The labels “business import”, “production import” and “processing import” are often used internally, but they do not always match a customs procedure code. “Production import” is especially ambiguous: goods imported for domestic manufacturing and domestic sale normally remain within the business-import framework, while materials imported to manufacture exported products may fall under the E31 export-production regime. Selecting a code merely because the company owns a factory can distort import-duty treatment, VAT analysis, contract files, inventory segregation, finalisation reporting and the handling of surplus materials. This article compares three transaction models: imports for domestic business/manufacturing, imports of materials for export production, and imports of materials under a processing relationship. It also identifies the data that must be locked before a declaration code is selected.

Updated: 17 July 2026 | Scope: domestic enterprises; not a substitute for specific guidance applicable to export-processing enterprises, non-tariff zones or special transactions

QUICK FACTS

Do not select by internal label

Confirm use, ownership, output, contract structure and tax mechanism before selecting a customs code.

Domestic business/manufacturing

Goods are imported for sale, consumption or domestic production; import-stage taxes normally apply unless a separate exemption exists.

Export production – E31

The enterprise imports materials, organises production and exports products while bearing commercial risks for materials, production and sales.

Processing – E21

Within this article’s main scope, the enterprise processes for a foreign trader; the official E21 scope is broader for certain transactions involving EPEs or non-tariff zones.

Exemption is conditional

E21/E31 do not create an automatic exemption; conditions, actual use and compliant handling of domestic diversion must be demonstrated.

Illustration for Business imports, export-production imports and processing imports: key differences — Illustration of the logistics topic, document or operation discussed in the article.

SCOPE

This article covers three common models for domestic enterprises: (i) importing goods for trading or domestic manufacturing; (ii) importing materials to manufacture exported products; and (iii) importing materials under a processing contract for a foreign trader. A11/A12, E31 and E21 are illustrations only. The exact code must be checked against the current procedure-code table, the importer’s status, the customs location and the actual transaction.

Under the official usage guidance, A12 applies to Vietnamese enterprises. A11 contains an exception for foreign-invested enterprises or other entities exercising import rights, in which case A41 and the relevant trading rights must also be reviewed. E21 is also broader than processing for a foreign trader because it covers certain imports for processing for EPEs or enterprises in non-tariff zones. Those special cases, as well as aircraft-supply scenarios in the code guidance, are outside this article’s main analysis.

This article should not be applied unchanged to EPEs, bonded warehouses, non-tariff zones, temporary import–re-export, leasing/borrowing, warranty goods, investment-duty exemptions or complex on-the-spot transactions. “Production import” here mainly means materials imported for export production; machinery or materials used to manufacture goods for domestic sale remain in the domestic business/manufacturing group.

TWO-LAYER RULE: The procedure code and tax treatment are separate determinations. First select A11/A12/E21/E31 from the transaction and official code guidance; then determine duty exemption or payment under the Law on Export and Import Duties and the conditions of Decree 134/2016/NĐ-CP as relevantly amended by Decree 18/2021/NĐ-CP. Declaring E21 or E31 does not itself create an exemption.

TERMS

Term	Meaning	Operational role
Business import	Goods imported for sale, consumption, investment or domestic business/manufacturing under a purchase transaction.	Determines import-stage taxes and the enterprise’s right to use or sell the goods after clearance.
A11/A12	Common business-import codes under Decision 1357/QĐ-TCHQ: A11 for business/consumption imports and A12 for business/production imports, with A12 applying to Vietnamese enterprises under the official scope.	Do not select them merely by choosing between “sale” and “production”. For FDI enterprises or entities exercising import rights, review the A41 exception and trading rights.
Export production	The enterprise imports materials, manufactures products and exports them; E31 is a common import code and E62 a common output code.	Links imported materials, production, inventory and exported products for tax-condition evidence.
Processing	The enterprise performs manufacturing operations under a processing contract for a foreign trader and receives a processing fee or agreed benefit.	The processing contract controls materials, products, norms, delivery and settlement.
E21	Code for materials and supplies imported to process for a foreign trader or, within the official scope, for an EPE or enterprise in a non-tariff zone; special cases outside this article also exist.	Links the declaration to a processing contract and material controls; it must not be used merely because an operation is described as “processing”.
Change of use	Using or disposing of goods for a purpose different from that originally declared.	May require a new declaration, taxes and supporting explanations depending on the case.

