In order to attract FDI, the Vietnamese government has issued many incentives and investment supports for foreign investors when investing in Vietnam. Thanh Do Law Firm would like to present about Incentives and investment support for foreign investors.

I. Legal grounds

– Law on Investment 2014;

– Enterprise Income Tax Law 2008

– Schedule of Vietnam’s WTO accession commitments

– Bilateral and multilateral agreements on investment to which Vietnam is a member

– Other relevant legal documents.

II. Investment incentives

2.1. Subjects entitled to investment preferences

– Investment projects belonging to investment incentive industries or industries or trades eligible for special investment incentives as prescribed in Appendix I, Decree 118;

– An investment project capitalized at VND 6,000 billion or more, disbursed at least VND 6,000 billion within 03 years from the date of issuance of the certificate of investment certificate or investment policy decision. Investment projects that meet these conditions are entitled to investment incentives as provided for investment projects in geographical areas with exceptionally difficult socio-economic conditions;

– Investment projects in rural areas employing 500 employees or more. Investment projects that meet these conditions are entitled to investment incentives as provided for investment projects in geographical areas with difficult socio-economic conditions;

– High-tech enterprises, scientific and technological enterprises, scientific and technological organizations;

– New investment projects and expansion investment projects.

2.2. Investment incentives

– High-tech activities, high-tech supporting industry products, research and development activities;

– Production of new materials, new energies, clean energies, renewable energies, produce products with value added from 30% or more, energy-saving products;

– Producing key electronic products, key mechanical products, agricultural machinery, automobiles, shipbuilding;

– Manufacture of supporting industry products for the textile and footwear industry;

– Manufacturing information technology products, software and digital content;

– Farming and processing agricultural, forestry and aquatic products; afforestation; salt making; fishing and fishery logistics; production of plant varieties and animal breeds; biotechnology products;

– Collection, treatment, recycling or reuse of waste;

– Investment in development, operation and management of infrastructure projects; developing public passenger transportation in urban areas;

– Preschool education, general education, vocational education;

– Medical examination and treatment; production of drugs and medicinal materials; vaccines, medical products, herbal medicines, traditional medicines; biotechnology to produce new drugs;

– Investment in physical training and sports establishments for disabled or professional people; protect and promote the value of cultural heritage;

– Investing in geriatric and psychiatric centers, treating patients infected with Agent Orange; centers for caring for the elderly, people with disabilities, orphans, helpless children;

– People’s credit institutions, microfinance institutions

2.3. Geographical areas of investment incentives

– Areas with difficult socio-economic conditions, areas with exceptionally difficult socio-economic conditions (Appendix II, Decree 118).

– Industrial parks, export processing zones, hi-tech parks, economic zones (Section 55, Annex II of Decree 118).

2.4. Adjustment of investment preferences

– Where an investment project satisfies conditions for additional investment incentives, the investor is entitled to that investment incentive for the remaining incentive period;

– Investors are not entitled to incentives according to the investment registration certificate, investment policy decision document in case the investment project does not meet the conditions for investment incentives specified in the certificate investment registration certificates, investment policy decisions. In case an investment project satisfies conditions for enjoying other investment preferences, the investor is entitled to such preferential treatment under that condition;

– In case an investment project does not meet conditions for enjoying investment incentives, investors are not entitled to investment incentives for the time not meeting conditions for enjoying investment incentives;

– Business organizations newly established or carrying out investment projects from conversion of economic organizations, ownership transfer, division, splitting, merger, consolidation or transfer of inherited investment projects Investment incentives of the investment project before conversion, division, splitting, merger, consolidation or transfer.

