Vietnam tax benefits for foreign investors
In the context of increasingly deep international economic integration, tax incentives play an important role in attracting and maintaining foreign direct investment (FDI). In particular, for FDI enterprises, this policy is not only a decisive factor but also a lever to help increase competitiveness and sustainable development in the market. Let’s learn about Vietnam tax benefits for foreign investors with S4B Vietnam.
1. Tax exemption, corporate income tax reduction
Pursuant to Article 20 of Circular 78/2014 of the Ministry of Finance, amended by Circular 96/2015:
● Tax exemption for 04 years, 50% Tax reduction programs for FDI enterprises of tax payable in the next 09 years
– Enterprise income from implementing new investment projects is entitled to a preferential tax rate of 10% for 15 years as stated in Section 1.1 of this article.
– Income of enterprises from implementing new investment projects in the socialized sector implemented in areas with difficult or extremely difficult socio-economic conditions.
● Tax exemption for 04 years, 50% reduction of tax payable in the next 05 years
Income of enterprises from implementing new investment projects in the socialized sector implemented in areas not on the List of areas with difficult or extremely difficult socio-economic conditions.
● Tax exemption for 02 years and 50% reduction of tax in the next 04 years
– Income from implementing new investment projects enjoys a preferential tax rate of 17% for 10 years as stated in Section 1.1 above.
– Income of enterprises from implementing new investment projects in Industrial Parks (except for Industrial Parks in the inner city of special-class urban areas, class I urban areas directly under the Central Government, class I urban areas directly under the provinces).
Tax reduction programs for FDI enterprises
2. Import tax exemption
Corporate tax incentives for FDI in Vietnam: Applies to imported goods to create fixed assets; imported raw materials, supplies, components for production.
3. Exemption and reduction of land use fees, land rent, land use tax
3.1 Exemption and reduction of land use fees
According to Article 5 of Decree No. 57/2018, enterprises with agricultural projects (special investment incentives, investment incentives and investment incentives) are allocated land by the State or are allowed to change the land purpose to build housing for employees according to the provisions of Article 55 of the Land Law:
Exemption from land use purpose conversion fee for the land area converted to build housing for employees working at the project. After that, exemption from land use fee for the converted land area.
3.2 Exemption and reduction of land rent
3.3 Exemption and reduction of non-agricultural land use tax
● According to Article 10 of Circular 153/2011/TT-BTC, agricultural land use tax is exempted for:
– Land of investment projects in the field of special investment encouragement (special investment incentives); investment projects in areas with particularly difficult socio-economic conditions; investment projects in the field of investment encouragement (investment incentives) in areas with difficult socio-economic conditions; land of enterprises employing over 50% of their labor force are war invalids and sick soldiers.
– Land of establishments implementing socialization for activities in the fields of education, vocational training, health, culture, sports, and environment.
● Article 11 of this Circular also stipulates a 50% reduction of land use tax for:
– Land of investment projects in the field of investment incentives; investment projects in areas with difficult socio-economic conditions; land of enterprises using 20% – 50% of workers are war invalids and sick soldiers.
Tax holiday regulations for foreign investors in Vietnam
4. Vietnam tax benefits for foreign investors
From January 1, 2016, the corporate income tax rate is 20%, except for some cases subject to higher tax rates or enjoying tax incentives.
Specifically, Article 19 of Circular No. 78/2014/TT-BTC, amended in Circular No. 96/2015/TT-BTC, stipulates the preferential tax rates as follows:
4.1 Tax rate of 10% for 15 years
- Income of enterprises from implementing new investment projects in areas with particularly difficult socio-economic conditions, economic zones, high-tech zones (including concentrated information technology zones);
- Income of enterprises from implementing new investment projects in the field of environmental protection: Production of environmental pollution treatment equipment, environmental monitoring and analysis equipment; pollution treatment and environmental protection; collection and treatment of wastewater, exhaust gas, solid waste; recycling and reuse of waste;
- High-tech enterprises, high-tech agricultural enterprises.
- Income of enterprises from implementing new investment projects in the field of production (except for production of goods subject to special consumption tax, mineral exploitation)
4.2 Tax rate 15%
Income of enterprises engaged in cultivation, animal husbandry, and processing in the agricultural and aquatic sectors in areas other than areas with difficult or particularly difficult socio-economic conditions.
4.3 Tax rate 17% for 10 years
- Income of enterprises from implementing new investment projects in areas with difficult socio-economic conditions.
- Income of enterprises from implementing new investment projects
If joint stock companies, limited liability companies, etc. all have their own characteristics, then the foreign-invested enterprise investment model also has its own distinct features, specifically:
- The main purpose of FDI is to optimize profits for foreign investors;
- The investor retains the right to decide in the business and production process;
- FDI investment capital will usually be attracted by countries with a solid and clear legal foundation and corridor;
- Tax holiday regulations for foreign investors in Vietnam
- Most FDI enterprises are newly established or acquire operating companies in the form of transferring shares, capital contributions, etc.
Above, S4B Vietnam has provided information on Vietnam’s preferential tax policies for FDI. Hopefully the above information is useful to readers. If you have any other questions of FDI tax planning strategies in Vietnam or need advice and support, please contact us via Hotline: + 84 24 3974 4181, our team will answer quickly and in detail.
>>>Read more: Accounting firms for FDI in Vietnam
S4B Vietnam
- Address: Unit 701B – 701C, Tower A, Handi Resco 521 Kim Ma Street, Ba Dinh District, Hanoi, Vietnam.
- Tel: + 84 24 3974 4181
- Email: service@s4b.com.vn
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