Foreign investors are most typically attracted by the tax incentives for direct investment in Vietnam. The Corporate Income Tax (CIT) rate has gradually fallen from 32% in 1997, to 25% in 2009, and most recently to 22% (as of January 1st, 2014) and 20% (takes effect on January 1st, 2016). These tax reductions have spurred new investment from national and foreign firms alike. In an effort to attract investors towards certain economic sectors, Vietnamese tax law further offers preferential tax rates, duration of tax reduction and tax exemptions for newly-established companies investing in areas with extreme socio-economic conditions, economic zones and high-tech parks. These incentives are also available for newly established firms investing in software manufacturing, education, training, vocational training, health care, culture, etc.
Investors should also be mindful of customs duties. The Law on Import and Export Duties provides tax exemptions to the following cases:
Moreover, the establishment of preferential tariff agreements for ASEAN and WTO members has helped many investors reduce input costs, increase productivity and enhance competitiveness in domestic and foreign markets.
In addition, the State Bank of Vietnam offers maximum interest rates of 9% for short-term loans in Vietnamese Dong (VND) in the following five economic sectors: agricultural and rural development, production and trading of exports; small and medium enterprises; ancillary industries; and high-tech enterprises.
Government-issued Decree No. 121/2010/ND-CP amends and supplements a number of articles of Decree No. 142/2005/ND-CP on the collection and reduction of land and water surface rent. Investors shall be exempt from land rent payments in the following cases: investment projects entitled to special investment incentives undertaken in the areas with exceptional socio-economic conditions; state-funded projects for the construction of students’ dormitories; projects for the construction of condominiums for industrial park workers; etc.
The Government also offers support programs on technology transfer, training, investment development and related services, as well as infrastructural development outside industrial parks, export processing zones and high-tech parks.
Aside from the incentives offered by the Government, eligible investors should consider referring to the incentive policies on project’s land, commercial fees, investment broker bonuses, etc., issued by the province in which they are currently investing.
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