– Incentives on corporate income tax

III. Forms of investment incentives

3.1. Financial policy incentives

(i) Corporate Income Tax (“CIT”) 
Tax rate Article events Term of application Exemption and reduction of corporate income tax Legal grounds
Exempt Reduction
10% –  Income of enterprises from implementation of new investment projects in areas with economic conditions – particularly difficult social, economic zones, high-tech zones;

–  Incomes of enterprises from the execution of new investment projects in the domains specified at Point b, Clause 1, Article 15 of Decree 218/2013/ND-CP of December 26, 2013;

–  Income of enterprises from execution of new investment projects in the field of environmental protection;

–   High-tech enterprises, agricultural enterprises applying high technologies;

–  Incomes of enterprises from the execution of new projects of investment in the manufacturing sector that meet either of the two criteria: (i) Projects with a minimum investment capital of 6 (six) trillion dong, implemented The disbursement must not exceed 5 years from the date of issuance of the investment certificate and must have a minimum total revenue of at least VND 10 (ten) trillion/year after 3 years from the year with turnover (by the fourth year at the latest from the year when the enterprise has turnover, the total turnover must reach at least 10 (ten) trillion dong/year). and (ii) D and implement projects with capital investment minimum of 6 (six) trillion, disburse no more than 3 years after being granted investment certificates and used over 3,000 employees slowest after 3 years from the year of turnover (no later than the 4th year from the year when the enterprise has turnover, the enterprise must meet the conditions of using the annual average number of laborers over 3,000 employees).

15 years from the first year of taxable income from the investment project. 4 years Discount 50 % for no more than 9 subsequent years  

 

 

 

 

 

Point a, Clause 1, Clause 2, Article 15 and Article 16 of the Investment Law 2014

Clause 1, Article 15 and Clause 1, Article 16 Decree 218/2013/ND-CP dated December 26, 2013;

 

Clause 1, Article 19 and Clause 1, Article 20 Circular 78/2014/TT-BTC June 18, 2014.

Clause 3, Article 6 of Circular 119/2014/TT-BTC

10% –  Income of enterprises from conducting socialization activities in the field of education – training, vocational training, health care, culture, sports and environment;

–  Income from publishing activities; print newspaper activities;

–  Income of enterprises from the implementation of investment projects – social housing business for sale, for rent, for lease purchase;

–  Income of enterprises from: Planting, tending and protecting forests; aquaculture forestry products in difficult socio-economic areas; production , multiplication and crossbreeding of plant and animal breeds; invest in preserving agricultural, aquatic and food products.

Full-term project implementation.     Clause 2, Article 15 Decree 218/2013/ ND-CP dated December 26, 2013;

Clause 3, Article 19 Circular 78/2014/TT-BTC June 18, 2014.

20% –  Income of enterprises from execution of new investment projects in geographical areas with difficult socio-economic conditions;

–  Income of enterprises from implementing new investment projects: Producing high-grade steel; manufacture of energy-saving products; production of machines and equipment for agricultural, forestry, fishery and salt production; production of irrigation equipment; production and refining of feeds for cattle, poultry and aquatic animals; developing traditional industries. From 1 January 2016, this enterprise’s income is subject to the tax rate of 17%.

–   Income of enterprises from the execution of new investment projects in industrial zones, except for industrial parks in geographical areas with favorable socio-economic conditions.

15 years from the first year of taxable income from the investment project 2 years Discount 50% for no more than 4 subsequent years  

 

Point a, Clause 1, Clause 2, Article 15 and Article 16 of the LOI No. 67;

 

 

Clause 3, Article 15 and Clause 3, Article 16 Decree 218/2013/ ND-CP dated December 26, 2013;

 

Clause 4, Article 19 and

Clause 3, Article 20 Circular 78/2014/TT-BTC June 18, 2014.

* Tax reduction for other cases (Pursuant to Article 21 of Circular 78/2014/TT-BTC)

1. Enterprises engaged in production, construction and transportation employing a lot of female laborers are entitled to a reduction of the enterprise income tax equal to the additional expenses for female laborers, including:

a) Expenses for vocational re-training;

b) Expenses for salaries and allowances (if any) for teachers in preschools and kindergartens organized and managed by enterprises;

c) Expenses for additional health check-ups during the year;

d) Allowances paid to female employees after giving birth. Basing itself on the provisions of the labor legislation, the Ministry of Finance shall coordinate with the Ministry of Labor, War Invalids and Social Affairs in specifying the allowance level specified in this Clause;

d) Wages and allowances paid for female employees who are entitled to maternity leave or breastfeeding leave while still working.

