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Encouraged
Sectors
If you decide to invest
in an encouraged sector,
there are very attractive tax incentives available to you.
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Enterprises
with foreign owned capital and foreign business co-operation
parties shall pay business income tax at the rate
of twenty five ( 25) percent on their profit earned,
except the cases provided in article
46.
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Preferential
treatments of business income tax (BIT) rates The
BIT rates applicable to cases where investment is
encouraged shall be as follows:
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| 1.
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IZ
enterprises operating in the service sector. |
| a.
|
20 %
rate shall apply to investment projects which
satisfy one of the following criteria: |
| b. |
Manufacturing
projects not on the list of encouraged projects
stated at Article
45 and clause 2 and 3 of this Article.
|
| 2.
|
15%
shall apply to investment projects which satisfy
one of the following criteria: |
| a.
|
Investment
projects which are on the list of encouraged projects. |
| b. |
Investing
in regions with difficult socio-economic conditions. |
| c. |
Export
processing enterprises operating in the service
sector. |
| d. |
IZ enterprises
exporting more than fifty (50%) percent of products. |
| e. |
Enterprises
subject to transfer the Vietnamese government
without compensation upon termination of operation. |
| 3.
|
10%
shall apply to investment project qualifying one
the following: |
| a.
|
Meeting
2 criteria set out at clause 2 of this Article. |
| b. |
Being
on the list of specially encouraged investment
projects. |
| c. |
Being
investment projects in regions with difficult
socio – economic conditions which is on the list
of encouraged regions. |
| d. |
Being
enterprises developing infra-structure facilities
of IZ, EPZ, HTZ; export processing enterprises. |
| e. |
Being
enterprises investing in medical care, education
and training, scientific research. |
| 4.
|
Regulations
on period entitled to incentive BIT rates are
as follows: |
| a.
|
Incentive
rates stated in this Article shall be carried
out for the whole duration of the project with
respect to projects meeting one of the following
criteria:
| • |
being in the list of specially encouraged
projects; |
| • |
being in the list of regions where socio-economic
conditions are |
| • |
specially
difficult, where investments are encouraged |
| • |
being
infra-structure development projects in
IZ, EPZ and HTZ; |
| • |
being
projects in IZ, EPZ, HTZ; |
| • |
being project in the fields of medical care,
education and training, scientific research. |
|
| b. |
10%
BIT rate shall apply for 15 years from the day
of commercial operation, except for projects mentioned
at paragraph a. |
| c. |
15%
BIT rate shall apply for 12 years from the day
of commercial operation, except for projects mentioned
at paragraph a. |
| d. |
20%
BIT rate shall apply for 10 years from the day
of commercial operation, except for projects mentioned
at paragraph a.. |
| e. |
After
a period of enjoying BIT incentive rates as stated
at paragraph b,c,d. 25% standard rate shall apply
to projects. |
| f. |
Overseas
Vietnamese who invest in Vietnam in accordance
with the provisions of the FIL in Vietnam shall
be entitled to a twenty (20) per cent reduction
of BIT as compared to those who invest in the
projects of the same type, except for cases where
they are entitled to a tax rate of ten (10) per
cent. |
|
Other relevant incentive acts include:
-
Decree No. 24/ND-CP, 31
July 2000 of the Government on Regulating in detail
the implementation of the Law on Foreign Investment
("FIL") in Vietnam
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Decree No.10/1998/ND-CP
On a Number of Measures for the Encouragement and Protection
of Foreign Direct Investment Activities in Vietnam (Decree
No.10)
-
Decision No.53/1999/QD-TTg
On a Number of Measures for the Encouragement of Foreign
Direct Investment (Decision No.53)
Profit Remittance
Tax Incentives
There are also tax incentives available
through the profit remittal tax system. The usual rate of
profit remittal tax is 7%, but if your investment is more
than $US10 million, then your tax rate will be just 3%,
while if it is between US$5 million and US$ 10 million,
your tax rate will be just 5%.
The relevant legal instruments
here are:
BOT Projects
Incentives also exist
if you are interested in investing in a BOT project. These
incentives include a low 10% tax rate, a reduced level of
withholding tax on the remittal of profits overseas, a tax
free grace period of up to 8 years, exemption from certain
import and export duties, and an exemption from paying land
use fees. With respect to investment projects in the form
of a BOT, BTO or BT contract, projects for construction
of infrastructure for Industrial Zones and Export Processing
Zones, and projects investing in Industrial Zones and Export
Processing Zones, the preferential income
tax rates apply for the entire duration of implementing
the investment project.
Other relevant legislative
instruments include:
-
Circular No.146/1999/TT-BTC
Providing Guidelines for Effecting Tax Reductions and
Exemptions According to the provisions of Decree No.51/1999/ND-CP
dated July 8, 1999 of the Government Providing Detailed
Regulations on the Implementation of the Law No.03/1998-QH10
on Encouragement of Domestic Investment (Amended)
Reinvested
Profits
If you decide to reinvest
your profits in encouraged sectors in Vietnam, you may
be entitled to a full or partial enterprise income tax refund.
To get this you need to apply to the Ministry of Finance
and meet the following conditions:
- Your re-investment
must be in an encouraged field;
- It must be for a term of at least 3 years; and
- The Legal Capital stated in the Investment License have
been fully paid up.