OPERATING MECHANISM

1. Domestic business/manufacturing: the enterprise imports for its own commercial use

The enterprise purchases goods from abroad, acts as importer and, after clearance, may sell, distribute, manufacture with or otherwise use the goods for the lawful declared purpose. The sales contract, invoice, Incoterm and commodity policy form the core file. Moving the goods into a factory does not automatically make the transaction E31. Where output is intended for the domestic market or the enterprise does not operate under the export-production mechanism, the import generally remains a business import.

2. Export production: the enterprise operates its own materials-to-exported-product chain

The enterprise buys or otherwise acquires materials for its own account, organises manufacturing and sells the output abroad. It bears commercial risk for material prices, yield, inventory, quality and export sales; no foreign principal controls the transaction through a processing contract. The import-duty exemption for export-production materials is preserved only when statutory conditions are met and actual use in exported products can be demonstrated.

3. Processing: manufacturing under a foreign principal’s contract

The processing relationship is governed by a processing contract: products, processing fee, material sourcing, norms, wastage, loaned machinery, delivery, scrap and contract closure. The processor should not manage the import as an ordinary material purchase. Each operational change must be traceable to the contract, an appendix or the principal’s instruction.

Mechanism criterion	Domestic business/manufacturing	Export production – E31	Processing – E21
Commercial basis	Purchase/investment contract; the enterprise imports to own and use.	Material purchase plus export sales orders/contracts; the enterprise bears business risk.	Processing contract with a principal falling within the E21 scope plus appendices/instructions; this article focuses on foreign traders.
Material ownership	Normally transferred to the importer under the purchase transaction.	Normally owned or commercially borne by the enterprise.	May belong to the principal or be self-supplied by the processor as agreed; the contract must be read.
Output	Domestic sale/use or export under an independent sales transaction.	Products must be exported to support the exemption attached to corresponding materials.	Products are delivered/returned under the processing contract or an authorised instruction.
Core cash flow	Payment for purchased goods; revenue from goods/products.	Payment for materials and export-sales revenue.	Processing fee; material payment depends on the supply arrangement.
Control point	Import duty, VAT, licences, labelling, standards and distribution rights.	Norms, materials/products/inventory, production facilities, export evidence and required reporting.	Processing contract, item codes, norms, deliveries, scrap and contract finalisation.

DECISION MATRIX

Question	Domestic business/manufacturing	Export production – E31	Processing – E21	Stop-and-review signal
Who buys the final product?	It may be sold domestically or exported under an independent sale.	There is a plan to export products manufactured by the enterprise.	The product is delivered to the principal or as directed under the contract.	The output is unclear or mixed domestic/export output is not segregated.
Who determines materials and design?	The enterprise, based on business or production needs.	The enterprise, based on export orders and production planning.	The principal and processor agree through the contract/appendices.	Instructions differ from the contract; model, norms or source are not updated.
What does the enterprise earn?	Sales revenue from goods or products.	Revenue from exported products.	A processing fee and agreed reimbursements.	The contract says processing but invoices/cash flow show a sale of finished goods.
How are surplus materials handled?	The enterprise continues lawful use or sale and records them normally.	They remain subject to the export-production control mechanism; domestic diversion requires compliant treatment.	Handled under the contract and rules on domestic sale, re-export, destruction, donation or transfer.	No plan exists for surplus, scrap or loaned machinery.
Is specialised customs inventory control required?	Not under the processing/export-production finalisation regime, unless another special regime applies.	Yes: materials, products, inventory, norms and reporting under applicable rules.	Yes: by processing contract, materials, products, norms and contract closure.	ERP cannot separate E21/E31/A11-A12 sources or trace declarations.

