INVESTMENT INCENTIVES FOR FOREIGN INVESTMENT PROJECTS IN VIETNAM

• In the strongly changes of world economy like today, in order to implement commitments when Vietnam joins the World Trade Organization WTO, free trade agreements, Vietnam has constantly changed to attract foreign investment. One of the measures to attract investment by the State is to issue investment incentive policies for foreign investment projects in Vietnam.

  
  In order to understand this issue, Hao Law Firm and Associate would like to summarize some investment incentive policies for foreign investment projects in Vietnam as follows:
  FIRST, ENTERPRISES WILL BE PREFERED ON USING LAND
  1. Legal basis:
  • Decree No. 118/2015/ND-CP dated November 12nd 2015 of the Government detailing and guiding the implementation of a number of articles of the Investment Law;
  • Decree No. 46/2014/ND-CP dated May 15th 2014 of the Government regulating exemption of land and water surface rent;
  • Decree 57/2018/ND-CP dated April 17th 2018 of the Government on encouraging enterprises to invest in agriculture and rural areas.
  2. Specific policy
  2.1. Exemption from land and water surface rent since the project is completed and put into operation:
  a) Three (3) years for projects on the list of encouraged investment domains; At the new production and business establishments of economic organizations, they will be relocated according to planning and relocated due to environmental pollution.
  b) Seven (7) years for investment projects in geographical areas with difficult socio-economic conditions.
  c) Eleven (11) years for investment projects in areas with particularly difficult socio-economic conditions; investment projects on the List of special investment incentive fields; projects on the list of domains eligible for investment encouragement are invested in geographical areas with difficult socio-economic conditions.
  d) Fifteen (15) years for projects on the list of encouraged investment sectors invested in geographical areas with exceptionally difficult socio-economic conditions; projects on the List of special investment incentive sectors are invested in areas with difficult socio-economic conditions.
  The list of investment incentive fields and special investment encouragement areas and areas with difficult socio-economic conditions and geographical areas with exceptionally difficult socio-economic conditions shall comply with regulations of government”.
  2.2. For agricultural projects:
  a) Enterprises have special agricultural projects with investment incentives shall be exempt from land and water surface rents from the date the State leases land and water surface.
  b) Enterprises with agricultural projects eligible for investment incentives shall be exempted from land and water surface rent for the first 15 years from the date the State leases land and water surface and reduces 50% of land and water surface for the next 7 years.
  c) Enterprises with agricultural projects that encourage investment shall be exempt from land and water surface rent for the first 11 years from the date the State leases land and water surface and reduces 50% of land and water surface rent for the next 5 years.
  d) Enterprises with agricultural projects (especially investment incentives, investment incentives, investment encouragement) are leased land by the State to build houses for workers of the projects, land for production establishments. Non-agricultural (land for construction of factories, warehouses, drying yards, roads, trees) including land permitted to be converted to other types of land stipulated in this clause to serve such projects shall be exempt from money rent land.
  e) Newly established small and medium agricultural enterprises are exempted from land and water surface rent from the State for the first 5 years from the date the project is completed and put into operation and reduce 50% of land and water surface rent in the next 10 years

  SECOND, ENTERPRISES WILL BE RECEIVED PREFERENCES ON FINANCIAL POLICY
  1. Legal basis:
  • Law amending and supplementing a number of articles of Tax Law No. 71/2014 / QH13 dated November 26th 2014 of the National Assembly
  • Decree 92/2013/ ND-CP dated August 13rd 2013 of the Government detailing the implementation of a number of articles effective from July 1, 2013 of the Law amending and supplementing a number of articles of the Law Corporate income tax and the Law amending and supplementing a number of articles of the Value Added Tax Law and additional amendments.
  • Circular 141/2013 / TT-BTC dated October 16th 2013 of the Ministry of Finance guiding the implementation of Decree No. 92/2013 / ND-CP dated August 13, 2013 providing details for implementation of a number of articles effective from July 1st 2013 of the Law amending and supplementing a number of articles of the Law on Enterprise Income Tax and the Law amending and supplementing a number of articles of the Law on Value Added Tax.
  2. Specific policy:
  2.1. Corporate income tax:

  No Tax Condition Term Enterprise Tax Income exemption and reduction
  Exemption of Enterprise Tax Income Reduce Corporate Income Tax
  1 10% – Income of enterprises from the implementation of new investment projects in areas with particularly difficult socio-economic conditions, economic zones and hi-tech parks.
  – Enterprise income implementing new investment projects: scientific research and technological development; high-tech applications; production of composite materials, light construction materials and rare and precious materials; production of renewable energy, clean energy, energy from waste disposal; biotechnology development; environmental Protection;
  – Income of enterprises from implementing socialization activities in the field of education – training, vocational training, health, culture, sports and environment 15 years from the first year of taxable income from investment projects 4 years 50% discount no later than 9 years
  Income of high-tech enterprises and agricultural enterprises applying high technology in accordance with the High-tech Law; 15 years from the date of certification
  2 20% – Income of enterprises from the implementation of new investment projects in areas with difficult socio-economic conditions;
  – Income of enterprises from implementing new investment projects, including: high-quality steel production; producing energy-saving products; production of machinery and equipment for agricultural, forestry, fishery and salt production; production of irrigation equipment; producing and refining feed for cattle, poultry and aquatic products; developing traditional industries. From January 1st 2016, the enterprise’s income specified in this Clause shall apply the tax rate of 17%.
  – Income of enterprises from the implementation of new investment projects in industrial zones, except for industrial zones in areas with favorable socio-economic conditions. 15 years from the first year of taxable income from investment projects 2 years 50% discount no later than 4 years
  3. Import and export taxes
  Import tax exemption for equipment, supplies, means of transport and other goods to implement investment projects in Vietnam. Income from technology transfer activities for projects eligible for investment incentives are exempt from income tax.
  4. Transfer losses
  Enterprises with losses may carry forward losses to the following year; These losses are deducted from taxable income. The time for carrying forward losses shall not exceed five years from the year following the year when losses arise.
  For a better understanding of the procedures to enjoy investment incentives, please contact Vu Nhu Hao and Associates Co., Ltd., according to the information below for specific instructions: