VietNamNet Bridge – Vietnam is expected to offer tax exemption and reduction for expansion parts of foreign-invested projects as well as tenants in industrial zones in order to attract long-term and environment-friendly investors, said an official of the Ministry of Planning and Investment (MPI).
Deputy Minister Dao Quang Thu announced the planned incentives with representatives of foreign-invested and domestic enterprises at a business luncheon organized last Friday by the European Chamber of Commerce in Vietnam (EuroCham). Thu briefed participants on the country’s general economic restructuring between now and 2020 with impacts and opportunities for businesses.
He acknowledged that there remained big difference between the Investment Law and the Law on Corporate Income Tax (CIT) in Vietnam. He pointed out the Law on CIT did not cover incentives for the expansion of projects, so investors are not subject to the tax incentives when they carry out expansion plans.
However, the amendments regarding tax incentives are already outlined in a draft Law on CIT and backed by the Government. This amended draft law will go to the National Assembly for approval soon, Thu said.
“We consider investors with expansion plans as those having a long-term business view in Vietnam. So, they should be encouraged and provided with favorable conditions,” Thu said in response to a question from the audience at the luncheon.
The Ministry of Finance has reported the National Assembly Standing Committee on amendments to the Law on CIT and the Law on Value-Added Tax, with an intended roadmap envisaging a CIT cut from the current ratio of 25% to 23% in 2014 and 20% in 2016. But, the deputy minister said many were in favor of the current CIT rate being slashed to 20% as soon as possible.
In addition, the Government has supported tax incentives for developers of industrial parks and their tenants like those before 2009 that were removed when the Law on CIT became effective early 2009.
Thu said the Government wanted to resume such incentives to attract investors to industrial parks and economic zones, where there are concentrated infrastructure facilities to better deal with manufacturing and environmental issues.
Thu noted that in reality, there was inconsistence between laws and policies, and cited the issues regarding taxes for the automobile industry as a case in point. However, these discouraging points would be reviewed and fixed to make life easy for businesses.
Thu said the Government would improve the legal bases for those projects to be undertaken under the public-private partnership (PPP) format, as this was regarded as a magnet to foreign investment. The purpose was to attract more investment, especially in infrastructure development, Thu answered a question raised by former EuroCham chairman Alain Cany.
There already exists a pilot mechanism on PPP but investors have voiced concerns about the terms regarding a maximum 30% capital of a PPP project contributed by the State, profit remittance and the responsible person of the State in such a project.
So, the mechanism will be improved with a view that there will not be a limit for the State capital contribution and there will be chances for private investors to ensure their commercial benefits from the PPP projects they invest.
“The Government has a policy to open various investment formats for the private sector, particularly the PPP so as to put infrastructure development on a fast track,” Thu said.
Relevant agencies have studied different PPP management policies from Britain and Canada as well as consultancy from international organizations, including the World Bank. Thu said adjustments are being made to create a much more favorable mechanism for PPP investors in this country.
Source: SGT