Investment incentives in Vietnam

8 September 2021

Vietnam is in integration with the world economy. Many trade agreements were signed, many incentives were issued to attract investment. The situation of foreign investment in Vietnam in recent years has many positive signs.

Along with that growth, investment incentive policies have also received a lot of attention. Knowing these policies is very important for domestic and foreign investors wishing to carry out investment activities in Vietnam.

  1. Enterprise income tax incentives
    • Incentive tax rate

Incentive tax rate applies differently to different subjects. Specifically:

  1. Incentive tax rate of 10% within 15 years applies to:
  • Income of enterprise from performance of new investment project in the area with extremely difficult socio-economic conditions;
  • Income of enterprise from performing new investment project in the fields: High technology; Scientific research and technological development; investment and development extremely significant infrastructure; production of software products; investment project in field of environmental protection. For investment projects that are of large size and furnished with high or new technologies which need special investment attraction, the duration of application of the tax rate of 10% may be longer but must not exceed 30 years.
  1. Incentive tax rate of 10% throughout the operation duration applies to:
  • Incomes of enterprises from socialized education and training, job training, health care, culture, sports and environmental protection activities incomes of publication activities, press agencies from printed newspapers.
  1. Incentive tax rate of 20% within 10 years applies to:
  • Income of enterprise from performance of new investment project in the area with extremely difficult socio-economic conditions, new investment project.
  1. Incentive tax rate of 20% throughout the operation duration applies to:
  • Tax rate of 20% for people’s credit fund and micro financial institution. From January 01, 2016, the tax rate of 17% shall be applied.
    • Tax exemption and reduction

Tax exemption and reduction as follows:

  1. Tax exemption for 4 years, reduction of 50% of tax payable for the next 9 years for:
  • Income of enterprise from performance of new investment project in the area with extremely difficult socio-economic conditions and income of enterprise from performance of investment which are applied incentive tax rate of 10% within 15 years.
  1. Tax exemption for 4 years, reduction of 50% of tax payable for the next 5 years for:
  • Income of enterprise from performance of new investment project in the socialized fields in geographical areas outside the list of those with difficult or particularly difficult socio-economic conditions.
  1. Tax exemption for 2 years, reduction of 50% of tax payable for the next 4 years for:
  • Income of enterprise from performance of new investment project in the area with extremely difficult socio-economic condition specified in the Appendix attached to Circular 78/2014/TT-BTC and enterprises implementing the project investment projects in industrial zones.

In addition, the law also stipulates a number of other cases of tax reduction, such as: Manufacturing, construction, transport enterprises that employ a large number of female workers and enterprises that employ ethnic minority laborers.

SAMSUNG is one of largest FDI projects in Vietnam. After being granted a Certificate of High-tech Enterprise, SAMSUNG Vietnam is entitled to the highest preferential level in accordance with the law on enterprise income tax as well as other incentives on import and export taxes and incentives of land use.

  1. Export and Import duties incentives
    • Tax exemption

According to the law, exported and imported goods in the following cases will be exempted from export and import duties:

  • Temporarily imported goods and temporarily exported goods;
  • Goods exported for processing and processed imports and goods imported for manufacture of domestic exports
  • Imported fixed assets of entities eligible for investment incentives, investment projects with official development assistance (ODA);
  • Imports or temporarily imported goods and temporarily exported goods serving petroleum activities;
  • Other cases under the law,…
    • Tax reduction

Exports and imports that are damaged or lost under customs supervision and the damage or loss is verified by a competent organization, tax reduction shall be granted.

The level of reduction shall be proportional to the loss of goods. Tax is exempt if the exports or imports are completely damaged or lost.

  1. Incentives of land use
    • Land use levy exemption or reduction

Land use levy exemption of or reduction in the following cases:

  • Investment projects belonging to industries, trades and investment incentive fields and implemented in areas of investment incentives;
  • Investment project in the area with extremely difficult socio-economic condition;
  • Other cases under the law and Prime Minister’s Decision.
    • Exemption of, reduction in land rent and water surface rent

Exemption of, reduction in land rent and water surface rent in the following cases:

  1. Exemption of land rent and water surface rent:
  • The investment projects which are given investment incentives to be carried out in the areas facing extreme socio-economic difficulties;
  • The land rents and water surface rents shall be exempted during the fundamental construction period;
  • The land rents and water surface rents shall be exempted after the land rent and water surface rent exemption of the fundamental construction period
  1. Reduction in land rent and water surface:
  • A rent for the land or water surface leased to serve the purposes of production and business other than the agricultural production, forestry, aquaculture and salt making shall be reduced by 50% during the pause in production and business in case of disaster, conflagration or force majeure.

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