DOCUMENTS AND DATA TO CHECK

Document/data	Domestic business/manufacturing	Export production – E31	Processing – E21	Fields that must reconcile
Contract	Purchase contract, price appendix and delivery terms.	Material purchase contract plus product export order/contract.	Processing contract, material/product/norm appendices and delivery instructions, including the legal status of the principal.	Parties, goods, ownership, delivery and payment.
Invoice/Packing List	Price, quantity, UOM, model, origin and packing.	Material codes used in the export-production system and transaction value.	Identify principal-supplied, self-supplied, free-of-charge or paid materials.	Item code, quantity, unit, price, currency and price term.
Technical/HS file	Catalogue, composition, function and import policy.	Material-to-product mapping, use ratio and HS code.	Contract item list, material/product codes and processing operation.	Trade name must not replace technical description and HS basis.
Production-site data	As required for business and commodity controls.	Production site, warehouse, capacity and records supporting export-production conditions.	Processing site, material/product warehouses and loaned machinery where applicable.	Address, location code, use rights, capacity and warehouse flow.
Output plan	Domestic use/sales plan or independent export contract.	Production plan, export orders, schedule and output declaration links.	Delivery schedule, consignee, border point and principal’s instruction.	Volume, timing, recipient and link to imported materials.
Accounting/warehouse data	Purchasing, tax and cost accounting.	Separate E31 material sources, E62 products, losses and inventory.	Separate each processing contract, principal, material, product and scrap.	Declaration–item–lot–warehouse–norm–product–export document.

Mandatory stop: where the contract, invoice, ownership and cash flow describe different transaction models, the declaration should not be transmitted until the commercial structure and documents are corrected.

PROCEDURE FOR SELECTING THE REGIME

Step	Input	Action	Output	Owner
1. Determine import purpose	Purchase request, production plan, sales order.	Identify whether goods are for sale, domestic manufacturing, export production or processing.	Approved use-purpose sheet.	Business/planning + customs.
2. Determine contractual relationship	Sales/processing contracts, appendices and cash flow.	Confirm whether the enterprise is buyer/seller or processor; identify ownership and commercial risk.	Transaction and ownership map.	Legal/accounting + customs.
3. Determine output and tax treatment	Sales plan, export contract, exemption conditions.	Match domestic/export output; determine the procedure code separately from the ability to satisfy Article 10 or Article 12 of Decree 134/2016 as amended by Decree 18/2021.	Tax and output matrix.	Tax + customs.
4. Test control readiness	ERP, warehouse, norms and production site.	Assess source segregation, materials/products/inventory tracking and reporting capability.	Readiness/gap report.	Production + warehouse + IT.
5. Check official code table	Results from steps 1–4 and customs location.	Consult Decision 1357 and customs guidance; do not infer from an internal label.	Proposed code and basis.	Declarant.
6. Pre-transmission approval	Draft declaration and source documents.	Review regime, importer, use, exemption, contract, items and linked data.	Approval or stop decision.	Independent reviewer.
7. Post-clearance monitoring	Declaration, warehouse, production and output documents.	Reconcile actual use; process a change of use before domestic sale/use where required.	Audit trail and change file.	Customs + accounting + warehouse.

COMMON RISKS AND ERRORS

Error	Cause	Impact	Control
Selecting E31 because the company has a factory	All production materials are assumed to be export-production materials.	Wrong regime, tax treatment and missing export-output evidence.	Confirm output market and export-production conditions first.
Declaring processing under a sales contract	Emails use the word “processing” but the legal/commercial relationship is a sale.	Cash flow, ownership and finalisation file do not reconcile.	Legal review of the contract and transaction map.
Treating A12 as duty-exempt export production	The name “business/production import” is confused with E31.	Underpaid tax or incorrect landed-cost budget.	Separate the customs code name from the statutory exemption.
Mixing E21 and E31 inventory	ERP has one material code without source tracking.	The enterprise cannot prove source, use or output.	Track source code, declaration, contract and batch.
Using exempt materials for domestic goods	Production planning changes without a customs change-control step.	Taxes, late-payment interest and compliance exposure.	Change-control before issuing materials to domestic production.
Ignoring scrap and waste	Only main materials and finished goods are tracked.	Finalisation variances and unsupported disposal.	Scrap codes, norms, weighing and approved disposal method.
Copying the previous declaration code	The new contract, buyer or output differs.	The wrong logic is embedded from the start.	A separate transaction-classification sheet for every deal.

