General legal regulations on investment incentives and assistance in Vietnam 2022
In addition to investment guarantees, investors are somewhat assured when investing in the Vietnamese market. The law also includes provisions for investment incentives and assistance in order to promote and encourage investment activities in specific objects, business lines consistent with the country’s economic development strategy. Let’s find out this issue with Lawyer X through the following scenario: “ Dear attorney! Can you tell me about the state’s incentives and assistance for business investment activities? What are the objects and conditions for receiving these benefits and incentives? Thanks for the advice!”
Legal grounds
Vietnam Law on Investment 2020
What are investment incentives and assistance?
Business investment means the use of investment capital by investors to carry out business activities. Investor means an organization or individual carrying out business investment activities. Investors include domestic investors, foreign investors and foreign-invested economic organizations.
From a legal perspective, investment incentives and support can be understood as all regulations issued by the State to create favorable conditions or provide certain benefits to both domestic and foreign investors when investing in the economy, on the basis of a harmonious combination between the interests of the state, the economy – society and investors.
The content of investment incentives and assistance
Forms and entities eligible for investment incentives
– Forms of investment incentives comprise:
+ Corporate income tax incentives, including application of a lower rate of corporate income tax for a certain period of time or throughout the investment project execution; exemption from and reduction of tax and other incentives prescribed by the Law on Corporate Income Tax.
+ Exemption from import tax on goods imported to form fixed assets; raw materials, supplies and components for manufacturing purposes in accordance with regulations of law on import and export tax;
+ Exemption from and reduction of land levy and land rents;
+ Accelerated depreciation, increasing the deductible expenses upon calculation of taxable income.
– Entities eligible for investment incentives comprise:
+ Investment projects in business lines eligible for investment incentives specified in Clause 1 Article 16 of Law on Investment 2020
+ Investment projects located in the areas eligible for investment incentives specified in Clause 2 Article 16 of Law on investment 2020
+ Any investment project whose capital is at least VND 6,000 billion of which at least VND 6,000 billion of is disbursed within 03 years from the issuance date of the investment registration certificate or the approval for investment guidelines and which satisfies any of the following criteria: the total revenue is at least VND 10,000 billion per year within 03 years from the year in which the revenue is earned or the project has more than 3,000 employees;
+ Social housing construction projects; investment projects located in rural areas and employing at least 500 employees; investment projects that employ persons with disabilities in accordance with regulations of law on persons with disabilities.
+ Hi-technology enterprises, science and technology enterprises and science and technology organizations; projects involving transfer of technologies on the List of technologies the transfer of which is encouraged in accordance with regulations of the Law on Technology Transfer, science and technology enterprise incubators prescribed by the Law on High Technologies and Law on Science and Technology; enterprises manufacturing and providing technologies, equipment, products and services with a view to satisfaction of environment protection requirements prescribed by the Law on Environment Protection;
+ Start-up projects, national innovation centers and research and development centers;
+ Business investment in small and medium-sized enterprises’ product distribution chain; business investment in technical establishments supporting small and medium-sized enterprises, small and medium-sized enterprise incubators; business investment in coworking spaces serving small and medium-sized enterprises and startups prescribed by the Law on Small and Medium-Sized Enterprises.
– Investment incentives shall be given to new investment projects and expansion projects.
– The level of each type of incentives shall be specified by regulations of the Law on Taxation, the Law on Accounting and the Law on Land.
– Regulations in Points b, c and d Clause 2 of Article 15, Law on Investment 2020 do not apply to:
+ Mineral mining projects;
+ Projects on manufacturing/sale of goods/services subject to special excise tax according to the Law on Special Excise Tax, except for projects on manufacturing of automobiles, aircrafts and yachts.
+ Commercial housing construction projects prescribed by the Law on Housing.
– Investment incentives applied for a fixed term and on the basis of results of project execution. Every investor must satisfy conditions for investment incentives in accordance with regulations of law during the period of enjoying investment incentives.
– An investment project that is eligible for various levels of investment incentive, including investment incentive specified in Article 20 of Law on Investment 2020 may apply the highest level.
Business lines and areas eligible for investment incentives
– Business lines eligible for investment incentives comprise:
+ Hi-tech activities, hi-tech ancillary products, research, manufacturing and development of from science and technology products in accordance with regulations of law on science and technology;
+ Manufacturing of new materials, new energy, clean energy, renewable energy; manufacturing of products with an added value of 30% or more; energy-saving products;
+ Manufacturing of key electronics, mechanical products, agricultural machinery, automobiles, automobile parts; shipbuilding;
+ Manufacturing of products on the List of prioritized supporting products;
+ Manufacturing of IT products, software products, digital contents;
+ Breeding, growing and processing of agriculture products, forestry products, aquaculture products; afforestation and forest protection; salt production; fishing and fishing logistics services; production of plant varieties, animal breeds and biotechnology products;
+ Collection, treatment, recycling or re-use of waste;
+ Investment in development, operation, management of infrastructural works; development of public transportation in urban areas;
+ Pre-school education, general education, vocational education, higher education;
+ Medical examination and treatment; manufacturing of medicinal products and medicinal materials, storage of medicinal products; scientific research into preparation technology and biotechnology serving creation of new medicinal products; manufacturing of medical equipment;
+ Investment in sports facilities for the disabled or professional athletes; protection and promotion of value of cultural heritage;
+ Investment in geriatric centers, mental health centers, treatment for agent orange patients; care centers for the elderly, the disabled, orphans, street children;
+ People’s credit funds, microfinance institutions;
+ Manufacturing of goods and provision of services for the purposes of creating or participating in value chains and industrial clusters.
