In recent years, the Government of Vietnam has gradually changed its strategy of attracting FDI into Vietnam from “attracting at all costs” to “selective attraction”. The top goal is to complete the policy of attracting and directing FDI flows in a selective direction, taking quality, technological efficiency and environmental protection as the main evaluation criteria; prioritize projects with advanced technology, new technology, high technology, clean technology, high added value, have a pervasive impact, connect the production chain associated with human resources training. In order to specific that goal, Vietnam has promulgated the Law on Investment 2020 with many investment incentive policies aimed at attracting and guiding FDI policies in the coming time to focus on a number of priority industry groups. Here are some outstanding new policies on investment incentives that will be officially applied from 2021:
- Addition of many sectors and trades with investment incentives
The Law on Investment 2020 adds a number of sectors and trades that are preferential to investment compared to today, including:
- University education;
- Producing products formed from scientific and technological results in accordance with the law on science and technology;
- Producing products on the list of supporting industrial products prioritizing development;
- Preservation of drugs, production of medical equipment;
- Producing goods, providing services that create or participate in value chains, industry-linked clusters
- More forms of investment incentives
According to the provisions of Clause 1, Article 15 of the Law on Investment 2020, from January 1, 2021, there will be the following forms of investment incentives:
- Corporate income tax incentives, including the application of corporate income tax rates lower than the normal tax rate for a term or the entire duration of investment projects; tax exemption, reduction and other incentives as prescribed by the law on corporate income tax;
- Exemption from import tax on imports for the creation of fixed assets; materials, supplies and components imported for production in accordance with the law on export tax and import tax;
- Exemption and reduction of land use rents, land rents and land use tax;
- Rapid depreciation increased deductible costs when calculating taxable income(currently not prescribed in this form).
- Addition of subjects applying investment incentives
- Investment projects on construction of social houses; investment projects in rural areas using 500 or more employees; investment projects on employment of disabled workers in accordance with the law on persons with disabilities (Point d, Clause 2, Article 15 of the Law on Investment in 2020).
- Projects with technology transfer on the list of technologies encouraged for transfer in accordance with the law on technology transfer; technology incubators, scientific and technological enterprise incubators in accordance with the law on high technology, the law on science and technology; enterprises producing and supplying technologies, equipment, products and services in service of environmental protection requirements in accordance with the law on environmental protection (Point dd, Clause 2, Article 15 of the Law on Investment in 2020).
- Innovative start-up investment projects, innovation centers, research and development centers (Point e, Clause 2, Article 15 of the Law on Investment in 2020).
- Investment in distribution chains of small and medium-sized enterprises; investment in technical establishments supporting small and medium-sized enterprises and incubators of small and medium-sized enterprises; investment in joint working zones to support small and medium-sized enterprises to start creative enterprises in accordance with the law on support for small and medium-sized enterprises (Point g, Clause 2, Article 15 of the Law on Investment in 2020).
Thereby, it can be seen that the innovation of the Investment Law in 2020 on the beneficiaries of investment incentives towards more concentrated high-tech enterprises, innovative start-up projects, research and development centers, production of new materials, new energy, clean energy, information technology products, software, digital content.
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