LEGAL BASIS AND OFFICIAL SOURCES

Source	Authority	Status	Role
2026 consolidated Customs Law, 54/VBHN-VPQH	Office of the National Assembly	Reflects Customs Law 54/2014/QH13 and current amendments, including Law 90/2025/QH15.	Declaration principles, declarant responsibility, inspection and supervision.
2026 consolidated Law on Export and Import Duties, 96/VBHN-VPQH	Office of the National Assembly	Current tax framework; the 2025 amendments do not replace the processing/export-production exemption mechanism.	Statutory basis for exemptions covering processing and materials used to manufacture exported products.
Decree 134/2016/NĐ-CP, with Articles 10 and 12 amended by Decree 18/2021/NĐ-CP	Government	Decree 18/2021 effective 25 April 2021.	Conditions, records and administration of processing/export-production exemptions and changes of use.
Decree 182/2025/NĐ-CP	Government	Effective 1 July 2025, but it amends other provisions of Decree 134 rather than Articles 10 or 12.	It is not the direct basis for determining E21/E31 exemption conditions in this article.
Circular 38/2015/TT-BTC, amended by Circulars 39/2018 and 121/2025	Ministry of Finance	Circular 121/2025 effective 1 February 2026.	Customs procedures, processing/export-production material controls, declaration data and applicable reporting.
Decision 1357/QĐ-TCHQ dated 18 May 2021	General Department of Customs, now within the Customs Department	Effective 1 June 2021; verify updates at declaration date.	Code table and official scope for A11, A12, E21, E31 and related regimes. It classifies the procedure but does not itself grant exemption.
Customs policy/Q&A pages	Customs Department	Operational explanations for specific facts; not a substitute for legislation.	Cross-check how customs interprets the codes for a particular file.

2026 Consolidated Customs Law 2026 Consolidated Duty Law Decree 134/2016 Decree 18/2021 Circular 121/2025 A11 guidance A12 guidance E21 guidance E31 guidance

FAQ

What if imported materials are used partly for export products and partly for domestic products?

Do not use one undifferentiated code merely because the material is identical. The enterprise needs a design that segregates purpose, source and output; domestic and export-production portions must be traceable and taxed/managed accordingly.

Is A12 the code for export-production materials?

No. A12 is a business/production import code under the code guidance; E31 is the common code for materials imported to manufacture exported products. Similar wording does not mean the same tax or control mechanism.

What is the core difference between processing and export production?

The contractual and business model. Processing is performed for a principal under a processing contract and generates a processing fee; export production involves the enterprise buying materials, manufacturing and selling exported products while bearing commercial risk.

Are E31 or E21 materials always exempt from import duty?

No. The procedure code and duty exemption are separate determinations: E21/E31 must match the transaction, while exemption depends on the statutory subject, conditions, records, actual use and compliant export/management under the duty law and Articles 10/12 of Decree 134 as amended by Decree 18/2021.

Can E31 materials be used for a processing order?

Only after reviewing the transaction structure, contract, source and applicable customs rules. Do not reclassify inventory only in ERP; transfer, supply or change-of-use procedures may be required.

Is machinery imported for a processing contract declared under E21?

Not automatically. Loaned or imported machinery may use different codes and rules depending on ownership, duration and transaction form. It must be separated from consumable processing materials.

When is a change-of-use procedure required?

When goods/materials are used or disposed of for a purpose different from the original declaration and tax mechanism. The timing, declaration and tax amount must be checked before the new use occurs.

APPLICATION NOTE: A procedure code is not determined only by the goods, department name or the existence of a factory. The conclusion must reflect the contract, cash flow, ownership, use, output, customs location and tax conditions. For mixed transactions or on-the-spot imports/exports, prepare a transaction map and obtain case-specific customs guidance before transmission. Vietnamese legal-source descriptions in this article are operational translations only, not official legal translations.

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