VietNamNet Bridge – The draft corporate income tax law stipulates the
jurisdiction of the government in deciding the investment incentives for the big
investment projects, which are expected to have high socio-economic impacts.
This means that big investors, who are considered the “special investors” thanks
to the great impacts on the socio-economic development of Vietnam, would be able
to require the “specific mechanisms” for them. In other words, the big
influential investors can “haggle” with the government of Vietnam about the
incentives they can enjoy if investing in Vietnam.
A member of the law compilation committee said that a lot of big investors whose
projects have big influences to the local economy development, but they cannot
enjoy high-level investment incentives, if referring to the currently applied
laws.
Meanwhile, tax incentives are one of the most important factors behind the
investors’ decisions to make investment in Vietnam.
The law compiler has implied Samsung, Nokia, LG and Canon. The investment
incentives offered to Samsung once raised controversy among state management
agencies. Samsung’s projects create a lot of local jobs and its exports allow it
to pay in much money to the state budget.
Therefore, local authorities believed that they needed to offer high incentives
to attract the big investor. Meanwhile, management agencies disagreed with the
incentives, saying that the incentives went beyond the current incentive frame
The official from the law compilation committee said that in such special cases,
the government would make the final decision on whether to offer incentives to
investors, and how high the incentives should be.
Samsung and Nokia, the mobile phone manufacturers, have been offered the highest
possible investment incentives reserved for high technology firms. However, the
local authorities offered the incentives just after considering the possible
effects of the projects on the local economy development, rather than referring
to the current laws.
Under the current laws, the investors cannot receive the incentives reserved for
high technology firms, because mobile phones are not listed as high technology
products subject to preferential treatment.
The general principle being pursued by the government is that Vietnam supports
all the authentic investors who have serious long term business plans in
Vietnam. However, the government must not make the decisions which come contrary
to the current laws. Therefore, Robert Bosch and Kumho Asia, also considered the
big investors, still have to wait for the government’s decisions.
The suggestion of the law compilation committee to give more power in deciding
the investment incentives to the government, if approved, would help settle the
existing problems.
In fact, the mechanism has been applied in some regional countries such as
Thailand and Indonesia. The governments of the countries have been negotiating
with big investors about the investment incentives for big-scaled projects which
have national influences to the socio-economic development.
“We need to do this in our current conditions,” Bui Quang Vinh, Minister of
Planning and Investment said on Dau tu. His words can be understood that Vietnam
needs to offer the incentives big enough to compete with other regional
countries to attract big investors.
Experts have agreed that the investors, who implement multi-billion dollar
projects, apply modern technologies and create many jobs, would have the right
to claim for their benefits.
Dr. Tran Dinh Thien, Head of the Vietnam Economics Institute, agreed on the
special mechanism, saying that it’s necessary to harmonize the benefits of the
investors and the sovereign benefits.
Compiled by C. V