1. The quantity of materials declared for incoming materials does not match the actual inventory.

This is the most common situation. After an EPE factory imports raw materials, if there is a discrepancy between the actual inventory quantity in the warehouse and the quantity recorded in the bonded ledger, the auditor will ask for an explanation of the source of the discrepancy.

Common causes : Failure to correct counting errors upon receipt; goods being stored in batches but being entered into the ledger in batches; failure to declare scrapped raw materials.

Risk of Fines : According to the Customs Administrative Penalty Act (Decree 128/2020/NĐ-CP), if a company discovers the discrepancy and proactively reports it, the fine is usually 10% of the difference in tax. If the discrepancy is discovered by customs before the company passively reports it, the fine increases to 20%. If the situation is deemed to be intentional concealment constituting tax evasion, a fine of 1–3 times the amount of tax owed will be imposed according to the Tax and Invoice Administrative Penalty Act (Decree 125/2020/NĐ-CP), plus overdue interest of 0.03% per day according to Section 59 of the Tax Administration Act (this is a reference range; the actual penalty depends on the circumstances of the discovery, please confirm with your local legal counsel).

II. The material consumption ratio does not match the declared BOM.

When applying for bonded import, each EPE factory needs to declare a Standard Bill of Materials (BOM), specifying the amount of raw materials consumed per unit of finished product. During inspections, customs will calculate the material consumption based on the actual export quantity and compare it with the total import volume.

Common causes : The BOM was not updated after submission with the process adjustment; the old version of the BOM was still in use after the design was changed; and the high material consumption rate during the trial production period was mixed into the formal production records.

Risk of penalties : If the actual material consumption exceeds the declared BOM, the excess imported raw materials will be considered as undeclared domestic sales, and import duties and value-added tax (VAT) will need to be paid, plus a penalty of 1-2 times the tax amount (this is a reference range; please verify it yourself). In this scenario, the amount of tax to be paid is often far greater than the tax saved when importing.

3. Waste materials and scraps were not declared or were underreported.

During the production process of EPE factories, waste materials, scraps, and defective products are generated. If these materials are not properly declared and disposed of, the "disappearance of part numbers" in the ledgers will become a problem during audits.

Common causes : waste materials are directly discarded without filing a loss application; scrap materials are sold externally without declaring the bonded material write-off; defective products are reprocessed and then shipped out of the warehouse with different part numbers.

Risk of fines : If undeclared waste materials are identified as bonded materials flowing into non-bonded uses, the tax payment logic is the same as in item two: the tax payable is calculated based on the import value of the raw materials, plus additional penalties. In some cases, the tax authorities will simultaneously initiate an investigation into the flow of waste materials. If illegal sales are involved, the level of fines will be significantly increased (this is a reference range; please verify it yourself).

IV. The quantity of finished products exported does not match the production records.

For EPE factories, the quantities on export customs declarations and in-house production completion records must correspond. If an auditor finds that 10,000 units were exported but the in-house production record only shows 9,200 units, the discrepancy must be explained.

Common causes : Incorrect conversion between production records and shipping units (e.g., mixing up the number of boxes and the number of pieces), outsourced parts not being recorded in the production records, or skipping system login when customers request urgent shipments.

Risk of fines : If the source of the quantity difference cannot be explained, the excess portion will be regarded as the export of non-bonded materials, which may affect the approval speed of the next bonded import application. In severe cases, it may trigger the suspension of bonded qualification review. During the suspension period, all import and export business must go through the general customs clearance procedure (this is a reference range, please verify it yourself).

V. Bonded materials are misappropriated for domestic sales or non-bonded purposes.

This is the most serious of the five scenarios. If bonded imported raw materials are not declared and are sold in Vietnam or used for non-export products, it is equivalent to evading import duties and is close to smuggling in nature.

Common causes : Foreign-invested factories received a small number of orders from Vietnam and used the same batch of bonded raw materials for production; bonded and non-bonded part numbers were not distinguished when transferring goods within the group; processing fee orders and own product orders used the same part number and were not managed in separate warehouses.

Risk of fines : If the actual consumption of materials exceeds the declared BOM, the excess imported raw materials will be considered as undeclared domestic sales and will be subject to import duties and value-added tax (VAT). If found guilty of tax evasion, according to Article 17 of the Tax and Invoice Administrative Penalty Act (Decree 125/2020/NĐ-CP), the fine will start at 1.5 times the amount of tax payable, depending on the severity of the offense. For aggravated offenses, the fine may be increased to 2, 2.5, or even 3 times (the actual applicable multiple depends on the circumstances of the discovery; please confirm with your local legal counsel). In this situation, the amount of tax payable is often far greater than the tax saved when the materials were initially imported.

Five-step verification checklist that can be performed independently before an audit

Before customs inspects your factory, the following five checks can help you identify the most vulnerable areas in your records. Each step may sound simple, but you'll realize the sheer volume of data required when executing them.

1. Sampling and comparison of incoming material records : Randomly select three to five main material numbers and compare the import customs declarations and warehousing records of the most recent three months with the current actual inventory to confirm that the three figures match.

2. Verify BOM version consistency : Confirm that the BOM version currently used on the production line is the same as the version declared by customs. If there are any process changes, confirm whether a BOM update declaration has been applied for.

3. Check the waste write-off records : retrieve the waste application forms for the most recent quarter, confirm that each waste item has a corresponding material number write-off record, and that the write-off method (scrap, auction, return) has been recorded.

4. Compare export customs declarations with production completion orders : Select the export quantity of the most recent month and trace back from the completion and warehousing order to confirm that the production records can explain the source of goods for each export customs declaration.

5. Investigate the source of raw materials for domestic sales orders : If the company also has local orders in Vietnam, confirm one by one whether the raw materials used in these orders have been completely separated from the bonded part numbers, and confirm that there are independent non-bonded warehouses or part number separations.

These five steps, along with the amount of data required for each step, will tell you what to do next.

Further Reading

New regulations for Vietnam's EPE export processing enterprises in 2026: tightened bonded supervision, and a compliance list that foreign-invested factories must complete.

Vietnam Tax Audit Trends 2026: Transfer Pricing and Related-Party Transactions Become Key Audit Focuses; How Can Foreign-Invested Enterprises Protect Themselves?

Three preparations that must be made before implementing MES in Southeast Asian factories