2. Enterprises employing ethnic minority laborers are entitled to enterprise income tax reduction equal to additional expenses for ethnic minority laborers for job training, housing support money, social insurance. , health insurance for ethnic minorities in the absence of State support under the prescribed regime.

3.2. Incentives export tax and import tax

* Tax-free

Based on Decree No. 87/2010/ND-CP of August 13, 2010

– Goods temporarily imported for re-export or temporarily exported for re-import for participation in fairs, exhibitions or product launches; machinery, equipment and professional tools temporarily imported for re-export or temporarily exported for re-import in service of work within a certain period of time;

– Upon expiry of the fair, exhibition, product introduction or end of work as prescribed by law, for temporarily exported goods must be imported back to Vietnam, for temporarily imported goods must be re-exported abroad;

– Imported and exported goods of foreign organizations and individuals enjoying diplomatic privileges and immunities in Vietnam;

– Goods imported for processing for foreign parties are exempt from import tax (including goods imported for processing for foreign parties allowed to be destroyed in Vietnam according to the provisions of law after liquidation, liquidation of processing contracts) and when returning products to foreign parties, they are exempt from export tax. Goods exported to foreign countries for processing for the Vietnamese side are exempt from export tax, when being re-imported, they are exempt from import tax on the value of goods exported to foreign countries for processing under contracts;

– Goods imported to create fixed assets of investment projects in fields eligible for import tax incentives are specified in Appendix 1 issued together with Decree 87/2010/ND-CP or geographical areas eligible for incentives. Import tax and investment projects funded with official development assistance (ODA) are exempt from import tax, including:

– Equipment and machinery;

– Specialized transport means cannot be manufactured at home in technology lines; worker-transporting vehicles, including cars of 24 seats or more and waterway vehicles;

– Components, details, knocked down parts, spare parts, fittings, molds and accessories for synchronous assembly with equipment, machinery and specialized means of transport specified at Points a and b this clause;

– Raw materials and supplies which cannot be domestically produced, used to manufacture equipment and machinery in technological lines or to manufacture components, details, separate parts, accessories, fixtures, molds, etc. accessories attached for synchronous assembly with equipment and machinery prescribed at Point a of this Clause;

– Construction materials that cannot be domestically produced;

– Plant varieties and animal breeds which are permitted to be imported to implement investment projects in the fields of agriculture, forestry and fishery;

– The import tax exemption for imported goods specified in Clauses 6 and 7, Article 12 of Decree No. 87/ND-CP applies to both cases of project expansion, technology replacement, industrial renewal.

– The first tax exemption for goods is imported equipment according to the list specified in Appendix II (List of equipment groups only exempted for the first import tax. Promulgated together with Decree 87/2010/ND-CP) to create fixed assets of projects entitled to import tax incentives, investment projects funded with official development assistance (ODA) for investment in hotels, offices and apartments for Rent, housing, commercial centers, technical services, supermarkets, golf courses, tourist resorts, sports areas, recreation areas, medical examination and treatment facilities, training, culture, finance , banking, insurance, auditing, consulting services.