– Areas eligible for investment incentives comprise:
+ Disadvantaged areas and extremely disadvantaged areas;
+ Industrial parks, export-processing zones, hi-tech zones and economic zones.
The Government shall compile and amend the List of business lines eligible for investment incentives and the List of areas eligible for investment incentives; determine business lines eligible for special investment incentives to be included in the List of business lines eligible for investment incentives.
Procedures for applying investment incentives
Based on the entities specified in Clause 2 Article 15 of Law on Investment 2020, the written approval for investment guidelines (if any), the investment registration certificate (if any), other relevant regulations of law, the investor shall determine the investment guidelines and follow procedures for enjoying investment incentives at the tax authority, finance authority, or customs authority according to the conditions for investment incentives in Article 15 and Article 16 of Law on Investment 2020
Forms of investment assistance
Forms of investment assistance comprise:
– Assistance in development of technical infrastructure and social infrastructure inside and outside the perimeter of the investment project;
– Assistance in training and development of human resources;
– Credit assistance;
– Assist in access to business premises; assistance in relocation of business establishments under decisions of regulatory agencies;
– Assistance in science, technology and technology transfer;
– Assistance in market development and information provision;
– Assistance in research and development.
The Government shall specify the forms of investment assistance in Clause 1 of this Article which is provided for hi-tech enterprises, science and technology enterprises, science and technology organizations, enterprises investing in agriculture and rural areas, enterprises investing in education, dissemination of laws and other entities in conformity with orientation for socio-economic development and the ability to balance the state budget in each period.
Assistance in development of infrastructure of industrial parks, export-processing zones, hi-tech zones and economic zones
– Pursuant to the planning decided or approved in accordance with regulations of the Law on Planning, Ministries, ministerial agencies and provincial People’s Committees shall formulate plans for investment and development and organize construction of technical infrastructure and social infrastructure beyond industrial parks, export-processing zones, hi-tech zones and dedicated sectors of economic zones.
– The State shall provide assistance for part of the capital investment in development from the state budget and concessional loan capital in order to synchronously develop the technical infrastructure and social infrastructure inside and outside the perimeter of industrial parks in disadvantaged areas or extremely disadvantaged areas.
– The State shall provide assistance for part of the capital investment in development from the state budget, concessional loan capital, and employ other capital raising methods to develop the technical infrastructure and social infrastructure in economic zones and hi-tech zones.
Special investment incentives and assistance
The Government shall decide to apply special investment incentives and assistance with a view to encouraging the development of some investment projects that exert significant socio-economic effects.
Entities eligible for special investment incentives and assistance specified in Clause 1 of this Article include:
– Projects on establishment (including the expansion of such establishment project) of innovation centers and research and development centers with a total investment capital of at least VND 3,000 and disbursing at least VND 1,000 billion within 03 years from the issuance date of the investment registration certificate or the approval for investment guidelines; the National Innovation Center established under the Prime Minister’s decision;
– Investment projects in the business line eligible special investment incentives with an investment capital of at least VND 30,000 billion and disbursing at least VND 10,000 billion within 03 years from the issuance date of the investment registration certificate or the approval for investment guidelines.
Levels of incentives and time limit for application of special incentives are prescribed by the Law on Corporate Income Tax and the Law on Land. Forms of special investment assistance are the same as those mentioned in Clause 1 Article 18 of Law on investment 2020
Special investment incentives and assistance set out in this Article do not apply to:
– any investment project that has been granted the investment certificate, the investment registration certificate or the decision on investment guidelines before the effective date of this Law;
– the investment projects mentioned in Clause 5 Article 15 of this Law.
The Government shall request the National Assembly to decide to apply investment incentives other than those specified in this Law and other laws if it is necessary to encourage the development of a project of special importance or a special administrative – economic unit.
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Frequently asked questions
Forms of investment assistance comprise: Assistance in development of technical infrastructure and social infrastructure inside and outside the perimeter of the investment project; Assistance in training and development of human resources; Credit assistance; Assist in access to business premises; assistance in relocation of business establishments under decisions of regulatory agencies; Assistance in science, technology and technology transfer; Assistance in market development and information provision; Assistance in research and development.
Forms of investment incentives comprise: Corporate income tax incentives, including application of a lower rate of corporate income tax for a certain period of time or throughout the investment project execution; exemption from and reduction of tax and other incentives prescribed by the Law on Corporate Income Tax; Exemption from import tax on goods imported to form fixed assets; raw materials, supplies and components for manufacturing purposes in accordance with regulations of law on import and export tax; Exemption from and reduction of land levy and land rents; Accelerated depreciation, increasing the deductible expenses upon calculation of taxable income.
Levels of incentives and time limit for application of special incentives are prescribed by the Law on Corporate Income Tax and the Law on Land. Forms of special investment assistance are the same as those mentioned in Clause 1 Article 18 of Law on investment 2020
Conclusion: So the above is General legal regulations on investment incentives and assistance in Vietnam 2022. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
