INVESTMENT INCENTIVES IN VIETNAM (PART 2)

Incentives on Land Rental

The table below summarises the incentives on Land Rental:

Projects

Exemption

In the list of investment encouragement sector new business development bases

3 yrs

Invest in areas of difficult socio-economic conditions

7 yrs

Invest in areas of specially difficult socio-economic conditions; in specially investment encouragement sectors; projects in the list of investment encouragement sectors investing difficult socio-economic areas

11 yrs

Projects in the list of specially investment encouragement sectors investing in areas of difficult socio-economic conditions or project the list of investment encouragement sectors investing in the areas of specially difficult social economic conditions

15 yrs

Sectoral investment incentives

BOT projects

Incentives offered to BOT projects is regulated in the Decree 108/2009/ND-CP dated 27 November 2009 of the Government on investment under BOT/BTO/BT projects and Decree 24/2011/ND-CP dated 5 April 2011 on the amendment of Decree 108/2009/ND-CP.

The Government encourages the implementation of projects to build, operate and manage new infrastructure facilities or to improve, expand, modernize, operate and manage existing works in the following domains:

i) Roads, road bridges, road tunnels and ferry landings;

ii) Railways, railway bridges and railway tunnels;

iii) Airports, seaports and river ports;

iv) Clean water supply systems; water drainage systems; and wastewater and waste collection and treatment systems;

v) Power plants and power transmission lines;

vi) Works in health care, education and training, sport facilities, working offices

vii) Other infrastructure facilities as decided by the Prime Minister.

The investment incentives given to BOT projects in the above fields include the following:

i) Reduced Corporate Income Tax (CIT) rates of 10% or 20% relative to the statutory rate of 25%

ii) Tax holiday for 4 years from the first profit-making year and a 50% reduction in the applicable rate for the following 9 years

iii)  Exemption from certain import and export duties; and iv)  Exemption from paying land use fees

Projects located in economics zones

Corporate Income Tax (CIT)

Type of project Corporate Income Tax Remittance Tax
Tax rate Tax holiday
Projects inside Ezs 10% within the first 15 years since the commencement of production 25% afterwards Tax holiday within 04 years since earning profits

50% reduction within 9 years afterwards

 

None
High-tech projects inside Ezs 10% within maximum of 30 years
Socialized projects inside Ezs 10% applied to the whole duration of a project

Other taxes

Import tax Value Added Tax (VAT) and Excise Tax Personal Income Tax
Raw materials and materials – not yet domestically produced for manufacturing in IPs and EPZs Commodities to form fixed assets for all projects in IPs, EPZs and EZs Goods imported into EPZs, processing enterprises Means of public transportation including bus and electric tramcars in IPs and EPZs Goods manufactured in imported to non-tariff area in EZs Some cases Experts and employees in EZs
Tax holiday within 5 years Tax holiday for the whole duration of the project VAT 0% VAT 0% Exemption from Excise Tax and VAT Repay VAT 50% reduction

Government supports in IPs, EPZs, and EZs infrastructure development

i) Compensation and site  clearance for  IP  infrastructure development in selected areas of difficult socio-economic conditions

ii) Providing technical infrastructure “out of the fence” of IPs

iii) Providing technical infrastructure “to the fence” of functional zones of EZs.

iv) Compensation and site clearance for functional zones of Ezs and establishment of resettling areas for villagers whose land has been withdrawn by the Government

v) Employees in Ezs shall rent houses (with land use right) inside the EZs

vi) One rental fee applied to both foreign and domestic investors

Government supports in house building for IP employees

i) Exemption from land rental fees

ii) Enjoy corporate income tax, import tax, and other special investment incentives applied to List of special investment incentive sectors

iii) Preferential or soft loans.

Government supports in waste treatment plant construction

i) Exemption from land rental fees

ii) Incentives of corporate income tax and export tax applied to specially investment incentive sectors

iii) State budget for water treatment plant construction allocated in selected areas of difficult socio-economic conditions

iv) Preferential or soft loans

vi) State budget for sewage treatment plant construction in functional zones of EZs.

Incentives for projects in high – technologies (Law on High technology)

(List of high technologies and hi-tech products prioritized for development Prime Minister’s Decision No. 49/ 2010/QD-TTg dated July 19, 2010)

i) Hi-tech enterprises are entitled to the highest incentive level under the laws on Land, Corporate income tax, Value-added tax, Import duty and export duty;

ii) The State supports the building of information, transport, electricity and water infrastructure, executive offices and waste treatment systems in hi-tech parks or hi-tech application agricultural parks.

iii) Provincial-level People’s Committees shall, within the ambit of  their powers and  tasks, conduct land clearance and  create  favorable conditions for organizations and individuals to invest in hi-tech parks or hi-tech application agricultural parks.

iii) Eligible for fundings by the National Master plan on high technologies development

iv) Eligible for financial aids by Funds for science and technology development and other Funds for activities in R&D, human resources training and technology transfers.

Incentives for projects in supporting industries (Prime Minister’s decision No. 12/2011/QD-TTg dated February 24, 2011 on policies on development of a number of supporting industries)

Enterprises investing in supporting industries are entitled for these following incentives and assistance from the government:

i) Market development support: Advertisement of their projects are posted on the official website of Ministry of Industry and Trade free of charge; financial support are offered for their trade and investment promotional expenses; facilitations are offered for their engagement in product and service supply chains.

ii) Infrastructure support: They are prioritized in terms of  land allocation; have access to the infrastructures, public and other services in industrial clusters and industrial zones; and get support in labor recruitment and training; They shall enjoy incentives of land for production for SMEs (in accordance with Decree 56/2009/ND-CP) and incentives on land under the laws on high technology.

iii) Science & Technology and labor training support: They are considered for getting financial aid for part of the expenses of technology transfer, purchasing design copyright, softwares, hiring foreign experts, and human resources training

iv) Financial support: They are considered for getting part of the State’s credit for investment development; entitled to tax incentives in accordance with provisions of the Law on High Technology.

v) Supporting industries development: Projects with products on the List of supporting industry’s products with development priority will be given relevant incentives and support. Investors should develop their project application forms in accordance with  current law and regulations, in which states their proposal for eligible incentives, then submit to the Appraisal Board of   supporting industry projects for appraisal and approval to report to the Prime Minister for final decision.

Incentives for enterprises invest in agriculture and rural areas
(Government’s Decree no 61/2010/ND-CP dated June 4, 2010)

Incentive on land lease:

Projects Incentive
Encouraged Agriculture projects Entitled to the lowest rent rate within the land rent bracket prescribed by the Provincial People’s Committee

Exemption from land and water surface rents for the first 11 years.

Agriculture projects eligible for investment incentives Entitled to the lowest rent rate within the land rent bracket prescribed by the provincial-level People’s Committee

Exemption from land and water surface rents for the first 15 years.

Agriculture projects eligible for special investment incentives Exemption from land and water surface rents

Investment Support:

i) Human resources training

ii) Market development

iii) Consultation services

iv) Science technology application

v) Transportation freight