– Projects with imported goods eligible for tax exemption for the first time prescribed in this Clause are not exempted from taxes under other provisions of this Article;

– Import tax exemption for raw materials and supplies directly serving the production of software products, which cannot be domestically produced yet;

– Import tax exemption for goods imported for direct use in scientific research and technological development activities, including: machines, equipment, spare parts, supplies and means of transport in the country not yet produced, domestic technology not yet created; documents, books, newspapers, scientific journals and electronic resources about science and technology;

– Raw materials, supplies and components which cannot be domestically produced yet, are imported for production of investment projects in the fields where investment is particularly encouraged as prescribed in Appendix I to this Decree or tables with exceptionally difficult socio-economic conditions (except for projects on assembling and assembling cars, motorcycles, air-conditioners, electric heaters, refrigerators, washing machines, electric fans, dishwashers, heads) discs, sound systems, electric irons, kettles, hair dryers, hand dryers and other items as decided by the Prime Minister) are exempt from import tax for 5 (five) years from the date of commencement of production;

– Machinery, equipment and means of transport (except for cars of less than 24 seats and cars designed to carry both people and goods equivalent to cars of less than 24 seats) imported by foreign contractors import by mode of temporary import for re-export for implementation of ODA projects in Vietnam is exempt from import tax upon temporary import and export tax when re-export;

– Areas eligible for import tax incentives specified in Clauses 9 and 14 of this Article comply with the List of geographical areas eligible for enterprise income tax incentives.

* Tax reduction consideration

Pursuant to Article 14 VBHN-BTC No. 09 of May 26, 2015

If goods are exported or imported under the supervision of customs agencies, if damaged or lost, which are appraised and certified by competent agencies or organizations, they shall be considered for tax reduction corresponding to the damage percentage. Actual interior of the goods. The customs office shall base itself on the amount of lost goods and the actual loss rate of the goods inspected and certified for tax reduction.

* Tax refund

Pursuant to Article 15 VBHN-BTC No. 09 of May 26, 2015

Refunding export tax and import tax in the following cases:

– Import goods for which import tax has been paid but which are still stored and stored at the border gate and are under customs supervision, are re-exported to foreign countries.

– Exported or imported goods for which export tax or import tax has been paid but not exported or imported.

– Goods for which export tax or import tax has been paid are actually exported or imported less.

– Goods imported for the production of export goods or exported into non-tariff areas, if import tax has been paid, shall be refunded in proportion to the proportion of actually exported products and not pay export tax on goods. Exports are eligible to be processed from all imported raw materials.

– Goods for which import tax has been paid and then exported in the following cases:

+ Goods imported for delivery and sale to foreign countries through agents in Vietnam;

+ Goods imported for sale to vehicles of foreign firms operating on international routes via Vietnamese ports and Vietnamese vehicles operating on international routes in accordance with the Government’s regulations.

– Goods temporarily imported for re-export or goods temporarily exported for re-import; Import goods entrusted to the foreign party and then re-exported for which import tax and export tax has been paid, including cases of goods re-exported to non-tariff areas (except for the case specified in Clause 1 of Article) 12 of this Decree).

– Goods that have been exported but must be imported back to Vietnam shall be considered for reimbursement of export tax paid and not subject to import tax.

– Goods imported but must be re-exported to foreign goods owners or re-exported to third countries or exported into non-tariff areas will be considered for refund of the paid import tax corresponding to the actually re-exported quantity and not pay export tax.

– Machinery, equipment, tools, vehicles of organizations and individuals permitted to temporarily import for re-export (except for cases of hire) to implement investment projects, construction and installation For construction of works, in service of production for which import tax has been paid, when re-exported from Vietnam or exported into non-tariff areas, import tax will be refunded. The refunded import tax shall be determined on the basis of the remaining use value of goods when re-exported, calculated according to the time of use and stay in Vietnam. If the goods are no longer valid, they will not be refunded.

– Goods exported or imported via international postal or express mail service that this service provider has paid taxes on behalf of goods owners but fail to deliver goods to recipients must be re-exported or re-imported. or in the case of confiscated or destroyed goods in accordance with the law, the paid tax shall be refunded.

– Imported and exported goods for which export and import tax has been paid but which are later exempted or reduced under decisions of competent state agencies.

3.3. Preferential policies on land investment

Exemption from land rent for water surface for the entire lease term Legal grounds
o     Investment projects in domains eligible for special investment incentives are invested in extremely difficult socio-economic areas;

o    Projects using land to build houses for workers of industrial zones under projects approved by competent authorities;

o     Land for construction of aviation facilities and facilities;

o     Land for construction of water supply facilities;

o     Land for construction of infrastructure for common use in IZs, ICs, EPZs.

 

Clause 1, Article 19, Decree 46/2014/ND-CP dated May 15, 2014;

 

Exemption of land rent and water surface rent for a definite term after the time of capital construction Legal grounds
o    03 years for projects on the list of investment incentives; for new production and business establishments which relocate according to planning due to environmental pollution;

o     07 years for investment projects in geographical areas with difficult socio-economic conditions;

o     11 years for investment projects in geographical areas with extremely difficult socio-economic conditions; projects on the list of domains eligible for special investment incentives; projects on the list of investment preferences invested in geographical areas with difficult socio-economic conditions;

o     15 years for projects on the list of domains eligible for investment incentives invested in geographical areas with exceptionally difficult socio-economic conditions; projects on the list of domains eligible for special investment incentives invested in difficult socio-economic areas.

 

 

Clause 1, Article 19, Decree 46/2014/ND-CP dated May 15, 2014;

 

 

3.4. Incentives for industrial parks and economic zones

(Extract the contents of Decree No. 82/2018/ND-CP of day 22 month 5 years 201 8 of Government Regulation on the management of industrial parks and economic zones)

– Industrial park is an area eligible for investment incentives and is entitled to incentive policies applicable to those on the List of areas with difficult socio-economic conditions according to the law on investment. Industrial parks established in areas on the list of geographical areas with exceptionally difficult socio-economic conditions are entitled to preferential policies applicable to those on the list of geographical areas with socio-economic conditions particularly difficult meeting the investment law.

– Economic Zone is the investment incentive areas, enjoying preferential policies applicable to the region on the list of areas with economic conditions – x ã Assembly special difficulties with the legislation on investment.

– Subjects, principles and procedures for application of investment preferences of investment projects in industrial parks and economic zones shall comply with the law on investment.

– Investment expenses on construction, operation or lease of condominiums and social infrastructure facilities in service of workers working in industrial parks or economic zones are reasonable expenses deducted for calculation taxable income of enterprises having investment projects in industrial parks and economic zones.

Clause 4 of this Article is guided by Article 1 of Circular 43/2019/TT-BTC as follows:

“first. Expenses for investment in construction, operation or lease of condominiums and social infrastructure works in service of workers working in industrial parks or economic zones of enterprises having investment projects in Industrial parks and economic zones are deducted when determining the taxable income as follows:

  1. a) For the value of fixed assets: Calculated into the value of works and depreciation deducted into deductible expenses when determining the income subject to enterprise income tax if it meets the conditions of fixed assets according to regulations of the Ministry of Finance on the regime of management, use and depreciation of fixed assets.
  2. b) Expenses (except for the case in Point a Clause 1 of this Article): To be included in deductible expenses when determining taxable income in accordance with the law on corporate income tax.
  3. Incentives for investment projects on construction of houses, cultural and sports facilities, social infrastructure works in service of workers working in industrial parks or economic zones

Investment projects on construction of houses, cultural and sports facilities, social infrastructure works in service of workers in industrial parks or economic zones are eligible for incentives under the construction law social housing and related laws. “

– Investors and enterprises having investment projects in industrial parks and economic zones are assisted by competent agencies in carrying out administrative procedures on investment, enterprises, land, construction and environment. , labor, trade under the “one-stop-shop, on-site” mechanism, support for labor recruitment and other related matters in project implementation.

IV. Investment support

The type of investment support formula

– Support the development of technical and social infrastructure systems within and outside the project boundary;

– Supporting access to production and business premises; support to relocate production facilities from inner cities;

– Credit support;

– Support for research and development;

– Supporting market development, providing information;

– Support for science, technology, technology transfer;

– Support training, developing human resources.