Vietnam Import Duty and VAT Exemptions for FDI Machinery: What Your Project Must Prove Before the First Shipment Arrives
You have secured your investment registration certificate, selected a factory site, and negotiated equipment supply contracts. The machinery is scheduled to ship. Then you discover that the duty exemption you assumed was automatic requires a registered list approved by customs before the goods arrive—not after they clear. Foreign investors routinely lose the entire exemption benefit on their first equipment shipment because the sequence was wrong. Vietnamese customs law is strict on this point: retrospective additions to the exemption list are the single most common cause of failed claims . This guide walks through the legal grounds, the required dossier, the registration procedure, the VAT treatment that sits alongside the duty exemption, and the mistakes that trigger rejection—all sourced from Vietnam’s Law on Export and Import Duties, Decree 134/2016/ND-CP, and the Ministry of Finance circulars that govern customs procedures.
What Is the Legal Basis for Machinery Import Tax Exemptions?
The exemption for machinery and equipment imported to form fixed assets of an investment project originates from Article 16 of the Law on Export and Import Duties No. 107/2016/QH13. This law took effect on September 1, 2016, and was most recently amended by Law No. 90/2025/QH15, effective July 1, 2025 . Article 16 establishes duty exemptions for FDI projects eligible for investment incentives in two broad categories: fixed assets and capital equipment. Imported machinery, equipment, components, spare parts, specialized vehicles, and construction materials forming part of the project's fixed assets are exempt from import duty .
The implementing rules are set out in Article 14 of Decree No. 134/2016/ND-CP (as amended by Decree No. 18/2021/ND-CP), which specifies the duty exemption for imports constituting fixed assets of entities eligible for investment incentives . The exemption is not automatic. It operates through a registered list of goods to be imported duty-free (Danh mục miễn thuế), submitted to customs against the project before importation. Each shipment is then reconciled against that list. Goods not on the list, or exceeding registered quantities, attract duty in the ordinary way .
What Does the Duty Exemption Cover—and What Does It Not?
Article 16 of Law 107/2016/QH13 covers the following categories when imported to form fixed assets of a qualifying investment project:
- Machinery and equipment forming part of the project's fixed assets.
- Components, parts, and spare parts imported together with the machinery and equipment.
- Specialized vehicles used directly in the project's production or construction process.
- Construction materials that cannot be produced domestically.
- Raw materials and components for a defined initial production period in certain encouraged categories.
What it does not cover is equally important. Ordinary consumables, office equipment outside the fixed asset definition, and replacement machinery imported years later outside the registered list are not exempt . This distinction frequently surprises operators expanding capacity. If you import a second production line after the initial exemption list has been exhausted, and the new equipment is not on that list, the shipment attracts full duty regardless of the project's incentive status.
Required Documents for the Duty Exemption Dossier
The dossier for duty exemption registration is prescribed by Article 31 of Decree 134/2016/ND-CP (as amended). The core components are:
- Notification of the duty-free import list (Danh mục miễn thuế) on Form No. 06 in Appendix VII to Decree 134/2016/ND-CP. This is submitted electronically through the customs electronic data processing system. If the system is unavailable, two original paper copies of Form No. 06 and one original of the reconciliation tracking slip (Form No. 07) are submitted .
- Investment Registration Certificate (Giấy chứng nhận đăng ký đầu tư) or the investment policy approval decision, or documents of equivalent legal value. This establishes the project's eligibility for investment incentives under the Law on Investment .
- Enterprise Registration Certificate (Giấy chứng nhận đăng ký doanh nghiệp) or equivalent.
- Written confirmation from the Ministry of Science and Technology for certain specialized transport vehicles referenced in Article 16 of Law 107/2016/QH13 (only applicable to specific vehicle categories, not general production machinery) .
- Contract for the manufacture or fabrication of machinery, equipment, or components where the goods are being manufactured to order (01 photocopy) .
In practice, customs also requires the technical specification or equipment schedule that forms the basis for the list. This document is not a separate statutory form, but it is the underlying evidence that customs uses to verify that the listed items are genuinely for the project's fixed assets. Keep it consistent with the investment certificate's project description.
