (such as trading or providing services to domestic enterprises), the application of the 0% VAT rate must be carefully reviewed. Each type of service should be evaluated to determine the extent to which it supports export versus non-export activities, in order to allocate the appropriate taxable value and corresponding VAT rate.

Recommendations 

Per the wording of the current regulations, the second interpretation is more likely to be applied in practice. However, the company with the provision of services to EPE should proactively review the scope of client and assess whether the services provided could also be used for other business activities beyond export processing. Such a review will help enterprises identify and quantify potential risks related to the applicable VAT rate, as well as closely monitor any new guidance or updates from the tax authorities to make timely adjustments (if necessary) in order to minimize risks and ensure compliance with regulations.

Our supports

Prepare for what's next with Forvis Mazars. We cut through the complexity of new regulations, providing the strategic guidance and support to keep you compliant and ahead of the curve. If you have questions or need support with adapting to new requirements, let our Tax experts advise you.

Please refer to the full updates in the Download section below.