If you satisfy these
requirements, the refund will be
-
100% with respect to projects that are entitled to a 10%
tax rate;
- 75% with respect to projects entitled to a 15% tax rate;
and
- 50% with respect
to projects entitled to a 20% tax rate.
Relevant legal instruments include:
Loss Carry
Forward
The Vietnamese government
recognizes that not all ventures are going to make a profit
from the very first day of operation. To accommodate for
this you are entitled to carry forward your losses for tax
purposes for a period of 5 years from the first year in
which a profit is made.
Relevant legal instruments
include:
Capitalized
Assets
Any assets that form
part of the capitalization of your investment are exempt
from import duties.
Relevant legal instruments
include:
Other
Considerations
Tax
Some legal instruments
relevant to taxation considerations include:
-
The Law on Foreign
Investment in Vietnam 2000.
-
Decree
No.12/CP & No. 24/CP
Regulating in Detail the Implementation of the Law on
Foreign Investment in Vietnam (The Foreign Investment
Decree)
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Circular No.89/1999/TC/BTC
Providing Guidelines for Implementing the Provisions
on Taxes Applicable to forms of Investment Under the
Law on Foreign Investment in Vietnam (Circular No.89)
-
Decree No.84/1998/ND/CP
Providing Detailed Regulations on the Implementation
of the Law on Special Sales Tax (Decree No.84)
-
Circular No.96/TC/TCT
Providing Guidelines in the Collection of Tax With Respect
to the Law on Companies, the Law on Private Enterprises,
the Law on Foreign Investment in Vietnam, the Law on
Encouragement of Domestic Investment, and by Investors
in Joint Venture Banks, Branches of Foreign Banks in
Vietnam and by Parties to Business Cooperation Contracts
under the Law on Foreign Investment in Vietnam (Circular
No.96)
-
The Law on Import and
Export Duties
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Circular No.35/2000/TT-BTC
Providing Guidelines on Implementing Decree No.09/2000/ND-CP
dated March 21, 2000 of the Government on promulgating
the List of Goods and Tariff Rates of Vietnam for Implementing
the Agreement on Common Effective Preferential Tariffs
(CEPT) of ASEAN countries for the Year 2000 (Circular
No.35)
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Circular No.169/1998/TT/BTC
Providing Guidelines on the Tax Regimes Applicable to
Foreign Organizations and Individuals Conducting Business
Activities in Vietnam in Other Forms than the Forms
of Investment under the Law on Foreign Investment in
Vietnam (Circular No.169)
Land
In Vietnam
all land is owned by the People. But this does not limit
the potential for long-term investment in real property
development. Land use rights can be leased, transferred
and mortgaged under the recently revised Law on Foreign
Investment.
-
Decision No.179/98/QD/BTC
Promulgating Regulations on Rental Rates for Land, Water
Surfaces and Sea Surfaces Applicable in Respect of Forms
of Foreign Investment in Vietnam (Decision No.179)
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The Law on
Foreign Investment in Vietnam 2000.
Flexibility
Mergers, divisions,
consolidations and other such corporate restructuring options
are possible in Vietnam, providing you with the flexibility
both in the way you set up your investment in Vietnam and
in the way in which it evolves over time.
Intellectual
& Industrial Property
Vietnam has a well-organized
national trade mark registration and protection regime.
It is important that investors register their trade marks
in Vietnam to obtain protection here. The National Office
of Industrial Property (NOIP), which also administers other
industrial property rights, administers the trademark regime.
Vietnam is also a party to the International Paris Convention
for the Protection of Industrial Property and the
Madrid Agreement Concerning the International
Registration of Marks.
Vietnam has provisions
in its Civil Code that protect an investor’s copyright,
including copyright in computer software. The Vietnamese
Government has also signed the Agreement on the Establishment
of Copyright Relations with the Government of the United
States of America (1998).
Guarantees
The Vietnamese Government
guarantees that your enterprise will not be nationalized
and that its assets will not be expropriated.
Foreign Exchange in
General
Vietnam’s foreign exchange
laws apply to all organizations and individuals that are
Vietnamese citizens, including JVCs and EFOCs, and to all
foreign residents and organizations operating in Vietnam.
The currency used in
Vietnam is the "Dong". While it is not freely
convertible on world currency markets, you are entitled
to purchase foreign exchange from banks in Vietnam and to
remit profits and capital back overseas. The general principle
is that current account transactions are not restricted,
while capital transactions require State Bank approval.
You are also entitled to maintain offshore bank accounts
connected with your investment, subject to State Bank approval.
Governing Law
Foreign Exchange matters
are governed by the Law on Foreign Investment in Vietnam
1996 (as amended), implementing regulations, and circulars
issued by the State Bank of Vietnam. (See list below) The
State Bank now conducts much of its supervision of foreign
currency transactions through the commercial banks operating
in Vietnam.
-
The Law on Foreign
Investment in Vietnam 2000.
-
Decree
No.12/CP & No. 24/CP
Regulating in Detail the Implementation of the Law on
Foreign Investment in Vietnam (The Foreign Investment
Decree)
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Decree No.63/1998/ND/CP
of the Government on Foreign Exchange Controls (Decree
No.63)
-
Circular N0.01/1999/TT/NHNN7
of the State Bank Guiding the Implementation of Decree
No.63/1998/ND/CP dated August 17, 1998 of the Government
on Foreign Exchange Control
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