Copyable Checklist: Duty Exemption Dossier Assembly
DUTY EXEMPTION DOSSIER CHECKLIST
Vietnam — Decree 134/2016/ND-CP, Article 31 PROJECT IDENTIFICATION
[ ] Investment Registration Certificate number: [Số GCNĐKĐT]
[ ] Project name as registered: [Tên dự án]
[ ] Investment incentive category confirmed: [Danh mục ưu đãi đầu tư]
[ ] Enterprise Registration Certificate number: [Số ĐKDN]
[ ] Tax code: [Mã số thuế] DUTY-FREE IMPORT LIST (DANH MỤC MIỄN THUẾ)
[ ] Form No. 06 (Appendix VII, Decree 134/2016/ND-CP) completed in Vietnamese
[ ] For paper submission: 02 original copies of Form No. 06 + 01 original Form No. 07
[ ] List of machinery/equipment/parts with HS codes, descriptions, quantities
[ ] Technical specification or equipment schedule attached
[ ] Supporting contracts for manufactured-to-order items (01 photocopy each) SUPPORTING DOCUMENTS
[ ] Investment Registration Certificate (certified copy or electronic data access authorized)
[ ] Enterprise Registration Certificate (certified copy or electronic data access authorized)
[ ] Ministry of Science and Technology confirmation (only for specialized transport vehicles)
[ ] Manufacture/fabrication contracts (only for custom-made machinery) SUBMISSION
[ ] List submitted electronically via customs data processing system
[ ] If electronic system unavailable: paper submission to provincial customs
[ ] Confirmation of list registration received
[ ] Reconciliation tracking slip (Form No. 07) obtained for paper submissionsStep-by-Step Registration and Import Procedure
Step 1: Confirm Project Eligibility for Investment Incentives
Before preparing the exemption list, verify that your Investment Registration Certificate explicitly grants investment incentives under the Law on Investment. The duty exemption is tied to the project's incentive category, not to the presence of foreign investment alone. Projects in encouraged sectors or encouraged geographical areas qualify. If your project is in a non-incentivized sector, the machinery import may not qualify for the Article 16 exemption.
Step 2: Prepare the Duty-Free Import List on Form No. 06
Complete Form No. 06 in Vietnamese. The list must include each item's description, quantity, and customs code (HS code). Attach the technical specification or equipment schedule that justifies the list. If the machinery must be imported in multiple shipments and cannot be reconciled at the time of import (a “combined assembly” or “line transfer” situation), submit two original paper copies of Form No. 06 as prescribed .
Step 3: Submit the List to Customs Before Importation
Submit the list electronically through the customs electronic data processing system. If the system is unavailable, submit the paper originals to the provincial customs department where the project is registered. The customs authority will acknowledge receipt and, in electronic submissions, automatically reconcile each subsequent shipment against the registered quantities .
Step 4: Import and Declare Each Shipment Against the Registered List
When the machinery arrives, declare it against the registered exemption list on the customs declaration. The declarant must self-determine and declare the exempted tax amount on the customs declaration and bears legal responsibility for the accuracy of the declaration . Customs will verify the declaration against the registered list and the supporting documents.
Step 5: Post-Clearance Reconciliation and Reporting
Exempted assets carry ongoing conditions. They must be used for the project for which the exemption was granted. Disposing of them, transferring them to another project, or changing their use within the statutory period can trigger repayment of the duty saved . Additionally, the project owner must notify customs of the use of duty-free imported goods as prescribed in Article 31a of Decree 134/2016/ND-CP .
VAT on Imported Machinery: Separate from Duty, Often Overlooked
The import duty exemption does not automatically resolve the VAT treatment. Import VAT and import duty are separate obligations, and the treatment of each should be modeled together . When goods are imported into Vietnam, VAT is generally payable at the importation stage at the standard rate of 10%, unless a specific exemption applies .
Under Circular No. 219/2013/TT-BTC, certain imported goods are not subject to VAT. These include machinery, equipment, parts, and supplies serving scientific research and technological development, and imported machinery and equipment forming fixed assets of investment projects in certain categories . The conditions for VAT exemption are distinct from the duty exemption conditions. A project that qualifies for duty exemption under Law 107/2016/QH13 may still need to satisfy separate VAT exemption criteria under VAT law.
For businesses that pay import VAT and later seek a refund, the conditions include: the entity is VAT-registered; the import VAT in relation to the imported fixed assets is VND 200 million or above; and the investment project is an important national project approved by the National Assembly, or falls within specified investment incentive categories . New investment projects with a scale of VND 6 billion or more, or projects in investment-priority sectors under the Law on Investment 2020, may also qualify for VAT refund consideration .
Common Mistakes and Rejection Warnings
- Registering the exemption list after the goods arrive. This is the single most common cause of failed claims. Retrospective additions are not accepted. The list must be registered and acknowledged before the affected shipment arrives .
- Mixing equipment with raw materials in the declaration. Declaring production equipment as “processing raw materials” to obtain duty-free treatment is a customs violation. Enterprises that have reclassified processing equipment as “components” or “raw materials” have faced duty reassessment and penalties .
- Using an exhausted list for later-phase equipment. Importing equipment against a list whose registered quantities have already been fully reconciled is another common way the exemption is partly lost. The reconciliation is automatic in the electronic system; once quantities are exhausted, further shipments attract duty .
- Failing to report the use of duty-free goods. The project owner must notify customs of the use of imported duty-free goods as prescribed. Failure to report is a compliance violation independent of the original exemption .
- Disposing of exempted machinery without notifying customs. Selling, transferring, or repurposing exempted equipment within the statutory period triggers repayment of the duty saved . Treat the exemption as a conditional benefit, not an unconditional one.
- Assuming VAT follows duty automatically. Import duty exemption and VAT exemption are governed by different legal instruments. A duty-exempt import may still attract VAT at 10%. Model both obligations separately .
- Ignoring the investment certificate's incentive scope. The duty exemption is tied to the project's incentive category. If the investment certificate does not explicitly grant incentives, the Article 16 exemption may not apply. Verify the certificate's language before preparing the exemption list.
Frequently Asked Questions
Does an FDI enterprise in Vietnam automatically get import duty exemption on machinery?
No. The exemption under Article 16 of the Law on Export and Import Duties applies only to projects eligible for investment incentives and only if the machinery forms part of the project's fixed assets. The exemption operates through a duty-free import list registered with customs before the goods arrive. A project without an explicit incentive category in its Investment Registration Certificate may not qualify.
When must the duty-free import list be registered with customs?
The list must be registered before the affected goods arrive. Retrospective additions are the single most common cause of failed claims. The list can be submitted electronically through the customs data processing system, or in paper form if the system is unavailable. Amendments to the list must also be registered before the affected goods arrive.
How long does customs take to process a duty exemption dossier?
Vietnam Customs commits to resolving a sufficient and legitimate duty exemption dossier within 10 working days of receipt. Declaration registration is completed within 30 minutes of receipt for standard cases. Plan your shipping schedule to allow for this processing window before the goods arrive at the port.
Is import VAT exempted on the same machinery that qualifies for duty exemption?
Not automatically. Import duty and VAT are separate obligations governed by different legal instruments. Import VAT is generally payable at the importation stage at 10% unless a specific VAT exemption applies under Circular No. 219/2013/TT-BTC. Certain machinery serving scientific research or forming fixed assets of qualifying investment projects may be exempt from VAT, but the conditions must be verified separately.
What happens if I sell or transfer exempted machinery to another project?
Selling, transferring, or changing the use of exempted machinery within the statutory period can trigger repayment of the duty saved. Exempted assets must be used for the project for which the exemption was granted. The project owner must also notify customs of the use of duty-free imported goods as prescribed in Article 31a of Decree 134/2016/ND-CP. Treat the exemption as a conditional benefit subject to ongoing compliance obligations.