Vietnam has the advantage of abundant resources and land fund to build manufacturing factories, so outsourcing is an area where many businesses are operating. However, for goods exported and imported under license, traders are only allowed to sign processing contracts for foreign traders when licensed. The article below Viet An Law will inform clients about the processing license in Vietnam.

Legal basis

• Law on Foreign Trade Management 2017;
• Decree 69/2018/ND-CP detailing several articles of the Law on Foreign Trade Management;
• Circular 12/2018/TT-BCT detailing several articles of the Law on Foreign Trade Management and Decree No. 69/2018/ND-CP, amended and supplemented by Circular 42/2019/TT-BCT and Circular 08/2023/TT-BCT.

Some related concepts

Processing is a commercial activity whereby the processing party uses part or all of the processing party’s raw materials and materials to perform one or more stages in the production process at the request of the party order processing to receive remuneration.

Thus, it can be understood that a processing license is a legal document certifying that a processing facility is qualified to process goods for foreign traders. The license to provide goods processing services is issued by the Ministry of Industry and Trade.

Obligation to obtain processing license in Vietnam

Not all goods processing activities require permission from the competent authority. Pursuant to Clause 4 Article 38 of Decree 69/2018/ND-CP stipulates that for goods exported and imported under license, traders can only sign processing contracts for foreign traders after being granted a license by the Ministry of Industry and Trade.

Thus, not all processing activities require a license. The law only requires traders to have a processing license issued by a competent authority in some specific cases, traders only need to apply for a license. Processing license from the Ministry of Industry and Trade in case of signing a processing contract for a foreign country.

Procedures for licensing goods processing in Vietnam

Components of required dossiers

Pursuant to Point a, Clause 4, Article 38 of Decree 69/2018/ND-CP stipulates that license application documents include the following documents:

Procedure for processing license requests

Step 1: Traders prepare and submit a license request to the Ministry of Industry and Trade in one of the following forms:

• Submit directly to the address: 54 Hai Ba Trung – Hanoi city
• Submit by mail
• Online: https://dichvucong.moit.gov.vn/HomePage.aspx

Step 2: The competent authority receives and processes the permit request

In case the dossier is not complete and by regulations, within 3 working days from the date of receiving the trader’s dossier, the Ministry of Industry and Trade shall send a document requesting the trader to complete the dossier.

Step 3: Notify the results of application processing

• Within 5 working days from the date of receiving the written response from the relevant ministry or ministerial-level agency, the Ministry of Industry and Trade shall issue the License to the trader.
• In case of not granting a License, the Ministry of Industry and Trade will respond in writing and clearly state the reason.

Note:

• In case a trader has a Certificate of eligibility to produce and trade goods that are processed for foreign traders, the Ministry of Industry and Trade shall consider granting a License to the trader within 5 working days from the date of receipt. The documents are complete and follow regulations, and there is no exchange of opinions with relevant ministries and ministerial-level agencies;
• In case of supplementing, amending the License, or re-issuing it due to loss or misplacement of the License, the trader shall send a written request and related documents to the Ministry of Industry and Trade. Within 5 working days from the date of receiving complete and prescribed documents, the Ministry of Industry and Trade will consider adjusting and re-issuing the License to the trader.
• For processing and exporting military uniforms to foreign armed forces, based on Clause 1, Article 9 of Circular 12/2018/TT-BCT, manufacturing enterprises need to complete an application form for a production license, processing and exporting military uniforms to foreign armed forces according to the form Appendix X issued with Circular 12/2018/TT-BCT.

Some questions related to goods processing activities

Who are the subjects accepted to process for foreign countries ?

Subjects eligible to process for foreign countries under the scope of Vietnamese law include:

• Vietnamese traders;
• Traders with foreign investment capital in Vietnam.

Does the object processing the goods have any requirements?

Processed goods must not be on the List of goods banned from export or temporarily suspended from export or on the List of goods banned from import or temporarily suspended from import;

• For goods exported or imported under license, traders can only sign contracts after being licensed by the Ministry of Industry and Trade.
• For goods in the conditional business investment list, only traders that meet all conditions according to regulations on production and trading of that item can process for export to foreign countries.
• For imported goods in the form of designated traders under the management authority of the State Bank of Vietnam, the processing of goods shall comply with the regulations of the State Bank of Vietnam.

What content does a goods processing contract include?

According to Article 39 of Decree No. 69/2018/ND-CP stipulates that processing contracts must be made in writing or another form of equivalent value and must at least include the following terms:

• Names and addresses of the contracting parties and the direct processing party.
• Name and quantity of processed products.
• Processing price.
• Payment terms and payment method.
• List, quantity, and value of imported raw materials, sub-materials, supplies, and domestically produced raw materials, sub-materials, and supplies (if any) for processing; norms for use of raw materials, auxiliary materials, and supplies; norms of consumable materials and material loss rate in processing.
• List and value of machinery and equipment rented, loaned, or donated for processing (if any).
• Measures to handle scrap, waste, and waste products and principles for handling rented or borrowed machinery and equipment, raw materials, auxiliary materials, and surplus supplies after the end of the processing contract.
• Delivery location and time.
• Trademarks and names of origin of goods.
• Validity period of the contract.

Is the party that processes the goods exempt from tax?

According to Point a, Clause 2, Article 42 of Decree 69/2018/ND-CP stipulates that the processing party is exempt from export and import tax according to the provisions of tax law on temporarily imported goods according to regulations loss levels and rates to carry out processing contracts and for exported processed products.

Business license consulting service of Viet An Law

• Consulting on conditions to be granted a processing license;
• Drafting documents for processing licenses;
• Representing clients to carry out licensing and establishment procedures;
• Consulting on other legal issues when doing business and production.

If you need a business license, please contact Viet An Law for the best support.

Disclaimer: This article was last updated in March 2024. Laws may have changed since then. Please contact Viet An Law to confirm the information in this article is current and for any legal assistance.